<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 26, 1998
1933 ACT REGISTRATION NO. 33-11802
1940 ACT REGISTRATION NO. 811-5002
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 21 [X]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 22 [X]
(Check appropriate box or boxes)
</TABLE>
------------------
INVESTORS FUND SERIES
(Exact name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, Illinois
(Address of Principal Executive Office)
60606
(Zip Code)
Registrant's Telephone Number, including Area Code: (312) 537-7000
Philip J. Collora, Vice President,
Treasurer and Secretary
INVESTORS FUND SERIES
222 South Riverside Plaza
Chicago, Illinois 60606
(Name and Address of Agent for Service)
With a copy to:
Cathy G. O'Kelly
David A. Sturms
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2)
[X] on May 1, 1998 pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ]this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
<PAGE> 2
INVESTORS FUND SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER LOCATION
OF FORM N-1A IN PROSPECTUS
------------ -------------
<S> <C>
1. Cover Page............................... Cover Page
2. Synopsis................................. Summary
3. Condensed Financial Information.......... Financial Highlights
4. General Description of Registrant........ Summary; Capital Structure and General
Information; Investment Objectives, Policies and
Risk Factors; Investment Techniques
5. Management of the Fund................... Summary; Investment Manager; Distributor
5A. Management's Discussion of Fund
Performance.................................... Capital Structure and General Information
6. Capital Stock and Other Securities....... Summary; Capital Structure and General
Information; Dividends and Taxes
7. Purchase of Securities Being Offered..... Summary; Purchase and Redemption; Net Asset
Value; Distributor
8. Redemption or Repurchase................. Purchase and Redemption
9. Pending Legal Proceedings................ Inapplicable
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary.................................. 2
Financial Highlights..................... 5
Investment Objectives, Policies and Risk
Factors................................ 14
Investment Techniques.................... 39
Net Asset Value.......................... 45
Purchase and Redemption.................. 46
Dividends and Taxes...................... 46
Capital Structure and General
Information............................ 47
Investment Manager....................... 47
Distributor.............................. 52
Appendix................................. 54
</TABLE>
This prospectus contains information about the Fund that you should know before
investing and should be retained for future reference. A Statement of Additional
Information dated May 1, 1998, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. It is available upon request
without charge from the Fund at the address or telephone number shown above.
AN INVESTMENT IN THE KEMPER MONEY MARKET PORTFOLIO IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE PORTFOLIO
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTORS
FUND
SERIES
PROSPECTUS MAY 1, 1998
INVESTORS FUND SERIES
222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
1-800-778-1482
Investors Fund Series (the "Fund") offers a choice of twenty investment
portfolios to investors applying for certain variable life insurance and
variable annuity contracts offered by Participating Insurance Companies.
The twenty investment portfolios are:
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 CONTRARIAN 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
KEMPER-DREMAN HIGH RETURN EQUITY
PORTFOLIO
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO
KEMPER GLOBAL BLUE CHIP PORTFOLIO
KEMPER INTERNATIONAL GROWTH AND INCOME
PORTFOLIO
Shares of the Portfolios are available exclusively as pooled funding vehicles
for the variable life insurance and variable annuity contracts of Participating
Insurance Companies.
<PAGE> 4
SUMMARY
FUND INVESTMENT CONCEPT. Investors Fund Series (the "Fund") is registered as an
open-end management investment company established on January 22, 1987 as a
Massachusetts business trust. The Fund is a series fund consisting of twenty
portfolios ("Portfolios"), listed below. Additional Portfolios may be created
from time to time. 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"). The Fund currently does not foresee any
disadvantages to the holders of VLI contracts and VA contracts arising from the
fact that the interests of the holders of such contracts may differ.
Nevertheless, the Fund's Board of Trustees intends to monitor events in order to
identify any material irreconcilable conflicts that may arise and to determine
what action, if any, should be taken. The VLI contracts and VA contracts are
described in the separate prospectuses issued by the Participating Insurance
Companies. The Fund assumes no responsibility for such prospectuses.
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 or investors (the "Shareholders"),
although such companies may pass through voting rights to their VLI and VA
contract holders.
The twenty Portfolios of the Fund are as follows:
KEMPER MONEY MARKET PORTFOLIO ("Money Market Portfolio") seeks maximum current
income to the extent consistent with stability of principal from a portfolio of
high quality money market instruments.
KEMPER TOTAL RETURN PORTFOLIO ("Total Return Portfolio") seeks a high total
return, a combination of income and capital appreciation, by investing in a
combination of debt securities and common stocks.
KEMPER HIGH YIELD PORTFOLIO ("High Yield Portfolio") seeks to provide a high
level of current income by investing in fixed-income securities.
KEMPER GROWTH PORTFOLIO ("Growth Portfolio") seeks maximum appreciation of
capital through diversification of investment securities having potential for
capital appreciation.
KEMPER GOVERNMENT SECURITIES PORTFOLIO ("Government Securities Portfolio") seeks
high current return consistent with preservation of capital from a portfolio
composed primarily of U.S. Government securities.
KEMPER INTERNATIONAL PORTFOLIO ("International Portfolio") seeks total return, a
combination of capital growth and income, principally through an internationally
diversified portfolio of equity securities.
KEMPER SMALL CAP GROWTH PORTFOLIO ("Small Cap Growth Portfolio") seeks maximum
appreciation of investors' capital from a portfolio primarily of growth stocks
of smaller companies.
KEMPER INVESTMENT GRADE BOND PORTFOLIO ("Investment Grade Bond Portfolio") seeks
high current income by investing primarily in a diversified portfolio of
investment grade debt securities.
KEMPER CONTRARIAN PORTFOLIO ("Contrarian Portfolio") seeks to achieve a high
rate of total return from a portfolio primarily of value stocks of larger
companies.
KEMPER SMALL CAP VALUE PORTFOLIO ("Small Cap Value Portfolio") seeks long-term
capital appreciation from a portfolio primarily of value stocks of smaller
companies.
KEMPER VALUE+GROWTH PORTFOLIO ("Value+Growth Portfolio") seeks growth of capital
through professional management of a portfolio of growth and value stocks.
KEMPER HORIZON 20+ PORTFOLIO ("Horizon 20+ Portfolio"), designed for investors
with approximately a 20+ year investment horizon, seeks growth of capital, with
income as a secondary objective.
2
<PAGE> 5
KEMPER HORIZON 10+ PORTFOLIO ("Horizon 10+ Portfolio"), designed for investors
with approximately a 10+ year investment horizon, seeks a balance between growth
of capital and income, consistent with moderate risk.
KEMPER HORIZON 5 PORTFOLIO ("Horizon 5 Portfolio"), designed for investors with
approximately a 5 year investment horizon, seeks income consistent with
preservation of capital, with growth of capital as a secondary objective.
KEMPER BLUE CHIP PORTFOLIO ("Blue Chip Portfolio") seeks growth of capital and
of income.
KEMPER GLOBAL INCOME PORTFOLIO ("Global Income Portfolio") seeks to provide high
current income consistent with prudent total return asset management.
KEMPER-DREMAN HIGH RETURN EQUITY PORTFOLIO ("High Return Equity Portfolio")
seeks to achieve a high rate of total return.
KEMPER-DREMAN FINANCIAL SERVICES PORTFOLIO ("Financial Services Portfolio")
seeks long-term capital appreciation by investing primarily in common stocks and
other equity securities of companies in the financial services industry believed
by the Portfolio's investment manager to be undervalued.
KEMPER GLOBAL BLUE CHIP PORTFOLIO ("Global Blue Chip Portfolio") seeks long-term
growth of capital through a diversified worldwide portfolio of marketable
securities, primarily equity securities, including common stocks, preferred
stocks and debt securities convertible into common stocks.
KEMPER INTERNATIONAL GROWTH AND INCOME PORTFOLIO ("International Growth and
Income Portfolio") seeks long-term growth of capital and current income,
primarily from foreign equity securities.
Each Portfolio except the Money Market Portfolio may engage in options and
financial futures transactions. The Total Return, High Yield, Growth, Small Cap
Growth, Investment Grade Bond, Value+Growth, Blue Chip and Financial Services
Portfolios each may invest a portion of its assets in foreign securities and
engage in related foreign currency transactions. The Horizon Portfolios each
will invest a portion of its assets in foreign securities and engage in related
foreign currency transactions. The International, Global Income, Global Blue
Chip and International Growth and Income Portfolios each will invest a
substantial portion of its assets in foreign securities and engage in related
foreign currency transactions. Foreign securities may include investments in
developing countries. The High Yield Portfolio will, and the Total Return,
Government Securities, Investment Grade Bond, Horizon, Financial Services,
Global Blue Chip and International Growth and Income Portfolios may, invest in
high yield (high risk) bonds. Each Portfolio except the Global Income Portfolio
is diversified. As a "non-diversified" Portfolio, the Global Income Portfolio
will be able to invest a relatively high percentage of its assets in a limited
number of issuers, therefore making the Portfolio more susceptible to a single,
economic, political or regulatory occurrence than a diversified portfolio. See
"Investment Objectives, Policies and Risk Factors."
RISK FACTORS. There is no assurance that the investment objective of any
Portfolio will be achieved and investment in each Portfolio includes risks that
vary in kind and degree depending upon the investment policies of the Portfolio.
The returns and net asset value of a Portfolio will fluctuate (except that the
Money Market Portfolio seeks to maintain a net asset value of $1.00 per share).
Investors should note that investments in high yield securities by certain
portfolios (the High Yield, Total Return, Government Securities, Investment
Grade Bond, Horizon, Financial Services, Global Blue Chip and International
Growth and Income Portfolios) entail relatively greater risk of loss of income
and principal than investments in higher rated securities; and market prices of
high yield securities may fluctuate more than market prices of higher rated
securities. The government guarantee of the U.S. Government securities in which
the Government Securities Portfolio may invest does not guarantee the market
value of the shares of the Portfolio. Normally the value of investments in U.S.
Government securities varies inversely with changes in interest rates. Foreign
investments by certain Portfolios (principally the International, Global Income,
Global Blue Chip and International Growth and
3
<PAGE> 6
Income Portfolios) involve risk and opportunity considerations not typically
associated with investing in U.S. companies. The return of such a Portfolio can
be adversely affected by changes in currency exchange rates. Investment by the
Small Cap Growth Portfolio and the Small Cap Value Portfolio primarily in
smaller companies involves greater risk than investment in larger, more
established companies. The High Return Equity Portfolio may invest a significant
percentage of its total assets in one or more market sectors, in which case,
financial, economic, business and other developments affecting issuers in that
sector may have a greater effect on the Portfolio than if it had not
concentrated its assets in that sector. Concentration by the Financial Services
Portfolio in investments in the financial services industry creates greater risk
than investments across various industries since the financial, economic and
business developments affecting issuers in such industry may have a greater
effect on the Portfolio than if it had not concentrated its assets in the
financial services industry. There are special risks associated with options,
financial futures, foreign currency and other derivative transactions and there
is no assurance that use of those investment techniques will be successful. Some
of the Portfolios may experience high portfolio turnover, which would involve
correspondingly greater brokerage commissions or other transaction costs. See
"Investment Objectives, Policies and Risk Factors."
PURCHASES AND REDEMPTIONS. The separate accounts of the Participating Insurance
Companies place orders to purchase and redeem shares of each Portfolio based on,
among other things, the amount of premium payments to be invested and surrender
and transfer requests to be effected on that date pursuant to VLI and VA
contracts. See "Purchase and Redemption."
INVESTMENT MANAGER. Scudder Kemper Investments, Inc. ("Scudder Kemper" or
"investment manager") serves as investment manager for each of the Portfolios
and is paid a monthly management fee at 1/12 of an annual rate, based upon the
average daily net assets of such Portfolios, as follows: Money Market (.50%),
Total Return (.55%), High Yield (.60%), Growth (.60%), Government Securities
(.55%), International (.75%), Small Cap Growth (.65%), Investment Grade Bond
(.60%), Contrarian (.75%), Small Cap Value (.75%), Value+Growth (.75%), Horizon
20+ (.60%), Horizon 10+ (.60%), Horizon 5 (.60%), Blue Chip (.65%), Global
Income (.75%) and International Growth and Income (1.00%). Scudder Kemper is
paid monthly an investment management fee by the High Return Equity and
Financial Services Portfolios based upon average daily net assets of each
Portfolio at an annual rate ranging from .75% to .62%, and is paid monthly an
investment management fee by the Global Blue Chip Portfolio based upon average
daily net assets of the Portfolio at an annual rate ranging from 1.00% to .90%.
As discussed more fully under "Investment Manager," Scudder Kemper has agreed to
temporarily waive its management fee for the current fiscal year in the amount
of .15% of average daily net assets of the Global Blue Chip Portfolio and .30%
of the average daily net assets of the International Growth and Income
Portfolio. Zurich Investment Management Limited ("ZIML"), an affiliate of
Scudder Kemper, serves as sub-adviser for the International and Global Income
Portfolios. ZIML is paid by Scudder Kemper a fee of .35% for the International
Portfolio and .30% for the Global Income Portfolio of the portion of the average
daily net assets of that Portfolio allocated by Scudder Kemper to ZIML for
management. Dreman Value Management, L.L.C. ("DVM") serves as sub-adviser for
the High Return Equity and Financial Services Portfolios and is paid by Scudder
Kemper a fee based upon average daily net assets of each Portfolio at an annual
rate ranging from .24% to .198%. See "Investment Manager."
GENERAL INFORMATION AND CAPITAL. Since the Fund offers multiple Portfolios, it
is known as a "series company." Shares of each Portfolio have equal
non-cumulative voting rights and equal rights with respect to dividends, assets
and liquidation of such Portfolio. Each Portfolio has its own objective,
policies and restrictions. The Fund is not required to hold annual shareholder
meetings, but will hold special shareholder meetings as required or deemed
desirable. See "Capital Structure and General Information."
4
<PAGE> 7
FINANCIAL HIGHLIGHTS
The tables below show financial information for each Portfolio (other than the
High Return Equity, Financial Services, Global Blue Chip, and International
Growth and Income Portfolios, which commenced operations on May 1, 1998)
expressed in terms of one share outstanding throughout the period. The
information for the Money Market, Total Return, High Yield and Growth Portfolios
for fiscal periods prior to 1990 reflects the operations of certain Separate
Accounts as discussed under "Capital Structure and General Information." The
information in the tables for the years ended December 31, 1990 through 1997 is
covered by the report of the Fund's independent auditors. The report is
contained in the Fund's Registration Statement and is available from the Fund.
The financial statements contained in the Fund's 1997 Annual Report to
Shareholders are incorporated herein by reference and may be obtained by writing
or calling the Fund.
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
year $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income and
dividends declared .05 .05 .06 .04 .03 .03 .06 .08 .09 .07
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 5.25% 5.03 5.66 3.96 2.83 3.43 5.89 8.08 9.11 7.47
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .55% .60 .55 .53 .56 .57 .56 .58 .57 .56
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 5.14% 4.90 5.52 3.95 2.79 3.38 5.80 7.78 8.75 7.19
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in
thousands) $100,143 70,601 61,078 83,821 68,177 75,270 76,479 95,759 78,683 80,362
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE TO MONEY MARKET PORTFOLIO:
The total returns for 1995 and 1994 include the effect of a capital contribution
from the investment manager. Without the capital contribution, the total returns
would have been 5.11% and 3.47%, respectively.
TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of year $ 2.815 2.579 2.112 2.586 2.473 2.658 2.071 2.021 1.707 1.605
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .090 .084 .084 .069 .069 .061 .080 .113 .102 .086
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) .377 .322 .453 (.313) .214 (.026) .677 (.013) .298 .102
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations .467 .406 .537 (.244) .283 .035 .757 .100 .400 .188
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distributions from net
investment income .090 .090 .070 .060 .050 .080 .110 .020 .086 .086
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain .370 .080 -- .170 .120 .140 .060 .030 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends .460 .170 .070 .230 .170 .220 .170 .050 .086 .086
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 2.822 2.815 2.579 2.112 2.586 2.473 2.658 2.071 2.021 1.707
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 19.96% 16.76 25.97 (9.50) 12.13 1.69 37.90 5.04 24.16 11.98
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS:
Expenses .60% .59 .60 .61 .59 .60 .61 .61 .58 .61
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 3.32% 3.21 3.52 3.13 3.19 3.41 3.46 5.94 5.43 5.19
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year
(in thousands) $786,996 697,102 659,894 586,594 643,830 528,007 412,772 272,747 262,652 206,262
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 122% 90 118 128 191 160 187 139 102 152
- ---------------------------------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the years ended December 31, 1997 and 1996 were $.0586 and
$.0574, respectively.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 8
HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
year $ 1.281 1.259 1.185 1.338 1.209 1.144 .914 1.122 1.258 1.225
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .116 .120 .125 .116 .120 .125 .140 .170 .151 .152
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) .019 .042 .069 (.149) .109 .070 .300 (.338) (.163) .033
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations .135 .162 .194 (.033) .229 .195 .440 (.168) (.012) .185
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends from net
investment income .120 .140 .120 .120 .100 .130 .210 .040 .124 .152
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.296 1.281 1.259 1.185 1.338 1.209 1.144 .914 1.122 1.258
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 11.61% 14.06 17.40 (2.25) 20.00 17.76 51.83 (15.45) (1.22) 15.66
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .65% .65 .65 .65 .63 .64 .67 .68 .63 .66
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 9.20% 9.70 10.27 9.49 9.54 10.44 12.95 16.27 12.50 11.98
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in
thousands) $391,664 289,315 257,377 219,415 233,964 162,158 121,608 88,566 150,674 138,461
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 90% 98 90 98 84 57 31 28 81 52
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
year $ 3.371 3.262 2.665 2.935 2.631 2.642 1.681 1.692 1.348 1.374
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .012 .030 .034 .018 .004 .007 .017 .032 .039 .032
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) .448 .589 .793 (.138) .370 .082 .974 (.023) .338 (.026)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations .460 .619 .827 (.120) .374 .089 .991 .009 .377 .006
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distributions from net
investment income .020 .040 .010 -- .010 .005 .030 .010 .033 .032
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gain .810 .470 .220 .150 .060 .095 -- .010 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends .830 .510 .230 .150 .070 .100 .030 .020 .033 .032
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 3.001 3.371 3.262 2.665 2.935 2.631 2.642 1.681 1.692 1.348
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 21.34% 21.63 32.97 (4.02) 14.63 3.57 59.47 0.60 27.87 .40
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .65% .64 .64 .66 .64 .64 .67 .68 .70 .71
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .42% .94 1.15 .69 .30 .65 .83 2.23 2.49 2.34
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in
thousands) $563,016 487,483 414,533 321,708 284,461 203,624 118,983 61,621 51,961 45,833
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 170% 175 88 106 78 78 106 135 93 301
- ---------------------------------------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the years ended December 31, 1997 and 1996 were $.0590 and
$.0558, respectively.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
Year ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.207 1.269 1.142 1.267 1.277 1.287 1.175 1.091 1.053 1.020
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .084 .085 .084 .067 .060 .064 .090 .093 .092 .089
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) .016 (.057) .123 (.102) .020 .006 .082 .011 .036 (.056)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .100 .028 .207 (.035) .080 .070 .172 .104 .128 .033
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distributions from net investment
income .100 .090 .080 .060 .060 .050 .060 .020 .090 --
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized
gain -- -- -- .030 .030 .030 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends .100 .090 .080 .090 .090 .080 .060 .020 .090 --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.207 1.207 1.269 1.142 1.267 1.277 1.287 1.175 1.091 1.053
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 8.96% 2.56 18.98 (2.74) 6.48 5.90 15.22 9.81 13.14 3.27
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses .64% .66 .65 .63 .60 .61 .63 .58 .53 1.81
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 7.12% 7.09 7.08 5.69 5.05 6.08 7.42 8.48 8.73 7.94
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in
thousands) $86,682 84,314 95,185 95,782 121,912 98,814 59,064 31,929 14,878 1,170
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 179% 325 275 606 534 492 141 174 28 25
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE TO GOVERNMENT SECURITIES PORTFOLIO:
Scudder Kemper waived its investment management fee from March 1, 1989 to March
1, 1990. Absent this waiver, the ratio of expenses to average net assets and the
ratio of net investment income to average net assets would have been 1.04% and
8.22%, respectively, in 1989 and .66% and 8.40%, respectively, in 1990.
7
<PAGE> 10
INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
----------------------------------------------------------
1997 1996 1995 1994 1993 1992(a)
-------- -------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.564 1.371 1.244 1.306 .993 1.000
- ----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .011 .011 .018 .009 .010 .010
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .130 .212 .139 (.056) .313 (.017)
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations .141 .223 .157 (.047) .323 (.007)
- ----------------------------------------------------------------------------------------------------------------------
Less dividends:
Distributions from net investment income .020 .020 .010 -- .009 --
- ----------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain .070 .010 .020 .015 .001 --
- ----------------------------------------------------------------------------------------------------------------------
Total dividends .090 .030 .030 .015 .010 --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.615 1.564 1.371 1.244 1.306 .993
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 9.46% 16.49 12.83 (3.59) 32.83 (.72)
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .91% .96 .92 .93 .92 1.11
- ----------------------------------------------------------------------------------------------------------------------
Net investment income .71% .89 1.39 .74 .86 1.01
- ----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $200,046 163,475 134,481 122,710 88,880 19,447
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 79% 87 126 107 116 129
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Average commission rates paid per share on stock transactions for the years
ended December 31, 1997 and 1996 were $.0142 and $.0183, respectively. Foreign
commissions usually are lower than U.S. commissions when expressed as cents per
share due to the lower per share price of many non-U.S. securities.
- --------------------------------------------------------------------------------
NOTE TO INTERNATIONAL PORTFOLIO:
(a) For the period from January 6, 1992 (inception) through December 31, 1992.
SMALL CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
------------------------------------
1997 1996 1995 1994(a)
-------- ------ ------ -------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.677 1.346 1.039 1.000
- --------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .004 .002 .005 .008
- --------------------------------------------------------------------------------------------------
Net realized and unrealized gain .488 .369 .307 .031
- --------------------------------------------------------------------------------------------------
Total from investment operations .492 .371 .312 .039
- --------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .010 -- .005 --
- --------------------------------------------------------------------------------------------------
Distribution from net realized gain .190 .040 -- --
- --------------------------------------------------------------------------------------------------
Total dividends .200 .040 .005 --
- --------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.969 1.677 1.346 1.039
- --------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 34.20% 28.04 30.07 3.95
- --------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .71% .75 .87 1.25
- --------------------------------------------------------------------------------------------------
Net investment income .20% .15 .42 .91
- --------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $137,415 69,137 35,373 12,909
- --------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 330% 156 81 58
- --------------------------------------------------------------------------------------------------
</TABLE>
Average commission rates paid per share on stock transactions for the years
ended December 31, 1997 and 1996 were $.0579 and $.0570, respectively.
- --------------------------------------------------------------------------------
NOTE TO SMALL CAP GROWTH PORTFOLIO:
(a) For the period from May 2, 1994 (inception) through December 31, 1994.
8
<PAGE> 11
INVESTMENT GRADE BOND PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
-----------------
1997 1996(a)
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.036 1.000
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income .066 .031
- --------------------------------------------------------------------------------
Net realized and unrealized gain .026 .005
- --------------------------------------------------------------------------------
Total from investment operations .092 .036
- --------------------------------------------------------------------------------
Less distribution from net investment income .010 --
- --------------------------------------------------------------------------------
Net asset value, end of period $ 1.118 1.036
- --------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 9.04% 3.57
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .80% .87
- --------------------------------------------------------------------------------
Net investment income 6.23% 4.93
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $15,504 1,998
- --------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 311% 75
- --------------------------------------------------------------------------------
</TABLE>
NOTE TO INVESTMENT GRADE BOND PORTFOLIO:
(a) For the period from May 1, 1996 (inception) through December 31, 1996.
CONTRARIAN PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
------------------
1997 1996(a)
-------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.174 1.000
- ---------------------------------------------------------------------------------
Income from investment operations:
Net investment income .031 .015
- ---------------------------------------------------------------------------------
Net realized and unrealized gain .323 .159
- ---------------------------------------------------------------------------------
Total from investment operations .354 .174
- ---------------------------------------------------------------------------------
Less distribution from net investment income .010 --
- ---------------------------------------------------------------------------------
Net asset value, end of period $ 1.518 1.174
- ---------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 30.38% 17.36
- ---------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .80% .90
- ---------------------------------------------------------------------------------
Net investment income 2.38% 2.42
- ---------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .80% .92
- ---------------------------------------------------------------------------------
Net investment income 2.38% 2.40
- ---------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $162,380 21,305
- ---------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 46% 57
- ---------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0561 .0500
- ---------------------------------------------------------------------------------
</TABLE>
NOTE TO VALUE PORTFOLIO:
(a) For the period from May 1, 1996 (inception) through December 31, 1996.
9
<PAGE> 12
SMALL CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
-----------------
1997 1996(a)
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.019 1.000
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income .012 .013
- --------------------------------------------------------------------------------
Net realized and unrealized gain .206 .006
- --------------------------------------------------------------------------------
Total from investment operations .218 .019
- --------------------------------------------------------------------------------
Less distribution from net investment income .010 --
- --------------------------------------------------------------------------------
Net asset value, end of period $ 1.227 1.019
- --------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 21.73% 1.86
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .84% 90
- --------------------------------------------------------------------------------
Net investment income 1.18% 2.25
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .84% .92
- --------------------------------------------------------------------------------
Net investment income 1.18% 2.23
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $76,108 13,307
- --------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 22% 61
- --------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0533 .0500
- --------------------------------------------------------------------------------
</TABLE>
NOTE TO SMALL CAP VALUE PORTFOLIO:
(a) For the period from May 1, 1996 (inception) through December 31, 1996.
VALUE + GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
-----------------
1997 1996(a)
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.146 1.000
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income .012 .008
- --------------------------------------------------------------------------------
Net realized and unrealized gain .277 .138
- --------------------------------------------------------------------------------
Total from investment operations .289 .146
- --------------------------------------------------------------------------------
Less distribution from net investment income .010 --
- --------------------------------------------------------------------------------
Net asset value, end of period $ 1.425 1.146
- --------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 25.47% 14.60
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .84% .90
- --------------------------------------------------------------------------------
Net investment income .95% .97
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .84% 1.01
- --------------------------------------------------------------------------------
Net investment income .95% .86
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $69,094 10,196
- --------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 50% 25
- --------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0591 .0596
- --------------------------------------------------------------------------------
</TABLE>
NOTE TO VALUE + GROWTH PORTFOLIO:
(a) For the period from May 1, 1996 (inception) through December 31, 1996.
10
<PAGE> 13
HORIZON 20+ PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
-----------------
1997 1996(a)
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.154 1.000
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income .020 .012
- --------------------------------------------------------------------------------
Net realized and unrealized gain .214 .142
- --------------------------------------------------------------------------------
Total from investment operations .234 .154
- --------------------------------------------------------------------------------
Less distribution from net investment income .010
- --------------------------------------------------------------------------------
Net asset value, end of period $ 1.378 1.154
- --------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 20.48% 15.37
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .93% .81
- --------------------------------------------------------------------------------
Net investment income 1.58% 1.71
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .93% 1.13
- --------------------------------------------------------------------------------
Net investment income 1.58% 1.39
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $16,659 3,759
- --------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 75% 60
- --------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0517 .0458
- --------------------------------------------------------------------------------
</TABLE>
NOTE TO HORIZON 20+ PORTFOLIO:
(a) For the period from May 1, 1996 (inception) through December 31, 1996.
HORIZON 10+ PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
-----------------
1997 1996(a)
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.114 1.000
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income .034 .018
- --------------------------------------------------------------------------------
Net realized and unrealized gain .151 .096
- --------------------------------------------------------------------------------
Total from investment operations .185 .114
- --------------------------------------------------------------------------------
Less distribution from net investment income .010
- --------------------------------------------------------------------------------
Net asset value, end of period $ 1.289 1.114
- --------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 16.77% 11.37
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .83% .78
- --------------------------------------------------------------------------------
Net investment income 2.77% 2.69
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .83% 1.01
- --------------------------------------------------------------------------------
Net investment income 2.77% 2.46
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $22,553 5,727
- --------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 67% 76
- --------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0501 .0455
- --------------------------------------------------------------------------------
</TABLE>
NOTE TO HORIZON 10+ PORTFOLIO:
(a) For the period from May 1, 1996 (inception) through December 31, 1996.
11
<PAGE> 14
HORIZON 5 PORTFOLIO
<TABLE>
<CAPTION>
Year ended
December 31,
-----------------
1997 1996(a)
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.096 1.000
- -------------------------------------------------------------------------------
Income from investment operations:
Net investment income .043 .023
- -------------------------------------------------------------------------------
Net realized and unrealized gain .095 .073
- -------------------------------------------------------------------------------
Total from investment operations .138 .096
- -------------------------------------------------------------------------------
Less distribution from net investment income .010
- -------------------------------------------------------------------------------
Net asset value, end of period $ 1.224 1.096
- -------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 12.70% 9.59
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .97% .83
- -------------------------------------------------------------------------------
Net investment income 3.63% 3.60
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .97% 1.01
- -------------------------------------------------------------------------------
Net investment income 3.63% 3.42
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $14,258 2,534
- -------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 89% 13
- -------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0525 .0490
- -------------------------------------------------------------------------------
</TABLE>
NOTE TO HORIZON 5 PORTFOLIO:
(a) For the period from May 1, 1996 (inception) through December 31, 1996.
BLUE CHIP PORTFOLIO
<TABLE>
<CAPTION>
1997(a)
-------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.000
- ---------------------------------------------------------------------
Income from investment operations:
Net investment income .017
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) .098
- ---------------------------------------------------------------------
Total from investment operations .115
- ---------------------------------------------------------------------
Net asset value, end of period $ 1.115
- ---------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 11.54%
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses .95%
- ---------------------------------------------------------------------
Net investment income 2.07%
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $18,421
- ---------------------------------------------------------------------
Portfolio turnover rate (annualized) 78%
- ---------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0597
- ---------------------------------------------------------------------
</TABLE>
NOTE TO BLUE CHIP PORTFOLIO:
(a) For the period from May 1, 1997 (inception) through December 31, 1997.
12
<PAGE> 15
GLOBAL INCOME PORTFOLIO
<TABLE>
<CAPTION>
1997(a)
-------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.000
- ---------------------------------------------------------------------
Income from investment operations:
Net investment income .036
- ---------------------------------------------------------------------
Net realized and unrealized gain (loss) (.007)
- ---------------------------------------------------------------------
Total from investment operations .029
- ---------------------------------------------------------------------
Net asset value, end of period $1.029
- ---------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.87%
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Expenses 1.10%
- ---------------------------------------------------------------------
Net investment income 5.36%
- ---------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $2,145
- ---------------------------------------------------------------------
Portfolio turnover rate (annualized) 290%
- ---------------------------------------------------------------------
</TABLE>
NOTE FOR GLOBAL INCOME PORTFOLIO:
(a) For the period from May 1, 1997 (inception) through December 31, 1997.
NOTE TO ALL PORTFOLIOS:
Financial Highlights reflect data at the Portfolio level and exclude contract
specific charges which would reduce total return.
13
<PAGE> 16
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
The Fund has adopted for each Portfolio, other than the High Return Equity,
Financial Services, Global Blue Chip, and International Growth and Income
Portfolios certain fundamental investment restrictions which, together with the
investment objective and policies, cannot be changed with respect to a Portfolio
without approval by holders of a majority of the outstanding voting shares as
defined in the Investment Company Act of 1940 ("1940 Act"). The Fund has also
adopted certain fundamental investment restrictions for the High Return Equity,
Financial Services, Global Blue Chip, and International Growth and Income
Portfolio which, together with the investment objective, cannot be changed with
respect to a Portfolio without approval by holders of a majority of the voting
shares as defined in the 1940 Act. See "Investment Restrictions" in the
Statement of Additional Information.
Each Portfolio has a different investment objective which it pursues through
separate investment policies, as described below. The differences in objectives
and policies among the Portfolios can be expected to affect the degree of market
and financial risk to which each Portfolio is subject and the return of each
Portfolio. There are market risks in any investment and therefore there can be
no assurance that the objective of any Portfolio will be achieved. The actual
return of a holder of a variable life or variable annuity contract will be
affected by charges imposed by the separate accounts of Participating Insurance
Companies.
MONEY MARKET PORTFOLIO. The Money Market Portfolio seeks maximum current income
to the extent consistent with stability of principal from a portfolio of the
following types of U.S. Dollar denominated money market instruments that mature
in twelve months or less:
1. Obligations of, or guaranteed by, the U.S. or Canadian Governments,
their agencies or instrumentalities. The two broad categories of U.S.
Government debt instruments are: (a) direct obligations of the U.S.
Treasury and (b) securities issued or guaranteed by agencies and
instrumentalities of the U.S. Government. Some obligations issued or
guaranteed by agencies or instrumentalities of the U.S. Government are
backed by the full faith and credit of the United States and others are
backed exclusively by the agency or instrumentality with limited rights of
the issuer to borrow from the U.S. Treasury.
2. Bank certificates of deposit, time deposits or bankers' acceptances
limited to U.S. banks or Canadian chartered banks having total assets in
excess of $1 billion.
3. Bank certificates of deposit, time deposits or bankers' acceptances of
U.S. branches of foreign banks having total assets in excess of $10
billion.
4. Commercial paper rated Prime-1 or Prime-2 by Moody's Investors Service,
Inc. ("Moody's") or A-1 or A-2 by Standard & Poor's Corporation ("S&P"), or
commercial paper or notes of comparable quality, such as are issued by
companies with an unsecured debt issue outstanding currently rated A or
higher by Moody's or S&P where the obligation is on the same or a higher
level of priority as the rated issue, and investments in other corporate
obligations such as publicly traded bonds, debentures and notes rated A or
higher by Moody's or S&P. See "Appendix--Ratings of Investments" in the
Statement of Additional Information for a description of the ratings.
5. Repurchase agreements of obligations which are suitable for investment
under the categories set forth above. Repurchase agreements are discussed
under "Investment Techniques--Repurchase Agreements."
In addition, the Money Market Portfolio limits its portfolio investments to
securities that meet the quality and diversification requirements of Rule 2a-7
of the 1940 Act. See "Net Asset Value."
To the extent the Money Market Portfolio purchases Eurodollar certificates of
deposit issued by London branches of U.S. banks, or commercial paper issued by
foreign entities, consideration will be given to their marketability, possible
restrictions on international currency transactions and to regulations imposed
by the domicile country of the foreign issuer. Eurodollar certificates of
deposit may not be subject to the same regulatory requirements as certificates
issued by U.S. banks and associated income may be subject to the
14
<PAGE> 17
imposition of foreign taxes. The Money Market Portfolio will normally invest at
least 25% of its net assets in instruments issued by domestic or foreign banks.
The Money Market Portfolio seeks to maintain its net asset value at $1.00 per
share by valuing its portfolio of investments on the amortized cost method in
accordance with Rule 2a-7 of the 1940 Act. See "Net Asset Value." While the
Portfolio will make every effort to maintain a fixed net asset value at $1.00
per share, there can be no assurance that this objective will be achieved.
The Money Market Portfolio may invest in instruments that bear rates of interest
that are adjusted periodically or that "float" continuously according to
formulae intended to minimize fluctuations in values of the instruments
("Variable Rate Securities"). The Fund determines the maturity of Variable Rate
Securities in accordance with Securities and Exchange Commission ("SEC") rules
that allow the Fund to consider certain of such instruments as having maturities
earlier than the maturity date on the instrument.
TOTAL RETURN PORTFOLIO. The Total Return Portfolio seeks a high total return, a
combination of income and capital appreciation, by investing in a combination of
debt securities and common stocks. The Portfolio's investments will normally
consist of domestic and foreign fixed income and equity securities. Fixed income
securities will include bonds, money market instruments (including repurchase
agreements) and other debt securities (such as U.S. and foreign government
securities and investment grade and high yield corporate obligations) and
preferred stocks, some of which may have a call on common stocks through
attached warrants or a conversion privilege. The Portfolio may invest in fixed
income securities that are in the lower rating categories and those that are
non-rated (sometimes called "junk bonds"). The characteristics of the rating
categories are described in "Appendix--Ratings of Investments" in the Statement
of Additional Information. For a discussion of lower rated and non-rated
securities and related risks, see "High Yield Portfolio" and "Special Risk
Factors--High Yield (High Risk) Bonds" below. Equity investments normally will
consist of common stocks and securities convertible into or exchangeable for
common stocks; however, the Portfolio may also make private placement
investments (which are normally restricted securities). For a further
description of equity securities, see "Growth Portfolio" below. The percentage
of assets invested in specific categories of fixed-income and equity securities
will vary from time to time depending upon the judgment of the investment
manager as to general market and economic conditions, trends in yields and
interest rates, and changes in fiscal or monetary policies.
The Portfolio does not make investments for short-term profits nor does it have
a separate portfolio turnover policy for equity and fixed income segments of its
portfolio. The Portfolio is not restricted in policy with regard to portfolio
turnover and will make changes in its investment portfolio from time to time as
business and economic conditions or market prices may dictate and as its
investment policy may require.
The Portfolio may write and purchase put and call options traded on national
securities exchanges or over-the-counter, including options on securities
indices. The Portfolio may also engage in financial futures transactions and may
purchase foreign securities and engage in related foreign currency transactions.
The Portfolio may purchase or sell portfolio securities on a when-issued or
delayed delivery basis. See "Special Risk Factors--Foreign Securities" and
"Investment Techniques."
HIGH YIELD PORTFOLIO. The High Yield Portfolio seeks to provide a high level of
current income by investing in fixed income securities. Fixed income obligations
include corporate debt securities, U.S. and Canadian Government securities,
obligations of U.S. and Canadian banking institutions, convertible securities,
assignments or participations in loans, preferred stock, and cash and cash
equivalents, including repurchase agreements.
The fixed income securities purchased by the Portfolio may include those in the
lower rating categories of the established rating services and those that are
non-rated (sometimes called "junk bonds"). Investments in such securities entail
relatively greater risk of loss of income or principal than investments in
higher rated securities; market prices may fluctuate more than market prices of
higher rated securities. See "Special Risk Factors--High Yield (High Risk)
Bonds" below for a discussion of such risks. These fixed income securities (debt
and preferred stock issues, including convertibles) normally offer a current
yield or yield to maturity that is significantly
15
<PAGE> 18
higher than the yield available from securities rated in the four highest
categories assigned by Moody's or S&P. See "Appendix--Ratings of Investments" in
the Statement of Additional Information for a description of Moody's and S&P
ratings.
The average maturity and the mix of investments of the Portfolio will vary as
the investment manager seeks to provide a high level of income considering the
available alternatives in the market. See "Appendix--High Yield
Portfolio/Portfolio Composition" in this prospectus. Since interest rates vary
with changes in economic, market, political and other conditions, there can be
no assurance that historic interest rates are indicative of rates which may
prevail in the future. Since the value of securities in the Portfolio fluctuates
depending upon market factors and inversely with current interest rate levels,
the net asset value of its shares will fluctuate. The investment manager will
adjust the investments of the Portfolio as considered advisable in view of
prevailing or anticipated market conditions. Accordingly, certain portfolio
securities may be purchased or sold in anticipation of a rise or a decline in
interest rates.
The Portfolio does not make investments for short-term profits, but it is not
restricted in policy with regard to portfolio turnover and will make changes in
its investment portfolio from time to time as business and economic conditions
or market prices may dictate and as its investment policy may require.
The Portfolio may write and purchase put and call options traded on national
securities exchanges or over-the-counter, including options on securities
indices. The Portfolio may also engage in financial futures transactions and may
purchase foreign securities and engage in related foreign currency transactions.
The Portfolio may purchase or sell portfolio securities on a when-issued or
delayed delivery basis. See "Special Risk Factors--Foreign Securities" and
"Investment Techniques."
GROWTH PORTFOLIO. The Growth Portfolio seeks maximum appreciation of capital
through diversification of investment securities having potential for capital
appreciation. Current income will not be a significant factor. The Portfolio's
investments normally will consist of equity securities and securities
convertible into or exchangeable for equity securities; however, it may also
make private placement investments (which are normally restricted securities).
As a non-fundamental investment policy, the Growth Portfolio will invest at
least 65% of its total assets in equity securities under normal circumstances.
Equity securities include common stocks, preferred stocks, securities
convertible into or exchangeable for common or preferred stocks, equity
investments in partnerships, joint ventures and other forms of non-corporate
investment and warrants, options and rights exercisable for equity securities.
The common stocks or the other securities selected will be those which, in the
investment manager's judgment, have significant appreciation possibilities.
Investment opportunities will often be sought among securities of small, less
well-known companies; but securities of large, well-known companies will also be
purchased, particularly when the investment manager considers such securities to
be priced favorably in comparison with securities of smaller companies. See
"Growth and Value Stocks" below.
In seeking to obtain capital appreciation, the Portfolio may trade in securities
for the short term. To this extent, the Portfolio will be engaged in trading
operations based on short-term market considerations as distinct from long-term
investment based upon fundamental valuation of securities. However, the
Portfolio will emphasize fundamental research in attempting to identify
under-valued situations that it hopes will appreciate over the longer term. The
Portfolio's investment policy may involve a somewhat greater risk than is
inherent in the ordinary investment security.
For defensive purposes, the Portfolio may temporarily hold a significant portion
of its assets in cash or defensive type securities, such as liquid high grade
debt securities, high quality money market instruments and repurchase
agreements.
The Portfolio may write and purchase put and call options traded on national
securities exchanges or over-the-counter, including options on securities
indices. The Portfolio may also engage in financial futures transactions and may
purchase foreign securities and engage in related foreign currency transactions.
The Portfolio may
16
<PAGE> 19
purchase or sell portfolio securities on a when-issued or delayed delivery
basis. See "Special Risk Factors--Foreign Securities" and "Investment
Techniques."
GOVERNMENT SECURITIES PORTFOLIO. The Government Securities Portfolio seeks high
current return consistent with preservation of capital from a portfolio composed
primarily of U.S. Government securities. The Portfolio will also invest in
fixed-income securities other than U.S. Government securities, and will engage
in options and financial futures transactions. The Portfolio may purchase or
sell portfolio securities on a when-issued or delayed delivery basis. See
"Investment Techniques." The Portfolio's current return is sought from interest
income and net short-term gains on securities and options and futures
transactions.
Under normal market conditions, the Portfolio will, as a fundamental policy,
invest at least 65% of its total assets in U.S. Government securities and
repurchase agreements of U.S. Government securities. There are two broad
categories of U.S. Government securities: (a) direct obligations of the U.S.
Treasury and (b) obligations issued or guaranteed by agencies and
instrumentalities of the United States. Some obligations issued or guaranteed by
agencies or instrumentalities are backed by the full faith and credit of the
United States (such as Government National Mortgage Association "GNMA"
Certificates) and others are backed exclusively by the agency or instrumentality
with limited rights of the issuer to borrow from the U.S. Treasury (such as
Federal National Mortgage Association Bonds). GNMA Certificates are debt
securities which represent an interest in one or a pool of mortgages which are
insured by the Federal Housing Administration or the Farmers Home
Administration, or guaranteed by the Veterans Administration. U.S. Government
securities may include "zero coupon" securities that have been stripped by the
U.S. Government of their unmatured interest coupons (see "Investment Policies
and Techniques" in the Statement of Additional Information for a discussion of
their features and risks) and collateralized obligations issued or guaranteed by
a U.S. Government agency or instrumentality (see "Investment Techniques").
U.S. Government securities of the type in which the Portfolio may invest have
historically involved little risk of loss of principal if held to maturity. The
government guarantee of the securities in the Portfolio, however, does not
guarantee the market value of the shares of the Portfolio. There are market
risks inherent in all investments in securities and the value of an investment
in the Portfolio will fluctuate over time. Normally, the value of the
Portfolio's investments varies inversely with changes in interest rates. For
example, as interest rates rise, the value of the Portfolio's investments will
tend to decline and, as interest rates fall, the value of the Portfolio's
investments will tend to increase. In addition, the potential for appreciation
in the event of a decline in interest rates may be limited or negated by
increased principal prepayments in respect to certain mortgage-backed
securities, such as GNMA certificates. Prepayment of high interest rate
mortgage-backed securities during times of declining interest rates will tend to
lower the return of the Portfolio and may even result in losses to the Portfolio
if some securities were acquired at a premium. With respect to securities
supported only by the credit of the issuing agency or by an additional line of
credit with the U.S. Treasury, there is no guarantee that the U.S. Government
will provide support to such agencies and such securities may involve risk of
loss of principal and interest.
The Portfolio will seek to enhance income through limited investment (up to 35%
of total assets) in fixed income securities other than U.S. Government
securities. Such other fixed-income securities include: (a) corporate debt
securities that are rated at the time of purchase within the four highest grades
by either Moody's (Aaa, Aa, A, or Baa) or S&P (AAA, AA, A, or BBB); (b)
commercial paper that is rated at the time of purchase within the two highest
grades by either Moody's (Prime-1 or Prime-2) or S&P (A-1 or A-2); (c) bank
certificates of deposit (including term deposits) or bankers' acceptances issued
by domestic banks (including their foreign branches) and Canadian chartered
banks having total assets in excess of $1 billion; and (d) repurchase agreements
with respect to any of the foregoing; provided, however, the Portfolio may
invest up to 10% of its total assets in fixed income securities without regard
to the foregoing limitations, including securities that are rated below Baa by
Moody's and BBB by S&P or are non-rated (sometimes called "junk bonds"). The
characteristics of the rating categories are described in "Appendix--Ratings of
Investments" in the Statement of Additional Information. For a discussion of
lower rated and non-rated securities and related risks, see "High Yield
Portfolio" above and "Special Risk Factors--High Yield (High Risk) Bonds" below.
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<PAGE> 20
The Portfolio may also invest in collateralized obligations which, consistent
with the limitations reflected above, may be privately issued or may be issued
or guaranteed by U.S. Government agencies or instrumentalities. See "Investment
Techniques."
During temporary defensive periods when the Fund's investment manager deems it
appropriate, the Portfolio may invest all or a portion of its assets in cash or
short-term high quality money market instruments, including short-term U.S.
Government securities and repurchase agreements with respect to such securities.
The yields on these securities tend to be lower than the yields on other
securities to be purchased by the Portfolio.
INTERNATIONAL PORTFOLIO. The International Portfolio seeks a total return, a
combination of capital growth and income, principally through an internationally
diversified portfolio of equity securities. Investments may be made for capital
growth or for income or any combination thereof for the purpose of achieving a
high overall return. There is no limitation on the percentage or amount of the
Portfolio's assets that may be invested for growth or income, and therefore at
any particular time the investment emphasis may be placed solely or primarily on
growth of capital or on income. While the Portfolio invests principally in
equity securities of non-U.S. issuers, it may also invest in convertible and
debt securities and foreign currencies. The Portfolio invests primarily in
non-U.S. issuers, and under normal circumstances more than 80% of the
Portfolio's total assets will be invested in non-U.S. issuers. In determining
whether the Portfolio will be invested for capital growth or income, the
investment manager analyzes the international equity and fixed income markets
and seeks to assess the degree of risk and level of return that can be expected
from each market. See "Growth and Value Stocks" below. Also see "Special Risk
Factors--Foreign Securities."
In pursuing its objective, the Portfolio invests primarily in common stocks of
established non-U.S. companies believed to have potential for capital growth,
income or both. However, there is no requirement that the Portfolio invest
exclusively in common stocks or other equity securities. The Portfolio may
invest in any other type of security including, but not limited to, convertible
securities (including warrants), preferred stocks, bonds, notes and other debt
securities of companies (including Euro-currency instruments and securities) or
obligations of domestic or foreign governments and their political subdivisions.
When the investment manager believes that the total return potential in debt
securities equals or exceeds that of equity securities, the Portfolio may
substantially increase its holdings of such debt securities. The Portfolio may
establish and maintain reserves for defensive purposes or to enable it to take
advantage of future buying opportunities. The Portfolio's reserves may be
invested in domestic as well as foreign short-term money market instruments
including, but not limited to, government obligations, certificates of deposit,
bankers' acceptances, time deposits, commercial paper, short-term corporate debt
securities and repurchase agreements.
The Portfolio makes investments in various countries. Under normal
circumstances, business activities in not less than three different foreign
countries will be represented in the portfolio. The Portfolio may, from time to
time, have more than 25% of its assets invested in any major industrial or
developed country that in the view of the investment manager poses no unique
investment risk. The Portfolio may purchase securities of companies, wherever
organized, that have their principal activities and interests outside the United
States. Under exceptional economic or market conditions abroad, the Portfolio
may, for defensive purposes, invest all or a major portion of its assets in U.S.
Government obligations or securities of companies incorporated in and having
their principal activities in the United States. The Portfolio may also invest
its reserves in domestic short-term money market instruments as described above.
In determining the appropriate distribution of investments among various
countries and geographic regions, the investment manager ordinarily considers
such factors as: prospects for relative economic growth among foreign countries;
expected levels of inflation; relative price levels of the various capital
markets; government policies influencing business conditions; the outlook for
currency relationships and the range of individual investment opportunities
available to the international investor. Currently, more than 60% of the market
capitalization of equity securities are represented by securities in currencies
other than the U.S. Dollar.
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<PAGE> 21
The Portfolio may purchase and sell options on securities, index options,
financial futures contracts and options on financial futures contracts. The
Portfolio may enter into forward foreign currency exchange contracts, foreign
currency options and foreign currency futures contracts and options thereon to
protect against uncertainty in the level of future foreign exchange rates. See
"Investment Techniques" below.
Generally, the Portfolio will not trade in securities for short-term profits
but, when circumstances warrant, securities may be sold without regard to the
length of time held.
Investors should understand that the expense ratio of the Portfolio can be
expected to be higher than that of portfolios investing in domestic securities
since the costs of operation are higher.
SMALL CAP GROWTH PORTFOLIO. The Small Cap Growth Portfolio seeks maximum
appreciation of investors' capital. Current income will not be a significant
factor. The Portfolio is designed primarily for investors with substantial
resources and the investment experience to consider their shares as a long-term
investment involving financial risk commensurate with potential substantial
gains. Since many of the securities in the Portfolio may be considered
speculative in nature by traditional investment standards, substantially greater
than average market volatility and investment risk may be involved. There is no
assurance that the Portfolio's objective will be achieved and its returns and
net asset value will fluctuate.
The Small Cap Growth Portfolio seeks attractive areas for investment opportunity
arising from such factors as technological advances, new marketing methods, and
changes in the economy and population. Currently, the investment manager
believes that such investment opportunities may be found among the following:
(a) companies engaged in high technology fields such as electronics, medical
technology and computer software and specialty retailing; (b) companies having a
significantly improved earnings outlook as the result of a changed economic
environment, acquisitions, mergers, new management, changed corporate strategy
or product innovation; (c) companies supplying new or rapidly growing services
to consumers and businesses in such fields as automation, data processing,
communications, and marketing and finance; and (d) companies having innovative
concepts or ideas.
As a non-fundamental investment policy, at least 65% of the Small Cap Growth
Portfolio's total assets normally will be invested in the equity securities of
smaller companies, i.e., those having a market capitalization of $1 billion or
less at the time of investment, many of which would be in the early stages of
their life cycle. The investment manager currently believes that investment in
such companies may offer greater opportunities for growth of capital than
larger, more established companies, but also involves certain special risks. See
"Special Risk Factors--Small Cap Securities" below for a discussion of the risks
associated with an investment in securities of companies with small market
capitalizations. See "Growth and Value Stocks" below.
The Small Cap Growth Portfolio's investment portfolio will normally consist
primarily of common stocks and securities convertible into or exchangeable for
common stocks, including warrants and rights. The Portfolio may also invest to a
limited degree in preferred stocks and debt securities when they are believed by
the investment manager to offer opportunities for capital growth. The Portfolio
may also write and purchase options, engage in financial futures transactions,
purchase foreign securities, engage in related foreign currency transactions and
lend its portfolio securities. See "Special Risk Factors--Foreign Securities"
and "Investment Techniques" below. When a defensive position is deemed
advisable, the Portfolio may, without limit, invest in high grade debt
securities and securities of the U.S. Government and its agencies or
instrumentalities or retain cash or cash equivalents, including repurchase
agreements.
In the selection of investments, long-term capital appreciation will take
precedence over short range market fluctuations. The Small Cap Growth Portfolio
does not intend to engage actively in trading for short-term profits, although
it may occasionally make investments for short-term capital appreciation when
such action is believed to be desirable and consistent with sound investment
procedure. Generally, the Portfolio will make long-term rather than short-term
investments. Nevertheless, it may dispose of such investments at any time it may
be deemed advisable because of a subsequent change in the circumstances of a
particular company or
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<PAGE> 22
industry or in general market or economic conditions. The rate of portfolio
turnover is not a limiting factor when changes in investment are deemed
appropriate. In addition, market conditions, cash requirements for redemption
and repurchase of Portfolio shares or other factors could affect the portfolio
turnover rate.
INVESTMENT GRADE BOND PORTFOLIO. The Investment Grade Bond Portfolio seeks high
current income by investing primarily in a diversified portfolio of investment
grade debt securities. Under normal market conditions, as a non-fundamental
policy, at least 65% of the Portfolio's assets will be invested in the following
categories: (a) corporate debt securities that are rated Aaa, Aa, A or Baa by
Moody's or AAA, AA, A or BBB by S&P or any other nationally recognized
statistical rating organization; (b) obligations of, or guaranteed by, the
United States, its agencies or instrumentalities; (c) obligations (payable in
U.S. Dollars) of, or guaranteed by, the government of Canada or any
instrumentality or political subdivision thereof; (d) commercial paper rated
Prime-1 or Prime-2 by Moody's or A-1 or A-2 by S&P; (e) bank certificates of
deposit or bankers' acceptances issued by domestic or Canadian chartered banks
having total deposits in excess of $1 billion; and (f) cash and cash
equivalents. The Portfolio may also invest up to 10% of its assets in preferred
stock.
There are market and investment risks with any security and the value of an
investment in the Portfolio may fluctuate over time. Normally, the value of the
Portfolio's investments varies inversely with changes in interest rates.
Corporate debt securities rated within the four highest grades by Moody's or S&P
are generally considered to be "investment grade." Like higher rated securities,
securities rated in the BBB or Baa categories are considered to have adequate
capacity to pay principal and interest, although they may have fewer protective
provisions than higher rated securities and thus may be adversely affected by
severe economic circumstances and are considered to have speculative
characteristics. The Portfolio may invest up to 35% of its total assets in fixed
income securities that are rated below BBB by S&P and Baa by Moody's or are
non-rated. For a discussion of lower rated and non-rated securities, commonly
referred to as "junk bonds," and related risks, see "Special Risk Factors--High
Yield (High Risk) Bonds" and "Appendix--Ratings of Investments" in the Statement
of Additional Information.
The Portfolio may purchase and sell options, engage in financial futures
transactions and purchase or sell portfolio securities on a when-issued or
delayed delivery basis. See "Investment Techniques" below. The Portfolio may
also invest in foreign securities and engage in related foreign currency
transactions. See "Special Risk Factors--Foreign Securities" below.
CONTRARIAN PORTFOLIO. The Contrarian Portfolio's investment objective is to
achieve a high rate of total return. It will invest principally in a diversified
portfolio consisting primarily of common stocks believed by the investment
manager to be undervalued. See "Growth and Value Stocks" below.
The Portfolio will invest primarily in common stocks of larger, listed companies
with a record of earnings and dividends, low price-earnings ratios, reasonable
returns on equity, and sound finances which, in the opinion of the investment
manager, have intrinsic value. The Portfolio may also invest in preferred
stocks, convertible securities and warrants. It is anticipated that most stocks
purchased will be listed on the New York Stock Exchange, but the Portfolio may
also purchase securities listed on other securities exchanges and in the over-
the-counter market. The Portfolio generally will invest in common stocks that
pay relatively high dividends, i.e., comparable to the dividend yield of S&P's
500 Composite Stock Index. In order to enhance its investment return, the
Portfolio may sell options on securities it holds ("covered call options"), and
sell put options on securities it may acquire. The Portfolio may earn premium
income on the sale of these options.
While most investments will be in dividend paying stocks, the Portfolio may also
acquire stocks that do not pay dividends in anticipation of market appreciation,
future dividends, or both, and when the investment manager believes that it
would be advantageous to write options on such stocks. The Portfolio will be
managed with a view to achieving a high rate of total return on investors'
capital primarily through appreciation of its common stock holdings, options
transactions and by acquiring and selling stock index futures and options
thereon and, to a lesser extent, through dividend and interest income, all of
which, in the investment manager's judgment, are elements of "total return."
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<PAGE> 23
While it is anticipated that under normal circumstances the Portfolio will be
fully invested, in order to conserve assets during periods when the investment
manager believes that the markets for equity securities are unduly speculative,
the Portfolio may invest all or a significant portion of its assets in cash or
defensive-type securities, such as high-grade debt securities, securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities and
high quality money market instruments, including repurchase agreements.
Investments in such interest-bearing securities will be for temporary defensive
purposes only.
SMALL CAP VALUE PORTFOLIO. The Small Cap Value Portfolio's investment objective
is to seek long-term capital appreciation. It will invest principally in a
diversified portfolio of equity securities of small companies with market
capitalizations ranging from $100 million to $1 billion that the investment
manager believes to be undervalued. See "Growth and Value Stocks" below. The
Portfolio may also invest in preferred stocks, convertible securities and
warrants. Under normal market conditions, at least 65% of the total assets of
the Portfolio will be invested in securities of companies whose market
capitalizations are less than $1 billion. The investment manager currently
believes that investment in such companies may offer greater opportunities for
growth of capital than larger, more established companies, but also involves
certain special risks. For a discussion of the risks associated with an
investment in securities of companies with small market capitalizations, see
"Special Risk Factors--Small Cap Securities" below.
The Portfolio will invest primarily in common stocks of companies with a record
of earnings, low price-earnings ratios, reasonable returns on equity and sound
finances which, in the opinion of the investment manager, have intrinsic value.
Such securities are generally traded on the New York Stock Exchange, the
American Stock Exchange and in the over-the-counter market. The Portfolio may
sell covered call options on securities it holds and put options on securities
it may acquire. The Portfolio may earn premium income on the sale of these
options. The Portfolio may also engage in financial futures transactions. See
"Investment Techniques" below.
While it is anticipated that under normal circumstances the Portfolio will be
fully invested, in order to conserve assets during periods when the investment
manager believes that the markets for equity securities are unduly speculative,
the Portfolio may invest all or a significant portion of its assets in cash or
defensive-type securities, such as high-grade debt securities, securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities and
high quality money market instruments, including repurchase agreements.
Investments in such interest-bearing securities will be for temporary defensive
purposes only.
VALUE+GROWTH PORTFOLIO. The Value+Growth Portfolio seeks growth of capital
through professional management of a portfolio of growth and value stocks. These
stocks include stocks of large established companies, as well as stocks of small
companies. A secondary objective is the reduction of risk over a full market
cycle compared to a portfolio of only growth stocks or only value stocks. See
"Growth and Value Stocks" below.
Although it is anticipated that the Portfolio will invest primarily in common
stocks of domestic companies, the Portfolio may also purchase convertible
securities, such as bonds and preferred stocks (including warrants and rights).
The Portfolio may also purchase options, engage in financial futures
transactions, purchase foreign securities, engage in related foreign currency
transactions and lend its portfolio securities. See "Special Risk
Factors--Foreign Securities" and "Investment Techniques" below. From time to
time, all or a significant portion of the Portfolio's assets may be held
temporarily in cash or defensive type securities, such as high-grade debt
securities, securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities and high quality money market instruments,
including repurchase agreements.
The Portfolio does not generally make investments for short-term profits, but it
is not restricted in policy with regard to portfolio turnover and will make
changes in its investment portfolio from time to time as business and economic
conditions and market prices may dictate and as its investment policy may
require.
HORIZON PORTFOLIOS. The Horizon 20+, Horizon 10+ and Horizon 5 Portfolios (the
"Horizon Portfolios") are designed for investors with different investment
horizons. Investors are encouraged to choose the appropriate
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Horizon Portfolio based upon their evaluation of their individual circumstances,
including the anticipated timing of major investment goals, such as sending a
child or grandchild to college, retirement or purchasing a home, as well as
their individual risk tolerance and investment objective. As investors' horizons
change, or as their investment goals change, they are encouraged to re-evaluate
their Horizon Portfolio choices to determine whether they should move all or a
portion of their investment to a different Horizon Portfolio with a more
appropriate objective and asset mix. The investment horizon of each Horizon
Portfolio should not be the sole factor in considering a Horizon Portfolio.
Investors should also review the investment objectives and policies of each
Horizon Portfolio.
Through professional management and diversification, each Horizon Portfolio
seeks to control risk for its given time horizon. Each Horizon Portfolio's
investment objectives, investment horizon, and investment policies are described
below.
HORIZON 20+ PORTFOLIO. The Horizon 20+ Portfolio, designed for investors with
approximately a 20+ year investment horizon, seeks growth of capital, with
income as a secondary objective. Under normal conditions, the Horizon 20+
Portfolio expects to maintain an asset allocation of approximately 80% equity
securities and 20% fixed income securities.
HORIZON 10+ PORTFOLIO. The Horizon 10+ Portfolio, designed for investors with
approximately a 10+ year investment horizon, seeks a balance between growth of
capital and income, consistent with moderate risk. Under normal conditions, the
Horizon 10+ Portfolio expects to maintain an asset allocation of approximately
60% equity securities and 40% fixed income securities.
HORIZON 5 PORTFOLIO. The Horizon 5 Portfolio, designed for investors with
approximately a 5 year investment horizon, seeks income consistent with
preservation of capital, with growth of capital as a secondary objective. Under
normal conditions, the Horizon 5 Portfolio expects to maintain an asset
allocation of approximately 40% equity securities and 60% fixed income
securities.
<TABLE>
<CAPTION>
HORIZON 20+ HORIZON 10+ HORIZON 5
TARGET ALLOCATION TARGET ALLOCATION TARGET ALLOCATION
----------------- ----------------- -----------------
<S> <C> <C> <C>
Equities............................................. 80% 60% 40%
Fixed Income......................................... 20% 40% 60%
</TABLE>
Although each Horizon Portfolio has a target asset allocation of equity and
fixed income securities, the investment manager may adjust each Horizon
Portfolio's asset mix somewhat based upon cash flow, market conditions and an
evaluation of the anticipated returns and risk for various asset classes. For
example, if equities are considered to have greater appreciation potential
relative to fixed income securities during a given period, a Horizon Portfolio's
percentage weighting of equities may be increased. Allocating assets permits the
investment manager to seek optimum performance for each Horizon Portfolio
consistent with its investment objective and investment horizon. Allocation
decisions are normally based upon long-term considerations and it is expected
that, over the long-term, the target allocation percentages will be closely
approximated.
When the investment manager determines that adverse market or economic
conditions exist and considers a temporary defensive position advisable, each
Horizon Portfolio may invest without limitation in high-grade debt securities,
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, and high quality money market instruments, including
repurchase agreements, or retain cash or cash equivalents. Each Horizon
Portfolio may also purchase and write options, engage in financial futures
transactions, engage in foreign currency transactions, lend its portfolio
securities and engage in delayed delivery transactions.
The Horizon Portfolios do not generally make investments for short-term profits,
nor do they have separate portfolio turnover policies for the equity and fixed
income asset classes. The Horizon Portfolios are not restricted in policy with
regard to portfolio turnover and will make changes in their investments from
time to
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time as business and economic conditions or market prices may dictate and as
their investment objectives and policies may require.
EQUITIES. Each Horizon Portfolio's investment in equity securities will be
comprised primarily of common stocks of U.S. and foreign (or "international")
companies, but may also include preferred stocks, securities convertible into
and exchangeable for common or preferred stocks (including other preferred
stocks, warrants and rights, but not including convertible debt securities),
equity investments in partnerships, joint ventures and other forms of
noncorporate investments and warrants and rights exercisable for equity
securities. Investments will primarily include stocks of large, established
companies, but may also include stocks of smaller companies. Each Horizon
Portfolio's equity securities will be divided between U.S. and international as
described below. The U.S. equity portion of each Horizon Portfolio is divided
further into two parts, one invested in growth stocks and one invested in value
stocks. As with the overall asset allocation, the investment manager may, from
time to time, adjust the equity asset class of each Horizon Portfolio. It is
expected, however, that adjustments to the mix of the equity asset class will be
more dynamic than adjustments to the overall mix.
U.S./INTERNATIONAL. The target mix between U.S. equities and international
equities seeks the optimum balance of risk reduction and return enhancement
available from international investing. This allows investors in each Horizon
Portfolio the opportunity to invest a portion of their assets in a diversified
portfolio of foreign securities. Under normal conditions, each Horizon
Portfolio's equity securities will consist of approximately 70% U.S. and 30%
international. In the case of the international equity exposure, allocations may
range from 20% to 40%, although the investment manager may decrease a Horizon
Portfolio's exposure to zero if investments in foreign securities appear to be
relatively unattractive in the judgment of the investment manager because of
current or anticipated adverse political or economic conditions.
Foreign securities can be attractive because they increase diversification, as
compared to a portfolio comprised solely of U.S. securities. In addition, many
foreign economies have, from time to time, grown faster than the U.S. economy,
and the returns on investments in these countries have exceeded those of similar
U.S. investments, although there can be no assurance that these conditions will
continue. International diversification allows an investor to achieve greater
portfolio diversification and to take advantage of changes in foreign economies
and market conditions. Although international investing entails special risks,
the mixture of U.S. and international stocks is designed to reduce risk, while
also increasing potential return, relative to investing in U.S. or international
stocks alone. There is no assurance, however, that any specific allocation will
reduce risk or increase returns. See "Special Risk Factors--Foreign Securities"
below.
U.S. GROWTH/U.S. VALUE. The allocation between U.S. growth stocks and U.S. value
stocks seeks to reduce the risk, over a full market cycle, of holding growth
stocks or value stocks alone. See "Growth and Value Stocks" below.
FIXED INCOME. The fixed income portion of each Horizon Portfolio may be invested
in a broad variety of fixed income securities including, without limitation: (a)
obligations issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities; (b) bonds, debentures, convertible debt instruments,
assignments or participation in loans, notes, commercial paper, and other debt
securities of corporations, trusts and other entities; (c) certificates of
deposit, bankers' acceptances and time deposits and (d) cash and cash
equivalents, including repurchase agreements. The fixed income portion of each
Horizon Portfolio will be comprised of U.S. Dollar denominated instruments.
Each Horizon Portfolio attempts to limit its exposure to credit risk by imposing
limits on the quality of specific securities in its Portfolio and by maintaining
a relatively high average weighted credit quality. Credit quality refers to a
fixed income security issuer's expected ability to make all required interest
and principal payments in a timely manner. Higher rated fixed income securities
generally represent less risk than lower or non-rated securities. Ratings
published by nationally recognized rating agencies such as S&P and Moody's are
widely accepted measures of credit risk. The fixed income portion of each
Horizon Portfolio will be invested in securities that are rated at the time of
purchase within the four highest grades assigned by Moody's, S&P, Fitch
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<PAGE> 26
Investors Service, Inc. ("Fitch") or Duff & Phelps Credit Rating Co. ("Duff") or
any other Nationally Recognized Statistical Rating Organization ("NRSRO") as
designated by the Securities and Exchange Commission, or will be of comparable
quality as determined by the investment manager, provided that up to 10% of the
fixed income portion of each Horizon Portfolio may be invested in securities
that are lower rated ("junk bonds"). The top four ratings currently assigned by
these organizations are as follows: Moody's (Aaa, Aa, A or Baa), S&P (AAA, AA, A
or BBB), Fitch (AAA, AA, A or BBB) and Duff (AAA, AA, A or BBB). In addition,
under normal conditions, each Horizon Portfolio expects to maintain a relatively
high average dollar-weighted credit quality (i.e., within the top two rating
categories of an NRSRO or comparable as determined by the investment manager).
Average dollar-weighted credit quality is calculated by averaging the ratings of
each fixed income security held by a Horizon Portfolio with each rating
"weighted" according to the percentage of assets that it represents. Average
dollar-weighted credit quality is not a precise measure of the credit risk
presented by a Horizon Portfolio of fixed income securities. For instance, a
combination of securities that are rated AAA and securities that are rated BB
that together result in an average weighted credit quality of AA may present
more risk than a group of just AA rated securities.
After a Horizon Portfolio purchases a security, its quality level may fall below
that at which it was purchased (i.e., downgraded). In such instance, the Horizon
Portfolio would not be required to sell the security, but the investment manager
will consider such an event in determining whether the Horizon Portfolio should
continue to hold the security. The ratings of NRSROs represent their opinions as
to the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings, and other opinions as to quality, are
relative and subjective and are not absolute standards of quality. For a
discussion of lower rated and non-rated securities and related risks, see
"Special Risk Factors -- High Yield (High Risk) Bonds" below.
Each Horizon Portfolio attempts to limit its exposure to interest rate risk by
maintaining a relatively short duration. Interest rate risk is the risk that the
value of the fixed income securities may rise or fall as interest rates change.
Under normal conditions, the target duration of the fixed-income portion of each
Horizon Portfolio is approximately 2.5 years, although it may range from 1.5 to
3.5 years depending upon market conditions. "Duration," and the more traditional
"average dollar-weighted maturity," are measures of how a fixed income portfolio
tend to react to interest rate changes. Each fixed income security held by a
Horizon Portfolio has a stated maturity. The stated maturity is the date when
the issuer must repay the entire principal amount to an investor. A security's
term to maturity is the time remaining to maturity. A security will be treated
as having a maturity earlier than its stated maturity date if the security has
technical features (such as puts or demand features) or a variable rate of
interest that, in the judgment of the investment manager, will result in the
security being valued in the market as though it has the earlier maturity.
Average dollar-weighted maturity is calculated by averaging the terms to
maturity of each fixed income security held by each Horizon Portfolio with each
maturity "weighted" according to the percentage of assets that it represents.
Unlike average dollar-weighted maturity, duration reflects both principal and
interest payments and is designed to measure more accurately a portfolio's
sensitivity to incremental changes in interest rates than does average weighted
maturity. By way of example, if the duration of a Horizon Portfolio's fixed
income securities were two years, and interest rates decreased by 100 basis
points ( a basis point is one-hundredth of one percent), the market price of
that portfolio of fixed income securities would be expected to increase by
approximately 2%.
BLUE CHIP PORTFOLIO. The Blue Chip Portfolio seeks growth of capital and of
income. In seeking to achieve its objective, the Portfolio will invest primarily
in common stocks of well capitalized, established companies that the Portfolio's
investment manager believes to have the potential for growth of capital,
earnings and dividends. Under normal market conditions, the Portfolio will, as a
fundamental policy, invest at least 65%, and may invest up to 100%, of its total
assets in the common stocks of companies with a market capitalization of at
least $1 billion at the time of investment.
In pursuing its objective, the Portfolio will emphasize investments in common
stocks of large, well known, high quality companies. Companies of this general
type are often referred to as "Blue Chip" companies. "Blue Chip" companies are
generally identified by their substantial capitalization, established history of
earnings and
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dividends, easy access to credit, good industry position and superior management
structure. "Blue Chip" companies are believed to generally exhibit less
investment risk and less price volatility than companies lacking these high
quality characteristics, such as smaller, less seasoned companies. In addition,
the large market of publicly held shares for such companies and the generally
high trading volume in those shares results in a relatively high degree of
liquidity for such investments. The characteristics of high quality and high
liquidity of "Blue Chip" investments should make the market for such stocks
attractive to investors both within and outside the United States. The Portfolio
will generally attempt to avoid speculative securities or those with significant
speculative characteristics.
Examples of "Blue Chip" companies currently eligible for investment by the
Portfolio include, but are not limited to, companies such as Pfizer Inc., Merck
& Co., Inc., Hewlett-Packard Company, AT&T Company, General Reinsurance, J.P.
Morgan & Co., Union Pacific Corporation and PepsiCo, Inc. While the Portfolio's
holdings will not be limited to the examples noted and need not contain any
specific security, companies of this general quality comprise a relatively
small, select group. In general, the Portfolio will seek to invest in those
established, high quality companies whose industries are experiencing favorable
secular or cyclical change. Thus, the Portfolio in seeking its objective will
endeavor to select its investments from among high quality companies operating
in the more attractive industries.
An indicated above, the Portfolio's investment portfolio will normally consist
primarily of common stocks. The Portfolio may invest to a more limited extent in
preferred stocks, debt securities and securities convertible into or
exchangeable for common stocks, including warrants and rights, when they are
believed to offer opportunities for growth of capital and of income. The
Portfolio may also purchase options, engage in financial futures transactions,
purchase foreign securities, engage in related foreign currency transactions and
lend its portfolio securities. See "Special Risk Factors--Foreign Securities"
and "Investment Techniques" below. The Portfolio may engage in short sales
against-the-box, although it is the Portfolio's current intention that no more
than 5% of its net assets will be at risk. When, as a result of market
conditions affecting "Blue Chip" companies, a defensive position is deemed
advisable to help preserve capital, the Portfolio may temporarily invest without
limit in high-grade debt securities, securities of the U.S. Government and its
agencies, and high quality money market instruments, including repurchase
agreements, or retain cash.
The Portfolio does not generally make investments for short-term profits, but it
is not restricted in policy with regard to portfolio turnover and will make
changes in its investment portfolio from time to time as business and economic
conditions and market prices may dictate and as its investment policy may
require.
There are risks inherent in the investment in any security, including shares of
the Portfolio. The investment manager attempts to reduce risk through
diversification of the Portfolio's holdings and fundamental research; however,
there is no guarantee that such efforts will be successful. The investment
manager believes that there are opportunities for growth of capital and growth
of dividends from investments in "Blue Chip" companies over time. The
Portfolio's shares are intended for long-term investment.
GLOBAL INCOME PORTFOLIO. The objective of the Global Income Portfolio is to
provide high current income consistent with prudent total return asset
management. In seeking to achieve its objective, the Portfolio will invest
primarily in investment grade foreign and domestic fixed income securities. In
managing the Portfolio's holdings to provide a high level of current income, the
investment manager will also be seeking to protect net asset value and to
provide investors with a total return, which is measured by changes in net asset
value as well as income earned. In so managing the Portfolio's holdings in an
effort to reduce volatility and increase returns, the investment manager may, as
is discussed more fully below, adjust the Portfolio's holdings across various
global markets, maturity ranges, quality ratings and issuers based upon its view
of interest rates and other market conditions prevailing throughout the world.
As a global fund, the Portfolio may invest in securities issued by any issuer
and in any currency and may hold foreign currency. Under normal market
conditions, as a fundamental policy, at least 65% of the Portfolio's assets will
be invested in the securities of issuers located in at least three countries,
one of which may be the
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United States. Securities of issuers within a given country may be denominated
in the currency of another country, or in multinational currency units such as
the European Currency Unit ("ECU"). Since the Portfolio invests in foreign
securities, the net asset value of the Portfolio will be affected by
fluctuations in currency exchange rates. See "Special Risk Factors--Foreign
Securities" below.
The Portfolio may seek to capitalize on investment opportunities presented
throughout the world and in international financial markets influenced by the
increasing interdependence of economic cycles and currency exchange rates.
Currently, more than 50% of the value of the world's debt securities is
represented by securities denominated in currencies other than the U.S. Dollar.
Over the past ten years, debt securities offered by certain foreign governments
provided higher investment returns than U.S. Government debt securities. Such
returns reflect interest rates prevailing in those countries and the effect of
gains and losses in the denominated currencies, which have had a substantial
impact on investment in foreign fixed income securities. The relative
performance of various countries' fixed income markets historically has
reflected wide variations relating to the unique characteristics of each
country's economy. Year-to-year fluctuations in certain markets have been
significant, and negative returns have been experienced in various markets from
time to time. The investment manager believes that investment in a global
portfolio can provide investors with more opportunities for attractive returns
than investment in a portfolio comprised exclusively of U.S. debt securities.
Also, the flexibility to invest in fixed income markets around the world can
reduce risk since, as noted above, different world markets have often performed,
at a given time, in radically different ways.
The Portfolio will allocate its assets among securities of various issuers,
geographic regions, and currency denominations in a manner that is consistent
with its objective based upon relative interest rates among currencies, the
outlook for changes in these interest rates, and anticipated changes in
worldwide exchange rates. In considering these factors, a country's economic and
political state, including such factors as inflation rate, growth prospects,
global trade patterns and government policies, will be evaluated.
It is currently anticipated that the Portfolio's assets will be invested
principally within Australia, Canada, Japan, New Zealand, the United States and
Western Europe, and in securities denominated in the currencies of these
countries or denominated in multinational currency units such as the ECU. The
Portfolio may also acquire securities and currency in less developed countries
and in developing countries.
The Portfolio may invest in debt securities of supranational entities
denominated in any currency. A supranational entity is an entity designated or
supported by the national governments of two or more countries to promote
economic reconstruction or development. Examples of supranational entities
include, among others, the World Bank, the European Investment Bank and the
Asian Development Bank. The Portfolio may, in addition, invest in debt
securities denominated in the ECU of an issuer in any country (including
supranational issuers). The Portfolio is further authorized to invest in
"semi-governmental securities," which are debt securities issued by entities
owned by either a national, state or equivalent government or are obligations of
such a government jurisdiction that are not backed by its full faith and credit
and general taxing powers.
The Portfolio is authorized to invest in the securities of any foreign or
domestic issuer. Investments by the Portfolio in fixed income securities may
include obligations issued or guaranteed by United States or foreign governments
(including foreign states, provinces and municipalities) or their agencies and
instrumentalities; obligations issued or guaranteed by supranational entities;
debt obligations of foreign and domestic corporations, banks and other business
organizations; and other foreign and domestic debt securities such as
convertible securities and preferred stocks, cash and cash equivalents and
repurchase agreements. Under normal market conditions, the Portfolio, as a
fundamental policy, will invest at least 65%, and may invest up to 100%, of its
total assets in fixed income securities. Some of the Portfolio's fixed income
securities may be convertible into common stock or be traded together with
warrants for the purchase of common stock, and the Portfolio may convert such
securities into equities and hold them as equity upon conversion. Investments
may include securities issued by enterprises that have undergone or are
currently undergoing privatization.
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The securities in which the Portfolio may invest will be "investment grade"
securities. Investment grade securities are those rated at the time of purchase
within the four highest grades assigned by Moody's, S&P or IBCA Limited
(including its affiliate IBCA, Inc.) ("IBCA"); or that are unrated but are of
comparable quality in the opinion of the investment manager. Like higher rated
securities, securities rated in the fourth grade are considered to have adequate
capacity to pay principal and interest, although they may have fewer protective
provisions than higher rated securities and thus may be adversely affected by
severe economic circumstances and are considered to have speculative
characteristics. The characteristics of the rating categories are described in
the Statement of Additional Information under "Appendix -- Ratings of
Investments." Most foreign fixed income securities are unrated. The
characteristics of the securities held by the Portfolio, such as the maturity
and type of issuer, will affect yields and yield differentials, which vary over
time.
When the investment manager deems it appropriate to invest for temporary
defensive purposes, such as during periods of adverse market conditions, or when
relative yields in other securities are not deemed attractive, part or all of
the Portfolio's assets may be invested in cash (including foreign currency) or
cash equivalent short-term obligations, either rated as high quality or
considered to be of comparable quality in the opinion of the investment manager,
including, but not limited to, certificates of deposit, commercial paper,
short-term notes, obligations issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities, and repurchase agreements secured thereby.
In particular, for defensive purposes a larger portion of the Portfolio's assets
may be invested in U.S. Dollar-denominated obligations to reduce the risks
inherent in non-U.S. Dollar-denominated assets.
The Portfolio will not normally engage in the trading of securities for the
purpose of realizing short-term profits, but it will adjust its portfolio as
considered advisable in view of prevailing or anticipated market conditions and
the Portfolio's investment objective. Accordingly, the Portfolio may sell
portfolio securities in anticipation of a rise in interest rates and purchase
securities for inclusion in its portfolio in anticipation of a decline in
interest rates.
The Portfolio may purchase and sell options on securities, index options,
financial futures contracts and options on financial futures contracts, may
enter into forward foreign currency exchange contracts, foreign currency options
and foreign currency futures contracts and options thereon and may engage in
delayed delivery transactions. See "Investment Techniques" below.
HIGH RETURN EQUITY PORTFOLIO. The High Return Equity Portfolio's investment
objective is to achieve a high rate of total return. The Portfolio will invest
primarily in common stocks of larger, listed companies with a record of earnings
and dividends, low price-earnings ratios, reasonable returns on equity, and
sound finances which, in the opinion of the investment manager, have intrinsic
value. The Portfolio generally will invest in common stocks that pay relatively
high dividends, i.e., comparable to the dividend yield of Standard & Poor's 500
Composite Stock Index. In order to enhance its investment return, the Portfolio
may sell covered call options, and sell put options on securities it may
acquire. The Portfolio will earn premium income on the sale of these options.
Under normal market conditions, the Portfolio will invest at least 65% of its
total assets in equity securities. Equity securities include common stock,
preferred stocks, securities convertible into or exchangeable for common or
preferred stocks, equity investments in partnerships, joint ventures and other
forms of non-corporate investments and warrants and rights exercisable for
equity securities and equity equivalents.
While most investments will be in dividend paying stocks, the Portfolio may also
acquire stocks that do not pay dividends in anticipation of market appreciation,
future dividends, and when the investment manager believes that it would be
advantageous to write options on such stocks. The Portfolio will be managed with
a view to achieving a high rate of total return on investors' capital primarily
through appreciation of its common stock holdings, options transactions and by
acquiring and selling stock index futures and options thereon and, to a lesser
extent, through dividend and interest income, all of which, in the investment
manager's judgment, are elements of "total return."
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Although the Portfolio will not invest 25% or more of its total assets in any
one industry, it may, from time to time, invest a significant percentage of its
total assets in one or more market sectors. The investment manager considers a
market sector to be comprised of a group of industries. If the Portfolio
concentrates its investments in a market sector, financial, economic, business
and other developments affecting issuers in that sector may have a greater
effect on the Portfolio than if it had not concentrated its assets in that
sector.
While it is anticipated that under normal circumstances the Portfolio will be
fully invested, in order to conserve assets during temporary defensive periods
when the investment manager deems it appropriate, the Portfolio may invest up to
100% of its assets in cash or defensive-type securities, such as high-grade debt
securities (those rated BBB or above by S&P, or Baa or above by Moody's),
securities of the U.S. Government or its agencies and high quality money market
instruments, including repurchase agreements. Investments in such interest
bearing securities will be for temporary defensive purposes only. It is
impossible to predict for how long such alternative strategies may be utilized.
FINANCIAL SERVICES PORTFOLIO. The Financial Services Portfolio seeks long-term
capital appreciation. The Portfolio pursues its investment objective by
investing primarily in common stocks and other equity securities of companies in
the financial services industry believed by the investment manager to be
undervalued. Securities of a company may be undervalued as a result of
overreaction by investors to unfavorable news about a company, industry or the
stock markets in general or as a result of a market decline, poor economic
conditions, tax-loss selling or actual or anticipated unfavorable developments
affecting a company.
The Portfolio invests in securities of financial services companies, including
commercial banks, insurance companies, thrifts, consumer finance companies,
commercial finance companies, leasing companies, securities brokerage firms,
asset management firms, and government-sponsored financial enterprises. The
Portfolio will invest primarily in common stocks of larger, listed companies
with a record of earnings and dividends, low price-earnings ratios, reasonable
returns on equity and sound finances which, in the opinion of the investment
manager, have intrinsic value. The Portfolio may, however, from time to time,
invest in stocks that pay no dividends. It is anticipated that most stocks
purchased will be listed on the New York Stock Exchange, but the Portfolio may
also purchase securities listed on other securities exchanges and in the
over-the-counter market.
In the opinion of the Portfolio's investment manager, the Portfolio offers
investors the opportunity to participate in the substantial long-term
appreciation potential of companies in the financial services sector.
Concentration by the Portfolio in investments in the financial services industry
creates greater risk than investment across various industries since the
financial, economic and business developments affecting issuers in such industry
may have a greater effect on the Portfolio than if it had not concentrated its
assets in the financial services industry. In addition, an investment in the
Portfolio may involve significantly greater risks and greater volatility than a
diversified equity mutual fund that is invested in issuers in various
industries. The Portfolio is subject to the risk that a particular group of
related stocks will decline in price due to industry-specific developments. As a
result, the Portfolio should only be considered a long-term investment and part
of a well-diversified portfolio.
Under normal circumstances, the Portfolio will invest at least 65% of its assets
in equity securities of companies in the financial services industry. For
purposes of the foregoing, a company will be considered within the financial
services industry if at least 50% of its assets, revenues or net income are
related to or derived from the financial services industry. The Portfolio will
invest primarily in equity securities of U.S. companies, but may invest up to
30% of its assets in foreign companies and in U.S. Dollar-denominated American
Depository Receipts ("ADRs"), which are bought and sold in the United States.
While the Portfolio invests predominantly in common stocks, the Portfolio may
purchase other types of equity securities, including preferred stock,
convertible or non-convertible securities, equity investments in partnerships,
joint ventures and other forms of non-corporate investment and rights and
warrants. Securities may be listed on national exchanges or traded
over-the-counter. The Portfolio may invest up to 35% of its assets in corporate
debt securities, including up to 5% of its assets in securities rated below
investment-grade, I.E., rated below BBB by S&P and below Baa by
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Moody's, or if unrated determined to be of equivalent quality by the Portfolio's
investment manager, or in U.S. Treasury securities, agency and instrumentality
obligations and zero coupon securities. In addition, the Portfolio may enter
into repurchase agreements, loan portfolio securities, purchase securities on a
when-issued basis and, further, may engage in strategic transactions to attempt
to increase stock market participation or for hedging purposes, to enhance
liquidity and manage transaction costs.
While it is anticipated that under normal circumstances the Portfolio will be
fully invested, in order to conserve assets during temporary defensive periods
when the investment manager deems it appropriate, the Portfolio may invest up to
100% of its assets in cash or defensive-type securities, such as high-grade debt
securities (those rated BBB or above by S&P, or Baa or above by Moody's),
securities of the U.S. Government or its agencies and high quality money market
instruments, including repurchase agreements. Investments in such interest
bearing securities will be for temporary defensive purposes only. It is
impossible to predict for how long such alternative strategies may be utilized.
GLOBAL BLUE CHIP PORTFOLIO. Global Blue Chip Portfolio seeks long-term growth of
capital through a diversified worldwide portfolio of marketable securities,
primarily equity securities, including common stocks, preferred stocks and debt
securities convertible into common stocks. The Portfolio invests in equity
securities of companies which are incorporated in the U.S. and in foreign
countries. The Portfolio will invest primarily in developed markets, with a
maximum of 15% of the Portfolio's total assets invested in emerging markets. It
also may invest in the debt securities of U.S. and foreign issuers. Income is an
incidental consideration.
In pursuing its objective, the Portfolio will emphasize investments in common
stocks of large, well known companies. Companies of this general type are often
referred to as "Blue Chip" companies. While specific investment and financial
criteria may vary from market to market, Blue Chip companies around the world
are generally identified by the investment manager as having substantial
capitalization, established financial history, ready access to credit, good
industry position and superior management structure. While these companies may
be among the largest in their local markets, they may be small by the standards
of U.S. stock market capitalization. Global Blue Chip companies are believed to
generally exhibit less investment risk and less price volatility, on average,
than companies lacking these characteristics, such as smaller, less-seasoned
companies. In addition, the large market of publicly held shares for such
companies and the generally higher trading volume in those shares generally
result in a relatively high degree of liquidity for such investments.
The Portfolio invests in companies that the investment manager believes will
benefit from global economic trends, promising technologies or products and
specific country opportunities resulting from changing geopolitical, currency or
economic relationships. The Portfolio's global framework allows it to take
advantage of investment opportunities wherever they arise, without being
constrained by location of a company's headquarters or the trading market for
its shares.
It is expected that investments will be spread broadly around the world with an
emphasis on developed economies and capital markets. The Portfolio will usually
be invested in securities of issuers located in at least three countries, one of
which may be the U.S. The Portfolio may be invested 100% in non-U.S. issues, and
for temporary defensive purposes may be invested 100% in U.S. issues, although
under normal circumstances it is expected that both foreign and U.S. investments
will be represented in the Portfolio's holdings. It is expected that investments
will include securities of companies of varying sizes, as measured by assets,
sales, income or market capitalization.
The Portfolio generally invests in equity securities of established companies
listed on U.S. or foreign securities exchanges, but also may invest in
securities traded over-the-counter. It also may invest in debt securities
convertible into common stock, and convertible and non-convertible preferred
stock, and fixed-income securities of governments, government agencies,
supranational agencies and companies when the investment manager believes the
potential for appreciation will equal or exceed that available from investments
in equity securities. These debt and fixed-income securities will be
predominantly investment-grade securities, that is, those rated Aaa, Aa, A or
Baa by Moody's or AAA, AA, A or BBB by S&P or those of equivalent quality as
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determined by the investment manager. The Portfolio may not invest more than 5%
of its total assets in debt securities rated Baa or below by Moody's, or BBB or
below by S&P or deemed by the investment manager to be of comparable quality
(commonly referred to as "high yield" or "junk" bonds). (See "Special Risk
Factors").
The Portfolio may invest in zero coupon securities. In addition, fixed-income
securities may be held without limit for temporary defensive purposes when the
investment manager believes market conditions so warrant and for temporary
investment. It is impossible to accurately predict how long such alternative
strategies may be utilized. Similarly, the Portfolio may invest in cash
equivalents (including domestic and foreign money market instruments, such as
bankers' acceptances, certificates of deposit, commercial paper, short-term
government and corporate obligations and repurchase agreements) for temporary
defensive purposes and for liquidity. The Portfolio may invest in closed-end
investment companies holding foreign securities, as well as shares of closed-
end investment companies that invest primarily in emerging market debt
securities. In addition, the Portfolio may engage in strategic transactions,
which may include derivatives. (See "Special Risk Factors").
INTERNATIONAL GROWTH AND INCOME PORTFOLIO. International Growth and Income
Portfolio seeks long-term growth of capital and current income primarily from
foreign equity securities. The Portfolio invests generally in common stocks of
established companies listed on foreign exchanges, which offer prospects for
growth of earnings while paying relatively high current dividends. The Portfolio
can also invest in other types of equity securities, including preferred stocks
and securities convertible into common stock. The Portfolio does not invest in
emerging markets, but instead focuses its investments on the developed foreign
countries included in the Morgan Stanley Capital International World ex-US Index
(the "MSCI").
The Portfolio's income-oriented strategy, which can help cushion returns in
volatile periods, and its concentration in developed markets, may make it
appropriate for investors seeking lower share price volatility than many other
international equity funds.
While the Portfolio offers the potential for price appreciation and dividend
income, it also involves various types of risk. The Portfolio's net asset value
can fluctuate with changes in world securities market levels, political
developments, movements in currencies, investment flows and other factors. (See
"Special Risk Factors").
In pursuing its dual objective, at least 80% of the Portfolio's net assets will
normally be invested in the equity securities of established non-U.S. companies.
The Portfolio generally invests in equity securities of established companies
listed on foreign securities exchanges, but also may invest in securities traded
over-the-counter. The Portfolio's equity investments include common stock,
convertible and non-convertible preferred stock, sponsored and unsponsored
depository receipts, and warrants.
The Portfolio intends to diversify investments among several developed foreign
markets and normally to invest in securities of issuers located in at least
three different countries. The Portfolio will invest predominantly in securities
of issuers in the developed foreign countries included in the MSCI.
Under normal conditions, the Portfolio may also invest up to 20% of its net
assets in debt securities convertible into common stock and fixed-income
securities of governments, governmental agencies, supranational agencies and
private issuers when the investment manager believes the potential for
appreciation and income will equal or exceed that available from investments in
equity securities. These securities will predominantly be "investment grade"
securities, which are those rated Aaa, Aa, A, or Baa by Moody's or AAA, AA, A or
BBB by S&P or if unrated, judged by the investment manager to be of equivalent
quality. The Portfolio may also invest up to 5% of its total assets in debt
securities which are rated below-investment grade. (See "Special Risk Factors").
The Portfolio may also hold up to 20% of its net assets in U.S. and foreign
income securities for temporary defensive purposes when the investment manager
believes market conditions so warrant. Similarly, the Portfolio may invest up to
20% of its net assets in cash equivalents including domestic and foreign money
market instruments, short-term government and corporate obligations and
repurchase agreements under normal circumstances and without limit for temporary
defensive purposes and to maintain liquidity. It is impossible to
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accurately predict for how long such alternative strategies may be utilized. In
addition, the Portfolio may engage in strategic transactions, which may include
derivatives. (See "Special Risk Factors").
The investment manager applies a disciplined, multi-part investment approach for
selecting stocks for the Portfolio. The first stage of this process involves
analyzing the pool of dividend-paying foreign securities, primarily from the
world's more mature markets, and targeting stocks that have high relative yields
compared to the average for their markets. In the investment manager's opinion,
this group of higher-yielding stocks offers the potential for returns that is
greater than or equal to the average market return, with price volatility that
is lower than the overall market volatility. The investment manager believes
that these potentially favorable risk and return characteristics exist because
the higher dividends offered by these stocks act as a "cushion" when markets are
volatile and because the stocks with higher yields tend to have more attractive
valuations (e.g., lower price-to-earnings ratios and lower price-to-book
ratios).
The second stage of portfolio construction involves a fundamental analysis of
each company's financial strength, profitability, projected earnings,
competitive positioning and ability of management. During this step, the
investment manager's research team identifies what it believes are the most
promising stocks for the Portfolio.
The third stage of the investment process involves diversifying the Portfolio
among different industry sectors. The key element of this stage is evaluating
how the stocks in different sectors react to economic factors such as interest
rates, inflation, Gross Domestic Product and consumer spending, and then
attaining a proper balance of stocks in these sectors based on the investment
manager's economic forecast.
The fourth and final stage of this ongoing process is diversifying the Portfolio
among different countries. The investment manager will seek to have broad
country representation, favoring those countries that it believes have sound
economic conditions and open markets. The Portfolio's strategy is to manage risk
and create opportunity at each of its four stages in the investment process,
starting with the focus on stocks with high relative yields.
GROWTH AND VALUE STOCKS. Certain Portfolios of the Fund intend to invest in
growth stocks or value stocks, or a combination thereof. Equity portfolios
managed by Scudder Kemper that typically invest in growth stocks include the
following Portfolios: Total Return (stock portion), Growth, International, Small
Cap Growth, Value+Growth (growth stock portion), Horizon (growth stock portion)
and Blue Chip. Equity portfolios managed by Scudder Kemper that typically invest
in value stocks include the following Portfolios: Contrarian, Small Cap Value,
Value+Growth (value stock portion), Horizon (value stock portion), High Return
Equity and Financial Services.
Growth stocks are stocks of companies whose earnings per share are expected by
the investment manager to grow faster than the market average. Growth stocks
tend to trade at higher price to earnings (P/E) ratios than the general market,
but the investment manager believes that the potential of such stocks for above
average earnings more than justifies their price. Value stocks are considered
"bargain stocks" because they are perceived as undervalued, i.e., attractively
priced in relation to their earnings potential (low P/E ratios). Value stocks
typically have dividend yields higher than the average of the companies
represented in the S&P 500 Stock Index. Typically, stocks of both types will
have market capitalizations in excess of $1 billion, except those stocks
selected for inclusion in the Small Cap Growth and Small Cap Value Portfolios,
which will typically have market capitalizations ranging from approximately $100
million to $1 billion.
In managing growth stocks, the investment manager emphasizes stock selection and
fundamental research in seeking to enhance long-term performance potential. The
investment manager considers a number of quantitative and qualitative factors in
considering whether to invest in a growth stock including high return on equity
and earnings growth rate, low level of debt, strong balance sheet, good
management and industry leadership. Other factors considered by the investment
manager in making its investments in growth stocks are patterns of increasing
growth in sales and earnings, the development of new or improved products or
services, favorable outlooks for growth in the industry, the probability of
increased operating efficiencies, emphasis on research
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and development, cyclical conditions, or other signs that a company is expected
to show greater than average capital appreciation and earnings growth.
In managing value stocks, the investment manager seeks stocks it believes to be
undervalued. Securities of a company may be undervalued as a result of
overreaction by investors to unfavorable news about a company, industry or the
stock markets in general or as a result of a market decline, poor economic
conditions, tax-loss selling or actual or anticipated unfavorable developments
affecting the company. The principal factor considered in determining whether a
stock is undervalued is P/E ratios.
The investment manager believes that the risk in owning stocks can be reduced by
investing in companies with sound finances whose current market prices are low
in relation to earnings. In determining whether a company's finances are sound,
the investment manager considers among other things, its cash position and
current ratio (current assets compared to current liabilities) and, in this
regard, considers a 2:1 ratio to be favorable. The investment manager applies
quantitative analysis to its research process, and begins by screening a large
number of stocks. In selecting among stocks with low P/E ratios, the investment
manager considers other factors such as the following about the issuer:
financial strength; book-to-market value; five and ten-year earnings growth
rates; five and ten-year dividend growth rates; five and ten-year return on
equity; size of institutional ownership; and earnings estimates for the next 12
months.
Fundamental analysis is used on companies that initially look promising.
Earnings and cash flow analysis as well as a company's conventional dividend
payout ratio are important to this process.
The policies of certain Portfolios of investing in securities that may be out of
favor differs from the investment approach followed by many other investment
companies. Companies reporting poor earnings, whose businesses are cyclically
down, whose prices have declined sharply or that are not widely followed are not
typically held by most investment companies. It is the investment manager's
belief, however, that the securities of sound, well-managed companies that may
be temporarily out of favor due to earnings declines or other adverse
developments are likely to provide a greater total investment return than
securities whose prices appear to reflect anticipated favorable developments.
The allocation between growth and value stocks in the Value+Growth and Horizon
Portfolios will be made by the investment manager's Quantitative Research
Department with the help of a proprietary model that evaluates macro-economic
factors such as the strength of the economy, interest rates and special factors
concerning growth and value stocks. Historically, the performance of growth and
value stocks has tended to be counter-cyclical, i.e., when one was in favor, the
other was out of favor relative to the equity market in general. Through the
allocation process, the investment manager will seek to weight the Portfolio
more heavily in the type of stocks that are believed to present greater total
return opportunities at the time. The neutral allocation between growth and
value stocks would be 50%/50%. Although allocations in favor of growth or value
normally would not be expected to exceed 60%, the allocation to growth or value
may be up to 75% at any time. Allocation decisions are normally based upon
long-term considerations and changes would normally be expected to be gradual.
There is no assurance that the allocation process will improve investment
results.
SPECIAL RISK FACTORS--HIGH YIELD (HIGH RISK) BONDS. As reflected above, the High
Yield Portfolio intends to invest a substantial portion of its assets in fixed
income securities offering high current income. Subject to their specific
investment objectives and policies as described above, the Total Return,
Government Securities, Investment Grade Bond, Horizon, Financial Services,
Global Blue Chip, and International Growth and Income Portfolios also may invest
a portion of their assets in such securities. Such high yield (high risk) fixed
income securities will ordinarily be in the lower rating categories (securities
rated below the fourth category) of recognized rating agencies or will be
non-rated. Lower rated and non-rated securities, which are commonly referred to
as "junk bonds," have widely varying characteristics and quality. These lower
rated and non-rated fixed income securities are considered, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation and generally will
involve more credit risk than securities in the higher rating categories.
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The market values of such securities tend to reflect individual corporate
developments to a greater extent than do those of higher rated securities, which
react primarily to fluctuations in the general level of interest rates. Such
lower rated securities also are more sensitive to economic conditions than are
higher rated securities. Adverse publicity and investor perceptions regarding
lower rated bonds, whether or not based on fundamental analysis, may depress the
prices for such securities. These and other factors adversely affecting the
market value of high yield securities will adversely affect a Portfolio's net
asset value.
The investment philosophy of the High Yield Portfolio with respect to high yield
(high risk) bonds is based upon the premise that over the long term a broadly
diversified portfolio of high yield fixed-income securities should, even taking
into account possible losses, provide a higher net return than that achievable
on a portfolio of higher rated securities. The Portfolio seeks to achieve the
highest yields possible while reducing relative risk through (a) broad
diversification, (b) credit analysis by the investment manager of the issuers in
which the Portfolio invests, (c) purchase of high yield securities at discounts
from par or stated value when practicable and (d) monitoring and seeking to
anticipate changes and trends in the economy and financial markets that might
affect the prices of portfolio securities. The investment manager's judgment as
to the "reasonableness" of the risk involved in any particular investment will
be a function of its experience in managing fixed income investments and its
evaluation of general economic and financial conditions, a specific issuer's
business and management, cash flow, earnings coverage of interest and dividends,
ability to operate under adverse economic conditions, and fair market value of
assets, and of such other considerations as the investment manager may deem
appropriate. The investment manager, while seeking maximum current yield, will
monitor current corporate developments with respect to portfolio securities and
potential investments and to broad trends in the economy. In some circumstances,
defensive strategies may be implemented to preserve or enhance capital even at
the sacrifice of current yield. Defensive strategies, which may be used singly
or in any combination, may include, but are not limited to, investments in
discount securities or investments in money market instruments as well as
futures and options strategies.
High yield (high risk) securities frequently are issued by corporations in the
growth stage of their development. They may also be issued in connection with a
corporate reorganization or a corporate takeover. Companies that issue such high
yielding securities often are highly leveraged and may not have available to
them more traditional methods of financing. Therefore, the risk associated with
acquiring the securities of such issuers generally is greater than is the case
with higher rated securities. For example, during an economic downturn or
recession, highly leveraged issuers of high yield securities may experience
financial stress. During such periods, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations may also be adversely affected by specific
corporate developments, or the issuer's inability to meet specific projected
business forecasts, or the unavailability of additional financing. The risk of
loss from default by the issuer is significantly greater for the holders of high
yield securities because such securities are generally unsecured and are often
subordinated to other creditors of the issuer. Although some risk is inherent in
all securities ownership, holders of fixed income securities have a claim on the
assets of the issuer prior to the holders of common stock. Therefore, an
investment in fixed income securities generally entails less risk than an
investment in common stock of the same issuer.
A Portfolio may have difficulty disposing of certain high yield (high risk)
securities because they may have a thin trading market. Because not all dealers
maintain markets in all high yield securities, the Fund anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market may have an adverse effect on
market price and a Portfolio's ability to dispose of particular issues and may
also make it more difficult for a Portfolio to obtain accurate market quotations
for purposes of valuing a Portfolio's assets. Market quotations generally are
available on many high yield issues only from a limited number of dealers and
may not necessarily represent firm bids of such dealers or prices for actual
sales.
Zero coupon securities and pay-in-kind bonds involve additional special
considerations. Zero coupon securities are debt obligations that do not entitle
the holder to any periodic payments of interest prior to maturity or a
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specified cash payment date when the securities begin paying current interest
(the "cash payment date") and therefore are issued and traded at a discount from
their face amount or par value. The market prices of zero coupon securities are
generally more volatile than the market prices of securities that pay interest
periodically and are likely to respond to changes in interest rates to a greater
degree than do securities paying interest currently having similar maturities
and credit quality. Zero coupon, pay-in-kind or deferred interest bonds carry
additional risk in that, unlike bonds that pay interest throughout the period to
maturity, a Portfolio will realize no cash until the cash payment date unless a
portion of such securities is sold and, if the issuer defaults, a Portfolio may
obtain no return at all on its investment.
Current federal income tax law requires the holder of a zero coupon security or
of certain pay-in-kind bonds (bonds which pay interest through the issuance of
additional bonds) to accrue income with respect to these securities prior to the
receipt of cash payments. To maintain its qualification as a regulated
investment company and avoid liability for federal income taxes, a Portfolio
will be required to distribute income accrued with respect to these securities.
Additional information concerning high yield (high risk) securities appears
under "Appendix--High Yield Portfolio/Portfolio Composition" in this prospectus
and under "Appendix--Ratings of Investments" in the Statement of Additional
Information.
SPECIAL RISK FACTORS--FOREIGN SECURITIES. The Total Return, High Yield, Growth,
Small Cap Growth, Investment Grade Bond, Value+Growth, Blue Chip and Financial
Services Portfolios invest primarily in securities that are publicly traded in
the United States; but, they have discretion to invest a portion of their assets
in foreign securities that are traded principally in securities markets outside
the United States. As a non-fundamental policy, these Portfolios (other than the
Financial Services Portfolio) currently limit investment in foreign securities
not publicly traded in the United States to 25% of their total assets. The
Financial Services Portfolio may invest up to 30% of its total assets in foreign
securities. The Horizon Portfolios will invest in foreign securities at a target
level normally ranging from 20% to 40% of the allocation of each Portfolio to
equity securities. See "Horizon Portfolios" above. These Portfolios may also
invest without limit in U.S. Dollar denominated American Depository Receipts
("ADRs") which are bought and sold in the United States and are not subject to
the preceding limitation. The Value, Small Cap Value and High Return Equity
Portfolios may invest up to 20% of their assets in securities of foreign
companies in the form of ADRs. Foreign securities in which a Portfolio may
invest include any type of security consistent with that Portfolio's investment
objective and policies. In connection with their foreign securities investments,
such Portfolios may, to a limited extent, engage in foreign currency exchange
transactions and purchase and sell foreign currency options and foreign currency
futures contracts as a hedge and not for speculation. The International, Global
Income, Global Blue Chip, and International Growth and Income Portfolios may
invest without limit in foreign securities and may engage in foreign currency
exchange transactions and may purchase and sell foreign currency options and
foreign currency futures contracts. See "Investment Techniques--Options and
Financial Futures Transactions--Foreign Currency Transactions." The Money Market
Portfolio and Government Securities Portfolio, each within its quality
standards, may also invest in securities of foreign issuers. However, such
investments will be in U.S. Dollar denominated instruments.
Foreign securities involve currency risks. The U.S. Dollar value of a foreign
security tends to decrease when the value of the U.S. Dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the U.S. Dollar falls against such currency. Fluctuations in
exchange rates may also affect the earning power and asset value of the foreign
entity issuing the security. Dividend and interest payments may be repatriated
based on the exchange rate at the time of disbursement or payment, and
restrictions on capital flows may be imposed. Losses and other expenses may be
incurred in converting between various currencies.
Foreign securities may be subject to foreign government taxes that reduce their
attractiveness. Other risks of investing in such securities include political or
economic instability in the country involved, the difficulty of
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predicting international trade patterns and the possibility of imposition of
exchange controls. The prices of such securities may be more volatile than those
of domestic securities. In addition, there may be less publicly available
information about foreign issuers than about domestic issuers. Many foreign
issuers are not subject to uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic issuers. There is generally
less regulation of stock exchanges, brokers, banks, and listed companies abroad
than in the United States. With respect to certain foreign countries, there is a
possibility of expropriation or diplomatic developments which could affect
investment in these countries.
EMERGING MARKETS. While a Portfolio's investments in foreign securities will
principally be in developed countries, a Portfolio may make investments in
developing or "emerging" countries, which involve exposure to economic
structures that are generally less diverse and mature than in the United States,
and to political systems that may be less stable. A developing or emerging
market country can be considered to be a country that is in the initial stages
of its industrialization cycle. Currently, emerging markets generally include
every country in the world other than the United States, Canada, Japan,
Australia, New Zealand, Hong Kong, Singapore and most Western European
countries. Currently, investing in many emerging markets may not be desirable or
feasible because of the lack of adequate custody arrangements for a Portfolio's
assets, overly burdensome repatriation and similar restrictions, the lack of
organized and liquid securities markets, unacceptable political risks or other
reasons. As opportunities to invest in securities in emerging markets develop, a
Portfolio may expand and further broaden the group of emerging markets in which
it invests. In the past, markets of developing or emerging market countries have
been more volatile than the markets of developed countries; however, such
markets often have provided higher rates of return to investors. The investment
manager believes that these characteristics can be expected to continue in the
future.
Many of the risks described above relating to foreign securities generally will
be greater for emerging markets than for developed countries. For instance,
economies in individual developing markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging markets have
experienced substantial rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain developing markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries with which they
trade.
Also, the securities markets of developing countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure, regulatory and
accounting standards in many respects are less stringent than in the United
States and other developed markets. There also may be a lower level of
monitoring and regulation of developing markets and the activities of investors
in such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other needs relating
to investment in foreign markets generally are more expensive than in the United
States; this is particularly true with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Such settlement problems may cause emerging market securities to be illiquid.
The inability of a Portfolio to make intended securities purchases because of
settlement problems could cause the Portfolio to miss attractive investment
opportunities. Inability to dispose of a portfolio security because of
settlement problems could result in losses to a Portfolio from subsequent
declines in value of the portfolio security or, if a Portfolio has entered into
a contract to sell the security, it could result in possible liability to the
purchaser. Certain emerging markets may lack clearing facilities equivalent to
those in developed
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countries. Accordingly, settlements can pose additional risks in such markets
and ultimately can expose a Portfolio to the risk of losses resulting from the
Portfolio's inability to recover from a counterparty.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading in securities may cease or may be
substantially curtailed and prices for a Portfolio's securities in such markets
may not be readily available. A Portfolio's securities in the affected markets
will be valued at fair value determined in good faith by or under the direction
of the Board of Trustees of the Fund.
Investment in certain emerging market securities is restricted or controlled to
varying degrees. These restrictions or controls may at times limit or preclude
foreign investment in certain emerging market securities and increase the costs
and expenses of a Portfolio. Emerging markets may require governmental approval
for the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market country's balance of payments, the market could impose temporary
restrictions on foreign capital remittances.
FIXED INCOME. Since most foreign fixed income securities are not rated, a
Portfolio will invest in foreign fixed income securities based upon the
investment manager's analysis without relying on published ratings. Since such
investments will be based upon the investment manager's analysis rather than
upon published ratings, achievement of a Portfolio's goals may depend more upon
the abilities of the investment manager than would otherwise be the case.
The value of the foreign fixed income securities held by a Portfolio, and thus
the net asset value of the Portfolio's shares, generally will fluctuate with (a)
changes in the perceived creditworthiness of the issuers of those securities,
(b) movements in interest rates, and (c) changes in the relative values of the
currencies in which a Portfolio's investments in fixed income securities are
denominated with respect to the U.S. Dollar. The extent of the fluctuation will
depend on various factors, such as the average maturity of a Portfolio's
investments in foreign fixed income securities, and the extent to which a
Portfolio hedges its interest rate, credit and currency exchange rate risks.
Many of the foreign fixed income obligations in which a Portfolio will invest
will have long maturities. A longer average maturity generally is associated
with a higher level of volatility in the market value of such securities in
response to changes in market conditions.
Investments in sovereign debt, including Brady Bonds, involve special risks.
Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a Portfolio may be unable
to collect all or any part of its investment in a particular issue.
Foreign investment in certain sovereign debt is restricted or controlled to
varying degrees, including requiring governmental approval for the repatriation
of income, capital or proceeds of sales by foreign investors. These restrictions
or controls may at times limit or preclude foreign investment in certain
sovereign debt or increase the costs and expenses of a Portfolio. A significant
portion of the sovereign debt in which a Portfolio may invest is issued as part
of debt restructuring and such debt is to be considered speculative. There is a
history of defaults with respect to commercial bank loans by public and private
entities issuing Brady Bonds. All or a portion of the interest payments and/or
principal repayment with respect to Brady Bonds may be uncollateralized.
PRIVATIZED ENTERPRISES. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. The governments of certain foreign countries
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have, to varying degrees, embarked on privatization programs contemplating the
sale of all or part of their interests in state enterprises. A Portfolio's
investments in the securities of privatized enterprises include privately
negotiated investments in a government or state-owned or controlled company or
enterprise that has not yet conducted an initial equity offering, investments in
the initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.
In certain jurisdictions, the ability of a foreign entity, such as a Portfolio
of the Fund, to participate in privatizations may be limited by local law, or
the price or terms on which a Portfolio of the Fund may be able to participate
may be less advantageous than for local investors. Moreover, there can be no
assurance that governments that have embarked on privatization programs will
continue to divest their ownership of state enterprises, that proposed
privatizations will be successful or that governments will not re-nationalize
enterprises that have been privatized.
In the case of the enterprises in which a Portfolio of the Fund may invest,
large blocks of the stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those enterprises. The
sale of some portion or all of those blocks could have an adverse effect on the
price of the stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as the enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which a Portfolio may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition.
DEPOSITORY RECEIPTS. Investments in securities of foreign issuers may be in the
form of American Depository Receipts ("ADRs"). For many foreign securities,
there are U.S. Dollar-denominated ADRs, which are bought and sold in the United
States and are issued by domestic banks. ADRs represent the right to receive
securities of foreign issuers deposited in the domestic bank or a correspondent
bank. ADRs do not eliminate all the risk inherent in investing in the securities
of foreign issuers, such as changes in foreign currency exchange rates. However,
by investing in ADRs rather than directly in foreign issuers' stock, the
Portfolios avoid currency risks during the settlement period. In general, there
is a large, liquid market in the United States for most ADRs. Securities of
foreign issuers are also available in the form of European Depository Receipts
("EDRs") and Global Depository Receipts ("GDRs"), which are receipts evidencing
an arrangement with a bank similar to that for ADRs and are designed for use in
European and other foreign securities markets. EDRs and GDRs are not necessarily
denominated in the currency of the underlying security.
NON-DIVERSIFIED PORTFOLIO. The Global Income Portfolio operates as a
"non-diversified" portfolio so that it will be able to invest more than 5% of
its assets in the obligations of an issuer, subject to the diversification
requirements of Subchapter M of the Internal Revenue Code applicable to the
Portfolio. This allows the Portfolio, as to 50% of its assets, to invest more
than 5% of its assets, but not more than 25%, in the securities of an individual
foreign government or corporate issuer. Currently, the Global Income Portfolio
does not intend to invest more than 5% of its assets in any individual corporate
issuer. Since the Portfolio may invest a relatively high percentage of its
assets in the obligations of a limited number of issuers, the Portfolio may be
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more susceptible to any single economic, political or regulatory occurrence than
a diversified portfolio. See "Investment Restrictions" in the Statement of
Additional Information.
SPECIAL RISK FACTORS--SMALL CAP SECURITIES. As reflected above, the Small Cap
Growth and Small Cap Value Portfolios intend to invest a substantial portion of
their assets in equity securities of small companies, i.e., those having a
market capitalization of $1 billion or less at the time of investment.
Investments in securities of companies with small market capitalizations are
generally considered to offer greater opportunity for appreciation and to
involve greater risks of depreciation than securities of companies with larger
market capitalizations. Smaller companies often have limited product lines,
markets or financial resources, and they may be dependent upon one or a few key
people for management. Since the securities of such companies are not as broadly
traded as those of companies with larger market capitalizations, these
securities are often subject to wider and more abrupt fluctuations in market
price.
Among the reasons for the greater price volatility of these securities are the
less certain growth prospects of smaller firms, a lower degree of liquidity in
the markets for such stocks compared to larger capitalization stocks or the
market averages in general, and the greater sensitivity of small companies to
changing economic conditions. In addition to exhibiting greater volatility,
small company stocks may, to a degree, fluctuate independently of larger company
stocks. Small company stocks may decline in price as large company stock prices
rise, or rise in price as large company stock prices decline. Investors should
therefore expect that the value of the shares of the Small Cap Growth and Small
Cap Value Portfolios may be more volatile than the shares of a portfolio that
invests in larger capitalization stocks.
ADDITIONAL INVESTMENT INFORMATION. The portfolio turnover rates for each
Portfolio other than the Money Market, High Return Equity, Financial Services,
Global Blue Chip, and International Growth and Income Portfolios are listed
under "Financial Highlights." Since securities with maturities of less than one
year are excluded from portfolio turnover rate calculations, the portfolio
turnover rate for the Money Market Portfolio is zero. It is anticipated that,
under normal circumstances, the portfolio turnover rate for the High Return
Equity and Financial Services Portfolios will not exceed 100% and, for the
Global Blue Chip, and International Growth and Income Portfolios, will not
exceed 75%. Frequency of portfolio turnover will not be a limiting factor should
a Portfolio's investment manager deem it desirable to purchase or sell
securities. Higher portfolio turnover (over 100%) involves correspondingly
greater brokerage commissions or other transaction costs. Higher portfolio
turnover may result in the realization of greater net short-term capital gains.
See "Dividends and Taxes" in the Statement of Additional Information.
The Global Income Portfolio may take full advantage of the entire range of
maturities of fixed income securities and may adjust the average maturity of its
portfolio from time to time, depending upon its assessment of relative yields on
securities of different maturities and its expectations of future changes in
interest rates. Thus, the average maturity of the Portfolio's securities may be
relatively short (under five years, for example) at some times and relatively
long (over 10 years, for example) at other times. Generally, since shorter term
debt securities tend to be more stable than longer term debt securities, the
Portfolio's average maturity will be shorter when interest rates are expected to
rise and longer when interest rates are expected to fall. Since in most foreign
markets debt securities generally are issued with maturities of ten years or
less, it is currently anticipated that the average maturity of the Portfolio's
securities will normally be in the intermediate range (three to ten years).
A Portfolio will not, as a non-fundamental policy, purchase illiquid securities
including repurchase agreements maturing in more than seven days, if, as a
result thereof, more than 15% (10% for the Money Market and High Return Equity
Portfolios) of the Portfolio's net assets, valued at the time of the
transactions, would be invested in such securities.
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INVESTMENT TECHNIQUES
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, each Portfolio may lend securities (principally to broker-dealers)
where such loans are callable at any time and are continuously secured by
segregated collateral (cash or other liquid securities) equal to no less than
the market value, determined daily, of the securities loaned. The Portfolio will
receive amounts equal to dividends or interest on the securities loaned. It will
also earn income for having made the loan. Any cash collateral pursuant to these
loans will be invested in short-term money market instruments. As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the collateral should the borrower of the securities fail financially.
However, the loans would be made only to firms deemed by the Portfolio's
investment manager to be of good standing, and when the Portfolio's investment
manager believes the potential earnings to justify the attendant risk. For each
Portfolio except the Global Blue Chip Portfolio, the investment manager will
limit such lending to not more than one-third of the value of a Portfolio's
total assets. For the Global Blue Chip Portfolio, the investment manager will
limit securities lending to not more than 5% of the value of the Portfolio's
total assets.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS. Each Portfolio except the Money
Market Portfolio may deal in options on securities and securities indices, which
options may be listed for trading on a national securities exchange or traded
over-the-counter, except that the Contrarian, Small Cap Value and High Return
Equity Portfolios do not engage in over-the-counter options transactions. The
ability to engage in options transactions enables a Portfolio to pursue its
investment objective and also to hedge against currency and market risks but is
not intended for speculation. In connection with their foreign securities
investments, the Total Return, High Yield, Growth, International, Small Cap
Growth, Investment Grade Bond, Horizon, Global Income, Financial Services,
Global Blue Chip, and International Growth and Income Portfolios may also
purchase and sell, and the Value+Growth and Blue Chip Portfolios may purchase,
foreign currency options.
The Government Securities Portfolio individually may write (sell) covered call
options on up to 100% of net assets, may write (sell) secured put options on up
to 50% of net assets and may purchase put and call options provided that no more
than 5% of net assets may be invested in premiums on such options. The Total
Return, High Yield, Growth, International, Small Cap Growth, Investment Grade
Bond, Horizon and Global Income Portfolios may write (sell) covered call and
secured put options on up to 25% of net assets and may purchase put and call
options provided that no more than 5% of its net assets may be invested in
premiums on such options. The Value+Growth and Blue Chip Portfolios may purchase
put and call options provided that no more than 5% of its net assets may be
invested in premiums on such options.
The Contrarian, Small Cap Value, High Return Equity, Financial Services, Global
Blue Chip, and International Growth and Income Portfolios are authorized to sell
covered call options on all of the stocks they hold. No put option will be sold
for those Portfolios, however, if as a result, a Portfolio would be obligated to
purchase securities whose total value exceeds 50% of its net assets (total
assets for the Global Blue Chip, and International Growth and Income
Portfolios). The Global Blue Chip and International Growth and Income Portfolios
may each purchase put and call options provided that the aggregate premiums paid
on all such options held by the Portfolio at any time do not exceed 20% of its
total assets. The Financial Services Portfolio may purchase put and call options
provided that no more than % of its net assets may be invested in premiums
on such options.
Each Portfolio, except the Money Market, Value+Growth and Blue Chip Portfolios
may write (sell) covered call options so long as they own securities or other
assets that are acceptable for escrow purposes. Also, such Portfolios may write
(sell) secured put options, which means that so long as the Portfolio is
obligated as a writer of a put option, it will invest an amount not less than
the exercise price of the put option in money market instruments.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying security or other asset at the exercise price
during the option period. A put option gives the purchaser the right to sell,
and the writer the obligation to buy, the underlying security or other asset at
the exercise price during the option period. The writer of a covered call owns
securities or other assets that are acceptable for escrow and the writer
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of a secured put invests an amount not less than the exercise price in eligible
securities or other assets to the extent that it is obligated as a writer. If a
call written by a Portfolio is exercised, the Portfolio foregoes any possible
profit from an increase in the market price of the underlying security or other
asset over the exercise price plus the premium received. In writing puts, there
is a risk that a Portfolio may be required to take delivery of the underlying
security or other asset at a disadvantageous price.
Over-the-counter traded options ("OTC options") differ from exchange traded
options in several respects. Such options are transacted with dealers directly
and not with a clearing corporation and there is a risk of non-performance by
the dealer as a result of the insolvency of such dealer or otherwise, in which
event a Portfolio may experience material losses. However, in writing options
the premium is paid in advance by the dealer. OTC options are available for a
greater variety of securities or other assets, and a wider range of expiration
dates and exercise prices, than for exchange traded options.
A Portfolio, as part of its option transactions, also may use index options.
Through the writing or purchase of index options a Portfolio can achieve many of
the same objectives as through the use of options on individual securities.
Options on securities indices are similar to options on a security except that,
rather than the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the
securities index upon which the option is based is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option.
Price movements in securities which a Portfolio owns or intends to purchase
probably will not correlate perfectly with movements in the level of an index
and, therefore, a Portfolio bears the risk of a loss on an index option which is
not completely offset by movements in the price of such securities. Because
index options are settled in cash, a call writer cannot determine the amount of
its settlement obligations in advance and, unlike call writing on specific
securities, cannot provide in advance for, or cover, its potential settlement
obligations by acquiring and holding the underlying securities.
Each Portfolio except the Money Market Portfolio may engage in financial futures
transactions. Financial futures contracts are commodity contracts that obligate
the long or short holder to take or make delivery of a specified quantity of a
financial instrument, such as a security, or the cash value of a securities
index during a specified future period at a specified price. A Portfolio will
"cover" futures contracts sold by the Portfolio and maintain in a segregated
account certain liquid assets in connection with futures contracts purchased by
the Portfolio as described under "Investment Policies and Techniques" in the
Statement of Additional Information. In connection with their foreign securities
investments, the Total Return, High Yield, Growth, International, Small Cap
Growth, Investment Grade Bond, Value+Growth, Horizon, Blue Chip, Global Income,
Financial Services, Global Blue Chip, and International Growth and Income
Portfolios may also engage in foreign currency financial futures transactions.
The Total Return, High Yield, Growth, International, Small Cap Growth,
Investment Grade Bond, Value+Growth, Horizon, Blue Chip and Global Income
Portfolios will not enter into any futures contracts or options on futures
contracts if the aggregate of the contract value of the outstanding futures
contracts of the Portfolio and futures contracts subject to outstanding options
written by the Portfolio would exceed 50% of the total assets of the Portfolio.
The Financial Services, Global Blue Chip, and International Growth and Income
Portfolios each will not enter into a futures contract or related option (except
for closing transactions) if immediately thereafter, the sum of the amount of
its initial margin and premiums on open future contracts and options thereon
would exceed 5% of the Portfolio's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
The Portfolios may engage in financial futures transactions and may use index
options as an attempt to hedge against currency and market risks. For example,
when the near-term market view is bearish but the portfolio composition is
judged satisfactory for the longer term, exposure to temporary declines in the
market may be reduced by entering into futures contracts to sell securities or
the cash value of an index. Conversely, where the
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near-term view is bullish, but a Portfolio is believed to be well positioned for
the longer term with a high cash position, the Portfolio can hedge against
market increases by entering into futures contracts to buy securities or the
cash value of an index. In either case, the use of futures contracts would tend
to reduce portfolio turnover and facilitate a Portfolio's pursuit of its
investment objective. Also, if a Portfolio owned long-term bonds and interest
rates were expected to rise, it could sell financial futures contracts. If
interest rates did increase, the value of the bonds in the Portfolio would
decline, but this decline would be offset in whole or in part by an increase in
the value of the Portfolio's futures contracts. If, on the other hand, long-term
interest rates were expected to decline, the Portfolio could hold short-term
debt securities and benefit from the income earned by holding such securities,
while at the same time the Portfolio could purchase futures contracts on
long-term bonds or the cash value of a securities index. Thus, the Portfolio
could take advantage of the anticipated rise in the value of long-term bonds
without actually buying them. The futures contracts and short-term debt
securities could then be liquidated and the cash proceeds used to buy long-term
bonds.
Futures contracts entail risks. If the investment manager's judgment about the
general direction of interest rates, markets or exchange rates is wrong, the
overall performance may be poorer than if no such contracts had been entered
into. There may be an imperfect correlation between movements in prices of
futures contracts and portfolio assets being hedged. In addition, the market
prices of futures contracts may be affected by certain factors. If participants
in the futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the assets and futures market could result. Price
distortions also could result if investors in futures contracts decide to make
or take delivery of underlying securities or other assets rather than engage in
closing transactions because of the resultant reduction in the liquidity of the
futures market. In addition, because, from the point of view of speculators,
margin requirements in the futures market are less onerous than margin
requirements in the cash market, increased participation by speculators in the
futures market could cause temporary price distortions. Due to the possibility
of price distortions in the futures market and because of the imperfect
correlation between movements in the prices of securities or other assets and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment manager still may not result in a successful hedging
transaction. A Portfolio could also experience losses if it could not close out
its futures position because of an illiquid secondary market. If any of these
events should occur, a Portfolio could lose money on the financial futures
contracts and also on the value of its portfolio assets. The costs incurred in
connection with futures transactions could reduce a Portfolio's return.
Index options involve risks similar to those risks relating to transactions in
financial futures contracts described above. Also, an option purchased by a
Portfolio may expire worthless, in which case a Portfolio would lose the premium
paid therefor.
A Portfolio may engage in futures transactions only on commodities exchanges or
boards of trade. A Portfolio will not engage in transactions in index options,
financial futures contracts or related options for speculation, but only as an
attempt to hedge against changes in interest rates or market conditions
affecting the values of securities which the Portfolio owns or intends to
purchase.
FOREIGN CURRENCY TRANSACTIONS. As indicated under "Investment Objectives,
Policies and Risk Factors--Special Risk Factors--Foreign Securities," the Total
Return, High Yield, Growth, Small Cap Growth, Investment Grade Bond,
Value+Growth, Horizon, Blue Chip and Financial Services Portfolios may invest a
limited portion of their assets, and the International, Global Income, Global
Blue Chip, and International Growth and Income Portfolios may invest without
limit, in securities denominated in foreign currencies. These Portfolios may
engage in foreign currency transactions in connection with their investments in
foreign securities but will not speculate in foreign currency exchange.
The value of the foreign securities investments of a Portfolio measured in U.S.
Dollars (including ADRs) may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and the
Portfolio may incur costs in connection with conversions between various
currencies. A Portfolio
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will conduct its foreign currency exchange transactions either on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign currency exchange market,
or through forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded directly between currency traders
(usually large commercial banks) and their customers.
When a Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the U.S. Dollar cost
or proceeds, as the case may be. By entering into a forward contract in U.S.
Dollars for the purchase or sale of the amount of foreign currency involved in
an underlying security transaction, the Portfolio is able to protect itself
against a possible loss between trade and settlement date resulting from an
adverse change in the relationship between the U.S. Dollar and such foreign
currency. However, this tends to limit potential gains that might result from a
positive change in such currency relationships. A Portfolio may also hedge its
foreign currency exchange rate risk by engaging in currency financial futures
and options transactions.
When the investment manager believes that the currency of a particular foreign
country may suffer a substantial decline against the U.S. Dollar, it may enter
into a forward contract to sell an amount of foreign currency approximating the
value of some or all of the Portfolio's securities denominated in such foreign
currency. In this situation the International, Global Income, Financial
Services, Global Blue Chip, and International Growth and Income Portfolios may,
instead, enter into a forward contract to sell a different foreign currency for
a fixed U.S. Dollar amount when the investment manager believes that the U.S.
Dollar value of the currency to be sold pursuant to the forward contract will
fall whenever there is a decline in the U.S. Dollar value of the currency in
which portfolio securities of the Portfolio are denominated ("cross-hedge"). The
forecasting of short-term currency market movement is extremely difficult and
whether such a short-term hedging strategy will be successful is highly
uncertain.
It is impossible to forecast with precision the market value of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary for
a Portfolio to purchase additional currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Portfolio is obligated to deliver when a decision
is made to sell the security and make delivery of the foreign currency in
settlement of a forward contract. Conversely, it may be necessary to sell on the
spot market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Portfolio is obligated to deliver.
The Portfolios will not speculate in foreign currency exchange. A Portfolio will
not enter into such forward contracts or maintain a net exposure in such
contracts where the Fund would be obligated to deliver an amount of foreign
currency in excess of the value of the Portfolio's securities or other assets
(a) denominated in that currency or (b), in the case of a "cross-hedge",
denominated in a currency or currencies that the Fund's investment manager
believes will have price movements that closely correlate with that currency.
The Portfolios' custodian bank segregates cash or liquid securities to the
extent required by applicable regulation in connection with forward foreign
currency exchange contracts entered into for the purchase of a foreign currency.
The Portfolios do not intend to enter into such forward contracts if they would
have more than 15% of the value of their total assets committed to such
contracts, except that there is no limit as to the percentage of assets that the
Global Income, Financial Services, Global Blue Chip, and International Growth
and Income Portfolios intend to commit to such forward contracts. A Portfolio
generally does not enter into a forward contract with a term longer than one
year.
DERIVATIVES. In addition to options, financial futures and foreign currency
transactions, consistent with its objective, each Portfolio may invest in a
broad array of financial instruments and securities in which the value of the
instrument or security is "derived" from the performance of an underlying asset
or a "benchmark" such as a security index, an interest rate or a currency
("derivatives"). Derivatives are most often used in an effort to
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manage investment risk, to increase or decrease exposure to an asset class or
benchmark (as a hedge or to enhance return), or to create an investment position
indirectly (often because it is more efficient or less costly than direct
investment). There is no guarantee that these results can be achieved through
the use of derivatives. The types of derivatives used by each Portfolio and the
techniques employed by the Portfolio's investment manager may change over time
as new derivatives and strategies are developed or regulatory changes occur.
SPECIAL RISK FACTORS--OPTIONS, FUTURES, FOREIGN CURRENCIES AND OTHER
DERIVATIVES. The Statement of Additional Information contains further
information about the characteristics, risks and possible benefits of options,
futures, foreign currency and other derivative transactions. See "Investment
Policies and Techniques" in the Statement of Additional Information. The
principal risks are: (a) possible imperfect correlation between movements in the
prices of options, currencies, futures or other derivatives contracts and
movements in the prices of the securities or currencies hedged, used for cover
or that the derivatives intended to replicate; (b) lack of assurance that a
liquid secondary market will exist for any particular option, futures, foreign
currency or other derivatives contract at any particular time; (c) the need for
additional skills and techniques beyond those required for normal portfolio
management; (d) losses on futures contracts resulting from market movements not
anticipated by the investment manager; and (e) the possible non-performance of
the counter-party to the derivative contract.
DELAYED DELIVERY TRANSACTIONS. The Total Return, High Yield, Growth, Government
Securities, Investment Grade Bond, Horizon, Global Income, Financial Services,
Global Blue Chip, and International Growth and Income Portfolios may purchase or
sell portfolio securities on a when-issued or delayed delivery basis. When-
issued or delayed delivery transactions arise when securities are purchased by a
Portfolio with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price and yield to the Portfolio
at the time of entering into the transactions. The value of fixed yield
securities to be delivered in the future will fluctuate as interest rates vary.
Because a Portfolio must set aside cash or other liquid securities to satisfy
its commitments to purchase when-issued or delayed delivery securities,
flexibility to manage the Portfolio's investments may be limited if commitments
to purchase when-issued or delayed delivery securities were to exceed 25% of the
value of its assets.
To the extent a Portfolio engages in when-issued or delayed delivery
transactions, it will generally do so for the purpose of acquiring portfolio
securities consistent with the Portfolio's investment objective and policies. A
Portfolio reserves the right to sell these securities before the settlement date
if deemed advisable. In some instances, the third-party seller of when-issued or
delayed delivery securities may determine prior to the settlement date that it
will be unable to meet its existing transaction commitments without borrowing
securities. If advantageous from a yield perspective, a Portfolio may, in that
event, agree to resell its purchase commitment to the third-party seller at the
current market price on the date of sale and concurrently enter into another
purchase commitment for such securities at a later date. As an inducement for a
Portfolio to "roll over" its purchase commitment, the Portfolio may receive a
negotiated fee.
REPURCHASE AGREEMENTS. Each Portfolio may invest in repurchase agreements, under
which it acquires ownership of a security and the broker-dealer or bank agrees
to repurchase the security at a mutually agreed upon time and price, thereby
determining the yield during the Portfolio's holding period. The investment
manager will evaluate the creditworthiness of all entities with which the
Portfolio intends to engage in repurchase agreements pursuant to procedures
adopted by the Board of Trustees of the Fund. Maturity of the securities subject
to repurchase may exceed one year. In the event of a bankruptcy or other default
of a seller of a repurchase agreement, the Portfolio might have expenses in
enforcing its rights, and could experience losses, including a decline in the
value of the underlying securities and loss of income. Repurchase agreements
maturing in more than seven days will be considered illiquid for purposes of the
Portfolios' limitations on illiquid securities.
REVERSE REPURCHASE AGREEMENTS. The Global Blue Chip and International Growth and
Income Portfolios may each enter into "reverse repurchase agreements," which are
repurchase agreements in which a Portfolio, as the
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seller of the securities, agrees to repurchase them at an agreed time and price.
Each Portfolio maintains a segregated account in connection with outstanding
reverse repurchase agreements. A Portfolio will enter into reverse repurchase
agreements only when the investment manager believes that the interest income to
be earned from the investment of the proceeds of the transaction will be greater
than the interest expense of the transaction.
BORROWINGS. Each Portfolio is authorized to borrow money for purposes of
liquidity and to provide for redemptions and distributions. Each Portfolio will
borrow only when the investment manager believes that borrowing will benefit the
Portfolio after taking into account considerations such as the costs of the
borrowing. Borrowing by each Portfolio will involve special risk considerations.
Although the principal of each Portfolio's borrowings will be fixed, a
Portfolio's assets may change in value during the time a borrowing is
outstanding, thus increasing exposure to capital risk.
SECTION 4(2) PAPER. Subject to its investment objectives and policies, a
Portfolio may invest in commercial paper issued by major corporations under the
Securities Act of 1933 in reliance on the exemption from registration afforded
by Section 3(a)(3) thereof. Such commercial paper may be issued only to finance
current transactions and must mature in nine months or less. Trading of such
commercial paper is conducted primarily by institutional investors through
investment dealers, and individual investor participation in the commercial
paper market is very limited. A Portfolio also may invest in commercial paper
issued in reliance on the so-called "private placement" exemption from
registration afforded by Section 4(2) of the Securities Act of 1933 ("Section
4(2) paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws, and generally is sold to institutional investors such
as a Portfolio who agree that they are purchasing the paper for investment and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) paper normally is resold to other
institutional investors like the Portfolio through or with the assistance of the
issuer or investment dealers who make a market in the Section 4(2) paper, thus
providing liquidity. The investment manager considers the legally restricted but
readily saleable Section 4(2) paper to be liquid; however, pursuant to
procedures approved by the Board of Trustees of the Fund, if a particular
investment in Section 4(2) paper is not determined to be liquid, that investment
will be included within the limitation of the particular Portfolio on illiquid
securities. The Fund's investment manager monitors the liquidity of each
Portfolio's investments in Section 4(2) paper on a continuing basis.
COLLATERALIZED OBLIGATIONS. Subject to its investment objectives and policies, a
Portfolio may purchase collateralized obligations, including interest only
("IO") and principal only ("PO") securities. A collateralized obligation is a
debt security issued by a corporation, trust or custodian, or by a U.S.
Government agency or instrumentality, that is collateralized by a portfolio or
pool of mortgages, mortgage-backed securities, U.S. Government securities or
other assets. The issuer's obligation to make interest and principal payments is
secured by the underlying pool or portfolio of securities. Collateralized
obligations issued or guaranteed by a U.S. Government agency or instrumentality,
such as the Federal Home Loan Mortgage Corporation, are considered U.S.
Government securities for purposes of this prospectus. Privately-issued
collateralized obligations collateralized by a portfolio of U.S. Government
securities are not direct obligations of the U.S. Government or any of its
agencies or instrumentalities and are not considered U.S. Government securities
for purposes of this prospectus. A variety of types of collateralized
obligations are available currently and others may become available in the
future.
Since the collateralized obligations may be issued in classes with varying
maturities and interest rates, the investor may obtain greater predictability of
maturity than with direct investments in mortgage-backed securities. Classes
with shorter maturities may have lower volatility and lower yield while those
with longer maturities may have higher volatility and higher yield. This
provides the investor with greater control over the characteristics of the
investment in a changing interest rate environment. With respect to interest
only and principal only securities, an investor has the option to select from a
pool of underlying collateral the portion of the cash flows that most closely
corresponds to the investor's forecast of interest rate movements. These
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instruments tend to be highly sensitive to prepayment rates on the underlying
collateral and thus place a premium on accurate prepayment projections by the
investor.
A Portfolio, other than the Money Market Portfolio, may invest in collateralized
obligations whose yield floats inversely against a specified index rate. These
"inverse floaters" are more volatile than conventional fixed or floating rate
collateralized obligations and the yield thereon, as well as the value thereof,
will fluctuate in inverse proportion to changes in the index upon which rate
adjustments are based. As a result, the yield on an inverse floater will
generally increase when market yields (as reflected by the index) decrease and
decrease when market yields increase. The extent of the volatility of inverse
floaters depends on the extent of anticipated changes in market rates of
interest. Generally, inverse floaters provide for interest rate adjustments
based upon a multiple of the specified interest index, which further increases
their volatility. The degree of additional volatility will be directly
proportional to the size of the multiple used in determining interest rate
adjustments.
Additional information concerning collateralized obligations is contained in the
Statement of Additional Information under "Investment Policies and
Techniques--Collateralized Obligations."
NET ASSET VALUE
ALL PORTFOLIOS (OTHER THAN THE MONEY MARKET PORTFOLIO). The net asset value per
share is determined by calculating the total value of a Portfolio's assets,
deducting total liabilities, and dividing the result by the number of shares
outstanding of such Portfolio. The net asset value of shares of a Portfolio is
computed as of the close of regular trading on the New York Stock Exchange (the
"Exchange") on each day the Exchange is open for trading. The Exchange is
scheduled to be closed on the following holidays: New Year's Day, Martin Luther
King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas. Portfolio securities for which market
quotations are readily available are generally valued at market value. All other
securities may be valued at fair value as determined in good faith by or under
the direction of the Board.
MONEY MARKET PORTFOLIO. The net asset value per share of the Money Market
Portfolio is determined at 11:00 a.m. and as of the earlier of 3:00 p.m. Central
time or the close of the Exchange on each day the Exchange is open for trading,
except that the net asset value will not be computed on a day in which no orders
to purchase shares were received or no shares were tendered for redemption. The
net asset value per share is determined by dividing the total assets of the
Portfolio minus its liabilities by the total number of its shares outstanding.
The net asset value per share of the Money Market Portfolio is ordinarily $1.00
calculated at amortized cost in accordance with Rule 2a-7 under the 1940 Act.
While this rule provides certainty in valuation, it may result in periods during
which value, as determined by amortized cost, is higher or lower than the price
the Portfolio would have received if all its investments were sold. Under the
direction of the Board of Trustees, certain procedures have been adopted to
monitor and stabilize the price per share for the Portfolio. Calculations are
made to compare the value of its investments valued at amortized cost with
market-based values. Market-based values will be obtained by using actual
quotations provided by market makers, estimates of market value, or values
obtained from yield data relating to classes of money market instruments or
government securities published by reputable sources. In the event that a
deviation of 1/2 of 1% or more exists between the Portfolio's $1.00 per share
net asset value, calculated at amortized cost, and the net asset value
calculated by reference to market-based quotations, or if there is any other
deviation that the Board of Trustees believes would result in a material
dilution to shareholders or purchasers, the Board of Trustees will promptly
consider what action, if any, should be initiated. In order to value its
investments at amortized cost, the Money Market Portfolio purchases only
securities with a maturity of one year or less and maintains a dollar-weighted
average portfolio maturity of 90 days or less. In addition, the Money Market
Portfolio limits its portfolio investments to securities that meet the quality
and diversification requirements of Rule 2a-7.
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PURCHASE AND REDEMPTION
The separate accounts of the Participating Insurance Companies place orders to
purchase and redeem shares of each Portfolio based on, among other things, the
amount of premium payments to be invested and surrender and transfer requests to
be effected on that day pursuant to VLI and VA contracts. The shares of all
Portfolios are each purchased and redeemed at the net asset value of each
Portfolio's shares determined that same day or, in the case of an order not
resulting automatically from VLI and VA contract transactions, next determined
after an order in proper form is received. An order is considered to be in
proper form if it is communicated by telephone or wire by an authorized employee
of the Participating Life Insurance Company.
From time to time, the Fund may temporarily suspend the offering of shares of
one or more of its Portfolios. During the period of such suspension,
shareholders of such Portfolio are normally permitted to continue to purchase
additional shares and to have dividends reinvested.
The Fund seeks to have its Money Market Portfolio as fully invested as possible
at all times in order to achieve maximum income. Since the Money Market
Portfolio will be investing in instruments which normally require immediate
payment in Federal funds (monies credited to a bank's account with its regional
Federal Reserve Bank), the Fund has adopted certain procedures for the
convenience of its shareholders and to ensure that the Money Market Portfolio
receives investable funds.
No fee is charged the shareholders when they purchase or redeem Portfolio
shares.
DIVIDENDS AND TAXES
DIVIDENDS FOR MONEY MARKET PORTFOLIO. The Money Market Portfolio's net
investment income is declared as a dividend daily. Shareholders will receive
dividends monthly in additional shares. If a shareholder withdraws its entire
account, all dividends accrued to the time of withdrawal will be paid at that
time.
DIVIDENDS FOR ALL PORTFOLIOS EXCEPT MONEY MARKET PORTFOLIO. The Fund normally
follows the practice of declaring and distributing substantially all the net
investment income and any net short-term and long-term capital gains of these
Portfolios at least annually.
TAXES. Under the current Internal Revenue Code ("Code"), Participating Insurance
Companies are taxed as life insurance companies and the operations of their
separate accounts are taxed as part of their total operations. Under current
interpretations of existing federal income tax law, investment income and
capital gains of separate accounts are not subject to federal income tax to the
extent applied to increase the values of VLI or VA contracts. Tax consequences
to VLI or VA contract holders are described in the separate prospectuses issued
by the Participating Insurance Companies.
Each Portfolio intends to continue to qualify (or, for the High Return Equity,
Financial Services, Global Blue Chip, and International Growth and Income
Portfolios, intend to qualify) as a regulated investment company under
subchapter M of the Code. As a result, with respect to any fiscal year in which
a Portfolio distributes all its net investment income and net realized capital
gains, that Portfolio will not be subject to federal income tax. Subchapter M
includes other requirements relating to the diversification of investments.
Subchapter M's diversification requirements are in addition to diversification
requirements under Section 817(h) of the Code and the 1940 Act. Each applicable
law's diversification requirement could require the sale of assets of a
Portfolio, which could have an adverse impact on the net asset value of such
Portfolio.
The preceding is a brief summary of certain of the relevant tax considerations.
The Statement of Additional Information includes a more detailed discussion.
This discussion is not intended, even as supplemented by the Statement of
Additional Information, as a complete explanation or a substitute for careful
tax planning and consultation with individual tax advisers.
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CAPITAL STRUCTURE AND GENERAL INFORMATION
The Fund was organized as a business trust under the laws of Massachusetts on
January 22, 1987. On May 1, 1997, the Fund changed its name from "Kemper
Investors Fund" to "Investors Fund Series." The Fund may issue an unlimited
number of shares of beneficial interest all having no par value. Since the Fund
offers multiple Portfolios, it is known as a "series company." Shares of a
Portfolio have equal noncumulative voting rights and equal rights with respect
to dividends, assets and liquidation of such Portfolio. Shares are fully paid
and nonassessable when issued, and have no preemptive or conversion rights. The
Fund is not required to hold annual shareholders' meetings and does not intend
to do so. However, it will hold special meetings as required or deemed desirable
for such purposes as electing trustees, changing fundamental policies or
approving an investment advisory contract. If shares of more than one Portfolio
are outstanding, shareholders will vote by Portfolio and not in the aggregate
except when voting in the aggregate is required under the 1940 Act, such as for
the election of trustees. The Board of Trustees may authorize the issuance of
additional Portfolios if deemed desirable, each with its own investment
objective, policies and restrictions. The Board of Trustees may also authorize
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. Currently, the Fund does not offer a multi-class fund structure, but it
may adopt such a structure at a future date.
On November 3, 1989, KILICO Money Market Separate Account, KILICO Total Return
Separate Account, KILICO Income Separate Account and KILICO Equity Separate
Account (collectively, the Accounts), which were separate accounts organized as
open-end management investment companies, were restructured into one continuing
separate account (KILICO Variable Annuity Separate Account) in unit investment
trust form with subaccounts investing in corresponding Portfolios of the Fund.
An additional subaccount also was created to invest in the Fund's Government
Securities Portfolio. The restructuring and combining of the Accounts is
referred to as the Reorganization. In connection with the Reorganization,
approximately $550,000,000 in assets was added to the Fund (which at that time
consisted of approximately $6,000,000 in assets). Because the assets added to
the Fund as a result of the Reorganization were significantly greater than the
existing assets of the Fund, the per share financial highlights of the Money
Market, Total Return, High Yield and Growth Portfolios in this Prospectus
reflect the Accounts as the continuing entities.
Information about the Portfolios' investment performance is contained in the
Fund's 1997 Annual Report to Shareholders, which may be obtained without charge
from the Fund.
Shareholder inquiries should be made by writing the Fund at the address shown on
the front cover of this Prospectus.
INVESTMENT MANAGER
INVESTMENT MANAGER. Scudder Kemper Investments, Inc. ("Scudder Kemper"), 345
Park Avenue, New York, New York, is the investment manager of each Portfolio and
provides each with continuous professional investment supervision. Scudder
Kemper is one of the largest investment managers in the country with more than
$210 billion under management and has been engaged in the management of
investment funds for more than seventy years. Zurich Insurance Company, a
leading, internationally recognized provider of insurance and financial services
in property/casualty and life insurance, reinsurance and structural financial
solutions as well as asset management, owns approximately 70% of Scudder Kemper
with the balance owned by Scudder Kemper's officers and employees.
Responsibility for overall management of the Fund rests with the Board of
Trustees and officers of the Fund. Professional investment supervision is
provided by Scudder Kemper. The investment management agreement provides that
Scudder Kemper shall act as investment adviser for each Portfolio, manage its
investments and provide it with various services and facilities. For its
services, Scudder Kemper is paid a management fee,
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payable monthly, based upon the average daily net assets of such Portfolios at
1/12 of the annual rate, as follows: Money Market (.50%), Total Return (.55%),
High Yield (.60%), Growth (.60%), Government Securities (.55%), International
(.75%), Small Cap Growth (.65%), Investment Grade Bond (.60%), Value (.75%),
Small Cap Value (.75%), Value+Growth (.75%), Horizon 20+ (.60%), Horizon 10+
(.60%), Horizon 5 (.60%), Blue Chip (.65%), Global Income (.75%) and
International Growth and Income (1.00%).
The High Return Equity, Financial Services and Global Blue Chip Portfolios each
pay Scudder Kemper an investment management fee, payable monthly, at 1/12 of the
annual rates shown below.
High Return Equity Portfolio
and Financial Services
Portfolio.......................75% for the first $250 million, .72% for the
next $750 million, .70% for the next $1.5
billion, .68% for the next $2.5 billion, .65%
for the next $2.5 billion, .64% for the next
$2.5 billion, .63% for the next $2.5 billion
and .62% over $12.5 billion.
Global Blue Chip Portfolio.....1.00% for the first $250 million, .95% for the
next $750 million and .90% over $1 billion.
Scudder Kemper has agreed to temporarily waive its management fee in the amount
of .15% of the average daily net assets of the Global Blue Chip Portfolio and
.30% of the average daily net assets of the International Growth and Income
Portfolio. The actual level of this voluntary waiver shall be in Scudder
Kemper's discretion and, upon notice to the Portfolio, Scudder Kemper may at any
time terminate this waiver.
Scudder Kemper uses the services of Zurich Investment Management Limited
("ZIML"), 1 Fleet Place, London, U.K. EC4M 7RQ, as a sub-adviser for the
International and Global Income Portfolios. ZIML is an affiliate of Zurich
Insurance Company and has served as sub-adviser for mutual funds since December,
1996 and investment adviser for certain institutional accounts since August,
1988. Under the terms of the Sub-Advisory Agreement between ZIML and Scudder
Kemper for the International and Global Income Portfolios, ZIML renders
investment advisory and management services with regard to that portion of the
Portfolio's assets as may be allocated by Scudder Kemper to ZIML from time to
time for management, including services related to foreign securities, foreign
currency transactions and related investments. Scudder Kemper pays ZIML for its
services a sub-advisory fee, payable monthly at 1/12 of the following annual
rates applied to the portion of the average daily net assets of the applicable
Portfolio allocated by Scudder Kemper to ZIML for management: .35% for the
International Portfolio and .30% for the Global Income Portfolio.
Dreman Value Management, L.L.C. ("DVM") Three Harding Road, Red Bank, New Jersey
07701, serves as sub-adviser for the High Return Equity and Financial Services
Portfolios. Under the terms of the sub-advisory agreement between Scudder Kemper
and DVM for each Portfolio, DVM manages the investment and reinvestment of each
Portfolio's assets in accordance with the investment objectives, policies and
limitations and subject to the supervision of Scudder Kemper and the Board of
Trustees. DVM was formed in April 1997 and has served as sub-adviser for each
Portfolio since each Portfolio's inception. DVM is controlled by David N.
Dreman. Scudder Kemper pays DVM for its services to each Portfolio a
sub-advisory fee, payable monthly, at the annual rate of .24% of the first $250
million of each Portfolio's average daily net assets, .23% of the average daily
net assets between $250 million and $1 billion, .224% of average daily net
assets between $1 billion and $2.5 billion, .218% of average daily net assets
between $2.5 billion and $5 billion, .208% of average daily net assets between
$5 billion and $7.5 billion, .205% of average daily net assets between $7.5
billion and $10 billion, .202% of average daily net assets between $10 billion
and $12.5 billion and .198% of each Portfolio's average daily net assets over
$12 billion.
Frank J. Rachwalski, Jr. is the portfolio manager of the Money Market Portfolio.
He has served in this capacity since the Portfolio commenced operations in 1982.
Mr. Rachwalski joined Scudder Kemper in January 1973 and is currently a managing
director of Scudder Kemper and a Vice President of the Fund. He received a
B.B.A. and an M.B.A. from Loyola University, Chicago, Illinois.
48
<PAGE> 51
Dennis H. Ferro is a Managing Director of ZIML and the portfolio manager for the
International Portfolio and has served in this capacity since March 1994. From
August 1998 to March 1994, Mr. Ferro was President and Chief Investment Officer
of an international investment advisory firm. He received a B.A. in Political
Science from Villanova University, Villanova, Pennsylvania and an MBA in Finance
from St. Johns University, Jamaica, New York. Mr. Ferro is a Chartered Financial
Analyst.
Michael A. McNamara (since 1990) and Harry E. Resis, Jr. (since 1993) are the
co-managers of the High Yield Portfolio. Mr. McNamara joined Scudder Kemper in
February 1972 and is currently a senior vice president of Scudder Kemper and a
vice president of the Fund. He received a B.S. in Business Administration from
the University of Missouri, St. Louis, Missouri, and an M.B.A. in Finance from
Loyola University, Chicago, Illinois. Mr. Resis joined Scudder Kemper in 1988
and is currently a senior vice president of Scudder Kemper and a vice president
of the Fund. He received a B.A. in Finance from Michigan State University,
Lansing, Michigan. Mr. Resis holds a number of NYSE and NASD licenses.
Steven H. Reynolds has been the lead portfolio manager of the Growth Portfolio
since September 1995. Mr. Reynolds joined Scudder Kemper in September 1995 and
is currently managing director of Scudder Kemper and he is a vice president of
the Fund. From 1991 to September 1995, he was a senior vice president and equity
portfolio manager of an investment advisory firm. Mr. Reynolds received a
bachelor's degree from Johns Hopkins University, Baltimore, Maryland and an
M.B.A. in finance from the University of Virginia, Charlottesville, Virginia.
Tracy McCormick Chester has been portfolio manager of the Growth Portfolio since
March 1998. Ms. Chester joined Scudder Kemper in September 1994 and is a senior
vice president of Scudder Kemper. Prior to joining Scudder Kemper, she was a
senior vice president and portfolio manager for an investment management company
from August 1992 to September 1994. She received a B.A. and an M.B.A. in finance
from Michigan State University, East Lansing, Michigan. Gary A. Langbaum has
been portfolio manager of the Growth Portfolio since March 1998. Mr. Langbaum
joined Scudder Kemper in 1988 and is a senior vice president of Scudder Kemper.
He received a B.A. in finance from the University of Maryland, College Park,
Maryland. Maureen P. Lentz has been portfolio manager of the Growth Portfolio
since March 1998. Ms. Lentz joined Scudder Kemper in November 1994 and is a vice
president at Scudder Kemper. From October 1986 to November 1994, she was a vice
president of an unaffiliated investment management firm. Ms. Lentz received a
B.S. in economics from John Carrol University and an M.B.A. in finance and
marketing from Case Western Reserve University in Cleveland, Ohio.
Richard L. Vandenberg is the portfolio manager of the Government Securities
Portfolio and has been a manager or co-manager since March 1996. Mr. Vandenberg
joined Scudder Kemper in March 1996 and is a vice president of the Fund. From
to March 1996, he was a senior vice president and portfolio
manager with an investment management firm. He received a B.B.A. and M.B.A.,
both in Finance, Investments and Banking, from the University of Wisconsin,
Madison, Wisconsin.
Maureen P. Lentz, lead portfolio manager of the Total Return Portfolio, has been
a portfolio manager of the Portfolio since January 1997. Gary Langbaum has
served as portfolio manager of the Total Return Portfolio since February 1995.
Steven Reynolds has been portfolio manager of the Total Return Portfolio since
March 1998 and Tracy McCormick Chester has been portfolio manager of the
Portfolio since March 1998. Biographical information regarding Ms. Lentz, Mr.
Langbaum, Mr. Reynolds and Ms. Chester appears above.
Lead portfolio manager David H. Burshtan has been a portfolio manager of the
Small Cap Growth Portfolio since January 1997. He joined Scudder Kemper in 1995
and is a vice president at Scudder Kemper. From 1993 to 1995, Mr. Burshtan was
employed as a senior international securities analyst, and prior thereto as a
senior portfolio manager for an unaffiliated investment management company. Mr.
Burshtan received a B.A. in economics from Brown University and an M.B.A. in
finance from the University of Chicago. Kurt R. Stalzer has been portfolio
manager of the Small Cap Growth Portfolio since he joined Scudder Kemper in
January 1997 and is a senior vice president at Scudder Kemper. From 1992 to
January 1997, Mr. Stalzer was a senior portfolio manager for an unaffiliated
investment management company. Mr. Stalzer received a B.B.A. in finance
49
<PAGE> 52
and accounting from the University of Michigan. Anne Carney has been portfolio
manager of the Small Cap Growth Portfolio since March 1998. Ms. Carney joined
Scudder Kemper in and is a at Scudder Kemper. Ms. Carney
received a degree from . Richard Goers has been portfolio manager of
the Small Cap Growth Portfolio since March 1998. Mr. Goers joined Scudder Kemper
in January 1971 and is a Senior Vice President at Scudder Kemper. Mr. Goers
received a B.S. from Iowa State University and an M.B.A. with a concentration in
finance from Northwestern University.
Thomas H. Forester and Steven T. Stokes have been the co-managers of the Small
Cap Value Portfolio since July 1997. Mr. Forester has lead responsibility for
the management of the Portfolio. He joined Scudder Kemper in May 1997. Prior to
joining Scudder Kemper, he served as a senior portfolio manager of an
unaffiliated investment management firm from 1995 to 1997. For the three years
prior to 1995, he was a portfolio manager of another investment management firm.
He received his undergraduate degree at the University of Colorado and an M.B.A.
in finance from Northwestern University. He is a chartered financial analyst.
Mr. Stokes joined Scudder Kemper in April, 1996 and is currently a managing
director of Scudder Kemper. Prior thereto, he served as a portfolio manager for
an unaffiliated investment management firm from 1986 to 1996. Mr. Stokes
received a B.S. degree in Finance from State University of New York at New Paltz
and is a Chartered Financial Analyst.
Thomas Sassi is the lead portfolio manager of the Contrarian Portfolio and has
been a portfolio manager since August 1996. Frederick L. Gaskin and Jonathan Kay
have been portfolio managers of the Contrarian Portfolio since September 1997.
Mr. Sassi joined Scudder Kemper in August 1996 and is a managing director at
Scudder Kemper. Prior to joining Scudder Kemper, he was a consultant with a
consulting firm from 1993 to August 1996. Mr. Sassi received a B.B.A. in
management and economics and an M.B.A. in Finance from Hofstra University in New
York City, New York. Frederick L. Gaskin joined Scudder Kemper in 1996 where he
has served as a managing director. From 1993 until 1996, Mr. Gaskin served as a
vice president and portfolio manager for an unaffiliated investment management
firm. He received a B.S. in finance from Appalachian State University and an
M.B.A. from Babcock Graduate School of Management. Jonathan Kay joined Scudder
Kemper in 1993 were he has served as a portfolio manager for institutional
accounts. From 1986 to 1993, Mr. Kay was a financial analyst for an unaffiliated
investment management firm. He received a B.A. in economics from the University
of Buffalo and an M.B.A. in Finance from Bernard M. Baruch College in New York
City, New York.
Robert Cessine has been the portfolio manager of the Investment Grade Bond
Portfolio since its inception in May, 1996. Mr. Cessine joined Scudder Kemper in
1993 and is a senior vice president of Scudder Kemper and director of investment
grade corporate and sovereign bond research. He received a B.S. in Economics
from the University of Wisconsin, Madison, Wisconsin, an M.S. in Agricultural
and Resource Economics from the University of Maryland, Baltimore/College Park,
Maryland and an M.S. in Finance from the University of Wisconsin, Madison,
Wisconsin. Mr. Cessine is a Chartered Financial Analyst.
William M. Knapp is the co-lead portfolio manager of the Horizon 20+, Horizon
10+ and Horizon 5 Portfolios and he has served as manager or co-manager of the
Portfolio since April 1997. Mr. Knapp joined Scudder Kemper in 1992 and is a
[senior vice president] at Scudder Kemper. He received a B.S. in economics from
Drake University and an M.S. and Ph.D. in industrial organization and finance
from the University of Wisconsin-Madison. Philip S. Fortuna has served as
co-lead portfolio manager of the Horizon 20+, Horizon 10+ and Horizon 5
Portfolios since March 1998. Mr. Fortuna joined Scudder Kemper in 1986 and is
currently a managing director of Scudder Kemper. Mr. Fortuna received a B.S.
degree in economics from Carnegie Mellon University in 1978 and an M.B.A. degree
from the University of Chicago in 1984. Karla Grant has served as portfolio
manager of the Horizon 20+, Horizon 10+ and Horizon 5 Portfolios since March
1998. Ms. Grant joined Scudder Kemper in November 1997 and is currently a vice
president of Scudder Kemper. Ms. Grant received a degree from
.
50
<PAGE> 53
William M. Knapp is the co-lead portfolio manager of the Value+Growth Portfolio
and has served as a manager or co-manager of the Portfolio since January 1997.
Philip S. Fortuna has served as the co-lead portfolio manager of the
Value+Growth Portfolio since March 1998 and Karla Grant has served as portfolio
manager of the Portfolio since March 1998. Biographical information regarding
Mr. Knapp, Mr. Fortuna and Ms. Grant appears above.
Tracy McCormick Chester is the lead portfolio manager of the Blue Chip Portfolio
and has served as portfolio manager of the Portfolio since its inception in May
1997. Steven Reynolds, Gary Langbaum and Maureen Lentz have served as portfolio
managers of the Blue Chip Portfolio since March 1998. Biographical information
regarding Ms. Chester, Mr. Reynolds, Mr. Langbaum and Ms. Lentz appears above.
Gordon K. Johns is the lead portfolio manager of the Global Income Portfolio and
has served as portfolio manager since May 1997. Mr. Johns joined ZIML in
September 1988 and is a managing director of ZIML. He received a B.A. in law
from Balliol College in Oxford, United Kingdom. Terence C. Prideaux and Pankaj
Shah have served as portfolio managers of the Global Income Portfolio since
March 1998. Mr. Prideaux joined ZIML in 1989 and is currently a director-fixed
income of ZIML. He received a B.A. in Law from Balliol College, Oxford, U.K. Mr.
Shah joined ZIML in 1997 and is currently a director-fixed income of
ZIML. He received a degree from .
David N. Dreman has been the portfolio manager of the High Return Equity and
Financial Services Portfolios since their inception. He is the Chairman of DVM.
Mr. Dreman is a pioneer of the philosophy of contrarian investing (buying what
is out of favor) and a leading proponent of the low P/E investment style. He is
a columnist for FORBES and the author of several books on the value style of
investing. He received a Bachelor of Commerce from the University of Manitoba,
Winnipeg, Manitoba, Canada.
Diego Espinosa is the lead portfolio manager of the Global Blue Chip Portfolio,
and he joined the investment manager in 1996. Mr. Espinosa is responsible for
development of the Portfolio's strategy and management of the Portfolio on a
daily basis. Mr. Espinosa has four years of direct investment experience as both
an analyst and a portfolio manager. Prior to that, he worked in commercial
banking for two years and as a management consultant for three years. William E.
Holzer, portfolio manager, also has day-to-day responsibility for the Global
Blue Chip Portfolio's worldwide strategy and investment themes. Mr. Holzer has
over 20 years' experience in global investing - first as an analyst and later as
a portfolio manager. He joined the investment manager in 1980. Nicholas Bratt,
portfolio manager, directs the Portfolio's overall global equity investment
strategies. Mr. Bratt joined the investment manager as a portfolio manager in
1976.
Sheridan Reilly is the lead portfolio manager of the International Growth and
Income Portfolio. Mr. Reilly joined the investment manager in 1995 and has over
10 years of experience as an international economic analyst in the financial
service industry where he developed strategies for global portfolios, currency
hedging, and foreign equity markets. Irene Cheng serves as portfolio manager for
the International Growth and Income Portfolio and she joined the investment
manager in 1993. Ms. Cheng, who has over 13 years of industry experience,
including five years as a portfolio manager, focuses on portfolio management and
research for the investment manager's international equity accounts.
FUND ACCOUNTING AGENT. Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of Scudder Kemper, is responsible for determining the daily net asset
value per share for each Portfolio and maintaining all accounting records
related thereto. Currently, SFAC receives no fee for its services to each
Portfolio other than the High Return Equity, Financial Services, Global Blue
Chip and International Growth and Income Portfolios; however, subject to Board
approval, at some time in the future, SFAC may seek payment for its services to
those Portfolios under its agreement with such Portfolios. SFAC charges a fee
for its services to the High Return Equity, Financial Services, Global Blue
Chip, and International Growth and Income Portfolios. See "Investment Manager
and Distributor - Fund Accounting Agent" in the Statement of Additional
Information for additional information.
51
<PAGE> 54
YEAR 2000 COMPLIANCE. Many computers currently are unable to correctly process
date-related information which spans the 21(st) century. The inability to
successfully address this issue could result in interruptions in a Portfolio's
business and have a material adverse effect on a Portfolio's operations. Scudder
Kemper and its affiliates have commenced a review of their computer-based
systems, as well as those of third party service providers, with a view toward
assessing whether or not the transition to the 21(st) century will have any
material impact on the ability of Scudder Kemper to conduct its business. The
process involves identifying the systems affected, monitoring the process of
system upgrades, as appropriate, against planned time lines, and developing
contingency plans in order to meet identified material risks.
CUSTODIAN AND TRANSFER AGENT. Investors Fiduciary Trust Company ("IFTC"), 801
Pennsylvania Avenue, Kansas City, Missouri 64105, as custodian, and State Street
Bank and Trust Company ("State Street"), 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodian, have custody of all securities and cash
of each Portfolio (other than the High Return Equity, Financial Services, Global
Blue Chip, and International Growth and Income Portfolios) maintained in the
United States; and The Chase Manhattan Bank, Chase MetroTech Center, Brooklyn,
New York 11245, as custodian, has custody of all securities and cash of such
Portfolios held outside the United States. State Street, as custodian, has
custody of all securities and cash of the High Return Equity and Financial
Services Portfolio. Brown Brothers Harriman & Co., as custodian, has custody of
all securities and cash of the Global Blue Chip and International Growth and
Income Portfolios. They attend to the collection of principal and income, and
payment for and collection of proceeds of securities bought and sold by those
Portfolios. IFTC is also the transfer agent and dividend-paying agent for each
Portfolio.
PORTFOLIO TRANSACTIONS. Scudder Kemper, ZIML and DVM place all orders for
purchases and sales of a Portfolio's securities. As described more fully under
"Portfolio Transactions" in the Statement of Additional Information, they may
consider sales of shares of the Fund and other funds managed by Scudder Kemper
or its affiliates or variable life insurance and variable annuity contracts
funded by the Fund as a factor in selecting broker-dealers.
Each Portfolio pays its respective fees and expenses of independent auditors,
counsel, custodian, the cost of reports and notices to owners of VLI and VA
contracts, brokerage commissions or transaction costs, taxes and registration
fees.
DISTRIBUTOR
Kemper Distributors, Inc. ("KDI"), 222 South Riverside Plaza, Chicago, Illinois
60606 an affiliate of Scudder Kemper, serves as distributor and principal
underwriter for the Fund pursuant to an underwriting agreement. KDI bears all
its expenses of providing services pursuant to the agreement. KDI provides for
the preparation of advertising or sales literature, and bears the cost of
printing and mailing prospectuses to persons other than shareholders. KDI bears
the cost of qualifying and maintaining the qualification of 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. KDI 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 service 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 that the Fund shall bear some or all of such expenses.
52
<PAGE> 55
KDI currently offers shares of each Portfolio of the Fund continuously to the
separate accounts of Participating Insurance Companies where permitted by
applicable law. The underwriting agreement provides that KDI accepts orders for
shares at net asset value, as no sales commission or load is charged. KDI has
made no firm commitment to acquire shares of the Fund.
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 KDI in the underwriting agreement.
53
<PAGE> 56
APPENDIX-- HIGH YIELD PORTFOLIO
PORTFOLIO COMPOSITION
The table below reflects the composition by quality rating of the investment
portfolio of the High Yield Portfolio. Percentages for the Portfolio reflect the
net asset weighted average of the percentage for each category on the last day
of each month in the 12 month period ended December 31, 1997. The table reflects
the percentage of net assets represented by fixed income securities rated by
Moody's or S&P, by non-rated fixed income securities and by other assets. The
percentage shown reflects the higher of the Moody's or S&P rating. U.S.
Government securities, whether or not rated, are reflected as Aaa and AAA
(highest quality). Cash equivalents include money market instruments, repurchase
agreements, net payables and receivables, U.S. Treasuries with a maturity of one
year or less and cash. Other assets include options, financial futures contracts
and equity securities. As noted under "Investment Objectives, Policies and Risk
Factors," the High Yield Portfolio invests in high yielding, fixed income
securities without relying upon published ratings. The allocations in the table
are not necessarily representative of the composition of the Portfolio at other
times. Portfolio composition will change over time.
END OF THE MONTH COMPOSITION OF PORTFOLIO BY QUALITY AS A PERCENTAGE OF
NET ASSETS (JANUARY 1997--DECEMBER 1997)
<TABLE>
<CAPTION>
HIGH
MOODY'S/S&P RATING YIELD GENERAL DESCRIPTION
OR OTHER CATEGORY PORTFOLIO OF BOND QUALITY
------------------ --------- -------------------
<S> <C> <C>
Cash Equivalents............................. 7%
Aaa/AAA...................................... 2 Highest quality
Aa/AA........................................ 0 High quality
A/A.......................................... 1 Upper medium grade
Baa/BBB...................................... 1 Medium grade
Ba/BB........................................ 15 Some speculative elements
B/B.......................................... 66 Speculative
Caa/CCC...................................... 3 More speculative
Ca/CC, C/C................................... 0 Very speculative
D............................................ 0 In default
Non-rated, Not in Default.................... 4
Non-rated, In Default........................ 0
Other Assets................................. 1
---
Net Assets................................... 100%
</TABLE>
The description of each bond quality category set forth in the table above is
intended to be a general guide and not a definitive statement as to how Moody's
and S&P define such rating category. A more complete description of the rating
categories is set forth under "Appendix--Ratings of Investments" in the
Statement of Additional Information. The ratings of Moody's and S&P represent
their opinions as to the quality of the securities that they undertake to rate.
It should be emphasized, however, that ratings are relative and subjective and
are not absolute standards of quality.
54
<PAGE> 57
INVESTORS FUND SERIES
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
LOCATION IN STATEMENT OF
ITEM NUMBER ADDITIONAL INFORMATION
OF FORM N-1A ------------------------
<S> <C> <C>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Inapplicable
13. Investment Objectives and Policies....... Investment Restrictions; Investment Policies and
Techniques; Appendix--Ratings of Investments
14. Management of the Fund................... Investment Manager and Distributor;
Officers and Trustees
15. Control Persons and Principal Holders of
Securities............................... Officers and Trustees
16. Investment Advisory and Other Services... Investment Manager and Distributor
17. Brokerage Allocation and Other
Practices................................ Portfolio Transactions; Investment Manager and
Distributor
18. Capital Stock and Other Securities....... Dividends and Taxes; Shareholder Rights
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Purchase and Redemption of Shares; Net Asset Value
20. Tax Status............................... Dividends and Taxes
21. Underwriters............................. Investment Manager and Distributor
22. Calculation of Performance Data.......... Inapplicable
23. Financial Statements..................... Financial Statements; Report of Independent Auditors;
Statement of Net Assets; Supplement to Statement of
Additional Information
</TABLE>
<PAGE> 58
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
INVESTORS FUND SERIES
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
1-800-778-1482
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the prospectus of Investors Fund Series (the "Fund") dated
May 1, 1998. The prospectus may be obtained without charge from the Fund.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Restrictions..................................... B-1
Investment Policies and Techniques.......................... B-10
Portfolio Transactions...................................... B-17
Investment Manager and Distributor.......................... B-20
Purchase and Redemption of Shares........................... B-24
Officers and Trustees....................................... B-24
Net Asset Value............................................. B-27
Dividends and Taxes......................................... B-29
Shareholder Rights.......................................... B-29
Report of Independent Auditors (April , 1998)............. B-31
Statement of Net Assets (April , 1998).................... B-32
Appendix--Ratings of Investments............................ B-33
</TABLE>
The financial statements appearing in the Fund's Annual Report for the fiscal
year ended December 31, 1997 are incorporated herein by reference. Such Report
accompanies this Statement of Additional Information.
ANN-13 5/98 (LOGO)printed on recycled paper
<PAGE> 59
INVESTMENT RESTRICTIONS
The Fund has adopted for each Portfolio, other than the High Return Equity,
Financial Services, Global Blue Chip, and International Growth and Income
Portfolios, certain fundamental investment restrictions which, together with the
investment objective and policies of each Portfolio, cannot be changed for a
Portfolio without approval by a majority of the outstanding voting shares of
that Portfolio. The fund has adopted certain fundamental investment restrictions
for the High Return Equity, Financial Services, Global Blue Chip, and
International Growth and Income Portfolios which, together with the investment
objective of each Portfolio, cannot be changed for a Portfolio without approval
by a majority of the outstanding voting shares of that Portfolio. As defined in
the Investment Company Act of 1940 ("1940 Act"), this means the lesser of the
vote of (a) 67% of the shares of a Portfolio present at a meeting where more
than 50% of the outstanding shares are present in person or by proxy or (b) more
than 50% of the outstanding shares of a Portfolio. In addition to the
fundamental investment restrictions, each Portfolio has certain non-fundamental
investment restrictions, which can be changed by the Board of Trustees without
shareholder approval.
The following fundamental investment restrictions apply to each of the Money
Market, Total Return, High Yield, Growth and Government Securities Portfolios
except as indicated to the contrary. The Portfolio may not:
(1) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government or its agencies or
instrumentalities) if, as a result, more than five percent (5%) of the
Portfolio's total assets would be invested in securities of that issuer.
For the High Yield Portfolio only, the restriction is as follows: "With
respect to 75% of the Portfolio's total assets, purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the Portfolio's total assets would be invested in the
securities of that issuer, or (b) the Portfolio would hold more than 10% of
the outstanding voting securities of that issuer."
(2) Except for the High Yield Portfolio, purchase more than ten percent
(10%) of any class of securities of any issuer. All debt securities and all
preferred stocks are each considered as one class.
(3) For the Money Market Portfolio only, enter into repurchase agreements
if, as a result thereof, more than ten percent (10%) of the Portfolio's
total assets valued at the time of the transaction would be subject to
repurchase agreements maturing in more than seven (7) days.
(4) Make loans to others (except the purchase of debt obligations or
repurchase agreements or by lending its Portfolio securities) in accordance
with its objective and policies.
(5) Borrow money except from a bank as a temporary measure for
extraordinary or emergency purposes and then only in an amount up to
one-third ( 1/3) of the value of its total assets, in order to meet
redemption requests without immediately selling any portfolio securities
(any such borrowings under this section will not be collateralized). If,
for any reason, the current value of the Portfolio's total assets falls
below an amount equal to three (3) times the amount of its indebtedness
from money borrowed, the Portfolio will reduce, within three (3) business
days, its indebtedness to the extent necessary. The Portfolio will not
borrow for leverage purposes. The Portfolio will not purchase any
investments while borrowings are outstanding.
(6) Make short sales of securities or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the
clearance of transactions; however, the Total Return, High Yield, Growth
and Government Securities Portfolios may make margin deposits in connection
with financial futures and options transactions.
(7) Concentrate more than 25% of a Portfolio's net assets in any one
industry; provided, however, that the Money Market Portfolio intends, under
normal conditions, to invest more than 25% of its net assets in
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instruments issued by banks in accordance with its investment objective and
policies. There is no limitation in respect to investments in obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
(8) For the Money Market Portfolio only, invest more than five percent (5%)
of the Portfolio's total assets in securities restricted as to disposition
under the Federal securities laws.
(9) Invest in commodities or commodity futures contracts, although it may
buy or sell financial futures contracts and options on such contracts; or
in real estate, although it may invest in securities which are secured by
real estate and securities of issuers which invest or deal in real estate;
provided that the Total Return, High Yield and Growth Portfolios may
purchase foreign currency on a spot basis (in cash).
(10) Purchase securities of other investment companies, except as permitted
under the 1940 Act including in connection with a merger, consolidation,
reorganization or acquisition of assets.
(11) Underwrite securities issued by others except to the extent the Fund
may be deemed to be an underwriter, under the Federal securities laws, in
connection with the disposition of portfolio securities.
(12) Issue senior securities except as permitted under the 1940 Act.
(13) For the Money Market Portfolio only, write, purchase or sell puts,
calls or combinations thereof.
(14) For the Total Return, High Yield and Growth Portfolios only, engage in
put or call option transactions; except it may write (sell) put or call
options on up to 25% of its net assets and may purchase put and call
options if no more than 5% of its net assets would be invested in premiums
on put and call options, combinations thereof or similar options; and it
may buy and sell options on financial futures contracts.
The following non-fundamental investment restrictions apply to each of the Money
Market, Total Return, High Yield, Growth and Government Securities Portfolios
except as indicated to the contrary. The Portfolio may not:
(1) Except for the Money Market Portfolio, invest more than 15% of its net
assets in illiquid securities.
(2) For the Money Market Portfolio only, invest more than 10% of its net
assets in illiquid securities.
(3) Invest for the purpose of exercising control or management of another
issuer.
The following fundamental investment restrictions apply to the International
Portfolio. The International Portfolio may not:
(1) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States or any foreign government or their
agencies or instrumentalities) if, as a result, more than 5% of the
Portfolio's total assets would be invested in securities of that issuer.
With respect to 75% of its assets, the Portfolio will limit its investments
in the securities of any one foreign government issuer to 5% of the
Portfolio's total assets.
(2) Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities. All debt securities are considered as one
class and all preferred stocks are considered as one class.
(3) Lend money provided that the making of time or demand deposits with
banks and the purchase of debt securities such as bonds, debentures,
commercial paper, repurchase agreements and short-term obligations in
accordance with its objective and policies are not prohibited.
(4) Borrow money except for temporary or emergency purposes (but not for
the purpose of purchase of investments) and then only in an amount not to
exceed 5% of the Portfolio's net assets; or pledge the Portfolio's
securities or receivables or transfer or assign or otherwise encumber them
in an amount exceeding the amount of the borrowing secured thereby.
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<PAGE> 61
(5) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the
clearance of transactions; however, the Portfolio may make margin deposits
in connection with financial futures and options transactions.
(6) Write or sell put or call options, combinations thereof or similar
options on more than 25% of the Portfolio's net assets; nor may it purchase
put or call options if more than 5% of the Portfolio's net assets would be
invested in premiums on put and call options, combinations thereof or
similar options; however, the Portfolio may buy or sell options on
financial futures contracts.
(7) Concentrate more than 25% of the value of its assets in any one
industry. Water, communications, electric and gas utilities shall each be
considered a separate industry. This limitation shall not apply to
obligations issued by the U.S. Government or its agencies or
instrumentalities.
(8) Invest in commodities or commodity futures contracts, although it may
buy or sell financial futures contracts and options on such contracts and
may enter into foreign currency transactions; or in real estate, although
it may invest in securities which are secured by real estate and securities
of issuers which invest or deal in real estate.
(9) Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization, or by purchase
in the open market of securities of closed-end investment companies where
no underwriter or dealer's commission or profit, other than customary
broker's commission, is involved and only if immediately thereafter not
more than (i) 3% of the total outstanding voting stock of such company is
owned by the Fund, (ii) 5% of the Fund's total assets would be invested in
any one such company, and (iii) 10% of the Fund's total assets would be
invested in such securities.
(10) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities. The Fund
may buy and sell securities outside the United States which are not
registered with the Securities and Exchange Commission or marketable in the
United States.
(11) Issue senior securities except as permitted under the 1940 Act.
The following non-fundamental investment restrictions apply to the International
Portfolio. The International Portfolio may not:
(1) Invest more than 15% of its net assets in illiquid securities.
(2) Invest for the purpose of exercising control or management of another
issuer.
The following fundamental investment restrictions apply to each of the Small Cap
Growth, Investment Grade Bond, Contrarian, Small Cap Value, Value+Growth and
Horizon Portfolios except as indicated to the contrary. The Portfolio may not:
(1) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its agencies or
instrumentalities) if, as a result, more than 5% of the Portfolio's total
assets would be invested in securities of that issuer; except that, for the
Contrarian and Small Cap Value Portfolios, up to 25% of each Portfolio's
total assets may be invested without regard to these limitations.
(2) Purchase more than 10% of the outstanding voting securities of any
issuer.
(3) Lend money or securities, provided that the making of time or demand
deposits with banks and the purchase of debt securities such as bonds,
debentures, commercial paper, repurchase agreements and short-term
obligations are not prohibited and the Portfolio may lend its portfolio
securities.
(4) Borrow money except from a bank as a temporary measure for
extraordinary or emergency purposes and then only in an amount up to
one-third ( 1/3) of the value of its total assets, in order to meet
redemption
B-3
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requests without immediately selling any portfolio securities (any such
borrowings under this section will not be collateralized). If, for any
reason, the current value of the Portfolio's total assets falls below an
amount equal to three (3) times the amount of its indebtedness from money
borrowed, the Portfolio will reduce, within three (3) business days, its
indebtedness to the extent necessary. The Portfolio will not borrow for
leverage purposes. The Portfolio will not purchase any investments while
borrowings are outstanding.
(5) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the
clearance of transactions; however, the Portfolio may make margin deposits
in connection with financial futures and options transactions.
(6) For the Small Cap Growth, Investment Grade Bond and Horizon Portfolios
only, write (sell) put or call options, combinations thereof or similar
options on more than 25% of the Portfolio's net assets; nor may the
Portfolio purchase put or call options if more than 5% of the Portfolio's
net assets would be invested in premiums on put and call options,
combinations thereof or similar options; however, the Portfolio may buy or
sell options on financial futures contracts.
(7) Concentrate 25% or more of the value of its assets in any one industry.
Water, communications, electric and gas utilities shall each be considered
a separate industry.
(8) Invest in commodities or commodity futures contracts, although it may
buy or sell financial futures contracts and options on such contracts; or
in real estate, although it may invest in securities which are secured by
real estate and securities of issuers which invest or deal in real estate.
(9) Underwrite securities issued by others except to the extent the Fund
may be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities.
(10) Issue senior securities except as permitted under the 1940 Act.
The following non-fundamental investment restrictions apply to each of the Small
Cap Growth, Investment Grade Bond, Contrarian, Small Cap Value, Value+Growth and
Horizon Portfolios except as indicated to the contrary. The Portfolio may not:
(1) Invest for the purpose of exercising control or management of another
issuer.
(2) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets, or
for the Contrarian, Small Cap Value and Horizon Portfolios, by purchase in
the open market of securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than customary broker's
commission, is involved and only if immediately thereafter not more than
(i) 3% of the total outstanding voting stock of such company is owned by
it, (ii) 5% of its total assets would be invested in any one such company,
and (iii) 10% of total assets would be invested in such securities.
(3) Invest more than 15% of its net assets in illiquid securities.
(4) For the Value+Growth Portfolio, write (sell) put or call options,
combinations thereof or similar options; nor may it purchase put or call
options if more than 5% of the Portfolio's net assets would be invested in
premiums on put and call options, combinations thereof or similar options;
however, the Portfolio may buy or sell options on financial futures
contracts.
(5) For the Contrarian and Small Cap Value Portfolios, write (sell) put or
call options, combinations thereof or similar options except that the
Portfolio may write covered call options on up to 100% of the Portfolio's
net assets and may write secured put options on up to 50% of the
Portfolio's net assets; nor may the Portfolio purchase put or call options;
however, the Portfolio may buy or sell options on financial futures
contracts.
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The Blue Chip Portfolio may not, as a fundamental policy:
(1) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities) if,
as a result, more than 5% of the total value of the Portfolio's assets
would be invested in securities of that issuer.
(2) Purchase more than 10% of any class of voting securities of any issuer.
(3) Make loans to others provided that the Portfolio may purchase debt
obligations or repurchase agreements, and it may lend its securities in
accordance with its investment objective and policies.
(4) Borrow money except as a temporary measure for extraordinary or
emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without
immediately selling any portfolio securities. If, for any reason, the
current value of the Portfolio's total assets falls below an amount equal
to three times the amount of its indebtedness from money borrowed, the
Portfolio will, within three days (not including Sundays and holidays),
reduce its indebtedness to the extent necessary. The Portfolio will not
borrow for leverage purposes and will not purchase securities or make
investments while borrowings are outstanding.
(5) Pledge, hypothecate, mortgage or otherwise encumber more than 15% of
its total assets and then only to secure borrowings permitted by
restriction number (4) above. (The collateral arrangements with respect to
options, financial futures and delayed delivery transactions and any margin
payments in connection therewith are not deemed to be pledges or other
encumbrances.)
(6) Purchase securities on margin, except to obtain such short-term credits
as may be necessary for the clearance of transactions; however, the
Portfolio may make margin deposits in connection with options and financial
futures transactions.
(7) Make short sales of securities or maintain a short position for the
account of the Portfolio unless at all times when a short position is open
it owns an equal amount of such securities or owns securities which,
without payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount to,
the securities sold short and unless not more than 10% of the Portfolio's
total assets is held as collateral for such sales at any one time.
(8) Write (sell) put or call options, combinations thereof or similar
options; nor may it purchase put or call options if more than 5% of the
Portfolio's net assets would be invested in premiums on put and call
options, combinations thereof or similar options; however, the Portfolio
may buy or sell options on financial futures contracts.
(9) Purchase securities (other than securities of the U.S. Government, its
agencies or instrumentalities) if as a result of such purchase 25% or more
of the Portfolio's total assets would be invested in any one industry.
(10) Invest in commodities or commodity futures contracts, although it may
buy or sell financial futures contracts and options on such contracts, and
engage in foreign currency transactions; or in real estate (including real
estate limited partnership interests), although it may invest in securities
which are secured by real estate and securities of issuers which invest or
deal in real estate.
(11) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities.
(12) Issue senior securities except as permitted under the Investment
Company Act of 1940.
The following non-fundamental restrictions apply to the Blue Chip Portfolio. The
Portfolio may not:
(i) Invest for the purpose of exercising control or management of another
issuer.
(ii) Invest more than 15% of its net assets in illiquid securities.
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<PAGE> 64
The Global Income Portfolio may not, as a fundamental policy:
(1) Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities) if,
as a result, more than 5% of the total value of the Portfolio's assets
would be invested in securities of that issuer except that, with respect to
50% of the Portfolio's total assets, the Portfolio may invest up to 25% of
its total assets in securities of any one issuer.
(2) Purchase more than 10% of any class of voting securities of any issuer.
(3) Make loans to others provided that the Portfolio may purchase debt
obligations or repurchase agreements and it may lend its securities in
accordance with its investment objective and policies.
(4) Borrow money except as a temporary measure for extraordinary or
emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without
immediately selling any portfolio securities. If, for any reason, the
current value of the Portfolio's total assets falls below an amount equal
to three times the amount of its indebtedness from money borrowed, the
Portfolio will, within three days (not including Sundays and holidays),
reduce its indebtedness to the extent necessary. The Portfolio will not
borrow for leverage purposes and will not purchase securities or make
investments while borrowings are outstanding.
(5) Pledge, hypothecate, mortgage or otherwise encumber more than 15% of
its total assets and then only to secure borrowings permitted by
restriction 4 above. (The collateral arrangements with respect to options,
financial futures and delayed delivery transactions and any margin payments
in connection therewith are not deemed to be pledges or other
encumbrances.)
(6) Purchase securities on margin, except to obtain such short-term credits
as may be necessary for the clearance of transactions; however, the
Portfolio may make margin deposits in connection with options and financial
futures transactions.
(7) Make short sales of securities or other assets or maintain a short
position for the account of the Portfolio unless at all times when a short
position is open it owns an equal amount of such securities or other assets
or owns securities which, without payment of any further consideration, are
convertible into or exchangeable for securities or other assets of the same
issue as, and equal in amount to, the securities or other assets sold short
and unless not more than 10% of the Portfolio's total assets is held as
collateral for such sales at any one time.
(8) Write or sell put or call options, combinations thereof or similar
options on more than 25% of the Portfolio's net assets; nor may the
Portfolio purchase put or call options if more than 5% of the Portfolio's
net assets would be invested in premiums on put and call options,
combinations thereof or similar options; however, the Portfolio may buy or
sell options on financial futures contracts.
(9) Purchase securities (other than securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities) if as a result of such
purchase 25% or more of the Portfolio's total assets would be invested in
any one industry.
(10) Invest in commodities or commodity futures contracts, although it may
buy or sell financial futures contracts and options on such contracts, and
engage in foreign currency transactions; or in real estate (including real
estate limited partnerships), although it may invest in securities which
are secured by real estate and securities of issuers which invest or deal
in real estate including real estate investment trusts.
(11) Underwrite securities issued by others except to the extent the
Portfolio may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities.
(12) Issue senior securities except as permitted under the Investment
Company Act of 1940.
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<PAGE> 65
The following non-fundamental restrictions apply to the Global Income Portfolio.
The Portfolio may not:
(i) Invest for the purpose of exercising control or management of
another issuer.
(ii) Invest more than 15% of its net assets in illiquid securities.
The High Return Equity Portfolio may not, as a fundamental policy:
(1) Purchase securities of any one issuer other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
(collectively "U.S. Government Securities") if immediately thereafter more
than 5% of its total assets would be invested in the securities of any one
issuer, or purchase more than 10% of an issuer's outstanding securities,
except that up to 25% of the Portfolio's total assets may be invested
without regard to these limitations.
(2) Borrow money or issue senior securities, except that the Portfolio may
borrow from banks for temporary purposes in amounts not in excess of 10% of
the value of its total assets at the time of such borrowing; or mortgage,
pledge, or hypothecate any assets except in connection with any such
borrowing in amounts not in excess of the lesser of the amount borrowed or
10% of the value of its total assets at the time of such borrowing;
provided that the Portfolio may enter into futures contracts and related
options as described in the prospectus. Optioned securities are not
considered to be pledged for purposes of this limitation.
(3) Purchase any securities which would cause more than 25% of the value of
its total assets at the time of purchase to be invested in the securities
of issuers conducting their principal activities in the same industry.
(4) Make loans, except that the Portfolio may lend securities it owns as
described herein and enter into repurchase agreements pursuant to its
investment objective and policies.
(5) Purchase securities on margin or make short sales of securities,
provided that the Portfolio may enter into futures contracts and related
options and make initial and variation margin deposits in connection
therewith.
(6) Purchase or sell commodities or commodity contracts, except futures
contracts and options thereon as stated in the prospectus, or invest in
oil, gas or mineral exploration or development programs, or in real estate
or mortgage loans provided that the Portfolio may, to the extent
appropriate to its investment objective, purchase publicly traded
securities of companies engaging in whole or in part in such activities.
(7) Engage in the business of underwriting securities issued by others,
except that the Portfolio may acquire securities which are subject to
restrictions on disposition ("restricted securities") within the meaning of
the Securities Act of 1933.
The following non-fundamental restrictions apply to the High Return Equity
Portfolio. The Portfolio may not:
(i) Invest for the purpose of exercising control over management of any
company.
(ii) Invest more than 10% of the value of its net assets in illiquid
securities, including restricted securities and repurchase agreements
with remaining maturities in excess of seven days, and other securities
for which market quotations are not readily available.
(iii) Invest its assets in securities of any investment company, except
by open market purchases, including an ordinary broker's commission, or
in connection with a merger, acquisition of assets, consolidation or
reorganization, and any investments in the securities of other
investment companies will be in compliance with the 1940 Act.
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<PAGE> 66
THE FINANCIAL SERVICES PORTFOLIO MAY NOT, AS A FUNDAMENTAL POLICY:
(1) Borrow money, except as permitted under the 1940 Act and as
interpreted or modified by regulatory authority having jurisdiction from
time to time.
(2) Issue senior securities, except as permitted under the 1940 Act and
as interpreted or modified by regulatory authority having jurisdiction,
from time to time.
(3) Purchase physical commodities or contracts relating to physical
commodities.
(4) Engage in the business of underwriting securities issued by others,
except to the extent that the Portfolio may be deemed to be an
underwriter in connection with the disposition of portfolio securities.
(5) Purchase or sell real estate, which term does not include securities
of companies which deal in real estate or mortgages or investments
secured by real estate or interests therein, except that the Portfolio
reserves freedom of action to hold and to sell real estate acquired as a
result of the Portfolio's ownership of securities.
(6) Make loans to other persons except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase agreements
and the purchase of debt instruments or interests in indebtedness in
accordance with the Portfolio's objective and policies may be deemed to
be loans. or
(7) Concentrate its investments in a particular industry, as that term
is used in the 1940 Act, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time, except that the
Portfolio may concentrate its investments in the financial services
industry.
THE FOLLOWING NON-FUNDAMENTAL RESTRICTIONS APPLY TO THE FINANCIAL SERVICES
PORTFOLIO. THE PORTFOLIO MAY NOT:
(i) Invest for the purpose of exercising control over management of any
company;
(ii) Invest its assets in securities of any investment company, except
by open market purchases, including an ordinary broker's commission, or
in connection with a merger, acquisition of assets, consolidation or
reorganization, and any investments in the securities of other
investment companies will be in compliance with the 1940 Act.
(iii) Invest more than 15% of the value of its net assets in illiquid
securities.
THE FOLLOWING FUNDAMENTAL INVESTMENT RESTRICTIONS APPLY TO EACH OF THE GLOBAL
BLUE CHIP AND INTERNATIONAL GROWTH AND INCOME PORTFOLIOS. EACH PORTFOLIO MAY
NOT:
(1) Borrow money, except as permitted under the 1940 Act and as
interpreted or modified by regulatory authority having jurisdiction from
time to time.
(2) Issue senior securities, except as permitted under the 1940 Act and
as interpreted or modified by regulatory authority having jurisdiction,
from time to time.
(3) Purchase physical commodities or contracts relating to physical
commodities.
(4) Engage in the business of underwriting securities issued by others,
except to the extent that a Portfolio may be deemed to be an underwriter
in connection with the disposition of portfolio securities.
(5) Purchase or sell real estate, which term does not include securities
of companies which deal in real estate or mortgages or investments
secured by real estate or interests therein, except that a Portfolio
reserves freedom of action to hold and to sell real estate acquired as a
result of the Portfolio's ownership of securities.
B-8
<PAGE> 67
(6) Make loans to other persons except (i) loans of portfolio
securities, and (ii) to the extent that entry into repurchase agreements
and the purchase of debt instruments or interests in indebtedness in
accordance with a Portfolio's investment objective and policies may be
deemed to be loans. or
(7) Concentrate its investments in a particular industry, as that term
is used in the 1940 Act, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
THE FOLLOWING NON-FUNDAMENTAL RESTRICTIONS APPLY TO THE GLOBAL BLUE CHIP AND
INTERNATIONAL GROWTH AND INCOME PORTFOLIOS. EACH PORTFOLIO MAY NOT:
(i) Borrow money in an amount greater than 5% of its total assets,
except (i) for temporary or emergency purposes and (ii) by engaging in
reverse repurchase agreements, dollar rolls, or other investments or
transactions described in the Portfolio's registration statement which
may be deemed to be borrowings.
(ii) Enter into either of reverse repurchase agreements or dollar rolls
in an amount greater than 5% of its total assets.
(iii) Purchase securities on margin or make short sales, except (a)
short sales against the box, (b) in connection with arbitrage
transactions, (c) for margin deposits in connection with futures
contracts, options or other permitted investments, (d) that transactions
in futures contracts and options shall not be deemed to constitute
selling securities short, and (e) that the Portfolio may obtain such
short-term credits as may be necessary for the clearance of securities
transactions.
(iv) Purchase options, unless the aggregate premiums paid on all such
options held by the Portfolio at any time do not exceed 20% of its total
assets; or sell put options, if as a result, the aggregate value of the
obligations underlying such put options would exceed 50% of its total
assets.
(v) Enter into futures contracts or purchase options thereon unless
immediately after the purchase, the value of the aggregate initial
margin with respect to such futures contracts entered into on behalf of
the Portfolio and the premiums paid for such options on futures
contracts does not exceed 5% of the fair market value of the Portfolio's
total assets; provided that in the case of an option that is in-the-
money at the time of purchase, the in-the-money amount may be excluded
in computing the 5% limit.
(vi) Purchase warrants if as a result, such securities, taken at the
lower of cost or market value, would represent more than 5% of the value
of the Portfolio's total assets (for this purchase, warrants acquired in
units or attached to securities will be deemed to have no value). and
(vii) For Global Blue Chip Portfolio: lend portfolio securities in an
amount greater than 5% of its total assets.
(viii) For International Growth and Income Portfolio: lend portfolio
securities in an amount greater than 33 1/3% of its total assets.
Except as specifically noted, if a percentage restriction is adhered to at the
time of investment, a later increase or decrease in percentage beyond the
specified limit resulting from a change in values or net assets will not be
considered a violation.
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INVESTMENT POLICIES AND TECHNIQUES
Each Portfolio except the Money Market Portfolio may engage in options and
futures transactions in accordance with its respective investment objectives and
policies and to the extent specified in the prospectus. Each such Portfolio
intends to engage in such transactions if it appears to the investment manager
to be advantageous to do so in order to pursue its objective and also to hedge
(i.e., protect) against the effects of market risks but not for speculative
purposes. The use of futures and options, and possible benefits and attendant
risks, are discussed below along with information about other investment
policies and techniques.
OPTIONS ON SECURITIES. A Portfolio may write (sell) "covered" call options on
securities as long as it owns the underlying securities subject to the option or
an option to purchase the same underlying securities, having an exercise price
equal to or less than the exercise price of the "covered" option, or will
establish and maintain with the Portfolio's custodian for the term of the option
a segregated account consisting of cash or other liquid securities ("eligible
securities") to the extent required by applicable regulation in connection with
the optioned securities. A Portfolio may write "covered" put options provided
that, so long as the Portfolio is obligated as a writer of a put option, the
Portfolio will own an option to sell the underlying securities subject to the
option, having an exercise price equal to or greater than the exercise price of
the "covered" option, or it will deposit and maintain with the custodian in a
segregated account eligible securities having a value equal to or greater than
the exercise price of the option. A call option gives the purchaser the right to
buy, and the writer the obligation to sell, the underlying security at the
exercise price during the option period. A put option gives the purchaser the
right to sell, and the writer has the obligation to buy, the underlying security
at the exercise price during the option period. The premium received for writing
an option will reflect, among other things, the current market price of the
underlying security, the relationship of the exercise price to such market
price, the price volatility of the underlying security, the option period,
supply and demand and interest rates. A Portfolio may write or purchase spread
options, which are options for which the exercise price may be a fixed dollar
spread or yield spread between the security underlying the option and another
security that is used as a bench mark. The exercise price of an option may be
below, equal to or above the current market value of the underlying security at
the time the option is written. The buyer of a put who also owns the related
security is protected by ownership of a put option against any decline in that
security's price below the exercise price less the amount paid for the option.
The ability to purchase put options allows the Portfolio to protect capital
gains in an appreciated security it owns, without being required to actually
sell that security. At times a Portfolio would like to establish a position in
securities upon which call options are available. By purchasing a call option,
the Portfolio is able to fix the cost of acquiring the security, this being the
cost of the call plus the exercise price of the option. This procedure also
provides some protection from an unexpected downturn in the market, because the
Portfolio is only at risk for the amount of the premium paid for the call option
which it can, if it chooses, permit to expire.
During the option period the covered call writer gives up the potential for
capital appreciation above the exercise price should the underlying security
rise in value, and the secured put writer retains the risk of loss should the
underlying security decline in value. For the covered call writer, substantial
appreciation in the value of the underlying security would result in the
security being "called away." For the secured put writer, substantial
depreciation in the value of the underlying security would result in the
security being "put to" the writer. If a covered call option expires
unexercised, the writer realizes a gain in the amount of the premium received.
If the covered call option writer has to sell the underlying security because of
the exercise of a call option, it realizes a gain or loss from the sale of the
underlying security, with the proceeds being increased by the amount of the
premium.
If a secured put option expires unexercised, the writer realizes a gain from the
amount of the premium, plus the interest income on the money market investment.
If the secured put writer has to buy the underlying security because of the
exercise of the put option, the secured put writer incurs an unrealized loss to
the extent that the current market value of the underlying security is less than
the exercise price of the put option. However, this
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would be offset in whole or in part by gain from the premium received and any
interest income earned on the money market investment.
OVER-THE-COUNTER OPTIONS. As indicated in the prospectus (see "Investment
Techniques -- Options and Financial Futures Transactions"), each Portfolio
except the Money Market, Contrarian, Small Cap Value and High Return Equity
Portfolios may deal in over-the-counter traded options ("OTC options"). OTC
options differ from exchange traded options in several respects. They are
transacted directly with dealers and not with a clearing corporation, and there
is a risk of nonperformance by the dealer as a result of the insolvency of such
dealer or otherwise, in which event a Portfolio may experience material losses.
However, in writing options the premium is paid in advance by the dealer. OTC
options are available for a greater variety of securities, and a wider range of
expiration dates and exercise prices, than are exchange traded options. Since
there is no exchange, pricing is normally done by reference to information from
market makers, which information is carefully monitored by the investment
manager and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it voluntarily only
by entering into a closing transaction. In the case of OTC options, there can be
no assurance that a continuous liquid secondary market will exist for any
particular option at any specific time. Consequently, a Portfolio may be able to
realize the value of an OTC option it has purchased only by exercising it or
entering into a closing sale with the dealer that issued it. Similarly, when a
Portfolio writes an OTC option, it generally can close out that option prior to
its expiration only by entering into a closing purchase transaction with the
dealer to which the Portfolio originally wrote it. If a covered call option
writer cannot effect a closing transaction, it cannot sell the underlying
security until the option expires or the option is exercised. Therefore, a
covered call option writer may not be able to sell an underlying security even
though it might otherwise be advantageous to do so. Likewise, a secured put
writer may be unable to sell the securities pledged to secure the put for other
investment purposes while it is obligated as a put writer. Similarly, a
purchaser of such put or call options might also find it difficult to terminate
its position on a timely basis in the absence of a secondary market.
The Fund understands the position of the staff of the Securities and Exchange
Commission ("SEC") to be that purchased OTC options and the assets used as
"cover" for written OTC options are illiquid securities. Procedures are in place
for each Portfolio for engaging in OTC options for the purpose of reducing any
potential adverse effect of such transactions upon the liquidity of the such
Portfolios. A brief description of such procedures is set forth below.
EACH PORTFOLIO OTHER THAN THE MONEY MARKET, CONTRARIAN, SMALL CAP VALUE, HIGH
RETURN EQUITY, FINANCIAL SERVICES, GLOBAL BLUE CHIP, AND INTERNATIONAL GROWTH
AND INCOME PORTFOLIOS
A Portfolio will only engage in OTC options transactions with dealers that have
been specifically approved by the Fund's investment manager pursuant to
procedures adopted by the Board of Trustees of the Fund. The Fund's investment
manager believes that the approved dealers should be able to enter into closing
transactions if necessary and, therefore, present minimal credit risks to a
Portfolio. The investment manager will monitor the creditworthiness of the
approved dealers on an on-going basis. A Portfolio currently will not engage in
OTC options transactions if the amount invested by the Portfolio in OTC options,
plus a "liquidity charge" related to OTC options written by the Portfolio, plus
the amount invested by the Portfolio in illiquid securities, would exceed 15% of
the Portfolio's net assets. The "liquidity charge" referred to above is computed
as described below.
The Fund anticipates entering into agreements with dealers to which a Portfolio
sells OTC options. Under these agreements a Portfolio would have the absolute
right to repurchase the OTC options from the dealer at any time at a price no
greater than a price established under the agreements (the "Repurchase Price").
The "liquidity charge" referred to above for a specific OTC option transaction
will be the Repurchase Price related to the OTC option less the intrinsic value
of the OTC option. The intrinsic value of an OTC call option for such purposes
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will be the amount by which the current market value of the underlying security
exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value
of the underlying security. If there is no such agreement requiring a dealer to
allow the Portfolio to repurchase a specific OTC option written by the
Portfolio, the "liquidity charge" will be the current market value of the assets
serving as "cover" for such OTC option.
FINANCIAL SERVICES, GLOBAL BLUE CHIP, AND INTERNATIONAL GROWTH AND INCOME
PORTFOLIOS
OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. A
Portfolio will only sell OTC options that are subject to a buy-back provision
permitting the Portfolio to require the Counterparty to sell the option back to
the Portfolio at a formula price within seven days. The Portfolio expects
generally to enter into OTC options that have cash settlement provisions,
although it is not required to do so.
Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, or other instrument underlying an OTC option it
has entered into with the Portfolio or fails to make a cash settlement payment
due in accordance with the terms of that option, the Portfolio will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the investment manager must assess the
creditworthiness of each such Counterparty or any guarantor or credit
enhancement of the Counterparty's credit to determine the likelihood that the
terms of the OTC option will be satisfied. A Portfolio will engage in OTC option
transactions only with U.S. government securities dealers recognized by the
Federal Reserve Bank of New York as "primary dealers" or broker/dealers,
domestic or foreign banks or other financial institutions which have received
(or the guarantors of the obligation of which have received) a short-term credit
rating of A-1 from S&P or P-1 from Moody's or an equivalent rating from any
nationally recognized statistical rating organization ("NRSRO").
OPTIONS ON SECURITIES INDICES. The Portfolios, as part of their options
transactions, may also use options on securities indices in an attempt to hedge
against market conditions affecting the value of securities that the Portfolio
owns or intends to purchase, and not for speculation. Through the writing or
purchase of index options, a Portfolio can achieve many of the same objectives
as through the use of options on individual securities. Options on securities
indices are similar to options on a security except that, rather than the right
to take or make delivery of a security at a specified price, an option on a
securities index gives the holder the right to receive, upon exercise of the
option, an amount of cash if the closing level of the securities index upon
which the option is based is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. This amount of cash is
equal to such difference between the closing price of the index and the exercise
price of the option. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. Unlike security options, all
settlements are in cash and gain or loss depends on price movements in the
market generally (or in a particular industry or segment of the market) rather
than price movements in individual securities. Price movements in securities
that the Fund owns or intends to purchase probably will not correlate perfectly
with movements in the level of an index since the prices of such securities may
be affected by somewhat different factors and, therefore, a Portfolio bears the
risk that a loss on an index option would not be completely offset by movements
in the price of such securities.
When a Portfolio writes an option on a securities index, it will be required to
deposit with its custodian and mark-to-market eligible securities to the extent
required by applicable regulation. In addition, where the Portfolio writes a
call option on a securities index at a time when the contract value exceeds the
exercise price, the Portfolio will segregate and mark-to-market, until the
option expires or is closed out, cash or cash equivalents equal in value to such
excess.
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A Portfolio may also purchase and sell options on other appropriate indices, as
available, such as foreign currency indices. Options on futures contracts and
index options involve risks similar to those risks relating to transactions in
financial futures contracts described below. Also, an option purchased by a
Portfolio may expire worthless, in which case the Portfolio would lose the
premium paid therefor.
FINANCIAL FUTURES CONTRACTS. The Portfolios may enter into financial futures
contracts for the future delivery of a financial instrument, such as a security,
or an amount of foreign currency, or the cash value of a securities index. This
investment technique is designed primarily to hedge (i.e. protect) against
anticipated future changes in market conditions or foreign exchange rates which
otherwise might affect adversely the value of securities or other assets which
the Portfolio holds or intends to purchase. A "sale" of a futures contract means
the undertaking of a contractual obligation to deliver the securities or the
cash value of an index or foreign currency called for by the contract at a
specified price during a specified delivery period. A "purchase" of a futures
contract means the undertaking of a contractual obligation to acquire the
securities or cash value of an index or foreign currency at a specified price
during a specified delivery period. At the time of delivery, in the case of
fixed income securities pursuant to the contract, adjustments are made to
recognize differences in value arising from the delivery of securities with a
different interest rate than that specified in the contract. In some cases,
securities called for by a futures contract may not have been issued at the time
the contract was written.
Although some futures contracts by their terms call for the actual delivery or
acquisition of securities or other assets, in most cases a party will close out
the contractual commitment before delivery of the underlying assets by
purchasing (or selling, as the case may be) on a commodities exchange an
identical futures contract calling for delivery in the same month. Such a
transaction, if effected through a member of an exchange, cancels the obligation
to make or take delivery of the underlying securities or other assets. All
transactions in the futures market are made, offset or fulfilled through a
clearing house associated with the exchange on which the contracts are traded. A
Portfolio will incur brokerage fees when it purchases or sells contracts, and
will be required to maintain margin deposits. At the time a Portfolio enters
into a futures contract, it is required to deposit with its custodian, on behalf
of the broker, a specified amount of cash or eligible securities, called
"initial margin." The initial margin required for a futures contract is set by
the exchange on which the contract is traded. Subsequent payments, called
"variation margin," to and from the broker are made on a daily basis as the
market price of the futures contract fluctuates. The costs incurred in
connection with futures transactions could reduce the Portfolio's return.
Futures contracts entail risks. If the investment manager's judgment about the
general direction of markets or exchange rates is wrong, the overall performance
may be poorer than if no contracts had been entered into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio assets being hedged. In addition, the market prices of
futures contracts may be affected by certain factors. If participants in the
futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the assets and futures markets could result. Price
distortions could also result if investors in futures contracts decide to make
or take delivery of underlying securities or other assets rather than engage in
closing transactions because of the resultant reduction in the liquidity of the
futures market. In addition, because, from the point of view of speculators, the
margin requirements in the futures markets are less onerous than margin
requirements in the cash market, increased participation by speculators in the
futures market could cause temporary price distortions. Due to the possibility
of price distortions in the futures market and because of the imperfect
correlation between movements in the prices of securities or other assets and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment manager may still not result in a successful hedging
transaction. If any of these events should occur, the Portfolio could lose money
on the financial futures contracts and also on the value of its portfolio
assets.
OPTIONS ON FINANCIAL FUTURES CONTRACTS. The Portfolios may purchase and write
call and put options on financial futures contracts. An option on a futures
contract gives the purchaser the right, in return for the premium paid, to
assume a position in a futures contract at a specified exercise price at any
time during the
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period of the option. Upon exercise, the writer of the option delivers the
futures contract to the holder at the exercise price. The Portfolio would be
required to deposit with its custodian initial margin and maintenance margin
with respect to call and put options on futures contracts written by it. A
Portfolio will establish segregated accounts or will provide cover with respect
to written options on financial futures contracts in a manner similar to that
described under "Options on Securities." Options on futures contracts involve
risks similar to those risks relating to transactions in financial futures
contracts described above. Also, an option purchased by a Portfolio may expire
worthless, in which case the Portfolio would lose the premium paid therefor.
DELAYED DELIVERY TRANSACTIONS. The Total Return, High Yield, Growth, Government
Securities, Investment Grade Bond, Horizon, Global Income, Financial Services,
Global Blue Chip, and International Growth and Income Portfolios may purchase or
sell portfolio securities on a when-issued or delayed delivery basis. When-
issued or delayed delivery transactions arise when securities are purchased by
the Portfolio with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price and yield to the Portfolio
at the time of entering into the transaction. When the Portfolio enters into a
delayed delivery transaction, it becomes obligated to purchase securities and it
has all of the rights and risks attendant to ownership of a security, although
delivery and payment occur at a later date. The value of fixed income securities
to be delivered in the future will fluctuate as interest rates vary. At the time
a Portfolio makes the commitment to purchase a security on a when-issued or
delayed delivery basis, it will record the transaction and reflect the liability
for the purchase and the value of the security in determining its net asset
value. Likewise, at the time a Portfolio makes the commitment to sell a security
on a delayed delivery basis, it will record the transaction and include the
proceeds to be received in determining its net asset value; accordingly, any
fluctuations in the value of the security sold pursuant to a delayed delivery
commitment are ignored in calculating net asset value so long as the commitment
remains in effect. The Portfolio generally has the ability to close out a
purchase obligation on or before the settlement date, rather than take delivery
of the security.
To the extent the Portfolio engages in when-issued or delayed delivery
transactions, it will do so for the purpose of acquiring portfolio securities
consistent with the Portfolio's investment objective and policies. The Portfolio
will only make commitments to purchase securities on a when-issued or delayed
delivery basis with the intention of actually acquiring the securities, but the
Portfolio reserves the right to sell these securities before the settlement date
if deemed advisable.
REGULATORY RESTRICTIONS. To the extent required to comply with applicable
regulation, when purchasing a futures contract, writing a put option or entering
into a delayed delivery purchase or a forward currency exchange purchase, a
Portfolio will maintain eligible securities in a segregated account. A Portfolio
will use cover in connection with selling a futures contract.
A Portfolio will not engage in transactions in financial futures contracts or
options thereon for speculation, but only to attempt to hedge against changes in
interest rates or market conditions affecting the value of securities which the
Portfolio holds or intends to purchase.
FOREIGN CURRENCY OPTIONS. The Total Return, High Yield, Growth, International,
Small Cap Growth, Investment Grade Bond, Value+Growth, Horizon, Blue Chip,
Global Income, Financial Services, Global Blue Chip, and International Growth
and Income Portfolios may engage in foreign currency options transactions. A
foreign currency option provides the option buyer with the right to buy or sell
a stated amount of foreign currency at the exercise price at a specified date or
during the option period. A call option gives its owner the right, but not the
obligation, to buy the currency, while a put option gives its owner the right,
but not the obligation, to sell the currency. The option seller (writer) is
obligated to fulfill the terms of the option sold if it is exercised. However,
either seller or buyer may close its position during the option period in the
secondary market for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a put
rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect the Portfolio against an adverse
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movement in the value of a foreign currency, it does not limit the gain which
might result from a favorable movement in the value of such currency. For
example, if a Portfolio were holding securities denominated in an appreciating
foreign currency and had purchased a foreign currency put to hedge against a
decline in the value of the currency, it would not have to exercise its put.
Similarly, if the Portfolio had entered into a contract to purchase a security
denominated in a foreign currency and had purchased a foreign currency call to
hedge against a rise in value of the currency but instead the currency had
depreciated in value between the date of purchase and the settlement date, the
Portfolio would not have to exercise its call but could acquire in the spot
market the amount of foreign currency needed for settlement.
FOREIGN CURRENCY FUTURES TRANSACTIONS. As part of their financial futures
transactions (see "Financial Futures Contracts" and "Options on Financial
Futures Contracts" above), the Total Return, High Yield, Growth, International,
Small Cap Growth, Investment Grade Bond, Value+Growth, Horizon, Blue Chip,
Global Income, Financial Services, Global Blue Chip, and International Growth
and Income Portfolios may use foreign currency futures contracts and options on
such futures contracts. Through the purchase or sale of such contracts, a
Portfolio may be able to achieve many of the same objectives as through forward
foreign currency exchange contracts more effectively and possibly at a lower
cost.
Unlike forward foreign currency exchange contracts, foreign currency futures
contracts and options on foreign currency futures contracts are standardized as
to amount and delivery period and are traded on boards of trade and commodities
exchanges. It is anticipated that such contracts may provide greater liquidity
and lower cost than forward foreign currency exchange contracts.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Total Return, High Yield,
Growth, International, Small Cap Growth, Investment Grade Bond, Value+Growth,
Horizon, Blue Chip, Global Income, Financial Services, Global Blue Chip,
International Growth and Income Portfolios may engage in forward foreign
currency transactions. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days ("term") from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. These contracts are
traded directly between currency traders (usually large commercial banks) and
their customers. The investment manager believes that it is important to have
the flexibility to enter into such forward contracts when it determines that to
do so is in the best interest of a Portfolio. A Portfolio will not speculate in
foreign currency exchange.
If a Portfolio retains the portfolio security and engages in an offsetting
transaction with respect to a forward contract, the Portfolio will incur a gain
or a loss (as described below) to the extent that there has been movement in
forward contract prices. If a Portfolio engages in an offsetting transaction, it
may subsequently enter into a new forward contract to sell the foreign currency.
Should forward prices decline during the period between a Portfolio's entering
into a forward contract for the sale of foreign currency and the date when it
enters into an offsetting contract for the purchase of the foreign currency, the
Portfolio would realize a gain to the extent the price of the currency it has
agreed to sell exceeds the price of the currency it has agreed to purchase.
Should forward prices increase, the Portfolio would suffer a loss to the extent
the price of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell. Although such contracts tend to minimize the
risk of loss due to a decline in the value of the hedged currency, they also
tend to limit any potential gain that might result should the value of such
currency increase. A Portfolio may have to convert its holdings of foreign
currencies into U.S. Dollars from time to time in order to meet such needs as
Portfolio expenses and redemption requests. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which they are buying and
selling various currencies.
The returns available from foreign currency denominated debt instruments can be
adversely affected by changes in exchange rates. The investment manager believes
that the use of foreign currency hedging techniques, including "cross-hedges"
for the International, Global Income, Financial Services, Global Blue Chip, and
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International Growth and Income Portfolios, can help protect against declines in
the U.S. Dollar value of income available for distribution to shareholders, and
against declines in the net asset value of a Portfolio's shares resulting from
adverse changes in currency exchange rates. For example, the return available
from securities denominated in a particular foreign currency would diminish if
the value of the U.S. Dollar increased against that currency. Such a decline
could be partially or completely offset by the increased value of a cross-hedge
involving a forward foreign currency exchange contract to sell a different
foreign currency, if that contract were available on terms more advantageous to
the Portfolio than a contract to sell the currency in which the position being
hedged is denominated. The investment manager believes that cross-hedges can
therefore provide significant protection of net asset value in the event of a
general rise in the U.S. Dollar against foreign currencies. However, a
cross-hedge cannot provide assured protection against exchange rate risks and,
if the investment manager misjudges future exchange rate relationships, the
Portfolio could be in a less advantageous position than if such a hedge had not
been established.
A Portfolio will not enter into forward contracts or maintain a net exposure in
such contracts when the Portfolio would be obligated to deliver an amount of
foreign currency in excess of the value of the Portfolio's securities or other
assets (a) denominated in that currency or (b), in the case of a "cross-hedge"
(see "Investment Objectives, Policies and Risk Factors" in the prospectus),
denominated in a currency or currencies that the investment manager believes
will have price movements that tend to correlate closely with that currency. The
investment manager will normally seek to select currencies for sale under a
forward contract for a "cross-hedge" that would reflect a price movement
correlation of .8 or higher with respect to the currency being hedged (1
reflects a perfect correlation, 0 reflects a random relationship and -1 reflects
a diametrically opposite correlation). There is, of course, no assurance that
any specific correlation can be maintained for any specific transaction. See
"Foreign Currency Transactions" under "Investment Techniques" in the prospectus.
The Portfolio's custodian bank segregates eligible securities to the extent
required by applicable regulation in connection with forward foreign currency
exchange contracts entered into for the purchase of foreign currency. If the
value of the securities segregated declines, additional cash or securities are
added so that the segregated amount is not less than the amount of the
Portfolio's commitments with respect to such contracts. The Portfolios currently
do not intend to enter into such forward contracts if they would have more than
15% of the value of their total assets committed to such contracts, except that
there is no limit as to the percentage of assets that the Global Income,
Financial Services, Global Blue Chip, and International Growth and Income
Portfolios intend to commit to such forward contracts. A Portfolio generally
will not enter into a forward contract with a term longer than one year.
COLLATERALIZED OBLIGATIONS. A Portfolio will currently invest in only those
collateralized obligations that are fully collateralized and that meet the
quality standards otherwise applicable to the Portfolio's investments. Fully
collateralized means that the collateral will generate cash flows sufficient to
meet obligations to holders of the collateralized obligations under even the
most conservative prepayment and interest rate projections. Thus, the
collateralized obligations are structured to anticipate a worst case prepayment
condition and to minimize the reinvestment rate risk for cash flows between
coupon dates for the collateralized obligations. A worst case prepayment
condition generally assumes immediate prepayment of all securities purchased at
a premium and zero prepayment of all securities purchased at a discount.
Reinvestment rate risk may be minimized by assuming very conservative
reinvestment rates and by other means such as by maintaining the flexibility to
increase principal distributions in a low interest rate environment. The
effective credit quality of the collateralized obligations in such instances is
the credit quality of the issuer of the collateral. The requirements as to
collateralization are determined by the issuer or sponsor of the collateralized
obligation in order to satisfy rating agencies, if rated. None of the Portfolios
currently intends to invest more than 5% of its total assets in collateralized
obligations that are collateralized by a pool of credit card or automobile
receivables or other types of assets rather than a pool of mortgages,
mortgage-backed securities or U.S. Government securities. Currently, none of the
Portfolios intends to invest more than 5% of its net assets in inverse floaters
as described in the prospectus (see "Investment Techniques--Collateralized
Obligations"). The Money Market Portfolio does not invest in inverse floaters.
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Payments of principal and interest on the underlying collateral securities are
not passed through directly to the holders of the collateralized obligations as
such. Collateralized obligations often are issued in two or more classes with
varying maturities and stated rates of interest. Because interest and principal
payments on the underlying securities are not passed through directly to holders
of collateralized obligations, such obligations of varying maturities may be
secured by a single portfolio or pool of securities, the payments on which are
used to pay interest on each class and to retire successive maturities in
sequence. These relationships may in effect "strip" the interest payments from
principal payments of the underlying securities and allow for the separate
purchase of either the interest or the principal payments, sometimes called
interest only ("IO") and principal only ("PO") securities. Collateralized
obligations are designed to be retired as the underlying securities are repaid.
In the event of prepayment on or call of such securities, the class of
collateralized obligation first to mature generally will be paid down first.
Therefore, although in most cases the issuer of collateralized obligations will
not supply additional collateral in the event of such prepayment, there will be
sufficient collateral to secure collateralized obligations that remain
outstanding. It is anticipated that no more than 5% of a Portfolio's net assets
will be invested in IO and PO securities. Governmentally-issued and
privately-issued IO's and PO's will be considered illiquid for purposes of a
Portfolio's limitation on illiquid securities, however, the Board of Trustees
may adopt guidelines under which governmentally-issued IO's and PO's may be
determined to be liquid.
In reliance on an interpretation by the SEC, a Portfolio's investments in
certain qualifying collateralized obligations are not subject to the limitations
in the 1940 Act regarding investments by a registered investment company, such
as a Portfolio, in another investment company.
ZERO COUPON GOVERNMENT SECURITIES. Subject to its investment objective and
policies, a Portfolio may invest in zero coupon U.S. Government securities. Zero
coupon bonds are purchased at a discount from the face amount. The buyer
receives only the right to receive a fixed payment on a certain date in the
future and does not receive any periodic interest payments. These securities may
include those created directly by the U.S. Treasury and those created as
collateralized obligations through various proprietary custodial, trust or other
relationships. The effect of owning instruments which do not make current
interest payments is that a fixed yield is earned not only on the original
investment but also, in effect, on all discount accretion during the life of the
obligations. This implicit reinvestment of earnings at the same rate eliminates
the risk of being unable to reinvest distributions at a rate as high as the
implicit yield on the zero coupon bond, but at the same time eliminates any
opportunity to reinvest earnings at higher rates. For this reason, zero coupon
bonds are subject to substantially greater price fluctuations during periods of
changing market interest rates than those of comparable securities that pay
interest currently, which fluctuation is greater as the period to maturity is
longer. Zero coupon bonds created as collateralized obligations are similar to
those created through the U.S. Treasury, but the former investments do not
provide absolute certainty of maturity or of cash flows after prior classes of
the collateralized obligations are retired. No Portfolio currently intends to
invest more than 5% of its net assets in zero coupon U.S. Government securities
during the current year.
PORTFOLIO TRANSACTIONS
BROKERAGE -- SCUDDER KEMPER
Allocation of brokerage is supervised by Scudder Kemper Investments, Inc.
("Scudder Kemper").
The primary objective of Scudder Kemper and Zurich Investment Management Limited
("ZIML") (each an "investment manager" and collectively, the "investment
managers") in placing orders for the purchase and sale of securities for a
Portfolio is to obtain the most favorable net results taking into account such
factors as price, commission where applicable, size of order, difficulty of
execution and skill required of the executing broker/dealer. The investment
managers seek to evaluate the overall reasonableness of brokerage commissions
paid (to the extent applicable) through their familiarity with commissions
charged on compatible transactions, as well as by
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comparing commissions paid by a Portfolio to reported commissions paid by
others. The investment managers review on a routine basis commission rates,
execution and settlement services performed, making internal and external
comparisons.
Each Portfolio's purchases and sales of fixed-income securities are generally
placed by the investment manager with primary market makers for these securities
on a net basis, without any brokerage commission being paid by a Portfolio.
Trading does, however, involve transaction costs. Transactions with dealers
serving as primary market makers reflect the spread between the bid and asked
prices. Purchases of underwritten issues may be made, which will include an
underwriting fee paid to the underwriter.
When it can be done consistently with the policy of obtaining the most favorable
net results, it is the investment managers' practice to place such orders with
broker/dealers who supply research, market and statistical information to a
Portfolio. The term "research, market and statistical information" includes
advice as to the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or purchasers
or sellers of securities; and analyses and reports concerning issuers,
industries, securities, economic factors and trends, portfolio strategy and the
performance of accounts. The investment managers are authorized when placing
portfolio transactions for a Portfolio to pay a brokerage commission in excess
of that which another broker might charge for executing the same transaction
solely on account of the receipt of research, market or statistical information.
In effecting transactions in over-the-counter securities, orders are placed with
the principal market makers for the security being traded unless, after
exercising care, it appears that more favorable results are available elsewhere.
In selecting among firms believed to meet the criteria for handling a particular
transaction, the investment manager may give consideration to those firms that
have sold or are selling shares of a fund managed by Scudder Kemper.
To the maximum extent feasible, it is expected that the investment managers will
place orders for portfolio transactions through Scudder Investor Services, Inc.
("SIS"), a corporation registered as a broker-dealer and a subsidiary of Scudder
Kemper; SIS will place orders on behalf of the Portfolios with issuers,
underwriters or other brokers and dealers. SIS will not receive any commission,
fee or other remuneration from the Portfolios for this service.
Although certain research, market and statistical information from
broker/dealers may be useful to a Portfolio and to the investment managers, it
is the opinion of the investment managers that such information only supplements
their own research effort since the information must still be analyzed, weighed
and reviewed by the investment manager's staff. Such information may be useful
to the investment manager in providing services to clients other than the
Portfolios and not all such information is used by the investment manager in
connection with the Portfolios. Conversely, such information provided to the
investment manager by broker/dealers through whom other clients of the
investment manager effect securities transactions may be useful to the
investment manager in providing services to a Portfolio.
The Trustees for the Fund review from time to time whether the recapture for the
benefit of a Portfolio of some portion of the brokerage commissions or similar
fees paid by a Portfolio on portfolio transactions is legally permissible and
advisable.
Each Portfolio's average portfolio turnover rate is the ratio of the lesser of
sales or purchases to the monthly average value of the portfolio securities
owned during the year, excluding all securities with maturities or expiration
dates at the time of acquisition of one year or less. A higher rate involves
greater brokerage transaction expenses to a Portfolio and may result in the
realization of net capital gains, which would be taxable to shareholders when
distributed. Purchases and sales are made for a Portfolio whenever necessary, in
management's opinion, to meet a Portfolio's objective.
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<PAGE> 77
BROKERAGE--DVM
Under the sub-advisory agreement between Scudder Kemper and Dreman Value
Management, L.L.C. ("DVM"), DVM places all orders for purchases and sales of the
High Return Equity and Financial Services Portfolios' securities. At times
investment decisions may be made to purchase or sell the same investment
securities of a Portfolio and for one or more of the other clients managed by
DVM. 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.
Position limits imposed by national securities exchanges may restrict the number
of options the Portfolio will be able to write on a particular security.
The above mentioned factors may have a detrimental effect on the quantities or
prices of securities, options or future contracts available to the Portfolio. On
the other hand, the ability of the Portfolio to participate in volume
transactions may produce better executions for the Portfolio in some cases. The
Board of Trustees believes that the benefits of DVM's organization outweigh any
limitations that may arise from simultaneous transactions or position
limitations.
DVM, in effecting purchases and sales of portfolio securities for the account of
the Portfolio, will implement the Portfolio's policy of seeking best execution
of orders. DVM 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 Portfolio and DVM. 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 DVM. In selecting among firms believed
to meet the criteria for handling a particular transaction, DVM may give
consideration to those firms that have sold or are selling shares of the
Portfolio and of other funds managed by Scudder Kemper and its affiliates, as
well as to those firms that provide market, statistical and other research
information to the Portfolio and DVM, although DVM is not authorized to pay
higher commissions to firms that provide such services, except as described
below.
DVM 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
products or services in accordance with the anticipated research and
non-research uses and the cost attributable to non-research use is paid by DVM
in cash. Subject to Section 28(e) and procedures adopted by the Board of
Trustees, the Portfolio could pay a firm that provides research services
commissions for effecting a securities transaction for the Portfolio in excess
of the amount other firms would have charged for the transaction if DVM
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 DVM's overall
responsibilities to the Portfolio and other clients. Not all of such research
services may be useful or of value in advising the Portfolio. Research benefits
will be available for all clients of DVM. The sub-advisory fee paid by Scudder
Kemper to DVM is not reduced because these research services are received.
B-19
<PAGE> 78
BROKERAGE COMMISSIONS
The table below shows total brokerage commissions paid by each Portfolio (other
than the High Return Equity, Financial Services, Global Blue Chip, and
International Growth and Income Portfolios, which commenced operations on May 1,
1998) then existing for the last three fiscal years and, for the most recent
fiscal year, the percentage thereof that was allocated to firms based upon
research information provided.
<TABLE>
<CAPTION>
ALLOCATED TO FIRMS
BASED ON RESEARCH
PORTFOLIO FISCAL 1997 IN FISCAL 1997 FISCAL 1996 FISCAL 1995
--------- ----------- ------------------ ----------- -----------
<S> <C> <C> <C> <C>
Money Market............................... $ 0 0% $ 0 $ 0
Total Return............................... $1,512,000 73% $1,562,000 $1,613,000
High Yield................................. $3,627,000 0% $2,567,000 $1,758,000
Growth..................................... $1,936,000 85% $1,782,000 $1,066,000
Government Securities...................... $ 16,000 0% $ 20,000 $ 15,000
International.............................. $ 747,000 85% $ 936,000 $ 941,000
Small Cap Growth........................... $2,658,000 98% $ 787,000 $ 245,000
Investment Grade Bond...................... $ 31,000 0% $ 6,000** --
Contrarian................................. $ 92,000 96% $ 26,000** --
Small Cap Value............................ $ 31,000 92% $ 50,000** --
Value+Growth............................... $ 97,000 90% $ 15,000** --
Horizon 20+................................ $ 35,000 90% $ 5,000** --
Horizon 10+................................ $ 37,000 88% $ 6,000** --
Horizon 5.................................. $ 17,000 90% $ 2,000** --
Blue Chip.................................. $ 31,000*** 92% -- --
Global Income.............................. $ 0*** 0% -- --
</TABLE>
- ---------------
* Commencement of Operations on May 1, 1994 through December 31, 1994
** Commencement of Operations on May 1, 1996 through December 31, 1996.
*** Commencement of Operations on May 1, 1997 through December 31, 1997.
INVESTMENT MANAGER AND DISTRIBUTOR
INVESTMENT MANAGER. Scudder Kemper is investment manager for each Portfolio.
Scudder Kemper is approximately 70% owned by 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. The balance of Scudder Kemper is owned by
Scudder Kemper's officers and employees. Pursuant to an investment management
agreement, Scudder Kemper acts as investment manager to each Portfolio, manages
its investments, administers its business affairs, furnishes office facilities
and equipment, provides clerical and administrative services, and permits any of
its officers or employees to serve without compensation as trustees or officers
of the Fund if elected to such positions. The agreement provides that each
Portfolio pays the charges and expenses of its operations including the fees and
expenses of the trustees (except those who are affiliates of the investment
manager), independent auditors, counsel, custodian and transfer agent and the
cost of share certificates, reports and notices to shareholders, brokerage
commissions or transaction costs, costs of calculating net asset value and
maintaining all accounting records related thereto, taxes and membership dues.
The Fund bears the expenses of registration of its shares with the Securities
and Exchange Commission, while the principal underwriter pays the cost of
qualifying and maintaining the qualification of the Fund's shares for sale under
the securities laws of the various states, if any.
B-20
<PAGE> 79
The agreement provides that Scudder Kemper shall not be liable for any error of
judgment or of law, or for any loss suffered by the Fund in connection with the
matters to which the agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the investment manager
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under the agreement.
The investment management agreement continues in effect from year to year so
long as its continuation is approved at least annually by a majority of the
trustees who are not parties to such agreement or interested persons of any such
party except in their capacity as trustees of the Fund and by the shareholders
or the Board of Trustees. The agreement may be terminated at any time upon 60
days' notice by either party, or by a majority vote of the outstanding shares,
and will terminate automatically upon assignment. Additional Portfolios may
become subject to the investment management agreement. The provisions concerning
continuation, amendment and termination and the allocation of the management
fees and the application of the expense limitation shall be on a Portfolio by
Portfolio basis. Additional Portfolios may be subject to different agreements.
ZIML, 1 South Place, London, U.K. EC2M 2ZS, an affiliate of Scudder Kemper, is
the sub-adviser for the International and Global Income Portfolios. ZIML acts as
sub-adviser pursuant to the terms of a Sub-Advisory Agreement between it and
Scudder Kemper for the Portfolios. ZIML is subject to regulation by the
Investment Management Regulatory Organization in England as well as the U.S.
Securities and Exchange Commission.
Under the terms of the Sub-Advisory Agreement for the International and Global
Income Portfolios, ZIML renders investment advisory and management services with
regard to that portion of a Portfolio's assets as may be allocated by Scudder
Kemper to ZIML from time to time for management, including services related to
foreign securities, foreign currency transactions and related investments. ZIML
may, under the terms of the Sub-Advisory Agreement, render similar services to
others including other investment companies. For its services, ZIML will receive
from Scudder Kemper a monthly fee at 1/12 of the following annual rates applied
to the portion of the average daily net assets of each Portfolio allocated by
Scudder Kemper to ZIML for management: .35% for the International Portfolio and
.30% for the Global Income Portfolio. ZIML permits any of its officers or
employees to serve without compensation as trustees or officers of the Fund if
elected to such positions.
The 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 the 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.
The 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 trustees who
are not parties to such agreement or interested persons of any such party except
in their capacity as trustees of the Fund and (b) by the shareholders or the
Board of Trustees. The Sub-Advisory Agreement may be terminated at any time for
a Portfolio upon 60 days notice by Scudder Kemper, ZIML or the Board of
Trustees, or by a majority vote of the outstanding shares of the Portfolio, and
will terminate automatically upon assignment or upon the termination of the
Fund's investment management agreement. If additional Portfolios become subject
to the Sub-Advisory Agreement, the provisions concerning continuation, amendment
and termination shall be on a Portfolio-by-Portfolio basis. Additional
Portfolios may be subject to a different agreement.
Dreman Value Management, L.L.C. ("DVM"), Three Harding Road, Red Bank, New
Jersey 07701, is the sub-adviser for the High Return Equity Portfolio and the
Financial Services Portfolio. DVM is controlled by David N. Dreman. DVM serves
as sub-adviser pursuant to the terms of a Sub-Advisory Agreement between it and
Scudder Kemper for each Portfolio.
B-21
<PAGE> 80
Under the terms of each Sub-Advisory Agreement, DVM manages the investment and
reinvestment of the Portfolio's assets and will provide such investment advice,
research and assistance as Scudder Kemper may, from time to time, reasonably
request. The current sub-advisory fee rates paid by Scudder Kemper to DVM for
each Portfolio are in the prospectus under "Investment Manager and Distributor."
Each Sub-Advisory Agreement provides that DVM will not be liable for any error
of judgment or mistake of law or for any loss suffered by the Portfolio 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 DVM in the performance of its duties or from reckless disregard by DVM
of its obligations and duties under the Sub-Advisory Agreement.
Each Sub-Advisory Agreement remains in effect until May 1, 2003 unless sooner
terminated or not annually approved as described below. Notwithstanding the
foregoing, the Sub-Advisory Agreement shall continue in effect through May 1,
2003 and year to year thereafter, but only as long as such continuance is
specifically approved at least annually (a) by a majority of the trustees who
are not parties to such agreement or interested persons of any such party except
in their capacity as trustees of the Fund, and (b) by the shareholders or the
Board of Trustees of the Fund. The Sub-Advisory Agreement may be terminated at
any time upon 60 days' notice by Scudder Kemper or by the Board of Trustees of
the Fund or by majority vote of the outstanding shares of the Portfolio, and
will terminate automatically upon assignment or upon termination of the
Portfolio's investment management agreement. DVM may not terminate the
Sub-Advisory Agreement prior to May 1, 2001. Thereafter, DVM may terminate the
Sub-Advisory Agreement upon 90 days' notice to Scudder Kemper.
Pursuant to the terms of an agreement, Scudder, Stevens & Clark, Inc.
("Scudder"), and Zurich Insurance Company ("Zurich"), formed a new global
investment organization by combining Scudder with Zurich Kemper Investments,
Inc. ("ZKI"), a former subsidiary of Zurich and the former investment manager
for each Portfolio other than the Contrarian, Small Cap Value, High Return
Equity, Financial Services, Global Blue Chip, and International Growth and
Income Portfolios, and Zurich Kemper Value Advisors, Inc. ("ZKVA"), a former
subsidiary of Zurich and the former investment manager for the Contrarian and
Small Cap Value Portfolios. Upon completion of the transaction, Scudder changed
its name to Scudder Kemper Investments, Inc. As a result of the transaction,
Zurich owns approximately 70% of Scudder Kemper, with the balance owned by
Scudder Kemper's officers and employees. In addition, ZIML is a wholly-owned
subsidiary of Zurich.
Because the transaction between Scudder and Zurich resulted in the assignment of
the Portfolios' investment management agreements with ZKI and ZKVA, as well as
the sub-advisory agreements with ZIML for certain Portfolios, the agreements
were deemed to be automatically terminated upon consummation of the transaction.
In anticipation of the transaction, however, a new investment management
agreement between the Fund and Scudder Kemper, and a new sub-advisory agreement
between Scudder Kemper and ZIML for the International and Global Income
Portfolios, were approved by the Fund's Board of Trustees and shareholders. The
new investment management and sub-advisory agreements were effective as of
December 31, 1997, and will be in effect for an initial term ending on the same
date as would the previous investment management and sub-advisory agreements.
The Portfolios' investment management and sub-advisory agreements are on
substantially the same terms as the investment management and sub-advisory
agreements terminated by the transaction, except that Scudder Kemper is the new
investment manager to the Portfolios.
The sub-adviser fees paid by Scudder Kemper to ZIML for the International and
Global Income Portfolios for the period from May 1, 1997 (inception) through
December 31, 1997 were $657,013 and $3,176, respectively.
The current investment management fee rates paid by the Portfolios are in the
prospectus under "Investment Manager."
B-22
<PAGE> 81
The investment management fees paid by each Portfolio (other than the High
Return Equity, Financial Services, Global Blue Chip, and International Growth
and Income Portfolios, which commenced operations on May 1, 1998) for its last
three fiscal years are shown in the table below.
<TABLE>
<CAPTION>
Portfolio Fiscal 1997 Fiscal 1996 Fiscal 1995
- --------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Money Market $ 497,000 $ 376,000 $ 373,000
Total Return $4,072,000 $3,691,000 $3,461,000
High Yield $1,991,000 $1,565,000 $1,463,000
Growth $3,142,000 $2,658,000 $2,132,000
Government Securities $ 460,000 $ 485,000 $ 538,000
International $1,419,000 $1,174,000 $ 946,000
Small Cap Growth $ 633,000 $ 340,000 $ 151,000
Investment Grade Bond $ 46,000 $ 4,000* --
Value $ 604,000 $ 44,000* --
Small Cap Value $ 307,000 $ 33,000* --
Value+Growth $ 257,000 $ 22,000* --
Horizon 20+ $ 56,000 $ 6,000* --
Horizon 10+ $ 77,000 $ 11,000* --
Horizon 5 $ 44,000 $ 5,000* --
Blue Chip $ 27,000** -- --
Global Income $ 9,000** -- --
</TABLE>
- ---------------
* Commencement of Operations on May 1, 1996 through December 31, 1996.
** Commencement of Operations on May 1, 1997 through December 31, 1997.
FUND ACCOUNTING AGENT. Scudder Fund Accounting Corp. ("SFAC"), a subsidiary of
Scudder Kemper, is responsible for determining the daily net asset value per
share of the Portfolios and maintaining all accounting records related thereto.
Currently, SFAC receives no fee for its services to each Portfolio other than
the High Return Equity, Financial Services, Global Blue Chip, and International
Growth and Income Portfolios; however, subject to Board approval, at some time
in the future, SFAC may seek payment for its services to those Portfolios under
its agreement with such Portfolios. The High Return Equity and Financial
Services Portfolios each pays SFAC an annual fee equal to .025% of the first
$150 million of average daily net assets of the Portfolio, .0075% of the next
$850 million of such assets and .0045% of such assets in excess of $1 billion,
plus holding and transaction charges for this service. The Global Blue Chip and
International Growth and Income Portfolios each pays SFAC an annual fee equal to
.065% of the first $150 million of average daily net assets of the Portfolio,
.04% of the next $850 million of such assets and .02% of such assets in excess
of $1 billion, plus holding and transaction charges for this service.
PRINCIPAL UNDERWRITER. Kemper Distributors, Inc. ("KDI"), a wholly owned
subsidiary of Scudder Kemper, is the distributor and principal underwriter for
shares of the Fund in the continuous offering of its shares. The Fund pays the
cost for the prospectus and shareholder reports to be set in type and printed
for existing shareholders, and KDI pays for the printing and distribution of
copies thereof used in connection with the offering of shares to prospective
shareholders. KDI also pays for supplementary sales literature and advertising
costs. Terms of continuation, termination and assignment under the underwriting
agreement are identical to those described above with regard to the investment
management agreements, except that termination other than upon assignment
requires six month's notice.
Investors Fiduciary Trust Company ("IFTC"), has entered into an agreement with
Kemper Investors Life Insurance Company ("KILICO") whereby KILICO provides
certain record keeping services. During the year ended December 31, 1997, no
fees for record keeping or dividend-paying agents' services, were paid to
KILICO.
B-23
<PAGE> 82
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Fund's independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Fund's annual financial statements, review certain
regulatory reports and the Fund's federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Fund. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
LEGAL COUNSEL. Vedder, Price, Kaufman & Kammholz, 222 N. LaSalle St., Chicago,
Illinois, serves as legal counsel to each Portfolio other than the Financial
Services, Global Blue Chip, and International Growth and Income Portfolios.
Dechert Price & Rhoads, Ten Post Office Square South, Boston, Massachusetts,
serves as legal counsel to the Financial Services, Global Blue Chip, and
International Growth and Income Portfolios.
PURCHASE AND REDEMPTION OF SHARES
Fund shares are sold at their net asset value next determined after an order and
payment are received as described in the Fund's prospectus.
Upon receipt by a Portfolio's Transfer Agent, of a request for redemption,
shares will be redeemed by the Fund at the applicable net asset value as
described in the Fund's prospectus.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange ("Exchange") is
closed, other than customary weekend and holiday closings or during any period
in which trading on the Exchange is restricted, (b) during any period when an
emergency exists as a result of which (i) disposal of a Portfolio's investments
is not reasonably practicable, or (ii) it is not reasonably practicable for the
Portfolio to determine the value of its net assets, or (c) for such other
periods as the Securities and Exchange Commission may by order permit for the
protection of the Fund's shareholders.
OFFICERS AND TRUSTEES
The officers and trustees of the Fund, their principal occupations and their
affiliations, if any, with Scudder Kemper or ZIML, the investment manager or
sub-adviser for the Fund and KDI, the Fund's principal underwriter or their
affiliates, are listed below. All persons named as trustees also serve in
similar capacities for other funds advised by Scudder Kemper.
JAMES E. AKINS (10/15/26), Trustee, 2904 Garfield Terrace, N.W., Washington,
D.C.; Consultant on International, Political and Economic Affairs; formerly a
career United States Foreign Service Officer, Energy Adviser for the White House
and United States Ambassador to Saudi Arabia, 1973-76.
ARTHUR R. GOTTSCHALK (02/13/25), Trustee, 10642 Brookridge Drive, Frankfort,
Illinois; Retired; formerly, President, Illinois Manufacturers Association;
Trustee, Illinois Masonic Medical Center; formerly, Illinois State Senator;
formerly, Vice President, The Reuben H. Donnelley Corp; formerly, attorney.
FREDERICK T. KELSEY (04/25/27), Trustee, 4010 Arbor Lane, Unit 102, Northfield,
Illinois; 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; formerly, Trustee of
the Pilot Funds.
*DANIEL PIERCE (3/18/34), Trustee, 345 Park Avenue, New York, New York; Chairman
of the Board and Managing Director, Scudder Kemper; Director, Fiduciary Trust
Company and Fiduciary Company Incorporated.
FRED B. RENWICK (02/01/30), Trustee, 3 Hanover Square, New York, New York;
Professor of Finance, New York University, Stern School of Business; Director,
TIFF Industrial Program, Inc., Director, the Wartburg Home Foundation; Chairman
Investment Committee of Morehouse College Board of Trustees; Chairman,
B-24
<PAGE> 83
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.
JOHN B. TINGLEFF (05/04/35), Trustee, 2015 South Lake Shore Drive, Harbor
Springs, Michigan; Retired; formerly President, Tingleff & Associates
(management consulting firm); formerly, Senior Vice President, Continental
Illinois National Bank & Trust Company.
*EDMOND D. VILLANI (3/4/47), Trustee, 345 Park Avenue, New York, New York;
President, Chief Executive Officer and Managing Director, Scudder Kemper.
JOHN G. WEITHERS (08/08/33), Trustee, 311 Springlake, Hinsdale, Illinois;
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.
*MARK S. CASADY (9/21/60), President, 345 Park Avenue, New York, New York;
Managing Director, Scudder Kemper.
*DAVID H. BURSHTAN (10/24/61), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Vice President, Scudder Kemper.
*ROBERT S. CESSINE (01/05/50), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Senior Vice President, Scudder Kemper; formerly, Vice
President, Wellington Management Company.
*TRACY McCORMICK CHESTER (9/27/54), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Senior Vice President, Scudder Kemper; formerly portfolio
manager for Fiduciary Management; prior thereto, independent consultant managing
private accounts.
*PHILIP J. COLLORA (11/15/45), Vice President, Treasurer and Secretary, 222
South Riverside Plaza, Chicago, Illinois; Attorney, Senior Vice President,
Scudder Kemper.
*THOMAS H. FORESTER (12/15/58), Vice President, 345 Park Avenue, New York, New
York; Vice President, Scudder Kemper.
*PHILIP S. FORTUNA ( / / ), Vice President, 101 California Street, Suite
4100, San Francisco, California; Managing Director, Scudder Kemper.
*FREDERICK L. GASKIN (12/18/61), Vice President, 345 Park Avenue, New York, New
York; Vice President, Scudder Kemper.
*JERALD K. HARTMAN (3/1/33), Vice President, 345 Park Avenue, New York, New
York; Managing Director, Scudder Kemper.
*JONATHAN KAY (9/22/61), Vice President, 345 Park Avenue, New York, New York;
Vice President, Scudder Kemper.
*WILLIAM M. KNAPP (4/23/61), Vice President, 222 South Riverside Plaza, Chicago,
Illinois; Vice President, Scudder Kemper.
*GARY A. LANGBAUM (12/16/48), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Executive Vice President, Scudder Kemper.
*MAUREEN P. LENTZ (8/26/61), Vice President, 222 South Riverside Plaza, Chicago,
Illinois; Vice President, Scudder Kemper.
*THOMAS W. LITTAUER (4/26/55), Vice President, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.
B-25
<PAGE> 84
*ANN M. McCREARY (11/6/56), Vice President, 345 Park Avenue, New York, New York;
Senior Vice President, Scudder Kemper.
*MICHAEL A. McNAMARA (12/28/44), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Senior Vice President, Scudder Kemper.
*ROBERT C. PECK, JR. (10/1/46), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper; formerly, Executive Vice
President and Chief Investment Officer with an unaffiliated investment
management firm from 1988 to 1997.
*KATHRYN L. QUIRK (12/3/52), Vice President, 345 Park Avenue, New York, New
York; Managing Director, Scudder Kemper.
*FRANK J. RACHWALSKI, JR. (03/26/45), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Senior Vice President, Scudder Kemper.
*HARRY E. RESIS, JR. (11/24/45), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Senior Vice President, Scudder Kemper.
*STEVEN H. REYNOLDS (09/11/43), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper.
*THOMAS F. SASSI (11/7/42), Vice President, 345 Park Avenue, New York, New York;
Managing Director, Scudder Kemper.
*KURT R. STALZER (5/1/58), Vice President, 222 South Riverside Plaza, Chicago,
Illinois; Senior Vice President, Scudder Kemper.
*STEVEN T. STOKES (7/18/62), Vice President, 345 Park Avenue, New York, New
York; Managing Director, Scudder Kemper.
*RICHARD L. VANDENBERG (11/16/49), Vice President, 222 South Riverside Plaza,
Chicago, Illinois; Senior Vice President, Scudder Kemper.
*LINDA J. WONDRACK (9/12/64), Vice President, Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.
*JOHN R. HEBBLE (6/27/58), Assistant Treasurer, Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.
*MAUREEN E. KANE (2/14/62), Assistant Secretary, Two International Place,
Boston, Massachusetts; Vice President, Scudder Kemper.
*CAROLINE PEARSON (4/1/62), Assistant Secretary, Two International Place,
Boston, Massachusetts; Vice President, Scudder Kemper.
*ELIZABETH C. WERTH (10/1/47), Assistant Secretary, 222 South Riverside Plaza,
Chicago, Illinois; Vice President, Scudder Kemper; Vice President, KDI.
* Interested persons of the Fund as defined in the Investment Company Act of
1940.
B-26
<PAGE> 85
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Fund. The table below shows amounts paid or
accrued to those trustees who are not designated "interested persons" during the
1997 calendar year.
<TABLE>
<CAPTION>
TOTAL
COMPENSATION FROM
AGGREGATE FUND AND FUND COMPLEX
COMPENSATION PAID TO
NAME OF TRUSTEE FROM FUND TRUSTEES**
--------------- ------------ ---------------------
<S> <C> <C>
James E. Akins.............................................. $39,900 $106,300
Arthur R. Gottschalk*....................................... $45,100 $121,100
Frederick T. Kelsey......................................... $41,800 $111,300
Fred B. Renwick............................................. $39,900 $106,300
John B. Tingleff............................................ $39,900 $106,300
John G. Weithers............................................ $39,900 $106,300
</TABLE>
- ---------------
* 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 $108,700 for Mr. Gottschalk.
** Includes compensation for service on the Boards of 14 funds managed by
Scudder Kemper and its affiliates with 42 fund portfolios during calendar
year 1997. Each trustee currently serves as a board member of 15 funds
managed by Scudder Kemper and its affiliates with 48 fund portfolios. Total
Compensation does not reflect amounts paid by Scudder Kemper Investments
Inc. to the trustees for meetings regarding the combination of Scudder and
ZKI. Such amounts totaled $42,800, $10,725, $39,000, $42,900, $42,900 and
$42,900 for Messrs. Akins, Gottschalk, Kelsey, Renwick, Tingleff and
Weithers, respectively.
As of March 2, 1998, the trustees and officers as a group owned beneficially
less than 1% of the outstanding shares of each Portfolio of the Fund.
As of March 2, 1998, all the shares of the Money Market, Total Return, High
Yield, Growth, Government Securities, International, Small Cap Growth,
Investment Grade Bond, Contrarian, Small Cap Value, Value+Growth, Horizon, Blue
Chip and Global Income Portfolios were held of record by KILICO Variable Annuity
Separate Account ("KVASA"), KILICO Variable Separate Account ("KVSA"), Separate
Account KGC ("KGC"), Separate Account KG ("KG"), Cova Variable Annuity Account
One ("Cova One") and Cova Variable Annuity Account Five ("Cova Five") on behalf
of the owners of variable life insurance contracts and variable annuity
contracts. At all meetings of shareholders of these Portfolios, Kemper Investors
Life Insurance Company ("KILICO") will vote the shares held of record by KVASA
and KVSA, Allmerica Financial Life Insurance and Annuity Company ("Allmerica")
will vote the shares held of record by KGC and KG, and Cova Financial Services
Life Insurance Company and Cova Financial Life Insurance Company (collectively,
"Cova") will vote the shares held of record by Cova One and Cova Five, only in
accordance with the instructions received from the variable life and variable
annuity contract owners on behalf of whom the shares are held. All shares for
which no instructions are received will be voted in the same proportion as the
shares for which instructions are received. Accordingly, KILICO disclaims
beneficial ownership of the shares of these portfolios held of record by KVASA
and KVSA, and Allmerica disclaims beneficial ownership of the shares of these
portfolios held of record by KGC and KG, and Cova disclaims beneficial ownership
of the shares of these portfolios held of record by Cova One and Cova Five.
NET ASSET VALUE
The net asset value per share of each Portfolio is the value of one share and is
determined by dividing the value of the Portfolio's net assets by the number of
shares outstanding. The net asset value of shares of the Portfolio is
B-27
<PAGE> 86
computed as of the close of regular trading on the New York Stock Exchange (the
"Exchange") on each day the Exchange is open for trading. The Exchange is
scheduled to be closed on the following holidays: New Year's Day, Martin Luther
King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
EACH PORTFOLIO OTHER THAN THE MONEY MARKET, HIGH RETURN EQUITY, FINANCIAL
SERVICES, GLOBAL BLUE CHIP, AND INTERNATIONAL GROWTH AND INCOME PORTFOLIOS
Portfolio securities traded on a domestic securities exchange or securities
listed on the NASDAQ National Market are valued at the last sale price on the
exchange or market where primarily traded or listed or, if there is no recent
sale price available, at the last current bid quotation. Portfolio securities
that are primarily traded on foreign securities exchanges are generally valued
at the preceding closing values of such securities on their respective exchanges
where primarily traded. A security that is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the primary
market for that security by the Board of Trustees or its delegates. Securities
not so traded or listed are valued at the last current bid quotation if market
quotations are available. Fixed income securities are valued by using market
quotations, or independent pricing services that use prices provided by market
makers or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics. Equity options are
valued at the last sale price unless the bid price is higher or the asked price
is lower, in which event such bid or asked price is used. Exchange traded fixed
income options, financial futures and options thereon are valued at the
settlement price established each day by the board of trade or exchange on which
they are traded. Over-the-counter traded fixed income options are valued based
upon current prices provided by market makers. Other securities and assets are
valued at fair value as determined in good faith by the Board of Trustees.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world; the calculation of net asset value does not
necessarily take place contemporaneously with the determination of the prices of
a Portfolio's foreign securities, which may be made prior to the determination
of net asset value. For purposes of determining a Portfolio's net asset value,
any assets and liabilities initially expressed in foreign currency values will
be converted into U.S. Dollar values at the mean between the bid and offered
quotations of such currencies against U.S. Dollars as last quoted by a
recognized dealer. If an event were to occur, after the value of a security was
so established but before the net asset value per share was determined, which
was likely to materially change the net asset value, then that security would be
valued using fair value determinations by the Board of Trustees or its
delegates.
HIGH RETURN EQUITY, FINANCIAL SERVICES, GLOBAL BLUE CHIP, AND INTERNATIONAL
GROWTH AND INCOME PORTFOLIOS
An exchange-traded equity security is valued at its most recent sale price.
Lacking any sales, the security is valued at the calculated mean between the
most recent bid quotation and the most recent asked quotation (the "Calculated
Mean"). Lacking a Calculated Mean, the security is valued at the most recent bid
quotation. An equity security which is traded on The Nasdaq Stock Market
("Nasdaq") is valued at its most recent sale price. Lacking any sales, the
security is valued at the most recent bid quotation. The value of an equity
security not quoted on Nasdaq, but traded in another over-the-counter market, is
its most recent sale price. Lacking any sales, the security is valued at the
Calculated Mean. Lacking a Calculated Mean, the security is valued at the most
recent bid quotation.
Debt securities are valued at prices supplied by the Portfolio's pricing
agent(s) which reflect broker/dealer supplied valuations and electronic data
processing techniques. Money market instruments purchased with an original
maturity of sixty days or less, maturing at par, are valued at amortized cost,
which the Board believes approximates market value. If it is not possible to
value a particular debt security pursuant to these valuation methods, the value
of such security is the most recent bid quotation supplied by a bona fide
marketmaker. If it is not possible to value a particular debt security pursuant
to the above methods, the investment manager may calculate the price of that
debt security, subject to limitations established by the Board.
B-28
<PAGE> 87
An exchange-traded options contract on securities, currencies, futures and other
financial instruments is valued at its most recent sale price on such exchange.
Lacking any sales, the options contract is valued at the Calculated Mean.
Lacking any Calculated Mean, the options contract is valued at the most recent
bid quotation in the case of a purchased options contract, or the most recent
asked quotation in the case of a written options contract. An options contract
on securities, currencies and other financial instruments traded
over-the-counter is valued at the most recent bid quotation in the case of a
purchased options contract and at the most recent asked quotation in the case of
a written options contract. Futures contracts are valued at the most recent
settlement price.
If a security is traded on more than one exchange, or upon one or more exchanges
and in the over-the-counter market, quotations are taken from the market in
which the security is traded most extensively.
If, in the opinion of the Fund's Valuation Committee of the Fund's Board, the
value of a Portfolio asset as determined in accordance with these procedures
does not represent the fair market value of the Portfolio asset, the value of
the Portfolio asset is taken to be an amount which, in the opinion of the
Valuation Committee, represents fair market value on the basis of all available
information. The value of other Portfolio holdings owned by the Portfolio is
determined in a manner which, in the discretion of the Valuation Committee, most
fairly reflects the fair market value of the property on the valuation date.
DIVIDENDS AND TAXES
DIVIDENDS. The Fund may at any time vary the dividend practices with respect to
a Portfolio and, therefore, reserves the right from time to time to either
distribute or retain for reinvestment such of its net investment income and its
net short-term and long-term capital gains as the Board of Trustees of the Fund
determines appropriate under the then current circumstances.
TAXES. Each Portfolio intends to continue to qualify (or, for the High Return
Equity, Financial Services, Global Blue Chip, and International Growth and
Income Portfolios, intend to qualify) as a regulated investment company under
subchapter M of the Internal Revenue Code ("Code") in order to avoid taxation of
the Fund and its shareholders.
Pursuant to the requirements of Section 817(h) of the Code, the only
shareholders of the Fund and its Portfolios will be insurance companies and
their separate accounts that fund variable insurance contracts. The prospectus
that describes a particular variable insurance contract discusses the taxation
of separate accounts and the owner of the particular variable insurance
contract.
Each Portfolio intends to comply with the requirements of Section 817(h) and
related regulations. Section 817(h) of the Code and the regulations issued by
the Treasury Department impose certain diversification requirements affecting
the securities in which the Portfolios may invest. These diversification
requirements are in addition to the diversification requirements under
subchapter M and the Investment Company Act of 1940. The consequences of failure
to meet the requirements of Section 817(h) could result in taxation of the
insurance company offering the variable insurance contract and immediate
taxation of the owner of the contract to the extent of appreciation on
investment under the contract.
The preceding is a brief summary of certain of the relevant tax considerations.
The summary is not intended as a complete explanation or a substitute for
careful tax planning and consultation with individual tax advisers.
SHAREHOLDER RIGHTS
The Fund is generally not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust of the Fund ("Declaration of Trust"),
however, shareholder meetings will be held in connection with the following
matters: (a) the election or removal of trustees if a meeting is called for such
purpose; (b) the adoption of any contract for which approval is required by the
1940 Act; (c) any termination of the Fund to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other than
B-29
<PAGE> 88
amendments changing the name of the Fund or any Portfolio, establishing a
Portfolio, supplying any omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision thereof); (e) as to
whether a court action, preceding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Fund or the
shareholders, to the same extent as the stockholders of a Massachusetts business
corporation; and (f) such additional matters as may be required by law, the
Declaration of Trust, the By-laws of the Fund, or any registration of the Fund
with the Securities and Exchange Commission or any state, or as the trustees may
consider necessary or desirable. The shareholders also would vote upon changes
in fundamental investment objectives, policies or restrictions.
Under current interpretations of the 1940 Act, the Fund expects that
Participating Insurance Company shareholders will offer VLI and VA contract
holders the opportunity to instruct them as to how Fund shares attributable to
such contracts will be voted with respect to the matters described above. The
separate prospectuses describing the VLI and VA contracts include additional
disclosure of how contract holder voting rights are computed.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Fund. The Declaration of Trust, however, contains provisions designed to protect
shareholders from liability for acts or obligations of the Fund and requires
that notice of such provisions be given in each agreement, obligation or
instrument entered into or executed by the Fund or the trustees. Moreover, the
Declaration of Trust provides for indemnification out of Fund property for all
losses and expenses of any shareholders held personally liable for the
obligations of the Fund and the Fund will be covered by insurance which the
trustees consider adequate to cover foreseeable tort claims. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
considered by Scudder Kemper remote and not material since it is limited to
circumstances in which the provisions limiting liability are inoperative and the
Fund itself is unable to meet its obligations.
The Declaration of Trust further provides that the trustees will not be liable
for errors of judgment or mistakes of fact or law. The Declaration of Trust does
not protect a trustee against any liability to which he or she should otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties of a trustee. The Declaration of Trust permits
the Trust to purchase insurance against certain liabilities on behalf of the
trustees.
B-30
<PAGE> 89
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholder
Investors Fund Series
We have audited the accompanying statement of net assets of the Kemper High
Return Equity, Kemper Financial Services, Kemper Global Blue Chip and Kemper
International Growth and Income Portfolios of Investors Fund Series as of April
, 1998. This statement of net assets is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this statement of net
assets based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of net assets is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement of net assets. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall statement of net assets
presentation. We believe that our audit of the statement of net assets provides
a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents fairly,
in all material respects, the financial position of each of the Kemper High
Return Equity, Kemper Financial Services, Kemper Global Blue Chip and Kemper
International Growth and Income Portfolios of Investors Fund Series at April ,
1998 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
April , 1998
B-31
<PAGE> 90
INVESTORS FUND SERIES
STATEMENT OF NET ASSETS--APRIL , 1998
<TABLE>
<CAPTION>
KEMPER
KEMPER KEMPER KEMPER INTERNATIONAL
HIGH RETURN FINANCIAL GLOBAL GROWTH AND
EQUITY SERVICES BLUE CHIP INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- --------- --------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash........................................................ $ $ $ $
Organization Costs.......................................... 11,000 11,000 11,000 11,000
-------- -------- -------- --------
Total Assets....................................... $ $ $ $
======== ======== ======== ========
LIABILITIES
Organization costs payable.................................. $ 11,000 $ 11,000 $ 11,000 $ 11,000
Net assets......................................... $ $ $ $
======== ======== ======== ========
NET ASSETS
Net assets, applicable to shares of beneficial interest
(unlimited number of shares authorized, no par value)
outstanding............................................... $ $ $ $
======== ======== ======== ========
THE PRICING OF SHARES
Net asset value and redemption price per share, applicable
to each Portfolio ($100,000 / 100,000 shares
outstanding).............................................. $ 1.000 $ 1.000 $ 1.000 $ 1.000
Maximum offering price per share, applicable to each
Portfolio (net asset value)............................... $ 1.000 $ 1.000 $ 1.000 $ 1.000
</TABLE>
NOTES:
1. Investors Fund Series (the "Fund") was organized as a business trust under
the laws of The Commonwealth of Massachusetts on January 22, 1987. All shares
of beneficial interest of the above Portfolios were issued to Scudder Kemper
Investments, Inc. ("Scudder Kemper"), the investment manager for the
Portfolios of the Fund, on April , 1998. The Fund may establish multiple
series; currently twenty series have been established.
2. Costs of $11,000 incurred by each of the above Portfolios in conjunction with
its organization, are amortized over the five year period beginning May,
1998. If any of the shares purchased by Scudder Kemper are redeemed prior to
the end of the amortization period, the redemption proceeds will be reduced
by the pro rata share of the unamortized costs as of the date of redemption.
B-32
<PAGE> 91
APPENDIX--RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2 AND PRIME-1, PRIME-2 COMMERCIAL PAPER RATINGS
Commercial paper rated by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements.
Long-term senior debt is rated "A" or better. The issuer has access to at least
two additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determine whether the
issuer's commercial paper is rated A-1 or A-2.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by them
in assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations. Relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated Prime-1 or 2.
CORPORATE BONDS
STANDARD & POOR'S CORPORATION BOND RATINGS
AAA. Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C. Debt rated BB, B, CCC, CC and C is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CI. The rating CI is reserved for income bonds on which no interest is being
paid.
D. Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
B-33
<PAGE> 92
MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
AAA. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA. Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
B-34
<PAGE> 93
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
INVESTORS FUND SERIES
We have audited the accompanying statement of assets and liabilities,
including the portfolios of investments, of the Kemper Money Market, Kemper
Total Return, Kemper High Yield, Kemper Growth, Kemper Government Securities,
Kemper International, Kemper Small Cap Growth, Kemper Investment Grade Bond,
Kemper Value, Kemper Small Cap Value, Kemper Value+Growth, Kemper Horizon 20+,
Kemper Horizon 10+, Kemper Horizon 5, Kemper Blue Chip and Kemper Global Income
Portfolios, comprising the Investors Fund Series as of December 31, 1997, and
the related statements of operations and changes in net assets for the periods
indicated therein and the financial highlights for each of the fiscal periods
since 1993. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios of the Investors Fund Series at December 31, 1997, the results
of their operations, the changes in their net assets and the financial
highlights for the periods indicated therein in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 17, 1998
21
<PAGE> 94
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
MONEY TOTAL HIGH KEMPER GOVERNMENT KEMPER
MARKET RETURN YIELD GROWTH SECURITIES INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $99,159,
$708,931, $372,411, $514,828, $89,195,
$163,149, $124,874, $14,891, $149,666,
$69,524, $65,716, $15,755, $21,117, $13,533,
$19,791 and $2,062, respectively) $ 99,159 787,904 384,800 553,908 91,593 199,414
- ------------------------------------------------------------------------------------------------------------------------------------
Cash 2,577 770 837 1,134 1,421 86
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable for:
Investments sold -- 6,955 -- 12,958 7 777
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio shares sold -- 64 144 85 108 --
- ------------------------------------------------------------------------------------------------------------------------------------
Interest and dividends 204 6,180 6,892 398 783 284
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 101,940 801,873 392,673 568,483 93,912 200,561
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for:
Investments purchased -- 13,986 784 4,880 7,140 118
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio shares redeemed 1,459 461 -- 276 31 156
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends 243 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Management fee 41 359 194 278 39 125
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and
related expenses 3 43 14 11 11 43
- ------------------------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 51 28 17 22 9 73
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,797 14,877 1,009 5,467 7,230 515
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $100,143 786,996 391,664 563,016 86,682 200,046
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $100,143 573,376 374,467 427,851 75,198 154,007
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on
investments and foreign currency transactions -- 110,353 (19,220) 90,779 (5,177) 6,511
- ------------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on
investments and assets and liabilities in
foreign currencies -- 78,973 12,389 39,066 2,398 36,247
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- 24,294 24,028 5,320 14,263 3,281
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $100,143 786,996 391,664 563,016 86,682 200,046
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
Shares outstanding 100,143 278,859 302,191 187,617 71,799 123,869
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE (net assets / shares outstanding) $1.00 2.822 1.296 3.001 1.207 1.615
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
22
<PAGE> 95
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
SMALL INVESTMENT SMALL KEMPER KEMPER KEMPER
CAP GRADE KEMPER CAP VALUE+ KEMPER KEMPER KEMPER BLUE GLOBAL
GROWTH BOND VALUE VALUE GROWTH HORIZON 20+ HORIZON 10+ HORIZON 5 CHIP INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
135,629 15,044 164,658 75,583 69,939 16,886 22,276 14,002 20,327 2,002
- ------------------------------------------------------------------------------------------------------------------------------
2,562 205 1 517 390 200 100 211 635 71
- ------------------------------------------------------------------------------------------------------------------------------
-- -- -- 16 -- -- -- -- -- 40
- ------------------------------------------------------------------------------------------------------------------------------
149 89 341 101 149 -- 106 102 64 --
- ------------------------------------------------------------------------------------------------------------------------------
78 180 256 63 86 65 166 104 21 35
- ------------------------------------------------------------------------------------------------------------------------------
138,418 15,518 165,256 76,280 70,564 17,151 22,648 14,419 21,047 2,148
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
917 -- 2,648 -- 1,353 439 -- 145 2,612 --
- ------------------------------------------------------------------------------------------------------------------------------
2 -- 114 111 68 36 74 1 -- --
- ------------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
71 7 91 46 42 8 11 7 8 1
- ------------------------------------------------------------------------------------------------------------------------------
8 -- 1 -- -- -- 1 -- 6 --
- ------------------------------------------------------------------------------------------------------------------------------
5 7 22 15 7 9 9 8 -- 2
- ------------------------------------------------------------------------------------------------------------------------------
1,003 14 2,876 172 1,470 492 95 161 2,626 3
- ------------------------------------------------------------------------------------------------------------------------------
137,415 15,504 162,380 76,108 69,094 16,659 22,553 14,258 18,421 2,145
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
101,213 14,003 139,101 68,517 62,295 14,671 20,138 12,920 17,745 2,076
- ------------------------------------------------------------------------------------------------------------------------------
24,803 141 4,245 605 2,052 578 519 214 (134) 22
- ------------------------------------------------------------------------------------------------------------------------------
10,755 153 14,992 6,059 4,223 1,131 1,159 469 536 (24)
- ------------------------------------------------------------------------------------------------------------------------------
644 1,207 4,042 927 524 279 737 655 274 71
- ------------------------------------------------------------------------------------------------------------------------------
137,415 15,504 162,380 76,108 69,094 16,659 22,553 14,258 18,421 2,145
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
69,790 13,863 107,003 62,003 48,483 12,093 17,502 11,652 16,515 2,085
- ------------------------------------------------------------------------------------------------------------------------------
1.969 1.118 1.518 1.227 1.425 1.378 1.289 1.224 1.115 1.029
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 96
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
MONEY TOTAL HIGH KEMPER GOVERNMENT KEMPER
MARKET RETURN YIELD GROWTH SECURITIES INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------------------------------
Interest $5,678 21,441 32,534 724 6,484 612
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends(b) -- 7,613 155 4,868 -- 2,432
- ----------------------------------------------------------------------------------------------------------------------------------
Total investment income 5,678 29,054 32,689 5,592 6,484 3,044
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Management fee 497 4,072 1,991 3,142 460 1,419
- ----------------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related
expenses 22 129 65 83 47 239
- ----------------------------------------------------------------------------------------------------------------------------------
Professional fees 9 99 41 66 12 24
- ----------------------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 24 141 55 97 15 32
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses 552 4,441 2,152 3,388 534 1,714
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 5,126 24,613 30,537 2,204 5,950 1,330
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments
and foreign currency transactions -- 112,547 2,260 91,317 3 8,474
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from futures transactions -- (68) (34) -- (184) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) -- 112,479 2,226 91,317 (181) 8,474
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation on
investments and assets and liabilities in
foreign currencies -- (3,457) 3,576 6,100 1,376 6,353
- ----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments -- 109,022 5,802 97,417 1,195 14,827
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,126 133,635 36,339 99,621 7,145 16,157
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from May 1, 1997 (commencement of operations) to December 31,
1997.
(b) Less foreign taxes withheld of $267 in the Kemper International Portfolio.
See accompanying Notes to Financial Statements.
24
<PAGE> 97
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
SMALL INVESTMENT SMALL KEMPER KEMPER
CAP GRADE KEMPER CAP VALUE+ KEMPER KEMPER KEMPER KEMPER GLOBAL
GROWTH BOND VALUE VALUE GROWTH HORIZON 20+ HORIZON 10+ HORIZON 5 BLUE CHIP INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(a) PORTFOLIO(a)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
532 535 703 464 69 134 355 297 72 71
- --------------------------------------------------------------------------------------------------------------------------------
357 -- 1,865 364 547 101 107 41 63 --
- --------------------------------------------------------------------------------------------------------------------------------
889 535 2,568 828 616 235 462 338 135 71
- --------------------------------------------------------------------------------------------------------------------------------
633 46 604 307 257 56 77 44 27 9
- --------------------------------------------------------------------------------------------------------------------------------
38 15 26 27 24 29 27 26 15 2
- --------------------------------------------------------------------------------------------------------------------------------
10 -- 5 3 2 1 1 1 -- --
- --------------------------------------------------------------------------------------------------------------------------------
11 -- 15 7 6 1 2 1 -- 1
- --------------------------------------------------------------------------------------------------------------------------------
692 61 650 344 289 87 107 72 42 12
- --------------------------------------------------------------------------------------------------------------------------------
197 474 1,918 484 327 148 355 266 93 59
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
25,239 141 4,262 436 1,903 538 530 225 (134) 19
- ---------------------------------------------------------------------------------------------------------------------------------
-- -- -- 323 148 40 (11) (11) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
25,239 141 4,262 759 2,051 578 519 214 (134) 19
- ---------------------------------------------------------------------------------------------------------------------------------
2,506 152 13,595 5,315 3,585 885 840 375 536 (24)
- ---------------------------------------------------------------------------------------------------------------------------------
27,745 293 17,857 6,074 5,636 1,463 1,359 589 402 (5)
- ---------------------------------------------------------------------------------------------------------------------------------
27,942 767 19,775 6,558 5,963 1,611 1,714 855 495 54
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 98
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER
MONEY MARKET TOTAL RETURN
PORTFOLIO PORTFOLIO
------------------ -------------------
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------------------
Net investment income $ 5,126 3,688 24,613 21,518
- ---------------------------------------------------------------------------------------------------------
Net realized gain (loss) -- (850) 112,479 86,334
- ---------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) -- 850 (3,457) (4,464)
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 5,126 3,688 133,635 103,388
- ---------------------------------------------------------------------------------------------------------
Equalization credits (charges) -- -- (285) (891)
- ---------------------------------------------------------------------------------------------------------
Distribution from net investment income (5,126) (3,688) (21,303) (22,873)
- ---------------------------------------------------------------------------------------------------------
Distribution from net realized gain -- -- (87,579) (20,332)
- ---------------------------------------------------------------------------------------------------------
Total dividends to shareholders (5,126) (3,688) (108,882) (43,205)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share transactions 29,542 9,523 65,426 (22,084)
- ---------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 29,542 9,523 89,894 37,208
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------
Beginning of year 70,601 61,078 697,102 659,894
- ---------------------------------------------------------------------------------------------------------
END OF YEAR $100,143 70,601 786,996 697,102
- ---------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME AT END OF YEAR $ -- -- 24,294 21,298
- ---------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
INVESTMENT GRADE VALUE SMALL CAP
BOND PORTFOLIO PORTFOLIO VALUE PORTFOLIO
------------------- ------------------- -------------------
YEAR MAY 1 YEAR MAY 1 YEAR MAY 1
ENDED TO ENDED TO ENDED TO
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- --------------------------------------------------------------------------------------------------------------------
Net investment income $ 474 30 1,918 143 484 102
- --------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 141 2 4,262 181 759 (154)
- --------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) 152 1 13,595 1,397 5,315 744
- --------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 767 33 19,775 1,721 6,558 692
- --------------------------------------------------------------------------------------------------------------------
Equalization credits 713 29 2,045 127 505 70
- --------------------------------------------------------------------------------------------------------------------
Distribution from net investment income (41) -- (389) -- (234) --
- --------------------------------------------------------------------------------------------------------------------
Net increase from capital share transactions 12,067 1,836 119,644 19,357 55,972 12,445
- --------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 13,506 1,898 141,075 21,205 62,801 13,207
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------------
Beginning of period 1,998 100 21,305 100 13,307 100
- --------------------------------------------------------------------------------------------------------------------
END OF PERIOD $15,504 1,998 162,380 21,305 76,108 13,307
- --------------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT
INCOME AT END OF PERIOD $ 1,207 59 4,042 270 927 172
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE> 99
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER KEMPER
HIGH YIELD GROWTH GOVERNMENT INTERNATIONAL SMALL CAP
PORTFOLIO PORTFOLIO SECURITIES PORTFOLIO PORTFOLIO GROWTH PORTFOLIO
----------------- ------------------ -------------------- ----------------- ----------------
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
30,537 25,297 2,204 4,160 5,950 6,259 1,330 1,388 197 79
- --------------------------------------------------------------------------------------------------------
2,226 711 91,317 111,045 (181) (527) 8,474 7,804 25,239 8,533
- --------------------------------------------------------------------------------------------------------
3,576 9,092 6,100 (29,470) 1,376 (3,644) 6,353 14,086 2,506 3,586
- --------------------------------------------------------------------------------------------------------
36,339 35,100 99,621 85,735 7,145 2,088 16,157 23,278 27,942 12,198
- --------------------------------------------------------------------------------------------------------
633 (2,891) 1,028 409 17 (1,240) 101 (121) 100 138
- --------------------------------------------------------------------------------------------------------
(25,931) (24,806) (2,753) (5,021) (6,694) (6,507) (2,135) (2,012) (445) --
- --------------------------------------------------------------------------------------------------------
-- -- (111,508) (58,999) -- -- (7,472) (1,044) (8,458) (1,209)
- --------------------------------------------------------------------------------------------------------
(25,931) (24,806) (114,261) (64,020) (6,694) (6,507) (9,607) (3,056) (8,903) (1,209)
- --------------------------------------------------------------------------------------------------------
91,308 24,535 89,145 50,826 1,900 (5,212) 29,920 8,893 49,139 22,637
- --------------------------------------------------------------------------------------------------------
102,349 31,938 75,533 72,950 2,368 (10,871) 36,571 28,994 68,278 33,764
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
289,315 257,377 487,483 414,533 84,314 95,185 163,475 134,481 69,137 35,373
- --------------------------------------------------------------------------------------------------------
391,664 289,315 563,016 487,483 86,682 84,314 200,046 163,475 137,415 69,137
- --------------------------------------------------------------------------------------------------------
24,028 18,803 5,320 5,752 14,263 15,002 3,281 2,739 644 444
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
KEMPER
KEMPER KEMPER KEMPER KEMPER KEMPER GLOBAL
VALUE+ HORIZON 20+ HORIZON 10+ HORIZON 5 BLUE CHIP INCOME
GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------- ------------------- ------------------- ---------- ---------
YEAR MAY 1 YEAR MAY 1 YEAR MAY 1 YEAR MAY 1 FOR THE PERIOD MAY 1
ENDED TO ENDED TO ENDED TO ENDED TO (COMMENCEMENT OF
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, OPERATIONS) TO
1997 1996 1997 1996 1997 1996 1997 1996 DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
327 28 148 18 355 50 266 29 93 59
- ------------------------------------------------------------------------------------------------------------------
2,051 61 578 11 519 6 214 2 (134) 19
- ------------------------------------------------------------------------------------------------------------------
3,585 638 885 246 840 319 375 94 536 (24)
- ------------------------------------------------------------------------------------------------------------------
5,963 727 1,611 275 1,714 375 855 125 495 54
- ------------------------------------------------------------------------------------------------------------------
233 41 138 21 358 44 376 25 181 15
- ------------------------------------------------------------------------------------------------------------------
(165) -- (57) -- (76) -- (43) -- -- --
- ------------------------------------------------------------------------------------------------------------------
52,867 9,328 11,208 3,363 14,830 5,208 10,536 2,284 17,645 1,976
- ------------------------------------------------------------------------------------------------------------------
58,898 10,096 12,900 3,659 16,826 5,627 11,724 2,434 18,321 2,045
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
10,196 100 3,759 100 5,727 100 2,534 100 100 100
- ------------------------------------------------------------------------------------------------------------------
69,094 10,196 16,659 3,759 22,553 5,727 14,258 2,534 18,421 2,145
- ------------------------------------------------------------------------------------------------------------------
524 69 279 39 737 94 655 54 274 71
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 100
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Investors Fund Series (the "Fund") is an open-end,
diversified management investment company organized
as a business trust under the laws of
Massachusetts. The Fund offers sixteen Portfolios.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES INVESTMENT VALUATION. Investments are stated at
value. The securities of the Portfolios (excluding
the Kemper Money Market Portfolio) that are traded
on a domestic securities exchange or securities
listed on the NASDAQ National Market are valued at
the last sale price on the exchange or market where
primarily traded or listed or, if there is no
recent sale, at the last current bid quotation.
Portfolio securities that are primarily traded on
foreign securities exchanges are generally valued
at the preceding closing values of such securities
on their respective exchanges where primarily
traded. A security that is listed or traded on more
than one exchange is valued at the quotation on the
exchange determined to be the primary market for
that security by the Board of Trustees or its
delegates. All other securities not so traded or
listed are valued at the last current bid quotation
if market quotations are available. Fixed income
securities are valued by using market quotations,
or independent pricing services that use prices
provided by market makers or estimates of market
values obtained from yield data relating to
instruments or securities with similar
characteristics. Equity options are valued at the
last sale price unless the bid price is higher or
the asked price is lower, in which event such bid
or asked price is used. Financial futures and
options thereon are valued at the settlement price
established each day by the board of trade or
exchange on which they are traded. Over-the-
counter traded fixed income options are valued
based upon prices provided by market makers.
Forward foreign currency contracts and foreign
currencies are valued at the forward and current
exchange rates, respectively, prevailing on the day
of valuation. Other securities and assets are
valued at fair value as determined in good faith by
the Board of Trustees.
The securities of the Kemper Money Market Portfolio
are stated at amortized cost, which approximates
market value. In the event that a deviation of 1/2
of 1% or more exists between the Portfolio's $1.00
per share net asset value, calculated at amortized
cost, and the net asset value calculated by
reference to market quotations, or if there is any
other deviation that the Board of Trustees believes
would result in a material dilution to shareholders
or purchasers, the Board of Trustees will promptly
consider what action, if any, should be initiated.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. Dollars. All assets and
liabilities initially expressed in foreign currency
values are converted into U.S. Dollars at the mean
between the bid and offered quotations of such
currencies against the U.S. Dollar as last quoted
by a recognized dealer. If such quotations are not
readily available, the rates of exchange are
determined in good faith by the Board of Trustees.
Income and expenses and purchases and sales of
investments are translated into U.S. Dollars at the
rates of exchange prevailing on the respective
dates of such transactions. The Portfolios include
that portion of the results of operations resulting
from changes in foreign exchange rates with the net
realized and unrealized gain (loss) on investments.
28
<PAGE> 101
NOTES TO FINANCIAL STATEMENTS
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, except that certain dividends
from foreign securities are recorded as soon as the
information is available to the Fund. Interest
income is recorded on the accrual basis and
includes discount amortization on all fixed income
securities and premium amortization on
mortgage-backed securities and money market
instruments. Realized gains and losses from
investment transactions are reported on an
identified cost basis.
Several of the Portfolios may purchase securities
with delivery or payment to occur at a later date.
At the time a Portfolio enters into a commitment to
purchase a security, the transaction is recorded
and the value of the security is reflected in the
net asset value. The value of the security may vary
with market fluctuations. No interest accrues to
the Portfolio until payment takes place. At the
time the Portfolio enters into this type of
transaction it is required to segregate cash or
other liquid assets equal to the value of the
securities purchased. At December 31, 1997, the
Kemper Government Securities Portfolio had
$7,140,000 of purchase commitments outstanding (8%
of net assets) with a corresponding amount of
assets segregated.
EXPENSES. Expenses arising in connection with a
Portfolio are allocated to that Portfolio. Other
Fund expenses are allocated among the Portfolios in
proportion to their relative net assets.
FUND SHARE VALUATION. Shares of each Portfolio of
the Fund are offered on a continuous basis to the
separate accounts of participating insurance
companies where permitted by law. On each day the
New York Stock Exchange is open for trading, each
Portfolio determines its net asset value per share
(NAV) by dividing the total value of the
Portfolio's investments and other assets, less
liabilities, by the number of Portfolio shares
outstanding. The NAV is determined as of the
earlier of 3:00 p.m. Chicago time or the close of
the Exchange for all Portfolios, and additionally
at 11:00 a.m. Chicago time for the Kemper Money
Market Portfolio. Because of the need to obtain
prices as of the close of trading on various
exchanges throughout the world, the calculation of
net asset value for the International Portfolio
does not take place contemporaneously with the
determination of prices of the Fund's foreign
securities.
FEDERAL INCOME TAXES. Each Portfolio has complied
with the special provisions of the Internal Revenue
Code available to investment companies and
therefore no federal income tax provision is
required. The accumulated net realized loss on
sales of investments for federal income tax
purposes at December 31, 1997 amounted to
approximately $19,205,000 in the Kemper High Yield
Portfolio, $4,613,000 in the Kemper Government
Securities Portfolio and $134,000 in the Kemper
Blue Chip Portfolio. These losses are available to
offset future taxable gains in the respective
Portfolios and, if not applied, expire during the
period 1998 through 2006.
DIVIDENDS TO SHAREHOLDERS. All Portfolios, except
the Kemper Money Market Portfolio, declare and pay
dividends of net investment income and net realized
capital gains annually, which are recorded on the
ex-dividend date. The Kemper Money Market Portfolio
declares a daily dividend equal to its net
investment income for that day, payable monthly.
Shareholders receive dividends in additional
shares.
29
<PAGE> 102
NOTES TO FINANCIAL STATEMENTS
Dividends are determined in accordance with income
tax principles which may treat certain transactions
differently from generally accepted accounting
principles. These differences are primarily due to
differing treatments for certain transactions such
as foreign currency transactions, if applicable.
EQUALIZATION ACCOUNTING. A portion of proceeds from
sales and cost of redemptions of Fund shares in all
Portfolios except the Kemper Money Market Portfolio
is credited or charged to undistributed net
investment income so that income per share
available for distribution is not affected by sales
or redemptions of shares.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES INVESTMENT MANAGER COMBINATION. Effective December
31, 1997, Zurich Insurance Company, the parent of
Zurich Kemper Investments, Inc. (ZKI), acquired a
majority interest in Scudder, Stevens & Clark, Inc.
(Scudder), another major investment manager. As a
result of this transaction, the operations of ZKI
were combined with Scudder to form a new global
investment organization named Scudder Kemper
Investments, Inc. (Scudder Kemper). The transaction
resulted in the termination of the Fund's
investment management agreement with ZKI, however,
a new investment management agreement between the
Fund and Scudder Kemper was approved by the Fund's
Board of Trustees and by the Fund's shareholders.
The new management agreement, which is effective
December 31, 1997, is the same in all material
respects as the previous management agreement,
except that Scudder Kemper is the new investment
adviser to the Fund. In addition, the name of the
Fund's principal underwriter was changed to Kemper
Distributors, Inc. (KDI).
MANAGEMENT AGREEMENT. Under the Fund's management
agreement with Scudder Kemper, the Fund pays a fee
based on average daily net assets of each Portfolio
at an annual rate of .50% for the Kemper Money
Market Portfolio, .55% for the Kemper Total Return
and Kemper Government Securities Portfolios, .60%
for the Kemper High Yield, Kemper Growth, Kemper
Investment Grade Bond, Kemper Horizon 20+, Kemper
Horizon 10+ and Kemper Horizon 5 Portfolios, .65%
for the Kemper Small Cap Growth and Kemper Blue
Chip Portfolios and .75% for the Kemper
International, Kemper Value, Kemper Small Cap
Value, Kemper Value+Growth, and Kemper Global
Income Portfolios. For the year ended December 31,
1997, the Fund incurred aggregate management fees
of $13,641,000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. During the year ended December 31,
1997, the Fund made no direct payments to its
officers and incurred trustees' fees of $270,000 to
independent trustees.
30
<PAGE> 103
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended December 31, 1997, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
PORTFOLIO PURCHASES FROM SALES
--------- --------- ----------
<S> <C> <C>
Kemper Total Return $924,037 $974,976
Kemper High Yield 433,435 366,542
Kemper Growth 889,985 880,277
Kemper Government Securities 167,936 175,356
Kemper International 142,813 141,889
Kemper Small Cap Growth 322,045 288,496
Kemper Investment Grade Bond 25,315 17,117
Kemper Value 132,750 35,490
Kemper Small Cap Value 46,681 8,195
Kemper Value+Growth 70,781 17,297
Kemper Horizon 20+ 18,709 7,316
Kemper Horizon 10+ 24,197 8,888
Kemper Horizon 5 17,553 6,555
</TABLE>
For the period from May 1, 1997 to December 31,
1997, investment transactions (excluding short-term
investments) are as follows (in thousands):
<TABLE>
<CAPTION>
PROCEEDS
PORTFOLIO PURCHASES FROM SALES
--------- --------- ----------
<S> <C> <C>
Kemper Blue Chip $ 18,803 $ 3,267
Kemper Global Income 4,847 2,804
</TABLE>
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following tables summarize the activity in
capital shares of each Portfolio of the Fund (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER MONEY MARKET PORTFOLIO
------------------------------------------------------------------------------
Shares sold 279,361 $ 279,361 149,223 $ 149,223
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 5,015 5,015 3,704 3,704
------------------------------------------------------------------------------
284,376 284,376 152,927 152,927
------------------------------------------------------------------------------
Shares redeemed (254,834) (254,834) (143,404) (143,404)
------------------------------------------------------------------------------
Net increase from capital
share transactions 29,542 $ 29,542 9,523 $ 9,523
------------------------------------------------------------------------------
------------------------------------------------------------------------------
KEMPER TOTAL RETURN PORTFOLIO
------------------------------------------------------------------------------
Shares sold 20,361 $ 52,952 36,913 $ 94,083
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 46,559 108,883 17,682 43,205
------------------------------------------------------------------------------
66,920 161,835 54,595 137,288
------------------------------------------------------------------------------
Shares redeemed (35,664) (96,409) (62,870) (159,372)
------------------------------------------------------------------------------
Net increase (decrease) from
capital share transactions 31,256 $ 65,426 (8,275) $ (22,804)
------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 104
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1997 1996
---------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER HIGH YIELD PORTFOLIO
------------------------------------------------------------------------------
Shares sold 153,373 $ 184,650 101,227 $ 118,182
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 22,228 25,931 21,456 24,806
------------------------------------------------------------------------------
175,601 210,581 122,683 142,988
------------------------------------------------------------------------------
Shares redeemed (99,314) (119,273) (101,236) (118,453)
------------------------------------------------------------------------------
Net increase from capital
share transactions 76,287 $ 91,308 21,447 $ 24,535
------------------------------------------------------------------------------
------------------------------------------------------------------------------
KEMPER GROWTH PORTFOLIO
------------------------------------------------------------------------------
Shares sold 17,325 $ 49,729 33,305 $ 104,951
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 49,988 114,261 22,196 64,020
------------------------------------------------------------------------------
67,313 163,990 55,501 168,971
------------------------------------------------------------------------------
Shares redeemed (24,302) (74,845) (37,981) (118,145)
------------------------------------------------------------------------------
Net increase from capital
share transactions 43,011 $ 89,145 17,520 $ 50,826
------------------------------------------------------------------------------
------------------------------------------------------------------------------
KEMPER GOVERNMENT SECURITIES PORTFOLIO
------------------------------------------------------------------------------
Shares sold 17,121 $ 16,263 11,632 $ 10,799
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 5,997 6,694 5,657 6,507
------------------------------------------------------------------------------
23,118 22,957 17,289 17,306
------------------------------------------------------------------------------
Shares redeemed (21,158) (21,057) (22,442) (22,518)
------------------------------------------------------------------------------
Net increase (decrease) from
capital share transactions 1,960 $ 1,900 (5,153) $ (5,212)
------------------------------------------------------------------------------
KEMPER INTERNATIONAL PORTFOLIO
------------------------------------------------------------------------------
Shares sold 36,340 $ 58,360 41,003 $ 59,682
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 6,447 9,607 2,155 3,056
------------------------------------------------------------------------------
42,787 67,967 43,158 62,738
------------------------------------------------------------------------------
Shares redeemed (23,422) (38,047) (36,773) (53,845)
------------------------------------------------------------------------------
Net increase from capital
share transactions 19,365 $ 29,920 6,385 $ 8,893
------------------------------------------------------------------------------
------------------------------------------------------------------------------
KEMPER SMALL CAP GROWTH PORTFOLIO
------------------------------------------------------------------------------
Shares sold 34,187 $ 62,047 28,558 $ 43,316
------------------------------------------------------------------------------
Shares issued in reinvestment
of dividends 6,358 8,904 840 1,209
------------------------------------------------------------------------------
40,545 70,951 29,398 44,525
------------------------------------------------------------------------------
Shares redeemed (11,990) (21,812) (14,446) (21,888)
------------------------------------------------------------------------------
Net increase from capital
share transactions 28,555 $ 49,139 14,952 $ 22,637
------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 105
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 1 TO
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- ----------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER INVESTMENT GRADE BOND PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 13,271 $ 13,473 1,962 $ 1,970
-----------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 40 41 -- --
-----------------------------------------------------------------------------
13,311 13,514 1,962 1,970
-----------------------------------------------------------------------------
Shares redeemed (1,377) (1,447) (133) (134)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 11,934 $ 12,067 1,829 $ 1,836
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
KEMPER VALUE PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 100,098 $135,103 18,543 $19,897
-----------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 324 389 -- --
-----------------------------------------------------------------------------
100,422 135,492 18,543 19,897
-----------------------------------------------------------------------------
Shares redeemed (11,573) (15,848) (489) (540)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 88,849 $119,644 18,054 $19,357
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
KEMPER SMALL CAP VALUE PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 55,160 $ 63,180 13,865 $13,311
-----------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 239 234 -- --
-----------------------------------------------------------------------------
55,399 63,414 13,865 13,311
-----------------------------------------------------------------------------
Shares redeemed (6,460) (7,442) (901) (866)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 48,939 $ 55,972 12,964 $12,445
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
KEMPER VALUE+GROWTH PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 42,473 $ 56,712 9,367 $ 9,935
-----------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 161 165 -- --
-----------------------------------------------------------------------------
42,634 56,877 9,367 9,935
-----------------------------------------------------------------------------
Shares redeemed (3,047) (4,010) (571) (607)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 39,587 $ 52,867 8,796 $ 9,328
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
KEMPER HORIZON 20+ PORTFOLIO
-----------------------------------------------------------------------------
Shares sold 9,642 $ 12,277 3,249 $ 3,460
-----------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 51 56 -- --
-----------------------------------------------------------------------------
9,693 12,333 3,249 3,460
-----------------------------------------------------------------------------
Shares redeemed (858) (1,125) (91) (97)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 8,835 $ 11,208 3,158 $ 3,363
-----------------------------------------------------------------------------
</TABLE>
33
<PAGE> 106
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MAY 1 TO
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------- ------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER HORIZON 10+ PORTFOLIO
----------------------------------------------------------------------------
Shares sold 13,389 $16,073 5,200 $ 5,375
-----------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 70 75 -- --
-----------------------------------------------------------------------------
13,459 16,148 5,200 5,375
-----------------------------------------------------------------------------
Shares redeemed (1,099) (1,318) (158) (167)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 12,360 $14,830 5,042 $ 5,208
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
KEMPER HORIZON 5 PORTFOLIO
----------------------------------------------------------------------------
Shares sold 10,209 $11,525 2,326 $ 2,399
-----------------------------------------------------------------------------
Shares issued in reinvestment of
dividends 40 43 -- --
-----------------------------------------------------------------------------
10,249 11,568 2,326 2,399
-----------------------------------------------------------------------------
Shares redeemed (910) (1,032) (113) (115)
-----------------------------------------------------------------------------
Net increase from capital share
transactions 9,339 $10,536 2,213 $ 2,284
-----------------------------------------------------------------------------
<CAPTION>
MAY 1 TO
DECEMBER 31, 1997
------------------
SHARES AMOUNT
--------------------------------------------------------------------------
<S> <C> <C>
KEMPER BLUE CHIP PORTFOLIO
--------------------------------------------------------------------------
Shares sold 17,303 $18,608
---------------------------------------------------------------------------
Shares redeemed (888) (963)
---------------------------------------------------------------------------
Net increase from capital share transactions 16,415 $17,645
---------------------------------------------------------------------------
---------------------------------------------------------------------------
KEMPER GLOBAL INCOME PORTFOLIO
--------------------------------------------------------------------------
Shares sold 2,953 $ 2,947
---------------------------------------------------------------------------
Shares redeemed (968) (971)
---------------------------------------------------------------------------
Net increase from capital share transactions 1,985 $ 1,976
---------------------------------------------------------------------------
</TABLE>
34
<PAGE> 107
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6 FINANCIAL FUTURES
CONTRACTS The Kemper Small Cap Value and Kemper Government
Securities Portfolios have entered into exchange
traded financial futures contracts in order to take
advantage of anticipated market conditions and, as
such, bear the risk that arises from entering into
these contracts.
At the time a Portfolio enters into a futures
contract, it is required to make a margin deposit
with its custodian. Subsequently, gain or loss is
recognized and payments are made on a daily basis
between the Portfolios and the broker as the market
value of the futures contract fluctuates. At
December 31, 1997, the market value of assets
pledged by the Portfolios to cover margin
requirements for open futures positions were
$100,000 and $212,000 for the Kemper Small Cap
Value and Kemper Government Securities Portfolios,
respectively. The Portfolios also have liquid
assets in their portfolios in excess of the face
amount of open futures contracts. At December 31,
1997, the Portfolios had the following futures
contracts open, with expirations in March, 1998:
<TABLE>
<CAPTION>
FACE GAIN (LOSS)
PORTFOLIO TYPE AMOUNT POSITION AT 12/31/97
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kemper Small Cap Value Russell 2000 $2,666,000 Long $(18,000)
-------------------------------------------------------------------------------
Kemper Government U.S. Treasury Note 2,490,000 Long 8,000
Securities U.S. Treasury Bond 479,000 Long 3,000
-------------------------------------------------------------------------------
$ 11,000
-------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
7 FORWARD FOREIGN
CURRENCY CONTRACTS In order to protect itself against a decline in the
value of a particular foreign currency against the
U.S. Dollar, the Kemper Global Income Portfolio has
entered into forward contracts to deliver foreign
currency in exchange for U.S. Dollars as described
below. The Portfolio bears the market risk that
arises from changes in foreign exchange rates, and
accordingly, the net unrealized gain or loss
amounts on these contracts are reflected in the
accompanying financial statements. The Portfolio
also bears the credit risk (which is limited to the
unrealized gain, if any) if the counterparty fails
to perform under the contract. At December 31,
1997, the Portfolio had the following forward
currency contracts outstanding with settlement
dates in April and July, 1998:
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY AMOUNT IN GAIN (LOSS) AT
TO BE DELIVERED U.S. DOLLARS 12/31/97
-------------------------------------------------------------------------------
<S> <C> <C> <C>
599,000 Australian Dollars $421,000 $29,000
-------------------------------------------------------------------------------
100,000 British Pounds 161,000 (4,000)
-------------------------------------------------------------------------------
215,000 New Zealand Dollars 135,000 12,000
-------------------------------------------------------------------------------
Net unrealized gain $37,000
-------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 108
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------------------------------------------
KEMPER MONEY MARKET PORTFOLIO
------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------
1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .06 .04 .03
- -------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------
TOTAL RETURN 5.25% 5.03 5.66 3.96 2.83
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------------
Expenses .55% .60 .55 .53 .56
- -------------------------------------------------------------------------------------------------
Net investment income 5.14% 4.90 5.52 3.95 2.79
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $100,143 70,601 61,078 83,821 68,177
- -------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO KEMPER MONEY MARKET PORTFOLIO
The total returns for 1995 and 1994 include the effect of a capital contribution
from the investment manager. Without the capital contribution, the total returns
would have been 5.11% and 3.47%, respectively.
<TABLE>
<CAPTION>
------------------------------------------------
KEMPER TOTAL RETURN PORTFOLIO
------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------
1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 2.815 2.579 2.112 2.586 2.473
- -------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .090 .084 .084 .069 .069
- -------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .377 .322 .453 (.313) .214
- -------------------------------------------------------------------------------------------------
Total from investment operations .467 .406 .537 (.244) .283
- -------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .090 .090 .070 .060 .050
- -------------------------------------------------------------------------------------------------
Distribution from net realized gain .370 .080 -- .170 .120
- -------------------------------------------------------------------------------------------------
Total dividends .460 .170 .070 .230 .170
- -------------------------------------------------------------------------------------------------
Net asset value, end of year $ 2.822 2.815 2.579 2.112 2.586
- -------------------------------------------------------------------------------------------------
TOTAL RETURN 19.96% 16.76 25.97 (9.50) 12.13
- -------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------------
Expenses .60% .59 .60 .61 .59
- -------------------------------------------------------------------------------------------------
Net investment income 3.32% 3.21 3.52 3.13 3.19
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $786,996 697,102 659,894 586,594 643,830
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate 122% 90 118 128 191
- -------------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the years ended December 31,
1997 and 1996 were $.0586 and $.0574, respectively.
- -------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 109
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION> ----------------------------------------------------
KEMPER HIGH YIELD PORTFOLIO
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.281 1.259 1.185 1.338 1.209
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .116 .120 .125 .116 .120
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .019 .042 .069 (.149) .109
- -----------------------------------------------------------------------------------------------
Total from investment operations .135 .162 .194 (.033) .229
- -----------------------------------------------------------------------------------------------
Less distribution from net investment
income .120 .140 .120 .120 .100
- -----------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.296 1.281 1.259 1.185 1.338
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 11.61% 14.06 17.40 (2.25) 20.00
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses .65% .65 .65 .65 .63
- -----------------------------------------------------------------------------------------------
Net investment income 9.20% 9.70 10.27 9.49 9.54
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $391,664 289,315 257,377 219,415 233,964
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 90% 98 90 98 84
- -----------------------------------------------------------------------------------------------
<CAPTION>
----------------------------------------------------
KEMPER GROWTH PORTFOLIO
----------------------------------------------------
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 3.371 3.262 2.665 2.935 2.631
- -----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .012 .030 .034 .018 .004
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .448 .589 .793 (.138) .370
- -----------------------------------------------------------------------------------------------
Total from investment operations .460 .619 .827 (.120) .374
- -----------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .020 .040 .010 -- .010
- -----------------------------------------------------------------------------------------------
Distribution from net realized gain .810 .470 .220 .150 .060
- -----------------------------------------------------------------------------------------------
Total dividends .830 .510 .230 .150 .070
- -----------------------------------------------------------------------------------------------
Net asset value, end of year $ 3.001 3.371 3.262 2.665 2.935
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 21.34% 21.63 32.97 (4.02) 14.63
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses .65% .64 .64 .66 .64
- -----------------------------------------------------------------------------------------------
Net investment income .42% .94 1.15 .69 .30
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $563,016 487,483 414,533 321,708 284,461
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 170% 175 88 106 78
- -----------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the years ended December 31,
1997 and 1996 were $.0590 and $.0558, respectively.
- -----------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 110
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION> ---------------------------------------------------
KEMPER GOVERNMENT SECURITIES PORTFOLIO
---------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.207 1.269 1.142 1.267 1.277
- ----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .084 .085 .084 .067 .060
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .016 (.057) .123 (.102) .020
- ----------------------------------------------------------------------------------------------
Total from investment operations .100 .028 .207 (.035) .080
- ----------------------------------------------------------------------------------------------
Less dividends
Distribution from net investment income .100 .090 .080 .060 .060
- ----------------------------------------------------------------------------------------------
Distribution from net realized gain -- -- -- .030 .030
- ----------------------------------------------------------------------------------------------
Total dividends .100 .090 .080 .090 .090
- ----------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.207 1.207 1.269 1.142 1.267
- ----------------------------------------------------------------------------------------------
TOTAL RETURN 8.96% 2.56 18.98 (2.74) 6.48
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses .64% .66 .65 .63 .60
- ----------------------------------------------------------------------------------------------
Net investment income 7.12% 7.09 7.08 5.69 5.05
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $86,682 84,314 95,185 95,782 121,912
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 179% 325 275 606 534
- ----------------------------------------------------------------------------------------------
<CAPTION>
---------------------------------------------------
KEMPER INTERNATIONAL PORTFOLIO
---------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 1.564 1.371 1.244 1.306 .993
- ----------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .011 .011 .018 .009 .010
- ----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .130 .212 .139 (.056) .313
- ----------------------------------------------------------------------------------------------
Total from investment operations .141 .223 .157 (.047) .323
- ----------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .020 .020 .010 -- .009
- ----------------------------------------------------------------------------------------------
Distribution from net realized gain .070 .010 .020 .015 .001
- ----------------------------------------------------------------------------------------------
Total dividends .090 .030 .030 .015 .010
- ----------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.615 1.564 1.371 1.244 1.306
- ----------------------------------------------------------------------------------------------
TOTAL RETURN 9.46% 16.49 12.83 (3.59) 32.83
- ----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------------
Expenses .91% .96 .92 .93 .92
- ----------------------------------------------------------------------------------------------
Net investment income .71% .89 1.39 .74 .86
- ----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Net assets at end of year (in thousands) $200,046 163,475 134,481 122,710 88,880
- ----------------------------------------------------------------------------------------------
Portfolio turnover rate 79% 87 126 107 116
- ----------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the years ended December 31,
1997 and 1996 were $.0142 and $.0183, respectively. Foreign commissions usually are lower than
U.S. commissions where expressed as cents per share due to the lower per share price of many
non-U.S. securities.
- ----------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 111
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-----------------------------------------------
KEMPER SMALL CAP GROWTH PORTFOLIO
-----------------------------------------------
YEAR ENDED DECEMBER 31, MAY 2 TO
-------------------------- DECEMBER 31,
1997 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.677 1.346 1.039 1.000
- ------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .004 .002 .005 .008
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain .488 .369 .307 .031
- ------------------------------------------------------------------------------------------
Total from investment operations .492 .371 .312 .039
- ------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .010 -- .005 --
- ------------------------------------------------------------------------------------------
Distribution from net realized gain .190 .040 -- --
- ------------------------------------------------------------------------------------------
Total dividends .200 .040 .005 --
- ------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.969 1.677 1.346 1.039
- ------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 34.20% 28.04 30.07 3.95
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ------------------------------------------------------------------------------------------
Expenses .71% .75 .87 1.25
- ------------------------------------------------------------------------------------------
Net investment income .20% .15 .42 .91
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $137,415 69,137 35,373 12,909
- ------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 330% 156 81 58
- ------------------------------------------------------------------------------------------
Average commission rates paid per share on stock transactions for the years ended December
31, 1997 and 1996 were $.0579 and $.0570, respectively.
- ------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 112
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER
INVESTMENT GRADE VALUE SMALL CAP VALUE+
BOND PORTFOLIO PORTFOLIO VALUE PORTFOLIO GROWTH PORTFOLIO
------------------- ------------------- ------------------- -------------------
YEAR MAY 1 YEAR MAY 1 YEAR MAY 1 YEAR MAY 1
ENDED TO ENDED TO ENDED TO ENDED TO
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1997 1996 1997 1996 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.036 1.000 1.174 1.000 1.019 1.000 1.146 1.000
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .066 .031 .031 .015 .012 .013 .012 .008
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) .026 .005 .323 .159 .206 .006 .277 .138
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .092 .036 .354 .174 .218 .019 .289 .146
- -------------------------------------------------------------------------------------------------------------------------------
Less distribution from net investment
income .010 -- .010 -- .010 -- .010 --
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.118 1.036 1.518 1.174 1.227 1.019 1.425 1.146
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 9.04% 3.57 30.38 17.36 21.73 1.86 25.47 14.60
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION (ANNUALIZED)
- -------------------------------------------------------------------------------------------------------------------------------
Expenses .80% .87 .80 .90 .84 .90 .84 .90
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 6.23% 4.93 2.38 2.42 1.18 2.25 .95 .97
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION (ANNUALIZED)
- -------------------------------------------------------------------------------------------------------------------------------
Expenses .80% .87 .80 .92 .84 .92 .84 1.01
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 6.23% 4.93 2.38 2.40 1.18 2.23 .95 .86
- -------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period (in
thousands) $15,504 1,998 162,380 21,305 76,108 13,307 69,094 10,196
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 311% 75 46 57 22 61 50 25
- -------------------------------------------------------------------------------------------------------------------------------
Average commission rate paid per share on
stock transactions NA NA $.0561 .0500 .0533 .0500 .0591 .0596
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE> 113
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER KEMPER KEMPER
HORIZON 20+ HORIZON 10+ HORIZON 5 BLUE CHIP GLOBAL INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------- ------------------- -------------------------
YEAR MAY 1 YEAR MAY 1 YEAR MAY 1 FOR THE PERIOD MAY 1
ENDED TO ENDED TO ENDED TO (COMMENCEMENT OF
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, OPERATIONS) TO
1997 1996 1997 1996 1997 1996 DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.154 1.000 1.114 1.000 1.096 1.000 1.000 1.000
- -----------------------------------------------------------------------------------------------
.020 .012 .034 .018 .043 .023 .017 .036
- -----------------------------------------------------------------------------------------------
.214 .142 .151 .096 .095 .073 .098 (.007)
- -----------------------------------------------------------------------------------------------
.234 .154 .185 .114 .138 .096 .115 .029
- -----------------------------------------------------------------------------------------------
.010 -- .010 -- .010 -- -- --
- -----------------------------------------------------------------------------------------------
1.378 1.154 1.289 1.114 1.224 1.096 1.115 1.029
- -----------------------------------------------------------------------------------------------
20.48 15.37 16.77 11.37 12.70 9.59 11.54 2.87
.93 .81 .83 .78 .97 .83 .95 1.10
- -----------------------------------------------------------------------------------------------
1.58 1.71 2.77 2.69 3.63 3.60 2.07 5.36
- -----------------------------------------------------------------------------------------------
.93 1.13 .83 1.01 .97 1.01 .95 1.10
- -----------------------------------------------------------------------------------------------
1.58 1.39 2.77 2.46 3.63 3.42 2.07 5.36
- -----------------------------------------------------------------------------------------------
16,659 3,759 22,553 5,727 14,258 2,534 18,421 2,145
- -----------------------------------------------------------------------------------------------
75 60 67 76 89 13 78 290
- -----------------------------------------------------------------------------------------------
.0517 .0458 .0501 .0455 .0525 .0490 .0597 NA
- -----------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE> 114
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
BANKING--4.4%
- --------------------------------------------------------------------------------
Credit Lyonnais, N.A., Inc.
5.78%, 1/20/98 $ 1,994
Swiss Bank Corp.
5.75%, 2/20/98 2,500
--------------------------------------------------
4,494
- --------------------------------------------------------------------------------
BUSINESS LOANS--24.8%
- --------------------------------------------------------------------------------
Broadway Capital Corp.
5.78%, 1/26/98 2,988
Eureka Securitization, Inc.
5.86%, 2/24/98 2,974
First Brands Corp.
5.82%, 1/29/98 2,987
Jet Funding Corp.
5.84%, 2/2/98 1,990
Preferred Receivables Funding Corp.
5.90%, 1/23/98 2,989
Sheffield Receivables Corp.
5.89%, 2/6/98 2,983
Thunder Bay Funding, Inc.
5.93%, 2/13/98 2,979
Windmill Funding Corp.
5.84%, 3/26/98 2,960
Working Capital Management Co., L.P.
6.28%, 2/25/98 1,981
--------------------------------------------------
24,831
- --------------------------------------------------------------------------------
CAPITAL AND EQUIPMENT
LENDING--12.9%
- --------------------------------------------------------------------------------
BTM Capital Corp.
5.79%, 1/26/98 1,992
Eiger Capital Corp.
5.84%, 2/13/98 2,979
Golden Manager's Acceptance Corp.
5.90%, 1/23/98 2,989
IBM Credit Corp.
5.71%, 1/14/98 2,495
(a)Sanwa Business Credit Corp.
5.98%, 1/16/98 2,500
--------------------------------------------------
12,955
- --------------------------------------------------------------------------------
CAPTIVE BUSINESS
LENDING--7.0%
- --------------------------------------------------------------------------------
(a)FINOVA Capital Corp.
6.03%, 1/13/98 2,000
Girsa Funding Corp.
5.86%, 2/2/98 1,990
Sony Capital Corp.
5.89%, 1/7/98 2,997
--------------------------------------------------
6,987
- --------------------------------------------------------------------------------
CONSUMER LENDING--6.0%
- --------------------------------------------------------------------------------
(a)Countrywide Home Loans
6.16%, 1/23/98 $ 2,001
NS Finance, Inc.
6.07%, 1/29/98 995
Transamerica Finance Corp.
5.77%, 1/29/98 2,987
--------------------------------------------------
5,983
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCE--8.9%
- --------------------------------------------------------------------------------
Dynamic Funding Corp.
6.08%, 2/4/98 2,983
Old Line Funding Corp.
5.94%, 1/21/98 2,990
Xerox Credit Corp.
5.78%, 1/13/98 2,994
--------------------------------------------------
8,967
- --------------------------------------------------------------------------------
FINANCIAL SERVICES--12.0%
- --------------------------------------------------------------------------------
(a)Bear Stearns Cos., Inc.
5.96%, 1/20/98 2,000
(a)Goldman Sachs Group, L.P.
5.85%, 1/12/98 2,000
(a)(b)Lehman Brothers Holdings, Inc.
5.95%, 1/21/98 2,000
(a)Merrill Lynch & Co., Inc.
5.96%, 1/5/98 2,000
(a)Morgan Stanley, Dean Witter,
Discover & Co.
5.93%, 1/20/98 2,000
Nomura Holding America, Inc.
5.78%, 1/20/98 1,994
--------------------------------------------------
11,994
- --------------------------------------------------------------------------------
HEALTH CARE--3.0%
- --------------------------------------------------------------------------------
A.H. Robins Co., Inc.
5.81%, 1/28/98 2,987
--------------------------------------------------
- --------------------------------------------------------------------------------
MANUFACTURING/
INDUSTRIAL--3.0%
- --------------------------------------------------------------------------------
Du Pont de Nemours and Co.
5.79%, 1/16/98 2,993
--------------------------------------------------
</TABLE>
42
<PAGE> 115
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES--6.0%
- --------------------------------------------------------------------------------
Frontier Corp.
6.16%, 1/14/98 $ 2,993
MCI Communications Corp.
5.84%, 2/17/98 2,977
--------------------------------------------------
5,970
--------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--88.0%
(AVERAGE MATURITY: 38 DAYS) 88,161
--------------------------------------------------
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT AND BANK NOTES
- --------------------------------------------------------------------------------
(a)Bank One
5.88%, 1/6/98 1,999
(a)Comerica Bank
5.67%, 1/2/98 2,000
(a)CoreStates Bank, N.A.
5.97%, 1/5/98 1,000
(a)Mellon Bank Corp.
5.68%, 2/9/98 1,999
(a)Morgan Guaranty Trust Co. of New York
5.63%, 1/2/98 2,000
(a)PNC Bank Corp.
5.62%, 1/2/98 2,000
--------------------------------------------------
TOTAL CERTIFICATES
OF DEPOSIT AND BANK NOTES--11.0%
(AVERAGE MATURITY: 18 DAYS) 10,998
--------------------------------------------------
TOTAL INVESTMENTS--99.0%
(AVERAGE MATURITY: 35 DAYS) 99,159
--------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.0% 984
--------------------------------------------------
NET ASSETS -- 100% $100,143
--------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER MONEY MARKET PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at December
31, 1997. The dates shown represent the demand date or next interest rate
change date.
(b) Illiquid security representing 2.0% of net assets at December 31, 1997.
See accompanying Notes to Financial Statements.
43
<PAGE> 116
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER OF
GOVERNMENT OBLIGATIONS SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES
- --------------------------------------------------------------------------------
7.75%, 2000 6,000 $ 6,242
6.375%, 2000 1,000 1,013
7.875%, 2001 7,000 7,486
7.75%, 2001 9,000 9,520
6.625%, 2002 3,340 3,450
6.25%, 2003 9,150 9,357
7.25%, 2004 1,750 1,888
5.875%, 2004 175 177
6.625%, 2007 275 291
6.125%, 2007 4,525 4,651
---------------------------------------------------------------------------
44,075
- --------------------------------------------------------------------------------
U.S. TREASURY BONDS
- --------------------------------------------------------------------------------
10.75%, 2003 $ 4,265 5,215
10.75%, 2005 10,495 13,648
10.375%, 2009 4,865 6,081
9.125%, 2009 4,870 5,693
13.875%, 2011 16,180 24,616
12.00%, 2013 1,800 2,653
10.625%, 2015 23,300 35,015
8.75%, 2020 4,000 5,335
6.50%, 2026 3,100 3,310
6.00%, 2026 1,030 1,029
6.625%, 2027 1,900 2,063
6.375%, 2027 700 739
6.125%, 2027 9,100 9,353
---------------------------------------------------------------------------
114,750
- --------------------------------------------------------------------------------
PROVINCE OF QUEBEC, CANADA
- --------------------------------------------------------------------------------
8.625%, 2005 1,500 1,687
---------------------------------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--20.4%
(Cost: $156,012) 160,512
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCKS
- --------------------------------------------------------------------------------
BASIC INDUSTRIES--1.9%
- --------------------------------------------------------------------------------
Crown Cork & Seal Co. 100,000 shs. 5,012
Ferro Corp. 175,000 4,255
Rhone-Poulenc Rorer, ADS
and warrants 135,600 3,229
W.R. Grace & Co. 35,000 2,815
---------------------------------------------------------------------------
15,311
- --------------------------------------------------------------------------------
CAPITAL GOODS--5.5%
- --------------------------------------------------------------------------------
B.F. Goodrich Co. 250,000 10,359
Emerson Electric Co. 100,000 5,644
General Electric Co. 180,000 13,207
General Motors Corp. 80,000 2,955
Raytheon Co. 44,992 2,219
Sundstrand Corp. 75,000 3,778
Technip, S.A. 3,468 368
York International Corp. 120,000 4,748
---------------------------------------------------------------------------
43,278
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--9.0%
- --------------------------------------------------------------------------------
Carnival Corp. 44,000 $ 2,437
(b) Consolidated Stores Corp. 117,500 5,163
CVS Corp. 70,000 4,484
(b) Federated Department Stores 90,000 3,876
Hilton Hotels Corp. 100,000 2,975
Honeywell, Inc. 50,000 3,425
Hudson's Bay Co. 10,200 227
J.C. Penney Co. 20,000 1,206
May Department Stores Co. 72,000 3,794
Philip Morris Cos. 180,000 8,156
PPG Industries 90,000 5,140
R. R. Donnelley & Sons Co. 200,000 7,450
Sears, Roebuck & Co. 160,000 7,240
Time Warner, Inc. 120,000 7,440
(b) Toys R Us 100,000 3,144
Tribune Co. 40,000 2,490
Wm. Wrigley Jr. Co. 28,900 2,299
---------------------------------------------------------------------------
70,946
- --------------------------------------------------------------------------------
CONSUMER DURABLES--2.1%
- --------------------------------------------------------------------------------
Federal-Mogul Corp. 80,000 3,240
Leggett & Platt, Inc. 120,000 5,025
Stanley Works 170,000 8,022
---------------------------------------------------------------------------
16,287
- --------------------------------------------------------------------------------
CONSUMER STAPLES--5.5%
- --------------------------------------------------------------------------------
CPC International 55,000 5,940
General Mills 50,000 3,581
H.J. Heinz Co. 60,000 3,049
International Flavors &
Fragrances 80,000 4,120
Kimberly-Clark Corp. 80,000 3,945
PepsiCo 145,000 5,283
RJR Nabisco Holdings Corp. 50,000 1,875
Sara Lee Corp. 90,000 5,068
Seagram Company, Ltd. 80,000 2,585
Unilever, N.V., ADR 120,000 7,493
---------------------------------------------------------------------------
42,939
- --------------------------------------------------------------------------------
ENERGY--2.8%
- --------------------------------------------------------------------------------
AMOCO Corp. 25,000 2,128
Baker Hughes, Inc. 60,000 2,618
Chevron Corp. 60,000 4,620
Exxon Corp. 83,200 5,091
Mobil Corp. 70,000 5,053
Petro-Canada 12,900 237
Royal Dutch Petroleum 40,000 2,168
---------------------------------------------------------------------------
21,915
- --------------------------------------------------------------------------------
FINANCE--8.1%
- --------------------------------------------------------------------------------
ADVANTA Corp. 101,700 2,581
Allstate Corp. 40,000 3,635
American Express Co. 45,000 4,016
American General Corp. 100,000 5,406
</TABLE>
44
<PAGE> 117
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
FINANCE--CONTINUED
- ----------------------------------------------------------------------
AmSouth Bancorporation 50,000 $ 2,716
Beneficial Corp. 60,000 4,988
Compass Bancshares 20,000 875
First Union Corp. 45,900 2,352
H.F. Ahmanson & Co. 25,000 1,673
Hibernia Corp. 50,000 941
Household International 45,000 5,740
Jefferson-Pilot Corp. 98,600 7,678
Morgan Stanley, Dean Witter,
Discover & Co. 130,000 7,686
PNC Bank Corp. 90,000 5,136
Safeco Corp. 120,000 5,850
Summit Bancorp 54,000 2,876
-----------------------------------------------------------------
64,149
- ----------------------------------------------------------------------
HEALTH CARE--9.6%
- ----------------------------------------------------------------------
Abbott Laboratories 120,000 7,868
ALZA Corp. 100,000 3,181
American Home Products Corp. 80,000 6,120
Betz Laboratories, Inc. 55,000 3,358
Biomet, Inc. 190,000 4,869
Bristol-Myers Squibb Co. 54,000 5,110
(b) British Biotech, PLC 14,500 25
Crescendo Pharmaceutical 5,000 58
C.R. Bard 160,000 5,010
Glaxo Wellcome, PLC 140,000 6,703
(b) HealthCare COMPARE Corp. 70,000 3,579
(b) HEALTHSOUTH Corp. 140,000 3,885
Novartis 95,000 7,695
Perkin-Elmer Corp. 85,000 6,040
(b) Tenet Healthcare Corp. 160,000 5,300
United Healthcare Corp. 70,000 3,478
Vencor, Inc. 140,000 3,421
-----------------------------------------------------------------
75,700
- ----------------------------------------------------------------------
TECHNOLOGY--9.1%
- ----------------------------------------------------------------------
AMP, Inc. 50,000 2,100
(b) Analog Devices 200,000 5,538
(b) Cisco Systems 45,000 2,509
Computer Associates
International 105,000 5,552
(b) Computer Sciences Corp. 120,000 10,020
(b) Compuware Corp. 170,000 5,440
(b) Gartner Group 134,300 5,003
Harris Corp. 200,000 9,175
Hewlett-Packard Co. 65,000 4,063
International Business
Machines Corp. 70,000 7,319
Linear Technology Corp. 10,000 576
(b) National Semiconductor Corp. 60,000 1,556
(b) Oracle Corp. 135,000 3,012
Pitney Bowes 45,000 4,047
(b) Sun Microsystems 70,000 2,791
(b) VIASOFT, Inc. 70,000 2,958
-----------------------------------------------------------------
71,659
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION--1.5%
- ---------------------------------------------------------------------
CSX Corp. 90,000 $ 4,860
(b) Federal Express Corp. 40,000 2,442
Norfolk Southern Corp. 135,000 4,160
----------------------------------------------------------------
11,462
- ---------------------------------------------------------------------
UTILITIES--3.9%
- ---------------------------------------------------------------------
Ameritech Corp. 60,000 4,830
AT&T 120,000 7,350
Canadian Pacific, Ltd. 100,000 2,725
Cincinnati Bell, Inc. 75,300 2,334
Enron Corp. 80,000 3,325
GTE Corp. 60,000 3,135
SBC Communications, Inc. 100,000 7,325
----------------------------------------------------------------
31,024
- ---------------------------------------------------------------------
MISCELLANEOUS--.1%
- ---------------------------------------------------------------------
Femsa 5,100 40
Getronics 18,600 593
- ---------------------------------------------------------------------
633
- ---------------------------------------------------------------------
----------------------------------------------------------------
TOTAL COMMON STOCKS--59.1%
(Cost: $393,895) 465,303
- ---------------------------------------------------------------------
CORPORATE OBLIGATIONS
- ---------------------------------------------------------------------
ASSET BACKED SECURITIES--.1%
- ---------------------------------------------------------------------
Pacific Gas & Electric,
6.42%, 2008 $ 400 401
Southern California Edison Co.
6.22%, 2004 100 100
6.28%, 2005 50 50
----------------------------------------------------------------
551
- ---------------------------------------------------------------------
BASIC INDUSTRIES--1.0%
- ---------------------------------------------------------------------
Case Corp.,
6.75%, 2007 500 508
Euramax International,
11.25%, 2006 2,850 3,092
MMI Products, Inc.,
11.25%, 2007 400 436
Riverwood International,
10.25%, 2006 2,650 2,637
Stone Container Corp.,
11.875%, 2016 1,000 1,070
Stone Container Finance
Corp., 11.50%, 2006 500 520
----------------------------------------------------------------
8,263
- ---------------------------------------------------------------------
CAPITAL GOODS--.2%
- ---------------------------------------------------------------------
Neenah Corp.,
11.125%, 2007 1,000 1,098
Nortek,
9.875%, 2004 90 92
Raytheon Co.,
6.75%, 2007 650 662
----------------------------------------------------------------
1,852
- ---------------------------------------------------------------------
</TABLE>
45
<PAGE> 118
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--6.5%
- -------------------------------------------------------
AFC Enterprise, Inc.,
10.25%, 2007 $ 700 $ 740
AMF Group
10.875%, 2006 2,100 2,308
(a) 12.20%, 2006 612 483
American Radio System,
9.00%, 2006 1,260 1,340
Cablevision Systems Corp.,
9.25%, 2005 1,800 1,908
Cinemark USA, Inc.,
9.625%, 2008 1,360 1,408
Cole National Group,
9.875%, 2006 2,640 2,825
Comcast Cable
Communications,
8.875%, 2017 300 355
Comcast Cablevision,
8.50%, 2027 325 382
Comcast Corp.,
9.375%, 2005 1,500 1,596
(a) Comcast UK Cable Partners,
Ltd., 11.20%, 2007 2,880 2,329
Dayton Hudson Corp.,
7.50%, 2006 600 638
Delco Remy International,
10.625%, 2006 1,000 1,080
Empress River Casino,
10.75%, 2002 2,000 2,150
Federated Department Stores,
10.00%, 2001 1,350 1,489
Granite Broadcasting Corp.,
9.375%, 2005 1,240 1,260
Harman International
Industries,
7.32%, 2007 600 617
Hilton Hotels Corp.
7.375%, 2002 500 510
7.20%, 2007 500 497
(a) International CableTel, Inc.
12.75%, 2005 330 276
11.50%, 2006 2,270 1,771
J.C. Penney Co.,
7.95%, 2017 600 668
K-III Communications Corp.,
8.50%, 2006 750 761
Kinder-Care Learning
Centers, 9.50%, 2009 500 498
News American Holdings,
9.25%, 2013 1,025 1,217
Pathmark Stores,
9.625%, 2003 2,545 2,341
Rogers Cantel Mobile, Inc.,
8.80%, 2007 2,100 2,084
Royal Caribbean Cruises,
Ltd., 8.25%, 2005 1,250 1,357
Simon DeBartolo Group, Inc.,
7.125%, 2007 800 814
Sinclair Broadcasting Group,
Inc., 8.75%, 2007 850 846
Staples, Inc.,
7.125%, 2007 750 764
Tele-Communications, Inc.,
9.80%, 2012 700 871
(a) TeleWest Communications, PLC,
11.00%, 2007 4,020 3,136
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--6.5% (CONTINUED)
- -------------------------------------------------------
Time Warner Entertainment
Co., L.P.,
8.875%, 2012 $ 425 $ 496
Time Warner, Inc.
9.125%, 2013 425 506
9.150%, 2023 450 554
Trump Atlantic City,
11.25%, 2006 1,800 1,760
USA Mobile Communications,
Inc.,
9.50%, 2004 1,750 1,698
Viacom Inc.,
8.00%, 2006 2,500 2,506
Windy Hill Pet Food
Company, Inc.,
9.75%, 2007 1,300 1,352
--------------------------------------------------------------------
50,191
- -------------------------------------------------------------------------
CONSUMER DURABLES--.6%
- -------------------------------------------------------------------------
Del Webb Corp.,
9.75%, 2008 2,600 2,720
WestPoint Stevens,
9.375%, 2005 2,050 2,158
--------------------------------------------------------------------
4,878
- -------------------------------------------------------------------------
ENERGY--.4%
- -------------------------------------------------------------------------
Gulf Canada Resources, Ltd.,
9.25%, 2004 1,500 1,575
USX Corp.,
9.375%, 2012 750 921
Wiser Oil Co.,
9.50%, 2007 690 674
--------------------------------------------------------------------
3,170
- -------------------------------------------------------------------------
FINANCE--2.4%
- -------------------------------------------------------------------------
AB Spintab,
7.50%, 2049 800 823
Abbey National, PLC,
7.35%, 2049 725 750
ABN AMRO Bank,
8.25%, 2009 1,250 1,355
Aegon, N.V.,
8.00%, 2006 1,000 1,096
Banco Central Hispano
Americano,
7.50%, 2005 1,070 1,116
Continental Homes Holding
Corp.,
10.00%, 2006 1,000 1,080
Corporation Andina De
Formento,
7.79%, 2017 750 777
Crestar Financial Corp.,
8.25%, 2002 600 643
Den Danske Bank,
7.40%, 2010 1,250 1,299
FINOVA Capital Corp.,
6.50%, 2002 550 554
Fleet Financial Group, Inc.
8.125%, 2004 100 108
8.625%, 2007 625 710
Ford Motor Credit Corp.,
7.75%, 2005 600 645
</TABLE>
46
<PAGE> 119
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
-----------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-----------------------------------------------------
<S> <C> <C>
FINANCE--CONTINUED
-----------------------------------------------------
General Electric Capital
Corp.
8.75%, 2007 $ 350 $ 409
8.625, 2008 400 472
Lehman Brothers Holdings
7.25%, 2003 250 258
7.375%, 2007 1,000 1,038
Morgan Stanley, Dean Witter,
Discover & Co.,
6.875%, 2007 750 764
NationsBank Corp.,
9.50%, 2004 600 697
Peoples Bank Bridgeport,
7.20%, 2006 700 714
Repsol International
Finance,
7.00%, 2005 1,000 1,034
Scotland International
Finance Co.,
8.80%, 2004 250 278
Skandinaviska Enskilda
Banken,
6.625%, 2049 1,000 1,001
Svenska Handelsbanken,
7.125%, 2049 650 654
Wells Fargo & Co.,
6.875%, 2006 750 768
-----------------------------------------------------
19,043
HEALTH CARE--.5%
-----------------------------------------------------
MedPartners, Inc.,
7.375%, 2006 875 862
Tenet Healthcare Corp.
10.125%, 2005 1,600 1,744
8.625%, 2007 1,000 1,030
-----------------------------------------------------
3,636
TRANSPORTATION--.4%
-----------------------------------------------------
Continental Airlines
7.75%, 2014 486 524
6.90%, 2018 400 407
Hayes Wheels International,
Inc.,
11.00%, 2006 1,500 1,673
Norfolk Southern Corp.,
7.35%, 2007 600 638
-----------------------------------------------------
3,242
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
UTILITIES--.7%
- ----------------------------------------------------------
(a) Call-Net Enterprises, Inc.,
13.25%, 2004 $ 500 $ 458
Commonwealth Edison
7.375%, 2004 850 881
7.00%, 2005 250 257
(a) Diamond Cable Communication PLC,
10.75%, 2007 1,000 684
Hyder, PLC,
6.875%, 2007 550 553
(a) McLeod, Inc.,
10.50%, 2007 1,500 1,091
U.S. West Capital Funding,
Inc.,
7.90%, 2027 850 930
WorldCom, Inc.
7.75%, 2007 500 534
7.75%, 2027 450 494
-----------------------------------------------------
5,882
-----------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--12.8%
(Cost: $97,638) 100,708
-----------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.88% to 6.50%
Due--January 1998
Merrill Lynch & Co. 15,000 14,971
Whirlpool Financial Corp. 15,000 14,989
Other 31,500 31,421
-----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--7.8%
(Cost: $61,386) 61,381
-----------------------------------------------------
TOTAL INVESTMENTS--100.1%
(Cost: $708,931) 787,904
-----------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(.1)% (908)
-----------------------------------------------------
NET ASSETS--100% $786,996
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER TOTAL RETURN PORTFOLIO OF INVESTMENTS
(a) Deferred interest obligation; currently zero coupon under the terms of the
initial offering.
(b) Non-income producing security.
Based on the cost of investments of $708,931,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $90,360,000, the
gross unrealized depreciation was $11,387,000 and the net unrealized
appreciation on investments was $78,973,000.
See accompanying Notes to Financial Statements.
47
<PAGE> 120
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
GOVERNMENT OBLIGATIONS AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTE
- ----------------------------------------------------------
9.125%, 1999 $ 1,000 $ 1,045
- ----------------------------------------------------------
REPUBLIC OF ARGENTINA
- ----------------------------------------------------------
9.50%, 2002 600 595
--------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--.4%
(Cost: $1,641) 1,640
--------------------------------------------------
CORPORATE OBLIGATIONS
- ----------------------------------------------------------
AEROSPACE AND DEFENSE--1.8%
- ----------------------------------------------------------
Airlines Pass Through Trust,
10.875%, 2019 2,290 2,588
Fairchild Corp.,
12.00%, 2001 2,220 2,231
L-3 Communication Corp.,
10.375%, 2007 450 488
Tracor,
8.50%, 2007 820 838
Valujet, Inc.,
10.25%, 2001 930 844
--------------------------------------------------
6,989
- ----------------------------------------------------------
BROADCASTING, CABLESYSTEMS AND PUBLISHING--13.4%
- ----------------------------------------------------------
Affinity Group, Inc.,
11.50%, 2003 1,590 1,693
American Banknote Corp.,
11.25%, 2007 800 802
American Lawyer
9.75%, 2007 475 482
(b) 12.25%, 2008 220 124
American Radio Systems,
9.00%, 2006 1,260 1,340
(b) Australis Holdings,
15.00%, with warrants,
2002 3,945 2,152
Big Flower Press, Inc.,
8.875%, 2007 2,390 2,402
Busse Broadcasting,
11.625%, 2000 680 731
Cablevision Systems Corp.
9.25%, 2005 620 657
8.125%, 2009 1,140 1,180
9.875%, 2013 1,145 1,270
10.50%, 2016 1,640 1,923
Capstar Broadcasting
9.25%, 2007 1,610 1,666
(b) 12.75%, 2009 1,020 745
CCA Holdings,
13.00%, 1999 1,000 1,430
Century Communications Corp.
9.50%, 2005 300 316
8.375%, 2007 550 551
Chancellor Media,
8.125%, 2007 600 587
(b) Charter Communications,
14.00%, 2007 1,870 1,482
Comcast Corp.,
9.125%, 2006 2,180 2,311
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
BROADCASTING, CABLESYSTEMS AND PUBLISHING--CONTINUED
- ----------------------------------------------------------
(b) Comcast UK Cable Partners, Ltd.,
11.20%, 2007 $ 4,630 $ 3,745
(b) Diamond Cable Communication, PLC
13.25%, 2004 1,990 1,791
11.75%, 2005 1,120 869
10.75%, 2007 890 609
EZ Communications,
9.75%, 2005 590 652
Foxkids Worldwide
(b) 10.25%, 2007 1,600 944
9.25%, 2007 1,350 1,313
Frontiervision
11.00%, 2006 1,260 1,402
(b) 11.875%, 2007 800 588
Granite Broadcasting Corp.,
10.375%, 2005 670 704
(b) International Cabletel,
Inc.,
12.75%, 2005 4,300 3,591
Newsquest Capital, PLC,
11.00%, 2006 960 1,077
NTL,
10.00%, 2007 550 579
Perry-Judd,
10.625%, 2007 450 468
Salem Communications Corp.,
9.50%, 2007 770 787
Sinclair Broadcasting Group, Inc.
9.00%, 2007 350 357
8.75%, 2007 940 935
Star Choice,
13.00%, 2005 750 774
Sullivan Broadcasting
10.25%, 2005 410 441
13.25%, 2006 810 1,079
(b) Telegroup, Inc.
10.50%, 2004 350 273
TeleWest Communications, PLC
9.625%, 2006 1,200 1,260
(b) 11.00%, 2007 3,715 2,898
(b) Transwestern Holdings,
11.875%, 2008 520 312
Transwestern Publishing,
9.625%, 2007 760 790
(b) UIH Australia Pacific, Inc.,
14.00%, with warrants, 2006 750 496
--------------------------------------------------
52,578
- ----------------------------------------------------------
BUSINESS SERVICES--1.5%
- ----------------------------------------------------------
Corporate Express, Inc.,
9.125%, 2004 1,300 1,326
Outdoor Systems
9.375%, 2006 1,785 1,901
8.875%, 2007 1,740 1,818
Universal Outdoor Holdings, Inc.,
9.75%, 2006 880 986
--------------------------------------------------
6,031
</TABLE>
48
<PAGE> 121
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
CHEMICALS AND AGRICULTURE--3.2%
- ----------------------------------------------------------
Agriculture, Mining and
Chemicals, Inc.,
10.75%, 2003 $ 940 $ 1,006
Atlantis Group, Inc.,
11.00%, 2003 1,735 1,761
Climachem,
10.75%, 2007 500 516
Hines Horticulture,
11.75%, 2005 610 674
Huntsman Polymer Corp.
11.75%, 2004 2,180 2,442
NL Industries, Inc.
11.75%, 2003 1,330 1,473
(b) 13.00%, 2005 1,350 1,350
Terra Industries, Inc.,
10.50%, 2005 840 902
Texas Petrochemicals,
11.125%, 2006 1,040 1,134
UCC Investors Holdings, Inc.
10.50%, 2002 840 952
11.00%, 2003 300 320
--------------------------------------------------
12,530
- ----------------------------------------------------------
COMMUNICATIONS--12.3%
- ----------------------------------------------------------
(b) Call-Net Enterprises, Inc.
13.25%, 2004 460 421
9.27%, 2007 1,050 715
(b) Cellular, Inc.,
11.75%, 2003 1,795 1,817
Comcast Cellular Holdings, Inc.,
9.50%, 2007 3,510 3,659
(b) Comcel,
13.125%, with warrants,
2003 2,200 1,799
CommNet Cellular,
11.25%, 2005 730 832
Dobson Communication Corp.,
11.75%, 2007 2,500 2,644
Econophone, Inc.,
13.50%, with warrants,
2007 1,260 1,443
Esprit Telecom,
11.50%, 2007 925 953
GCI General Communication,
9.75%, 2007 1,520 1,581
HighwayMaster
Communications, Inc.,
13.75%, with warrants,
2005 730 750
(b) ICG Holdings,
13.50%, 2005 2,820 2,284
Interamerica Communications,
14.00%, 2007 280 283
Intermedia Capital Partners,
11.25%, 2006 1,300 1,453
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
COMMUNICATIONS--CONTINUED
- ----------------------------------------------------------
Intermedia Communications of
Florida, Inc., with warrants
expiring 2000
(b) 12.50%, 2006 $ 660 $ 518
(b) 11.25%, 2007 2,700 1,924
8.875%, 2007 570 709
McLeod, Inc.
(b) 10.50%, 2007 2,320 1,688
9.25%, 2007 870 914
Metronet Communications
12.00%, 2007 550 632
(b) 10.75%, 2007 630 384
MGC Communications,
13.00%, 2004 1,290 1,293
(b) Millicom International
Cellular, S.A.,
13.50%, 2006 2,410 1,771
Netia Holdings
10.25%, 2007 225 215
11.25%, 2007 345 195
(b) Nextel Communications
10.65%, 2007 590 375
9.75%, 2007 2,630 1,611
Nextlink Communications,
12.50%, 2006 850 972
Primus Telecommunications Group,
11.75%, with warrants,
2004 1,000 1,080
(b) PTC International Finance, B.V.,
10.75%, 2007 1,810 1,177
RCN Corp.
(b) 11.125%, 2007 820 513
10.00%, 2007 1,080 1,118
Rogers Cantel
8.80%, 2007 630 625
9.375%, 2008 700 737
9.75%, 2016 1,830 1,958
Teligent,
11.50%, 2007 800 800
USA Mobile Communications,
Inc. II
14.00%, 2004 880 977
9.50%, 2004 585 567
Vanguard Cellular Systems,
9.375%, 2006 1,280 1,331
Western Wireless
10.50%, 2006 and 2007 1,940 2,098
Winstar Equipment,
12.50%, 2004 1,180 1,324
--------------------------------------------------
48,140
</TABLE>
49
<PAGE> 122
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSTRUCTION MATERIALS--4.3%
- ----------------------------------------------------------
Airxcel,
11.00%, 2007 $ 840 $ 865
American Standard, Inc.
(b) 10.50%, 2005 1,110 1,127
9.25%, 2016 1,445 1,503
(b) Building Materials
Corporation of America,
11.75%, 2004 3,895 3,681
Desa International,
9.875%, 2007 1,250 1,281
Falcon Building Products, Inc.,
9.50%, 2007 1,120 1,165
Kevco,
10.375%, 2007 925 945
Nortek, Inc.
9.875%, 2004 1,240 1,265
9.125%, 2007 1,470 1,487
Triangle Pacific Corp.,
10.50%, 2003 2,185 2,302
Waxman Industries, Inc.
(b) 12.75%, 2004 400 362
(a) 52,274 warrants, expiring
2004 89
Werner Holdings,
10.00%, 2007 750 773
--------------------------------------------------
16,845
- ----------------------------------------------------------
CONSUMER PRODUCTS AND SERVICES--10.8%
- ----------------------------------------------------------
AFC Enterprises, Inc.,
10.25%, 2007 1,970 2,083
Allied Waste Industries
10.25%, 2006 790 870
(b) 11.30%, 2007 1,770 1,246
Ameriking,
10.75%, 2006 920 966
AMF Bowling World
(b) 12.25%, 2006 1,800 1,422
10.875%, 2006 2,890 3,175
Avondale Mills,
10.25%, 2006 1,670 1,791
Cinemark USA, Inc.,
9.625%, 2008 980 1,014
Coinmach Corp.,
11.75%, 2005 3,430 3,807
(b) Crown Castle International Corp.,
10.625%, 2007 2,500 1,562
Doskocil Manufacturing Co.,
10.125%, 2007 850 880
Dyersburg Corp.,
9.75%, 2007 590 618
Flagstar Corp.
10.75%, 2001 780 798
10.875%, 2002 480 494
Hedstrom Corp.,
10.00%, 2007 370 373
Herff Jones, Inc.,
11.00%, 2005 900 981
Hollywood Entertainment Corp.,
10.625%, 2004 1,115 1,087
Kinder-Care Learning Centers,
9.50%, 2009 3,080 3,065
Knoll, Inc.,
10.875%, 2006 676 757
Krystal Co.,
10.25%, 2007 490 502
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS AND SERVICES--CONTINUED
- ----------------------------------------------------------
NBTY, Inc.,
8.625%, 2007 $ 1,000 $ 1,000
Perkins Finance,
10.125%, 2007 600 603
Pillowtex Corp.,
9.00%, 2007 500 513
Premier Parks, Inc.,
12.00%, 2003 780 867
Riddell Sports, Inc.,
10.50%, 2007 1,095 1,136
Scovill Fasteners,
11.25%, 2007 800 818
(b) Sealy Mattress,
10.875%, 2007 500 304
(b) Six Flags Theme Park,
12.25%, 2005 3,850 4,100
Van De Kamps, Inc.,
12.00%, 2005 900 1,004
West Point Stevens, Inc.,
9.375%, 2005 3,300 3,473
Windy Hill Pet Food Company, Inc.,
9.75%, 2007 770 801
--------------------------------------------------
42,110
- ----------------------------------------------------------
DRUGS AND HEALTH CARE--3.5%
- ----------------------------------------------------------
Dade International Inc.,
11.125%, 2006 1,730 1,912
Genesis Eldercare,
9.00%, 2007 1,680 1,649
Graham-Field Health,
9.75%, 2007 560 588
Integrated Health Services, Inc.,
9.50%, 2007 1,150 1,182
Packard Bioscience,
9.375%, 2007 400 384
(b) Paragon Health Networks,
10.50%, 2007 2,170 1,340
Tenet Healthcare
10.125%, 2005 3,530 3,848
8.00%, 2005 590 600
8.625%, 2007 610 628
Vencor,
8.625%, 2007 1,570 1,574
--------------------------------------------------
13,705
- ----------------------------------------------------------
ENERGY AND RELATED SERVICES--6.4%
- ----------------------------------------------------------
AEI Holdings,
10.00%, 2007 550 567
Bellweather Exploration Co.,
10.875%, 2007 990 1,084
Benton Oil & Gas Co.
11.625%, 2003 1,515 1,670
9.375%, 2007 1,170 1,196
Clark Refining,
8.875%, 2007 600 608
Coda Energy,
10.50%, 2006 1,460 1,582
Dailey Petro Service,
9.75%, 2007 800 840
Espirito Santo,
10.00%, 2007 1,670 1,495
Ferrellgas Partners, L.P.,
9.375%, 2006 1,000 1,065
</TABLE>
50
<PAGE> 123
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
ENERGY AND RELATED SERVICES--CONTINUED
- ----------------------------------------------------------
Forcenergy Gas Exploration
9.50%, 2006 $ 1,470 $ 1,567
8.50%, 2007 1,520 1,535
National Energy Corp.,
10.75%, 2006 800 830
Ocean Energy,
9.75%, 2006 490 538
Pacalta Resources, Ltd.,
10.75%, 2004 1,900 1,843
Parker Drilling Corp.,
9.75%, 2006 1,140 1,226
Plains Resources,
10.25%, 2006 1,300 1,398
Rutherford-Moran Oil Corp.,
10.75%, 2004 570 580
Stone Energy Corp.,
8.75%, 2007 620 632
United Meridian Corp.,
10.375%, 2005 1,920 2,131
Vintage Petroleum
9.00%, 2005 1,635 1,700
8.625%, 2009 400 416
Wiser Oil Co.,
9.50%, 2007 460 450
--------------------------------------------------
24,953
- ----------------------------------------------------------
FINANCIAL SERVICES, HOME BUILDING AND REAL ESTATE--3.8%
- ----------------------------------------------------------
Continental Homes Holding,
10.00%, 2006 496 536
Del Webb Corp.,
9.75%, 2008 1,590 1,663
Donaldson, Lufkin & Jenrette
5.984%, 2002 1,400 1,392
DVI, Inc.,
9.875%, 2004 520 545
Emergent Group,
10.750%, 2004 620 618
Forecast Group, L.P.,
11.375%, 2000 765 711
Fortress Group,
13.75%, 2003 880 990
Hovnanian Enterprises,
11.25%, 2002 1,858 1,939
Intertek Finance,
10.25%, 2006 940 989
Kaufman & Broad Home Corp.
7.75%, 2004 1,000 994
9.625%, 2006 310 328
New Millen Home Building,
12.00%, 2004 220 218
Presley Cos.,
12.50%, 2001 1,275 1,227
Southern Pacific Funding,
11.50%, 2004 530 519
UDC Homes,
12.50%, 2000 970 980
Williams Scotsman, Inc.,
9.875%, 2007 1,300 1,345
--------------------------------------------------
14,994
- ----------------------------------------------------------
HOTELS AND GAMING--2.3%
- ----------------------------------------------------------
Eldorado Resorts,
10.50%, 2006 2,010 2,201
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
HOTELS AND GAMING--CONTINUED
- ----------------------------------------------------------
Empress River Casino,
10.75%, 2002 $ 1,640 $ 1,763
Harvey's Casino Resorts,
10.625%, 2006 740 807
HMH Properties
9.50%, 2005 1,650 1,749
8.875%, 2007 750 786
Players International,
10.875%, 2005 660 713
Trump Atlantic City,
11.25%, 2006 1,049 1,017
--------------------------------------------------
9,036
- ----------------------------------------------------------
MANUFACTURING, METALS AND MINING--10.8%
- ----------------------------------------------------------
Aftermarket Technology,
12.00%, 2004 1,035 1,149
Alvey Systems,
11.375%, 2003 370 393
Bar Technologies,
13.50%, with warrants,
2001 1,060 1,192
Centaur Mining,
11.00%, 2007 700 703
Collins & Aikman Corp.,
11.50%, 2006 1,820 2,043
Crain Industries, Inc.,
13.50%, 2005 1,240 1,513
Day International Group,
Inc.,
11.125%, 2005 1,710 1,881
Delco Remy International
10.625%, 2006 1,630 1,760
8.625%, 2007 750 758
Euramax International, PLC,
11.25%, 2006 1,580 1,714
Foamex, L.P.,
9.875%, 2007 1,930 1,949
Fort Worth Tower,
9.875%, 2007 610 625
GS Technologies
12.00%, 2004 380 417
12.25%, 2005 620 695
Hayes Wheels International, Inc.,
11.00%, 2006 1,750 1,951
IMO Industries,
11.75%, 2006 1,750 1,934
Johnstown American,
11.75%, 2005 660 723
JPS Automotive Products Corp.,
11.125%, 2001 1,780 1,985
Koppers Industries,
9.875%, 2007 550 567
MMI Products, Inc.,
11.25%, 2007 450 491
Motors and Gears, Inc.,
10.75%, 2006 1,200 1,272
Neenah Corp.,
11.125%, 2007 1,820 1,997
Park-Ohio Industries,
9.25%, 2007 1,110 1,136
Renco Metals,
11.50%, 2003 1,005 1,070
Telex Communication,
10.50%, 2007 320 316
</TABLE>
51
<PAGE> 124
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
MANUFACTURING, METALS AND MINING--CONTINUED
- ----------------------------------------------------------
Thermadyne Industries, Inc.
10.25%, 2002 $ 1,390 $ 1,442
10.75%, 2003 626 673
UCAR Global,
12.00%, 2005 2,472 2,762
Venture Holdings,
9.50%, 2005 1,510 1,536
WCI Steel, Inc.,
10.00%, 2004 1,240 1,266
Wheeling-Pitt Corp.,
9.25%, 2007 1,800 1,737
Weirton Steel Corp.,
11.375%, 2004 1,000 1,055
Wells Aluminum Corp.,
10.125%, 2005 1,400 1,484
--------------------------------------------------
42,189
- ----------------------------------------------------------
PAPER, FOREST PRODUCTS, AND CONTAINERS--8.0%
- ----------------------------------------------------------
AEP Industries,
9.875%, 2007 550 565
Berry Plastics Corp.,
12.25%, 2004 1,330 1,450
BPC Holding Corp.,
12.50%, 2006 750 818
BWAY Corp.,
10.25%, 2007 870 953
Doman Industry,
9.25%, 2007 700 682
Fonda Group,
9.50%, 2007 840 798
Gaylord Container Corp.
12.75%, 2005 2,530 2,713
9.75%, 2007 690 669
Huntsman Corp.
9.50%, 2007 1,700 1,776
Maxxam Group, Inc.
(b) 12.25%, 2003 440 439
11.25%, 2003 1,653 1,760
National Fiberstock Corp.,
11.625%, 2002 760 802
Pindo Deli Finance
Mauritius, Ltd.,
10.75%, 2007 600 513
Printpack, Inc.
9.875%, 2004 530 563
10.625%, 2006 1,360 1,443
Riverwood International
10.25%, 2006 1,180 1,174
10.625%, 2007 1,270 1,283
10.875%, 2008 3,785 3,596
Specialty Paperboard,
9.375%, 2006 865 913
Spinnaker Industries,
10.75%, 2006 1,450 1,486
Stone Container Corp.
9.875%, 2001 1,600 1,588
12.25%, 2002 1,020 1,033
11.50%, 2006 2,185 2,272
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
PAPER, FOREST PRODUCTS, AND CONTAINERS--CONTINUED
- ----------------------------------------------------------
Tjiwi Kimia Finance
Mauritius, Ltd.,
10.00%, 2004 $ 600 $ 486
U.S. Can Corp.,
10.125%, 2006 1,570 1,649
--------------------------------------------------
31,424
- ----------------------------------------------------------
RETAILING--3.6%
- ----------------------------------------------------------
Cole National Group
9.875%, 2006 270 289
8.625%, 2007 1,090 1,083
(a) Color Tile, Inc.,
10.75%, 2001 1,470 15
Finlay Fine Jewelry Corp.,
10.625%, 2003 1,945 2,042
Guitar Center Management,
11.00%, 2006 880 977
J. Crew Group
10.375%, 2007 880 766
(b) 13.125%, 2008 1,330 579
Nine West Group,
9.00%, 2007 650 618
Pamida Holdings,
11.75%, 2003 1,340 1,367
Pathmark Stores
12.625%, 2002 490 407
9.625%, 2003 780 718
Petro Shopping Centers, L.P.,
10.50%, 2007 2,520 2,671
Specialty Retailers
8.50%, 2005 270 275
9.00%, 2007 470 479
TravelCenters of
America, Inc.,
10.25%, 2007 1,880 1,974
--------------------------------------------------
14,260
- ----------------------------------------------------------
TECHNOLOGY--.9%
- ----------------------------------------------------------
Communication and Power
Industry, Inc.,
12.00%, 2005 585 655
EV International,
11.00%, 2007 920 938
Viasystems, Inc.,
9.75%, 2007 1,700 1,755
--------------------------------------------------
3,348
- ----------------------------------------------------------
TRANSPORTATION--.5%
- ----------------------------------------------------------
TFM, S.A. de C.V.,
10.25%, 2007 1,440 1,483
(b) Transtar Holdings, L.P.,
13.375%, 2003 631 549
--------------------------------------------------
2,032
--------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--87.1%
(Cost: $329,618) 341,164
--------------------------------------------------
</TABLE>
52
<PAGE> 125
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
COMMON AND PREFERRED STOCKS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
Benedek Unit, PIK,
preferred with warrants 5,000 $ 660
(a) Capital Pacific Holdings 3,634 4
Clark USA,
PIK, preferred 2,600 277
Crown American Realty Trust,
preferred 16,400 857
(a) Echostar Communications
Corp. 7,387 124
(a) Empire Gas Corp.,
warrants 2,070 10
(a) Foamex International,
warrants 940 19
(a) Gaylord Container Corp. 122,950 707
(a) Gulf States Steel, warrants 1,810 9
(a) Intelcom Group, Inc., warrants 4,851 68
Sinclair Capital, preferred 13,000 1,417
(a) Sullivan Broadcasting 12,960 130
--------------------------------------------------
TOTAL COMMON AND
PREFERRED STOCKS--1.1%
(Cost: $3,437) 4,282
--------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.88% to 6.51%
Due--January 1998
Cooper Industries, Inc. $14,000 $ 13,990
Whirlpool Financial Corp. 10,000 9,993
Other 13,753 13,731
--------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--9.6%
(Cost: $37,715) 37,714
--------------------------------------------------
TOTAL INVESTMENTS--98.2%
(Cost: $372,411) 384,800
--------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--1.8% 6,864
--------------------------------------------------
NET ASSETS--100% $391,664
--------------------------------------------------
</TABLE>
NOTES TO KEMPER HIGH YIELD PORTFOLIO OF INVESTMENTS
(a) Non-income producing security. In the case of a bond, generally denotes that
issuer has defaulted on the payment of interest or has filed for bankruptcy.
(b) Deferred interest obligation; currently zero coupon under terms of the
initial offering.
Based on the cost of investments of $372,411,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $16,096,000, the
gross unrealized depreciation was $3,707,000 and the net unrealized appreciation
on investments was $12,389,000.
See accompanying Notes to Financial Statements.
53
<PAGE> 126
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--1.1%
- ----------------------------------------------------------
(a) Femsa 17,400 $ 137
(a) USA Waste Services 150,300 5,899
-----------------------------------------------------
6,036
- ----------------------------------------------------------
CAPITAL GOODS--.1%
- ----------------------------------------------------------
-----------------------------------------------------
Technip, S.A. 4,634 491
- ----------------------------------------------------------
COMPUTER SYSTEMS AND SOFTWARE--16.1%
- ----------------------------------------------------------
(a) Cadence Design Systems 476,000 11,662
Compaq Computer Corp. 98,650 5,568
(a) Electronic Arts 351,800 13,302
(a) Gartner Group 398,600 14,848
Hewlett-Packard Co. 130,100 8,131
International Business
Machines Corp. 11,500 1,202
(a) Oracle Corp. 152,800 3,409
(a) Parametric Technology Corp. 201,600 9,551
(a) PeopleSoft, Inc. 178,400 6,958
(a) Sterling Commerce, Inc. 242,800 9,333
(a) Sun Microsystems 163,700 6,528
-----------------------------------------------------
90,492
- ----------------------------------------------------------
CONSUMER CYCLICALS--13.1%
- ----------------------------------------------------------
(a) AutoZone 246,000 7,134
Dayton Hudson Corp. 145,100 9,794
(a) Federated Department Stores 271,700 11,700
Hilton Hotels Corp. 200,000 5,950
Hudson's Bay Co. 16,700 372
J.C. Penney Co. 34,600 2,087
Lowes Companies 95,900 4,573
May Department Stores Co. 231,200 12,181
(a) Tommy Hilfiger Corp. 199,600 7,011
(a) Toys R Us 412,500 12,968
-----------------------------------------------------
73,770
- ----------------------------------------------------------
CONSUMER STAPLES--3.9%
- ----------------------------------------------------------
Avon Products 63,900 3,922
Gillette Co. 71,500 7,181
International Flavors &
Fragrances 120,400 6,201
Wm. Wrigley Jr. Co. 54,800 4,360
-----------------------------------------------------
21,664
- ----------------------------------------------------------
ENERGY--4.9%
- ----------------------------------------------------------
Baker Hughes, Inc. 289,200 12,616
BJ Services Co. 24,500 1,762
Halliburton Co. 104,500 5,427
Schlumberger, Ltd. 99,000 7,970
(a) Transocean Offshore, Inc. 400 19
-----------------------------------------------------
27,794
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCE--14.4%
- ----------------------------------------------------------
ADVANTA Corp 225,900 $ 5,732
American Express Co. 60,800 5,426
Banc One Corp. 209,400 11,373
Citicorp 4,100 518
Corestates Financial 18,100 1,449
First Union Corp. 151,700 7,775
Hartford Financial Services 40,000 3,743
Household International 71,100 9,070
Merrill Lynch & Co. 28,900 2,108
Morgan Stanley, Dean Witter,
Discover & Co. 202,300 11,961
NationsBank 235,300 14,309
PNC Bank Corp. 103,800 5,923
Washington Mutual, Inc. 29,400 1,876
-----------------------------------------------------
81,263
- ----------------------------------------------------------
HEALTH CARE--23.3%
- ----------------------------------------------------------
ALZA Corp. 179,700 5,717
American Home Products
Corp. 134,800 10,312
(a) Amgen, Inc. 228,000 12,341
Baxter International 131,900 6,653
(a) Biogen 302,000 10,985
(a) Boston Scientific Corp. 109,100 5,005
Bristol-Myers Squibb Co. 112,200 10,617
(a) Crescendo Pharmaceutical 8,985 104
Eli Lilly & Co. 132,000 9,191
Medtronic, Inc. 138,800 7,261
Perkin-Elmer Corp. 161,100 11,448
SmithKline Beecham Group 161,800 8,323
United Healthcare Corp. 396,800 19,716
Warner-Lambert Co. 108,900 13,504
-----------------------------------------------------
131,177
- ----------------------------------------------------------
SEMICONDUCTORS AND NETWORKING--13.3%
- ----------------------------------------------------------
AMP, Inc. 180,200 7,568
(a) Analog Devices 225,500 6,244
(a) Applied Materials, Inc. 89,800 2,705
(a) Ascend Communications, Inc. 114,300 2,800
(a) Cisco Systems 210,700 11,747
Intel Corp. 157,000 11,029
Linear Technology Corp. 78,200 4,506
(a) Microchip Technology 192,200 5,766
(a) National Semiconductor Corp. 205,400 5,328
(a) Teradyne, Inc. 185,600 5,939
Texas Instruments 57,600 2,592
(a) 3Com Corp. 115,500 4,035
United Technologies 66,000 4,806
-----------------------------------------------------
75,065
- ----------------------------------------------------------
TELECOMMUNICATIONS--3.9%
- ----------------------------------------------------------
CBS, Inc. 197,000 5,799
(a) Nokia Corp. 31,500 2,205
(a) Tellabs, Inc. 111,500 5,896
(a) WorldCom, Inc. 260,900 7,892
-----------------------------------------------------
21,792
</TABLE>
54
<PAGE> 127
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
-----------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
-----------------------------------------------------
<S> <C> <C>
-----------------------------------------------------
TRANSPORTATION--2.0%
-----------------------------------------------------
CSX Corp. 106,700 $ 5,762
Norfolk Southern Corp. 182,100 5,611
-----------------------------------------------------
11,373
-----------------------------------------------------
TOTAL COMMON STOCKS--96.1%
(Cost: $501,837) 540,917
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--2.3%
Yield--6.15%
Due--January 1998
(Cost: $12,991) $13,000 12,991
-----------------------------------------------------
TOTAL INVESTMENTS--98.4%
(Cost: $514,828) 553,908
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.6% 9,108
-----------------------------------------------------
NET ASSETS--100% $563,016
-----------------------------------------------------
</TABLE>
NOTES TO KEMPER GROWTH PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $514,828,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $59,414,000, the
gross unrealized depreciation was $20,334,000 and the net unrealized
appreciation on investments was $39,080,000.
See accompanying Notes to Financial Statements.
55
<PAGE> 128
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GOVERNMENT
NATIONAL MORTGAGE
ASSOCIATION -- 56.9%
(Cost: $47,510)
Adjustable Rate Mortgages 7.00% 2022 $ 2,470 $ 2,543
Pass-through Certificates 7.00 2022-2024 13,556 13,703
7.50 2022-2027 10,904 11,212
8.00 2016-2027 12,355 12,856
8.50 2016-2028 4,111 4,329
9.00 2016-2027 3,200 3,429
9.50 2013-2022 528 571
10.00 2016 586 645
-------------------------------------------------------------------------------
49,288
- --------------------------------------------------------------------------------------------------------------------
U.S. TREASURY
SECURITIES -- 12.2%
(Cost: $10,843)
Notes 8.75 2000 5,000 5,367
7.875 2001 1,000 1,069
7.00 2006 1,600 1,728
Bonds 11.875 2003 870 1,131
9.125 2009 484 566
9.125 2018 555 756
-------------------------------------------------------------------------------
10,617
- --------------------------------------------------------------------------------------------------------------------
FEDERAL HOME
LOAN MORTGAGE
CORPORATION -- 10.0%
(Cost: $8,059)
Pass-through Certificates 7.00 2023-2024 8,605 8,711
-------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 9.3%
(Cost: $7,911)
Pass-through Certificates 6.50 2025 502 496
7.00 2028 5,000 5,036
7.50 2025 1,644 1,683
8.00 2024-2025 788 816
-------------------------------------------------------------------------------
8,031
- --------------------------------------------------------------------------------------------------------------------
CANADIAN PROVINCIAL
OBLIGATIONS -- 1.3%
(Cost: $1,094)
Province of Ontario 7.625 2004 500 537
Province of Quebec 8.625 2005 500 562
-------------------------------------------------------------------------------
1,099
-------------------------------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--89.7%
(Cost: $75,417) 77,746
-------------------------------------------------------------------------------
</TABLE>
56
<PAGE> 129
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
TYPE RATE MATURITY AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(a) CORPORATE
OBLIGATIONS -- 16.0%
American Express Master Trust 7.60% 2002 $ 2,500 $ 2,624
Banco Central Hispano 7.50 2005 500 521
Chase Credit Co. 5.55 2003 2,500 2,460
Equitable Life 6.95 2005 500 510
Ford Motor Credit 8.00 2002 500 531
Green Tree Financial Corp. 7.00 2027 2,500 2,539
Nabisco, Inc. 6.70 2002 500 505
NCNB/NationsBank Corp. 9.50 2004 500 581
Olympic Automobile Receivable 7.00 2004 2,500 2,558
Sears Roebuck Acceptance Corp. 6.75 2005 500 509
Southwestern Bell Telephone 6.625 2005 500 509
-------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--16.0%
(Cost: $13,778) 13,847
-------------------------------------------------------------------------------
TOTAL INVESTMENTS--105.7%
(Cost: $89,195) 91,593
-------------------------------------------------------------------------------
LIABILITIES, LESS CASH AND OTHER ASSETS--(5.7)% (4,911)
-------------------------------------------------------------------------------
NET ASSETS--100% $ 86,682
-------------------------------------------------------------------------------
</TABLE>
NOTES TO KEMPER GOVERNMENT SECURITIES PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) The portfolio may invest up to 35% of total assets in fixed income
securities other than U.S. Government Securities.
Based on the cost of investments of $89,195,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $2,839,000, the
gross unrealized depreciation was $441,000 and the net unrealized appreciation
on investments was $2,398,000.
See accompanying Notes to Financial Statements.
57
<PAGE> 130
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
EUROPE
- ----------------------------------------------------------
NETHERLANDS--15.8%
Koninklijke Ahold, N.V.
FOOD RETAILER 198,003 $ 5,167
Aegon, N.V.
INSURANCE COMPANY 50,911 4,533
ING Groep, N.V.
BANKING AND INSURANCE 106,456 4,484
Getronics, N.V.
INFORMATION AND
COMMUNICATION SERVICES 96,500 3,075
Unique International, N.V.
TEMPORARY EMPLOYMENT 102,730 2,189
Nedcon Groep
MANUFACTURER OF RACKING
SYSTEMS 42,000 2,051
Royal Dutch Petroleum
PETROLEUM PRODUCER 36,260 1,991
Vedior, N.V.
TEMPORARY EMPLOYMENT 106,000 1,908
(a) Baan Company, N.V.
SERVICE SOFTWARE
APPLICATIONS 57,800 1,893
Aalberts Industries, N.V.
CAPITAL GOODS AND
COMPONENTS 62,059 1,638
De Boer Unigro, N.V.
FOOD RETAILER 48,300 1,525
Sligro Beheer, N.V.
DISTRIBUTOR OF FOOD AND
NON-FOOD PRODUCTS 9,000 564
Beter Bed Holding, N.V.
FURNITURE RETAILER 27,000 521
-----------------------------------------------------
31,539
- ----------------------------------------------------------
UNITED KINGDOM--13.5%
- ----------------------------------------------------------
Barclays, PLC
BANKING 199,621 5,335
BBA Group, PLC
DIVERSIFIED ENGINEERING
COMPANY 692,064 4,672
Glaxo Wellcome, PLC
PHARMACEUTICAL COMPANY 189,822 4,523
Rentokil Group, PLC
SERVICES COMPANY 960,000 4,210
British Petroleum
PETROLEUM PRODUCER 303,424 4,017
Prudential Corp., PLC
FINANCIAL SERVICES 190,000 2,308
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
UNITED KINGDOM--CONTINUED
- ----------------------------------------------------------
Marks & Spencer, PLC
CONSUMER GOODS AND FOOD
RETAILER 110,000 $ 1,090
(a) British Bio-Tech Group
PHARMACEUTICAL COMPANY 450,000 774
-----------------------------------------------------
26,929
- ----------------------------------------------------------
SWITZERLAND--9.6%
- ----------------------------------------------------------
Novartis
PHARMACEUTICAL COMPANY 4,160 6,759
Ciba Specialty Chemicals
CHEMICAL PRODUCER 44,160 5,268
Roche Holdings, A.G.
PHARMACEUTICAL COMPANY 525 5,221
Alusuisee-Lonza Holding
ALUMINUM, CHEMICALS AND
PACKAGING MANUFACTURER 2,000 1,910
-----------------------------------------------------
19,158
- ----------------------------------------------------------
FRANCE--7.2%
- ----------------------------------------------------------
Elf Aquitaine
OIL AND GAS PRODUCER 53,800 6,290
Carrefour, S.A.
FOOD RETAILER 8,400 4,405
AXA--UAP, S.A.
INSURANCE COMPANY 25,000 1,945
Technip, S.A.
ENGINEERING COMPANY 16,400 1,739
-----------------------------------------------------
14,379
- ----------------------------------------------------------
GERMANY--4.9%
- ----------------------------------------------------------
Mannesmann, A.G.
CAPITAL GOODS PRODUCER 5,260 2,659
Veba, A.G.
ELECTRIC UTILITY 32,000 2,180
SAP, A.G.
COMPUTER SOFTWARE COMPANY 6,900 2,097
Viag, A.G.
DIVERSIFIED MANUFACTURING
COMPANY 3,600 1,940
SGL CARBON, A.G.
CHEMICAL PRODUCER 7,000 903
-----------------------------------------------------
9,779
- ----------------------------------------------------------
IRELAND--4.3%
- ----------------------------------------------------------
Bank of Ireland
BANKING 411,234 6,283
Independent Newspapers, PLC
PUBLISHER 443,201 2,400
-----------------------------------------------------
8,683
</TABLE>
58
<PAGE> 131
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
SPAIN--4.2%
- ----------------------------------------------------------
Banco Popular Espanol, S.A.
BANKING 32,400 $ 2,264
Telefonica de Espana, S.A.
DOMESTIC AND INTERNATIONAL
TELECOMMUNICATIONS 74,000 2,112
Banco Santander, S.A.
BANKING 46,000 1,536
Banco Bilbao Vizcaya, S.A.
BANKING 37,800 1,223
Repsol, S.A.
OIL COMPANY 23,300 994
Prosegur, Cia de Seguridad, S.A.
SECURITY SERVICES PROVIDER 35,000 351
----------------------------------------------------
8,480
- ----------------------------------------------------------
ITALY--3.6%
- ----------------------------------------------------------
Telecom Italia, SpA
TELECOMMUNICATIONS PROVIDER 620,000 3,963
Telecom Italia Mobile
MOBILE TELECOMMUNICATIONS
PROVIDER 700,000 3,233
-----------------------------------------------------
7,196
- ----------------------------------------------------------
SWEDEN--.6%
- ----------------------------------------------------------
(a) Industri-Matematik
International Corp.
SERVICE SOFTWARE
APPLICATIONS 41,300 1,218
-----------------------------------------------------
- ----------------------------------------------------------
PORTUGAL--.3%
- ----------------------------------------------------------
Electricidade de Portugal, S.A.
ELECTRICITY PROVIDER 32,000 607
-----------------------------------------------------
TOTAL EUROPEAN
COUNTRIES--64.0% 127,968
-----------------------------------------------------
PACIFIC REGION
- ----------------------------------------------------------
JAPAN--11.1%
- ----------------------------------------------------------
Sony Corp.
ELECTRONICS MANUFACTURER 43,400 3,872
Fuji Photo Film Co., Ltd.
PRECISION INSTRUMENTS
MANUFACTURER 78,000 2,999
Honda Motor Co., Ltd.
AUTOMOBILE MANUFACTURER 72,000 2,652
Ricoh Co., Ltd.
PRECISION INSTRUMENTS
MANUFACTURER 185,000 2,305
Toray Industries
TEXTILE MANUFACTURER 360,000 1,620
Shohkoh Fund & Co., Ltd.
FINANCING COMPANY 5,200 1,592
Circle K Japan
CONVENIENCE RETAILER 32,400 1,557
Canon, Inc.
PRECISION INSTRUMENTS
MANUFACTURER 58,000 1,356
Bellsystem 24, Inc.
TELEMARKETING FIRM 10,000 1,315
Toppan Printing Co., Ltd.
PRINTING SERVICES 78,000 1,020
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
JAPAN--CONTINUED
- ----------------------------------------------------------
Murata Manufacturing
ELECTRONICS COMPONENTS
MANUFACTURER 47,000 $ 1,186
Noritsu Koki Co., Ltd.
PRECISION INSTRUMENTS
MANUFACTURER 30,400 753
-----------------------------------------------------
22,227
- ----------------------------------------------------------
HONG KONG--1.2%
- ----------------------------------------------------------
HSBC Holdings, PLC
BANKING 56,601 1,395
CITIC Pacific, Ltd.
CONGLOMERATE 243,000 966
-----------------------------------------------------
2,361
-----------------------------------------------------
TOTAL PACIFIC REGION--12.3% 24,588
-----------------------------------------------------
COMMONWEALTH COUNTRIES
- ----------------------------------------------------------
CANADA--5.8%
- ----------------------------------------------------------
Petro-Canada
OIL AND GAS COMPANY 282,700 5,195
Hudson's Bay Co.
DEPARTMENT STORE RETAILER 133,500 2,975
(a) Philip Services Corp.
RECYCLING 166,500 2,393
(a) Boardwalk Equities, Inc.
REAL ESTATE COMPANY 85,000 1,056
-----------------------------------------------------
11,619
- ----------------------------------------------------------
AUSTRALIA--.9%
- ----------------------------------------------------------
St. George Bank, Ltd.
BANKING 335,575 1,909
-----------------------------------------------------
- ----------------------------------------------------------
NEW ZEALAND--.3%
- ----------------------------------------------------------
Restaurant Brands New
Zealand, Ltd.
RETAILER 630,000 624
-----------------------------------------------------
TOTAL COMMONWEALTH
COUNTRIES--7.0% 14,152
-----------------------------------------------------
LATIN AMERICA
- ----------------------------------------------------------
MEXICO--3.2%
- ----------------------------------------------------------
Fomento Economico Mexicano,
S.A. de C.V., "B," ADR
BEER AND SOFT DRINK
MANUFACTURER 245,000 1,936
Kimberly-Clark de Mexico,
S.A. de C.V.
PAPER PRODUCTS PRODUCER 392,700 1,861
Grupo Elektra, S.A. de C.V., GDR
RETAILER 902,500 1,559
Industries Bachoco, S.A.
POULTRY PRODUCER 53,250 1,038
-----------------------------------------------------
6,394
</TABLE>
59
<PAGE> 132
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
BRAZIL--1.6%
- ----------------------------------------------------------
Telecommunicoes Brasileiro, S.A.
TELEPHONE COMPANY 13,500 $ 1,572
Petroleo Brasileiro, S.A.
OIL AND GAS COMPANY 6,550,000 1,532
-----------------------------------------------------
3,104
- ----------------------------------------------------------
CHILE--.5%
- ----------------------------------------------------------
Supermercados Unimarc, S.A.
FOOD RETAILER 85,100 1,048
-----------------------------------------------------
TOTAL LATIN AMERICAN
COUNTRIES--5.3% 10,546
-----------------------------------------------------
TOTAL COMMON STOCKS--88.6%
(Cost: $140,986) 177,254
-----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
MONEY MARKET INSTRUMENTS
Yield--5.80% to 5.94%
Due--January and February 1998
CIESCO, L.P. $10,000 $ 9,986
IBM Credit Corp. 6,000 5,986
Other 6,200 6,188
-----------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--11.1%
(Cost: $22,163) 22,160
-----------------------------------------------------
TOTAL INVESTMENTS--99.7%
(Cost: $163,149) 199,414
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--.3% 632
-----------------------------------------------------
NET ASSETS--100% $200,046
-----------------------------------------------------
</TABLE>
At December 31, 1997, the Kemper International Portfolio had the following
industry diversification (dollars in thousands):
<TABLE>
<CAPTION>
VALUE %
-----------------------------------------------------------------------------
<S> <C> <C>
Finance $ 36,829 18.5
-----------------------------------------------------------------------------
Consumer Cyclicals 30,895 15.5
-----------------------------------------------------------------------------
Capital Goods 20,825 10.4
-----------------------------------------------------------------------------
Energy 20,019 10.0
-----------------------------------------------------------------------------
Health Care 17,277 8.6
-----------------------------------------------------------------------------
Technology 16,882 8.4
-----------------------------------------------------------------------------
Utilities 13,667 6.8
-----------------------------------------------------------------------------
Basic Industries 12,094 6.0
-----------------------------------------------------------------------------
Consumer Staples 8,766 4.4
-----------------------------------------------------------------------------
TOTAL COMMON STOCKS 177,254 88.6
-----------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS, CASH AND OTHER NET ASSETS 22,792 11.4
-----------------------------------------------------------------------------
NET ASSETS $200,046 100.0
-----------------------------------------------------------------------------
</TABLE>
NOTES TO KEMPER INTERNATIONAL PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $163,149,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $41,364,000, the
gross unrealized depreciation was $5,470,000 and the net unrealized appreciation
on investments was $35,894,000.
See accompanying Notes to Financial Statements.
60
<PAGE> 133
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- -----------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--1.1%
- -----------------------------------------------------
(a) Casella Waste Systems,
Inc. 57,400 $1,514
- -----------------------------------------------------
CAPITAL GOODS--1.6%
- -----------------------------------------------------
(a) Global Industries, Ltd. 70,000 1,190
(a) Littlefuse, Inc. 42,000 1,045
------------------------------------------------
2,235
- -----------------------------------------------------
CONSUMER CYCLICALS--23.8%
- -----------------------------------------------------
(a) American Coin
Merchandising 91,100 1,606
American Skiing Co. 180,000 2,678
(a) Bright Horizons
Children's
Center, Inc. 102,900 1,929
(a) CapStar Hotel Co. 127,500 4,375
Four Seasons Hotels,
Inc. 34,700 1,097
Hertz Corp. 86,500 3,482
(a) MGM Grand 63,000 2,272
(a) Neiman-Marcus 51,000 1,543
(a) Outdoor Systems, Inc. 88,250 3,387
(a) Preview Travel, Inc. 57,100 432
(a) Romac International 95,000 2,321
Royal Caribbean Cruises,
Ltd. 76,000 4,052
(a) SOS Staffing Service,
Inc. 72,600 1,370
(a) Sportsline USA, Inc. 62,000 667
Travis Boats 65,000 1,568
------------------------------------------------
32,779
- -----------------------------------------------------
CONSUMER DURABLES--2.4%
- -----------------------------------------------------
Noble International,
Ltd. 32,400 290
U.S. Industries 98,250 2,960
------------------------------------------------
3,250
- -----------------------------------------------------
CONSUMER STAPLES--7.4%
- -----------------------------------------------------
(a) American Italian Pasta
Co. 58,600 1,465
Corn Products
International 30,000 894
(a) Education Management
Corp. 34,800 1,079
(a) Hearst-Argyle
Television, Inc. 70,300 2,091
(a) Jacor Communications 55,000 2,922
Middleby Corp. 100,000 781
(a) Whole Foods Market 19,000 971
------------------------------------------------
10,203
- -----------------------------------------------------
ENERGY--1.4%
- -----------------------------------------------------
(a) Dawson Geophysical Co. 40,600 665
(a) Precision Drilling Corp. 50,000 1,219
------------------------------------------------
1,884
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- -----------------------------------------------------
<S> <C> <C>
FINANCE--19.4%
- -----------------------------------------------------
(a) ABR Information Services 84,000 $ 2,006
AmerUs Life Holdings,
Inc. 62,300 2,297
ARM Financial Corp. 60,400 1,593
Commercial Federal Corp. 57,000 2,027
Executive Risk 26,500 1,850
Financial Federal Corp. 64,800 1,531
First Union Real Estate
Investments 190,000 3,088
Flag Financial Corp. 35,000 752
Peoples Heritage
Financial Group 57,500 2,645
Protective Life
Insurance Co. 30,000 1,792
Sirrom Capital Corp. 28,500 1,485
Spieker Properties 50,000 2,143
Texas Regional
Bancshares 34,200 1,043
(a) Trammell Crow Co. 89,900 2,315
------------------------------------------------
26,567
- -----------------------------------------------------
HEALTH CARE--11.7%
- -----------------------------------------------------
Coast Dental Services,
Inc. 53,600 1,286
Concentra Managed Care,
Inc. 53,000 1,789
(a) Dura Pharmaceuticals 40,000 1,835
Hansen Orthopedic Group 115,800 1,491
(a) Healthworld Corp. 101,300 1,222
(a) Ocular Sciences, Inc. 29,000 761
Omnicare, Inc. 60,000 1,860
(a) PAREXEL International
Corp. 42,500 1,572
RehabCare Group 75,000 1,988
(a) Safeskin Corp. 40,500 2,298
------------------------------------------------
16,102
- -----------------------------------------------------
TECHNOLOGY--20.0%
- -----------------------------------------------------
(a) Advanced Fibre Co. 45,000 1,311
(a) Analog Devices 51,500 1,426
Belden, Inc. 61,500 2,168
(a) Brightpoint, Inc. 65,000 902
(a) Comverse Technology 38,500 1,502
(a) Electronic Arts 28,000 1,059
(a) Gartner Group 57,000 2,123
(a) Interface Systems 61,500 1,784
(a) Keane, Inc. 30,000 1,219
(a) KLA-Tencor Corp. 32,000 1,236
Linear Technology Corp. 36,000 2,074
(a) Microchip Technology 40,000 1,200
(a) Natural MicroSystems
Corp. 39,800 1,851
Pittway Corp. 32,000 2,228
(a) Smart Modular
Technologies, Inc. 30,000 690
(a) VIASOFT, Inc. 25,000 1,056
(a) Visio Corp. 60,000 2,302
(a) World Access, Inc. 55,000 1,313
------------------------------------------------
27,444
</TABLE>
61
<PAGE> 134
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
<S> <C> <C>
TRANSPORTATION--1.2%
- -------------------------------------------------------
(a) Knight Transportation 60,000 $ 1,665
--------------------------------------------------
TOTAL COMMON STOCKS--90.0%
(Cost: $112,888) 123,643
--------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.87% to 6.15%
Due -- January 1998
Cooper Industries $ 3,000 $ 2,998
Whirlpool Financial 3,000 2,998
Other 6,000 5,990
--------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--8.7%
(Cost: $11,986) 11,986
--------------------------------------------------
TOTAL INVESTMENTS--98.7%
(Cost: $124,874) $135,629
--------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.3% 1,786
--------------------------------------------------
NET ASSETS -- 100% $137,415
--------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER SMALL CAP GROWTH PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $124,874,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $13,710,000, the
gross unrealized depreciation was $2,955,000 and the net unrealized appreciation
on investments was $10,755,000.
See accompanying Notes to Financial Statements.
62
<PAGE> 135
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER INVESTMENT GRADE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
PRINCIPAL
GOVERNMENT OBLIGATIONS AMOUNT VALUE
- ---------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTE
- ---------------------------------------------------------------------------------
6.25%, 2003 $ 50 $ 51
U.S. TREASURY BOND
10.75%, 2003 450 552
- ---------------------------------------------------------------------------------
MORTGAGE BACKED SECURITY
- ---------------------------------------------------------------------------------
FNMA, 7.00%, 2027 1,089 1,097
- ---------------------------------------------------------------------------------
GOVERNMENT AGENCY
- ---------------------------------------------------------------------------------
Tennessee Valley Authority,
6.25%, 2017 100 100
----------------------------------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--11.6%
(Cost: $1,787) 1,800
----------------------------------------------------------------------------
CORPORATE OBLIGATIONS
- ---------------------------------------------------------------------------------
AEROSPACE--2.0%
- ---------------------------------------------------------------------------------
Lockheed Martin,
7.25%, 2006 150 157
Raytheon Co.,
6.75%, 2007 150 153
---------------------------------------------------------------------------
310
- --------------------------------------------------------------------------------
ASSET BACKED SECURITIES--1.3%
- --------------------------------------------------------------------------------
Pacific Gas & Electric,
6.42%, 2008 100 100
Southern California Edison Co.
6.22%, 2004 50 50
6.28%, 2005 50 50
---------------------------------------------------------------------------
200
- --------------------------------------------------------------------------------
BANKS--11.1%
- --------------------------------------------------------------------------------
Abbey National, PLC,
7.35%, 2049 25 26
ABN-Amro Holding, N.V.,
8.25%, 2009 100 108
Banco Central Hispano,
7.50%, 2005 100 104
BCH Cayman Islands, Ltd.,
7.70%, 2006 70 74
Capital One Bank,
8.125%, 2000 100 103
Corporation Andina De Formento,
7.79%, 2017 100 104
Crestar Financial Corp.,
8.25%, 2002 100 107
Den Danske Bank,
7.40%, 2010 50 52
Fleet Financial Group, Inc.
8.125%, 2004 25 27
8.625%, 2007 175 199
Kansallis Osake Bank,
10.00%, 2002 100 113
NationsBank Corp.,
9.50%, 2004 200 232
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
BANKS--CONTINUED
- --------------------------------------------------------------------------------
Peoples Bank Bridgeport,
7.20%, 2006 $ 100 $ 102
Riggs National Corp.,
8.50%, 2006 100 106
Scotland International,
8.80%, 2004 50 56
Svenska Handelsbanken,
7.125%, 2049 100 101
Wells Fargo & Co.,
6.875%, 2006 100 102
---------------------------------------------------------------------------
1,716
- --------------------------------------------------------------------------------
COMMUNICATIONS, MEDIA AND ELECTRONICS--7.4%
- --------------------------------------------------------------------------------
Cablevision Systems Corp.,
7.875%, 2007 150 153
Comcast Cable,
8.875%, 2017 50 59
Comcast Cablevision,
8.50%, 2027 100 118
News American Holdings, Inc.,
9.25%, 2013 200 238
Tele-Communications, Inc.,
9.80%, 2012 150 187
Time Warner
Entertainment Co., L.P.,
8.375%, 2023 75 86
Time Warner, Inc.
7.25%, 2017 50 51
9.15%, 2023 75 92
Viacom, Inc.,
7.75%, 2005 50 51
WorldCom, Inc.
7.75%, 2007 50 53
7.75%, 2027 50 55
---------------------------------------------------------------------------
1,143
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS, SERVICES AND RETAIL--9.9%
- --------------------------------------------------------------------------------
Chrysler Corp.,
7.45%, 2027 150 160
Dayton Hudson Corp.,
7.50%, 2006 100 106
Dimon, Inc.,
8.875%, 2006 100 107
Federated Department Stores,
10.00%, 2001 200 221
Harman International,
7.32%, 2007 75 77
J.C. Penney Co.
7.95%, 2017 155 173
May Department Stores Co.,
6.875%, 2005 50 51
Phillip Morris Cos.,
7.20%, 2007 150 155
Royal Caribbean Cruises, Ltd.,
8.25%, 2005 120 130
</TABLE>
63
<PAGE> 136
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS, SERVICES AND RETAIL--CONTINUED
- ----------------------------------------------------------------------------
Sears Roebuck Acceptance Corp.,
7.00%, 2007 $ 150 $ 156
Staples, Inc.,
7.125%, 2007 200 203
-----------------------------------------------------------------------
1,539
- ----------------------------------------------------------------------------
DRUGS AND HEALTH CARE--1.2%
- ----------------------------------------------------------------------------
MedPartners, Inc.,
7.375%, 2006 40 39
Tenet Healthcare,
8.625%, 2003 150 158
-----------------------------------------------------------------------
197
- ----------------------------------------------------------------------------
ENERGY AND CHEMICALS--1.3%
- ----------------------------------------------------------------------------
Gulf Canada Resources,
8.35%, 2006 75 81
USX Corp.,
9.375%, 2012 100 123
-----------------------------------------------------------------------
204
- ----------------------------------------------------------------------------
FINANCIAL SERVICES--10.0%
- ----------------------------------------------------------------------------
Aegon, N.V.,
8.00%, 2006 200 219
Associates Corp.,
6.625%, 2001 200 202
Case Credit Corp.,
6.75%, 2007 200 203
Felcor Suites, L.P.
7.375%, 2004 75 75
7.625%, 2007 25 25
FINOVA Capital Corp.,
6.50%, 2002 100 101
General Electric Capital Corp.
8.75%, 2007 50 58
8.625%, 2008 50 59
Lehman Brothers Holdings
7.25%, 2003 50 52
7.375%, 2007 100 104
Morgan Stanley, Dean Witter,
Discover & Co.
6.875%, 2007 200 204
Simon DeBartolo,
7.125%, 2007 100 102
Tanger Properties, L.P.,
7.875%, 2004 50 51
TriNet Corporate Realty Trust,
7.70%, 2017 100 104
-----------------------------------------------------------------------
1,559
- ----------------------------------------------------------------------------
TRANSPORTATION--3.1%
- ----------------------------------------------------------------------------
Continental Airlines, Inc.
7.75%, 2014 49 52
6.90%, 2018 50 51
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION--CONTINUED
- ----------------------------------------------------------------------------
CSX Corp.,
7.45%, 2007 $ 150 $ 159
Ford Motor Credit,
7.75%, 2005 100 108
Norfolk Southern Corp.,
7.35%, 2007 100 106
-----------------------------------------------------------------------
476
- ----------------------------------------------------------------------------
UTILITIES--5.9%
- ----------------------------------------------------------------------------
Centerior Energy,
7.67%, 2004 100 104
Cleveland Electric Illumination,
7.43%, 2009 100 103
Commonwealth Edison
7.375%, 2004 50 52
7.00%, 2005 100 103
Hyder, PLC,
6.875%, 2007 150 151
Niagara Mohawk Power,
8.00%, 2004 50 53
Northwest Pipeline,
6.625%, 2007 100 101
U.S. West Capital Funding, Inc.
7.90%, 2027 125 137
7.95%, 2097 100 109
-----------------------------------------------------------------------
913
-----------------------------------------------------------------------
TOTAL CORPORATE
OBLIGATIONS--53.2%
(Cost: $8,117) 8,257
-----------------------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.60% to 5.76%
Due--January 1998
Federal Home Loan Mortgage Corp. 2,700 2,692
Federal National
Mortgage
Association 2,300 2,295
-----------------------------------------------------------------------
TOTAL MONEY
MARKET INSTRUMENTS--32.2%
(Cost: $4,987) 4,987
-----------------------------------------------------------------------
TOTAL INVESTMENTS--97.0%
(Cost: $14,891) 15,044
-----------------------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--3.0% 460
-----------------------------------------------------------------------
NET ASSETS--100% $ 15,504
-----------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER INVESTMENT GRADE BOND PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Based on the cost of investments of $14,891,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $155,000, the gross
unrealized depreciation was $2,000 and the net unrealized appreciation on
investments was $153,000.
See accompanying Notes to Financial Statements.
64
<PAGE> 137
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER
COMMON STOCKS OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------
BANKS--11.5%
- -----------------------------------------------------------
Banc One Corp. 31,200 $ 1,695
BankAmerica Corp. 15,000 1,095
Bankers Trust New York Corp. 10,000 1,124
Chase Manhattan Corp. 16,000 1,752
First Union Corp. 50,400 2,583
Golden West Financial Corp. 15,000 1,467
Mellon Bank Corp. 30,000 1,819
NationsBank 38,400 2,335
Norwest Corp. 18,200 703
PNC Bank, N.A. 18,900 1,078
Wachovia Corp. 20,000 1,622
Wells Fargo & Co. 4,200 1,426
------------------------------------------------------
18,699
- -----------------------------------------------------------
BASIC INDUSTRIES--10.4%
- -----------------------------------------------------------
ALCOA 20,000 1,407
Crown Cork & Seal Co. 48,000 2,406
Dow Chemical Co. 21,500 2,182
Eastman Chemical Co. 25,000 1,489
Georgia-Pacific Corp. 15,000 911
Louisiana-Pacific Corp. 70,000 1,330
Nucor Corp. 45,000 2,174
Praxair, Inc. 30,000 1,350
Sonoco Products Co. 60,000 2,081
Timber Co. 15,000 340
Union Camp Corp. 21,500 1,154
------------------------------------------------------
16,824
- -----------------------------------------------------------
CAPITAL GOODS--5.1%
- -----------------------------------------------------------
General Electric Co. 57,000 4,182
Pitney Bowes 16,500 1,484
Xerox Corp. 35,000 2,583
------------------------------------------------------
8,249
- -----------------------------------------------------------
CONSUMER CYCLICALS--4.7%
- -----------------------------------------------------------
Honeywell 30,000 2,055
May Department Stores Co. 30,000 1,581
McDonald's Corp. 50,000 2,388
Whitman Corp. 60,000 1,564
------------------------------------------------------
7,588
- -----------------------------------------------------------
CONSUMER DURABLES--4.0%
- -----------------------------------------------------------
Ford Motor Co. 78,500 3,822
Superior Industries
International 99,000 2,654
------------------------------------------------------
6,476
- -----------------------------------------------------------
CONSUMER STAPLES--4.8%
- -----------------------------------------------------------
Philip Morris Cos. 134,500 6,095
UST, Inc. 47,900 1,769
------------------------------------------------------
7,864
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------
ENERGY--10.6%
- -----------------------------------------------------------
AMOCO Corp. 40,700 $ 3,465
Atlantic Richfield Co. 30,000 2,404
Chevron Corp. 23,500 1,810
Enron Corp. 47,500 1,974
Exxon Corp. 60,000 3,671
Kerr-McGee Corp. 30,000 1,899
Texaco 35,000 1,903
------------------------------------------------------
17,126
- -----------------------------------------------------------
FINANCIAL SERVICES--13.6%
- -----------------------------------------------------------
American International Group 20,900 2,273
BRE Properties, Inc. 60,000 1,688
Federal Home Loan Mortgage
Corp. 134,600 5,645
Federal National Mortgage
Association 78,600 4,485
General Re Corp. 8,000 1,696
H.F. Ahmanson & Co. 25,300 1,694
Meditrust 39,652 1,452
National City Corp. 20,000 1,315
Post Properties 45,000 1,828
------------------------------------------------------
22,076
- -----------------------------------------------------------
HEALTH CARE--7.3%
- -----------------------------------------------------------
American Home Products Corp. 40,000 3,060
Becton Dickinson & Co. 50,000 2,500
Bristol-Myers Squibb Co. 30,000 2,839
C.R. Bard 64,500 2,020
Glaxo Wellcome, ADR 31,200 1,494
------------------------------------------------------
11,913
- -----------------------------------------------------------
TECHNOLOGY--3.3%
- -----------------------------------------------------------
AMP, Inc. 67,000 2,814
Raytheon Co. 51,500 2,601
------------------------------------------------------
5,415
- -----------------------------------------------------------
UTILITIES--3.1%
- -----------------------------------------------------------
GTE Corp. 60,000 3,135
Southern Co. 74,000 1,915
------------------------------------------------------
5,050
- -----------------------------------------------------------
OTHER--3.6%
- -----------------------------------------------------------
Standard & Poor's Depository
Receipts 60,000 5,816
------------------------------------------------------
TOTAL COMMON STOCKS--82.0%
(Cost: $118,102) 133,096
------------------------------------------------------
</TABLE>
65
<PAGE> 138
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT--7.7%
State Street Bank, dated 12/31/97,
4.75%, due 1/2/98
Collateralized by U.S.
Treasury bonds
(Cost: $12,553) $ 12,553 $ 12,553
- ------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.55% to 6.11%
Due--January and February
1998
CIESCO, L.P. 4,000 3,994
Ford Motor Credit 3,000 2,993
GTE Corp. 3,000 2,982
Sheffield Receivables 3,000 2,989
Other 6,077 6,051
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
VALUE
- ------------------------------------------------------------------------
<S> <C>
TOTAL MONEY MARKET
INSTRUMENTS--11.7%
(Cost: $19,011) 19,009
- ------------------------------------------------------------------------
TOTAL INVESTMENTS--101.4%
(Cost: $149,666) $164,658
- ------------------------------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(1.4)% (2,278)
- ------------------------------------------------------------------------
NET ASSETS--100% $162,380
- ------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE TO KEMPER VALUE PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
Based on the cost of investments of $149,666,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $15,612,000, the
gross unrealized depreciation was $620,000 and the net unrealized appreciation
on investments was $14,992,000.
See accompanying Notes to Financial Statements.
66
<PAGE> 139
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER SMALL CAP VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
CONSUMER DISCRETIONARY--13.1%
- ---------------------------------------------------------------
Applebee's International 22,900 $ 414
(a) BJ's Wholesale Club 15,100 474
(a) Boston Chicken 39,700 255
Brown Group, Inc. 27,700 369
Burlington Coat Factory 5,000 82
Bush Industries 11,000 286
Carmike Cinemas 10,700 307
CDI Corp. 11,100 508
DIMON, Inc. 24,900 654
Finish Line, Inc. 26,900 353
First Brands Corp. 27,100 730
Footstar, Inc. 5,000 134
(a) Friedman's, Inc. 27,500 375
Haggar Apparel Co. 9,600 151
Harman International
Industries 10,800 458
Heilig - Meyers 13,200 158
Herbalife International, Inc.
Class A 9,266 195
Class B 18,533 398
Hollywood Entertainment Corp. 46,500 494
Homebase, Inc. 13,100 103
(a) Lone Star Steakhouse & Saloon 26,900 471
(a) ShopKo Stores 5,000 109
Springs Industries, Inc. 12,200 634
(a) Swisher International Group,
Inc. 5,000 85
(a) Tommy Hilfiger Corp. 10,000 351
(a) Valassis Communications 12,000 444
(a) Wet Seal 9,500 280
(a) Young Broadcasting Corp. 18,500 717
----------------------------------------------------------
9,989
- ---------------------------------------------------------------
CONSUMER STAPLES--.6%
- ---------------------------------------------------------------
(a) Performance Food Group 18,000 428
- ---------------------------------------------------------------
ENERGY--5.4%
- ---------------------------------------------------------------
Atmos Energy Corp. 15,800 478
(a) Basin Exploration 7,500 133
(a) Chieftain International, Inc. 18,000 382
Giant Industries 11,500 219
KCS Energy 24,100 500
(a) Nuevo Energy Co. 15,800 644
(a) Seitel, Inc. 24,800 425
(a) Tesoro Petroleum Corp. 24,500 380
(a) Triton Energy Corp. 11,900 347
(a) Veritas DGC, Inc. 15,100 596
----------------------------------------------------------
4,104
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ---------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES--20.6%
- ---------------------------------------------------------------
(a) Acceptance Insurance Cos. 16,100 $ 389
Ambassador Apartments 15,500 319
(a) Amerin 10,000 280
Associated Banc Corp. 11,876 655
Astoria Financial Corp. 11,800 658
Bank Atlantic Bancorp 35,500 579
Chartwell Re Corp. 11,900 402
Commercial Federal Corp. 21,750 773
Compass Bancshares 8,550 374
Consumer Portfolio Services 12,000 115
Cullen Frost Bankers 13,000 789
Doral Financial Corp. 13,800 350
Excel Realty Trust, Inc. 12,800 403
(a) First Alliance Corp. 7,000 129
First Commerce Corp. 8,500 572
Fremont General Corp. 13,000 712
HUBCO, Inc. 12,360 484
Imperial Credit Commercial
Mortgage Investment 39,300 575
Imperial Credit Industries 33,300 683
Lawyers Title Insurance Corp. 5,000 157
Long Island Bancorp 12,300 610
ML Bancorp, Inc. 800 24
New Century Financial Co. 3,300 34
(a) Ocwen Financial Corp. 5,000 127
PennCorp Financial Group 10,000 357
Peoples Heritage Financial
Group 4,500 207
Redwood Trust 21,100 430
Reliance Group Holdings, Inc. 38,700 547
RenaissanceRe Holdings, Ltd. 6,000 265
Resource Bancshares Mortgage
Group 46,515 759
(a) Southern Pacific Funding
Corp. 46,200 606
Sovereign Bancorp 5,000 104
(a) Trans Financial, Inc. 7,500 292
United Companies Financial
Corp. 15,100 234
UST Corp. 10,000 278
W.R. Berkley Corp. 9,000 395
Webster Financial Corp. 12,100 805
Winston Hotels 18,000 237
----------------------------------------------------------
15,709
- ---------------------------------------------------------------
HEALTH CARE--3.4%
- ---------------------------------------------------------------
(a) Apria Healthcare Group 24,500 329
(a) CONMED Corp. 28,800 756
(a) Genesis Health Ventures 20,000 528
(a) Hologic, Inc. 16,100 333
Integrated Health Services 21,389 667
----------------------------------------------------------
2,613
</TABLE>
67
<PAGE> 140
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
NUMBER
OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
MATERIALS AND PROCESSING--13.7%
- -----------------------------------------------------------
AK Steel Holding Corp. 30,000 $ 531
AMCOL International 41,250 655
Ball Corp. 18,000 636
(a) Buckeye Technologies, Inc. 10,000 462
Carpenter Technology Corp. 13,300 639
Del Webb Corp. 13,600 354
Elcor Corp. 20,250 486
Flowserve Corp. 18,526 517
Furon Co. 35,400 739
(a) Global Industrial
Technologies, Inc. 18,000 305
Intermet Corp. 33,000 578
(a) Lone Star Technologies 18,500 525
(a) Lydall, Inc. 22,800 445
MascoTech 24,500 450
Mississippi Chemical Corp. 10,000 183
(a) Mueller Industries, Inc. 3,500 207
Oregon Metallurgical Corp. 23,500 784
Quanex Corp. 16,500 464
(a) Shaw Group 19,700 453
Trinity Industries 12,200 544
(a) Wyman-Gordon Co. 22,000 432
------------------------------------------------------
10,389
- -----------------------------------------------------------
PRODUCER DURABLES--4.4%
- -----------------------------------------------------------
Blount International, "A" 19,000 507
Briggs & Stratton Corp. 12,000 583
(a) Electroglas 5,000 77
General Cable Corp. 19,600 709
Pacific Scientific Co. 9,800 235
Stewart & Stevenson Services 23,900 609
Watts Industries, Inc. 22,500 637
------------------------------------------------------
3,357
- -----------------------------------------------------------
TECHNOLOGY--7.2%
- -----------------------------------------------------------
(a) Altron, Inc. 15,000 199
Belden, Inc. 14,000 493
(a) Benchmark Electronics 9,600 214
Breed Technologies, Inc. 14,200 259
(a) Burr Brown Corp. 8,950 287
(a) ESS Technology 18,000 137
(a) EXAR Corp. 7,100 117
(a) HADCO Corp. 4,800 217
(a) HMT Technology Corp. 42,500 553
(a) Hutchinson Technology 18,200 398
(a) Komag, Inc. 15,000 223
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--CONTINUED
- -----------------------------------------------------------
(a) Kulicke & Soffa Industries 2,500 $ 47
(a) Learning Co. 40,900 657
(a) MasTec, Inc. 11,000 252
(a) MicroAge, Inc. 3,400 51
(a) Read-Rite Corp. 25,900 408
Scientific-Atlanta 36,800 616
(a) Tech-Sym Corp. 7,400 188
(a) Vanstar Corp. 11,300 128
------------------------------------------------------
5,444
- -----------------------------------------------------------
TRANSPORTATION--4.0%
- -----------------------------------------------------------
Airborne Freight Corp. 11,500 714
(a) America West Holdings 36,600 682
Borg-Warner Automotive, Inc. 12,700 660
Fleetwood Enterprises 15,000 636
Myers Industries 22,220 379
------------------------------------------------------
3,071
- -----------------------------------------------------------
UTILITIES--.6%
- -----------------------------------------------------------
(a) Jones Intercable, Inc. 24,900 437
------------------------------------------------------
TOTAL COMMON STOCKS--73.0%
(Cost: $49,480) 55,541
------------------------------------------------------
(b) MONEY MARKET INSTRUMENTS
Yield--4.98% to 6.47%
Due--January and February 1998
American Honda Finance Corp. $2,000 1,996
CIESCO, L.P. 3,000 2,995
Countrywide Funding Corp. 2,000 1,997
FINOVA Capital Corp. 2,000 1,994
General Motors Corp. 2,000 1,998
Lehman Brothers Holdings,
Inc. 2,000 1,997
Matterhorn Capital 2,000 1,984
Sheffield Receivables 2,000 1,993
Other 3,100 3,088
------------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--26.3%
(Cost: $20,044) 20,042
------------------------------------------------------
TOTAL INVESTMENTS--99.3%
(Cost: $69,524) 75,583
------------------------------------------------------
CASH AND OTHER ASSETS, LESS
LIABILITIES--.7% 525
------------------------------------------------------
NET ASSETS--100% $76,108
------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER SMALL CAP VALUE PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) The Fund has entered into exchange-traded Russell 2000 Index futures
contracts in order to take advantage of anticipated market conditions and
effectively invest in equities approximately $2,700,000 of money market
instruments. As a result, approximately 76% of the Fund's net assets are
effectively invested in equities. (See Note 6 of the Notes to Financial
Statements.)
Based on the cost of investments of $69,524,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $9,300,000, the
gross unrealized depreciation was $3,241,000 and the net unrealized appreciation
on investments was $6,059,000.
See accompanying Notes to Financial Statements.
68
<PAGE> 141
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER VALUE+GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--5.0%
- -----------------------------------------------------------
AMP, Inc. 9,700 $ 407
Champion International Corp. 2,000 91
Dow Chemical Co. 3,800 386
Eastman Chemical Co. 3,300 197
Georgia-Pacific Corp. 1,800 109
Louisiana-Pacific Corp. 15,000 285
Nucor Corp. 7,000 338
Praxair, Inc. 5,000 225
Sonoco Products Co. 14,000 486
Timber Co. 1,800 41
Union Camp Corp. 4,200 225
(a) USA Waste Services 15,175 596
Weyerhaeuser Co. 2,000 98
------------------------------------------------------
3,484
- -----------------------------------------------------------
CAPITAL GOODS--6.6%
- -----------------------------------------------------------
B.F. Goodrich Co. 7,200 298
Crown Cork & Seal Co. 7,000 351
Emerson Electric Co. 9,800 553
General Electric Co. 24,500 1,798
Pitney Bowes, Inc. 3,000 270
Raytheon Co. 6,000 303
(a) U.S. Filter Corp. 17,900 536
Xerox Corp. 6,000 443
------------------------------------------------------
4,552
- -----------------------------------------------------------
CONSUMER CYCLICALS--11.1%
- -----------------------------------------------------------
American Greetings Corp. 21,000 822
(a) AutoZone 16,100 467
Carnival Corp. 16,000 886
Dillard Department Stores 16,500 582
May Department Stores Co. 6,500 342
(a) MGM Grand 19,000 685
NIKE 20,500 805
(a) Nine West Group 21,000 545
Sears, Roebuck & Co. 14,900 674
(a) Tommy Hilfiger Corp. 19,700 692
V.F. Corp. 4,000 184
Walt Disney Co. 10,100 1,000
------------------------------------------------------
7,684
- -----------------------------------------------------------
CONSUMER DURABLES--1.8%
- -----------------------------------------------------------
Ford Motor Co. 13,000 633
Magna International, Inc.,
"A" 3,800 239
Superior Industries
International 14,000 375
------------------------------------------------------
1,247
- -----------------------------------------------------------
CONSUMER STAPLES--10.2%
- -----------------------------------------------------------
McDonald's Corp. 15,000 716
Newell Co. 16,500 701
PepsiCo 6,500 237
Philip Morris Cos. 60,500 2,741
Procter & Gamble Co. 6,000 479
Tricon Global Restaurants,
Inc. 1,050 30
UST, Inc. 58,200 2,150
------------------------------------------------------
7,054
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
ENERGY--4.0%
- ----------------------------------------------------------
AMOCO Corp. 6,000 $ 511
Atlantic Richfield Co. 4,900 393
Chevron Corp. 3,700 285
Columbia Gas System 1,800 141
Enron Corp. 6,000 249
Exxon Corp. 10,200 624
Kerr-McGee Corp. 4,500 285
Royal Dutch Petroleum 2,800 152
YPF Sociedad Anonima, ADR 4,500 154
-----------------------------------------------------
2,794
- ----------------------------------------------------------
FINANCE--20.3%
- ----------------------------------------------------------
American General Corp. 3,300 178
American International Group 3,000 326
Banc One Corp. 6,700 364
BankAmerica Corp. 3,200 233
Bankers Trust New York Corp. 1,900 214
Bank of New York Co. 5,600 324
Barnett Banks 3,000 216
Bear Stearns Cos. 11,700 556
BRE Properties, Inc. 9,000 253
Chase Manhattan Corp. 4,500 493
Crestar Financial Corp. 1,400 80
Federal Home Loan Mortgage
Corp. 24,700 1,036
Federal National Mortgage
Association 29,100 1,660
First Chicago NBD Corp. 4,000 334
First Union Corp. 4,600 236
General Re Corp. 3,500 742
Golden West Financial Corp. 3,000 293
Hartford Financial Services 6,000 561
H.F. Ahmanson & Co. 5,000 335
Hibernia Corp. 34,000 640
Jefferson-Pilot Corp. 6,100 475
J.P. Morgan & Co. 700 79
KeyCorp 1,000 71
MBIA, Inc. 2,400 160
Meditrust 3,604 132
Merrill Lynch & Co. 12,100 882
MGIC Investment Corp. 7,000 465
Morgan Stanley, Dean Witter,
Discover & Co. 11,000 650
NationsBank 9,000 547
PNC Bank Corp. 7,000 399
Post Properties 8,000 325
Republic NY Corp. 600 67
Safeco Corp. 8,000 390
Torchmark Corp. 2,000 84
Wells Fargo & Co. 700 238
-----------------------------------------------------
14,038
</TABLE>
69
<PAGE> 142
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
HEALTH CARE--14.0%
- ----------------------------------------------------------
Abbott Laboratories 11,500 $ 754
(a) ALZA Corp. 34,500 1098
American Home Products Corp. 20,500 1,568
Astra, A.B., ADR 36,700 631
Baxter International 5,000 252
Becton Dickinson & Co. 8,000 400
(a) Biogen 10,200 371
Boston Scientific Corp. 6,000 275
Bristol-Myers Squibb Co. 4,700 445
C.R. Bard 15,500 485
Crescendo Pharmaceutical 1,050 12
(a) HealthCare COMPARE Corp. 10,500 537
Johnson & Johnson 7,500 494
Mallinckrodt Group 16,400 623
Merck & Co. 10,100 1,073
United Healthcare Corp. 13,100 651
-----------------------------------------------------
9,669
- ----------------------------------------------------------
TECHNOLOGY--22.9%
- ----------------------------------------------------------
(a) Applied Materials, Inc. 29,400 886
(a) Ascend Communications, Inc. 10,000 245
(a) Atmel Corp. 33,000 613
(a) Cisco Systems 25,350 1,413
Compaq Computer Corp. 21,600 1,219
(a) Computer Sciences Corp. 12,800 1,069
Diebold 18,500 937
Electronic Data Systems 2,500 110
First Data Corp. 9,000 263
Hewlett-Packard Co. 2,800 175
Intel Corp. 21,200 1,489
Linear Technology Corp. 11,100 640
(a) Microchip Technology 22,500 675
(a) Novellus Systems 14,500 469
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
(a) Parametric Technology Corp. 13,000 $ 616
(a) Quantum Corp. 30,000 602
Reynolds & Reynolds Co. 34,500 636
(a) Seagate Technology 13,000 250
(a) Sun Microsystems 25,500 1,017
(a) Teradyne, Inc. 25,500 816
(a) 3Com Corp. 37,975 1,327
(a) Western Digital Corp. 19,900 320
-----------------------------------------------------
15,787
- ----------------------------------------------------------
TRANSPORTATION--.4%
- ----------------------------------------------------------
Canadian National Railway Co. 5,200 246
- ----------------------------------------------------------
UTILITIES--3.5%
- ----------------------------------------------------------
GTE Corp. 11,000 575
Southern Co. 20,000 518
(a) WorldCom, Inc. 42,700 1,292
-----------------------------------------------------
2,385
-----------------------------------------------------
TOTAL COMMON STOCKS--99.8%
(Cost: $64,717) 68,940
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--1.4%
Yield--6.45%
Due--January 1998
(Cost: $999) $ 1,000 999
-----------------------------------------------------
TOTAL INVESTMENTS--101.2%
(Cost: $65,716) 69,939
-----------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(1.2)% (845)
-----------------------------------------------------
NET ASSETS--100% $69,094
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER VALUE + GROWTH PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $65,716,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $6,796,000, the
gross unrealized depreciation was $2,573,000 and the net unrealized appreciation
on investments was $4,223,000.
See accompanying Notes to Financial Statements.
70
<PAGE> 143
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 20+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY SECURITIES--15.8%
- ----------------------------------------------------------
Notes 7.50%, 1999 $ 100 $ 103
8.875%, 2000 250 267
8.50%, 2000 450 480
6.75%, 2000 499 510
5.50%, 2000 575 572
6.625%, 2001 450 463
7.875%, 2004 211 236
-----------------------------------------------------
2,631
- ----------------------------------------------------------
MORTGAGE BACKED SECURITIES--3.2%
- ----------------------------------------------------------
FHLMC, 6.00%, 2006 66 66
FHLMC, 6.50%, 2014 107 108
FNMA, 6.01%, 2000 150 151
GNMA, 7.00%, 2015 210 213
-----------------------------------------------------
538
-----------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--19.0%
(Cost: $3,147) 3,169
-----------------------------------------------------
COMMON STOCKS
- ----------------------------------------------------------
BASIC INDUSTRIES--3.1%
- ----------------------------------------------------------
AK Steel Holding Corp. 1,210 shs. 21
AMCOL International 1,815 29
Crown Cork & Seal Co. 1,000 50
Dow Chemical Co. 500 50
Eastman Chemical Co. 500 29
Georgia-Pacific Corp. 300 18
Louisiana-Pacific Corp. 2,000 38
Nucor Corp. 900 43
Oregon Metallurgical Corp. 975 33
Rentokil Initial, PLC 12,205 54
Sonoco Products Co. 1,500 52
Technip, S.A. 193 20
Timber Co. 300 7
Toray Industries 7,500 34
Union Camp Corp. 600 32
-----------------------------------------------------
510
- ----------------------------------------------------------
CAPITAL GOODS--6.0%
- ----------------------------------------------------------
Applied Industrial
Technologies 600 16
B.F. Goodrich Co. 800 33
Blount International, "A" 1,460 39
Casella Waste System, Inc. 3,000 79
General Electric Co. 3,800 279
(a) Littelfuse, Inc. 1,900 47
Mannesmann, A.G. 151 76
Murata Manufacturing 1,200 30
Noble International, Ltd. 300 3
Pacific Scientific Co. 2,010 48
Raytheon Co. 900 45
Sony Corp. 700 62
Trinity Industries 570 25
(a) USA Waste Services 1,852 73
(a) U.S. Filter Corp. 4,500 135
-----------------------------------------------------
990
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS--9.8%
- ----------------------------------------------------------
(a) American Coin Merchandising 3,600 $ 63
American Greetings Corp. 2,400 94
(a) AutoZone 1,800 52
Borg-Warner Automotive, Inc. 450 23
(a) Bright Horizons Children's
Center, Inc. 2,800 53
Brown Group, Inc. 1,360 18
(a) CapStar Hotel Co. 1,100 38
Carnival Corp. 1,800 100
Carrefour, S.A. 76 40
(a) Consolidated Graphics, Inc. 500 23
Dillard Department Stores 2,800 99
(a) Education Management Corp. 500 16
Femsa "B" Fomento Economico
Mexicano, S.A. 6,200 49
Finish Line 1,430 19
Four Seasons Hotels, Inc. 1,400 44
(a) Friedman's, Inc. 1,600 22
(a) Hearst-Argyle Television,
Inc. 600 18
Hertz Corp. 400 16
Hudson's Bay Co. 2,975 66
May Department Stores Co. 600 32
(a) Men's Wearhouse 1,400 49
Meredith Corp. 400 14
(a) MGM Grand 1,800 65
(a) Neiman-Marcus 800 24
NIKE 2,950 116
(a) Nine West Group 3,000 78
(a) Outdoor Systems, Inc. 1,100 42
(a) Outsource International 500 6
(a) Preview Travel, Inc. 500 4
Sears, Roebuck & Co. 1,900 86
(a) SOS Staffing Services 500 9
(a) SportsLine USA, Inc. 1,200 13
(a) Tommy Hilfiger Corp. 2,500 88
Trammell Crow Co. 800 21
Walt Disney Co. 1,300 129
-----------------------------------------------------
1,629
- ----------------------------------------------------------
CONSUMER DURABLES--2.0%
- ----------------------------------------------------------
BBA Group, PLC 5,180 35
Ford Motor Co. 1,800 88
Honda Motor Co., Ltd. 1,100 41
Magna International Inc.,
"A" 600 38
Simpson Industries 2,000 24
Superior Industries
International 2,000 54
U.S. Industries 1,750 53
-----------------------------------------------------
333
- ----------------------------------------------------------
CONSUMER STAPLES--10.5%
- ----------------------------------------------------------
(a) American Italian Pasta Co. 2,000 50
Arbor Drugs 2,850 53
Avon Products 2,000 123
(a) Boston Chicken 1,790 12
Coca Cola Co. 700 47
(a) Emmis Broadcasting Corp. 800 37
Flowserve Corp. 986 28
Independent Newspapers, PLC 11,320 61
</TABLE>
71
<PAGE> 144
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES--CONTINUED
- ----------------------------------------------------------
Kimberly-Clark de Mexico,
S.A. de C.V. 15,400 $ 73
Koninklijke Ahold, N.V. 4,898 128
(a) Lone Star Steakhouse &
Saloon 1,340 23
McDonald's Corp. 3,600 172
(a) MSC Industrial Direct 1,400 59
Newell Co. 2,700 115
Ocular Sciences, Inc. 200 5
PepsiCo 1,500 55
Philip Morris Cos. 7,100 322
Procter & Gamble Co. 1,300 104
Star Buffet, Inc. 200 2
UST, Inc. 6,200 229
(a) Whole Foods Market 1,000 51
-----------------------------------------------------
1,749
- ----------------------------------------------------------
ENERGY--3.8%
- ----------------------------------------------------------
AMOCO Corp. 600 51
Atlantic Richfield Co. 700 56
Atmos Energy Corp. 600 18
British Petroleum 2,961 39
Chevron Corp. 500 39
Columbia Gas System 300 24
(a) Dawson Geophysical Co. 2,000 33
Elf Aquitaine 528 62
Exxon Corp. 1,200 73
Giant Industries 1,110 21
KCS Energy 780 16
Petro-Canada 2,300 42
Repsol, S.A. 820 35
Royal Dutch Petroleum 1,396 77
(a) Tesoro Petroleum Corp. 1,190 18
YPF Sociedad Anonima, ADR 900 31
-----------------------------------------------------
635
- ----------------------------------------------------------
FINANCE--16.9%
- ----------------------------------------------------------
American General Corp. 1,000 54
AmerUS Life Holdings, Inc. 1,000 37
ARM Financial Corp. 2,300 61
Astoria Financial Corp. 485 27
AXA-UAP, S.A. 500 39
Banco Bilbao Vizcaya 1,801 58
Banco Popular Espanol 880 61
Banc One Corp. 700 38
BankAmerica Corp. 400 29
Bankers Trust New York Corp. 200 22
Bank of Ireland 5,430 83
Barnett Banks 600 43
Bear Stearns Cos. 1,600 76
BRE Properties, Inc. 1,200 34
Chase Manhattan Corp. 400 44
CITIC Pacific, Ltd. 6,500 26
Commercial Federal Corp. 550 20
Compass Bancshares 610 27
Del Webb Corp. 1,230 32
Excel Realty Trust, Inc. 765 24
Executive Risk 300 21
Federal Home Loan Mortgage
Corp. 3,400 143
Federal National Mortgage
Association 4,000 228
Financial Federal Corp. 2,900 69
First Chicago NBD Corp. 400 33
First Commerce Corp. 420 28
First Union Corp. 1,640 84
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCE--CONTINUED
- ----------------------------------------------------------
Fleet Financial Group, Inc. 300 $ 22
Golden West Financial Corp. 400 39
Hartford Financial Services 600 56
H.F. Ahmanson & Co. 300 20
Hibernia Corp. 3,000 56
HSBC Holdings, PLC 3,644 90
Imperial Credit Industries 1,035 21
ING Groep, N.V. 1,020 43
Jefferson-Pilot Corp. 550 43
Kansas City Southern
Industries 600 19
KeyCorp 300 21
LaSalle Partners 1,200 43
Meditrust 720 26
Merrill Lynch & Co. 1,300 95
MGIC Investment Corp. 1,600 106
Morgan Stanley, Dean Witter,
Discover & Co. 2,000 118
NationsBank 2,550 155
PennCorp Financial Group 720 26
PNC Bank Corp. 800 46
Post Properties 900 37
Protective Life Insurance
Co. 400 24
Republic NY Corp. 250 29
Resource Bancshares Mortgage
Group 1,890 31
Safeco Corp. 1,000 49
Texas Regional Bancshares 150 5
Torchmark Corp. 2,100 88
United Companies Financial
Corp. 940 15
Vedior, N.V. 1,130 20
Wells Fargo & Co. 100 34
-----------------------------------------------------
2,818
- ----------------------------------------------------------
HEALTH CARE--9.3%
- ----------------------------------------------------------
Abbott Laboratories 1,500 98
ALZA Corp. 3,900 124
American Home Products Corp. 1,900 145
Astra, A.B., ADR 3,366 58
Baxter International 600 30
Becton Dickinson & Co. 400 20
(a) Biogen 1,600 58
Bristol-Myers Squibb Co. 800 76
(a) British Biotech, PLC 5,110 9
Concentra Managed Care, Inc. 457 15
(a) CONMED Corp. 1,270 33
C.R. Bard 1,300 41
Crescendo Pharamaceutical 125 1
(a) Dura Pharamaceuticals 600 28
Glaxo Wellcome, PLC 2,194 52
(a) Hanger Orthopedic Group 2,500 32
(a) HealthCare COMPARE Corp. 1,450 74
(a) Healthworld Corp. 1,700 21
Johnson & Johnson 1,200 79
Mallinckrodt Group 1,700 65
Merck & Co. 1,200 128
Novartis 21 34
(a) PAREXEL International Corp. 1,000 37
RehabCare Group 1,000 27
Roche Holding, A.G. 5 50
(a) Safeskin Corp. 900 51
(a) Sofamor-Danek Group 600 39
United Healthcare Corp. 1,700 84
Zeneca Group, PLC 1,115 39
-----------------------------------------------------
1,548
</TABLE>
72
<PAGE> 145
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--15.4%
- ----------------------------------------------------------
(a) Adaptec, Inc. 2,500 $ 93
AMP, Inc. 900 38
(a) Analog Devices 2,600 72
(a) Applied Materials, Inc. 3,900 117
(a) Ascend Communications, Inc. 1,500 37
(a) Atmel Corp. 4,700 87
Belden, Inc. 800 28
Canon, Inc. 900 21
(a) Cisco Systems 3,300 184
Compaq Computer Corp. 2,575 145
(a) Computer Sciences Corp. 1,650 138
(a) Comverse Technology 100 4
Diebold 2,000 101
ESS Technologies, Inc. 1,570 12
Fuji Photo Film Co., Ltd. 1,000 38
(a) Gartner Group 400 15
Getronics 1,050 33
Hewlett-Packard Co. 400 25
HMT Technology Corp. 1,600 21
Intel Corp. 2,700 190
(a) Jones Intercable, Inc. 1,435 25
(a) KLA-Tencor Corp. 100 4
(a) Learning Co. 1,850 30
Linear Technology Corp. 1,500 86
(a) MRV Communications 300 7
(a) Natural MicroSystems Corp. 300 14
(a) Novellus Systems 1,800 58
(a) Parametric Technology Corp. 1,800 85
Pittway Corp. 100 7
(a) Quantum Corp. 2,400 48
(a) Read-Rite Corp. 1,380 22
Reynolds & Reynolds Co. 6,300 116
(a) Sanmina Corp. 450 30
(a) Seagate Technology 1,500 29
(a) Sun Microsystems 5,000 199
(a) Tech-Sym Corp. 120 3
Telecom Italia Spa 5,700 36
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
(a) Teradyne, Inc. 3,700 $ 118
(a) 3Com Corp. 4,950 173
(a) VIASOFT, Inc. 200 8
(a) Western Digital Corp. 4,100 66
-----------------------------------------------------
2,563
- ----------------------------------------------------------
TRANSPORTATION--.2%
- ----------------------------------------------------------
Canadian National Railway
Co. 700 33
(a) Knight Transportation 200 6
-----------------------------------------------------
39
- ----------------------------------------------------------
UTILITIES--2.7%
- ----------------------------------------------------------
GTE Corp. 1,200 63
Southern Co. 1,800 47
Telecom Italia Mobile 13,915 64
Telefonica de Espana, S.A. 1,830 52
Veba, A.G. 635 43
(a) WorldCom, Inc. 6,100 185
-----------------------------------------------------
454
-----------------------------------------------------
TOTAL COMMON STOCKS--79.7%
(Cost: $12,159) 13,268
-----------------------------------------------------
MONEY MARKET INSTRUMENTS--2.7%
Yield--5.73%
Due--January 1998
(Cost: $449) $ 450 449
-----------------------------------------------------
TOTAL INVESTMENTS--101.4%
(Cost: $15,755) 16,886
-----------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(1.4)% (227)
-----------------------------------------------------
NET ASSETS -- 100% $16,659
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER HORIZON 20+ PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $15,755,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $1,597,000, the
gross unrealized depreciation was $466,000 and the net unrealized appreciation
on investments was $1,131,000.
See accompanying Notes to Financial Statements.
73
<PAGE> 146
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 10+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
U. S. TREASURY SECURITIES--31.8%
- -----------------------------------------------------------
Notes 8.875%, 2000 $ 1,178 $ 1,261
8.50%, 2000 1,370 1,455
6.75%, 2000 670 685
5.50%, 2000 1,200 1,193
8.00%, 2001 1,000 1,069
6.625%, 2001 850 874
6.25%, 2002 450 458
7.875%, 2004 150 168
------------------------------------------------------
7,163
- -----------------------------------------------------------
MORTGAGE BACKED SECURITIES--6.6%
- -----------------------------------------------------------
FHLMC, 6.00%, 2006 219 218
FHLMC, 6.50%, 2014 230 232
FNMA, 6.01%, 2000 500 502
GNMA, 7.00%, 2015 531 537
------------------------------------------------------
1,489
------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS--38.4%
(Cost: $8,608) 8,652
------------------------------------------------------
COMMON STOCKS
- -----------------------------------------------------------
BASIC INDUSTRIES--2.5%
- -----------------------------------------------------------
AK Steel Holding Corp. 1,650 shs. 29
AMCOL International 2,625 41
Champion International Corp. 300 13
Crown Cork & Seal Co. 600 30
Dow Chemical Co. 600 60
Eastman Chemical Co. 400 23
Georgia-Pacific Corp. 300 18
Louisiana-Pacific Corp. 1,200 23
Millennium Chemicals, Inc. 107 3
Nucor Corp. 700 34
Oregon Metallurgical Corp. 1,440 48
Rentokil Initial, PLC 15,248 67
Sonoco Products Co. 2,000 69
Technip, S.A. 350 37
Timber Co. 300 6
Toray Industries 9,000 40
Union Camp Corp. 500 27
------------------------------------------------------
568
- -----------------------------------------------------------
CAPITAL GOODS--4.5%
- -----------------------------------------------------------
Applied Industrial
Technologies 1,050 28
B.F. Goodrich Co. 700 29
Blount International, "A" 2,180 58
Casella Waste System, Inc. 1,500 40
Emerson Electric Co. 1,200 68
General Electric Co. 3,800 279
(a) Littelfuse, Inc. 700 17
Mannesmann, A.G. 85 43
Murata Manufacturing 1,000 25
Noble International, Ltd. 300 3
Pacific Scientific Co. 2,980 72
Raytheon Co. 900 45
Sony Corp. 800 71
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS--CONTINUED
- -----------------------------------------------------------
Trinity Industries 830 $ 37
(a) USA Waste Services 1,775 70
(a) U.S. Filter Corp. 3,100 93
Xerox Corp. 600 44
------------------------------------------------------
1,022
- -----------------------------------------------------------
CONSUMER CYCLICALS--7.3%
- -----------------------------------------------------------
(a) American Coin Merchandising 2,100 37
American Greetings Corp. 2,100 82
(a) AutoZone 2,300 67
Borg Warner Automotive, Inc. 640 33
(a) Bright Horizons Children's
Center, Inc. 2,100 39
Brown Group, Inc. 2,000 27
(a) CapStar Hotel Co. 1,500 51
Carnival Corp. 1,800 100
Carrefour, S.A. 81 42
(a) Consolidated Graphics, Inc. 1,050 49
Dillard Department Stores 2,400 85
(a) Education Management Corp. 800 25
Femsa "B" Fomento Economico
Mexicano, S.A. 8,700 69
Finish Line 2,130 28
Four Seasons Hotels, Inc. 1,000 32
(a) Friedman's, Inc. 2,285 31
(a) Hearst-Argyle Television,
Inc. 900 27
Hertz Corp. 300 12
Hudson's Bay Co. 3,375 75
May Department Stores Co. 300 16
(a) Men's Wearhouse 1,300 45
Meredith Corp. 400 14
(a) MGM Grand 2,000 72
(a) Neiman-Marcus 600 18
NIKE 3,000 118
(a) Outdoor Systems, Inc. 1,100 42
(a) Outsource International 400 5
(a) Preview Travel, Inc. 500 4
Sears, Roebuck & Co. 2,200 100
(a) SOS Staffing Services 600 11
(a) SportsLine USA, Inc. 1,200 13
(a) Tommy Hilfiger Corp. 2,800 98
Trammell Crow Co. 1,200 31
V.F. Corp. 600 28
Walt Disney Co. 1,300 129
------------------------------------------------------
1,655
- -----------------------------------------------------------
CONSUMER DURABLES--1.8%
- -----------------------------------------------------------
BBA Group, PLC 6,044 41
Ford Motor Co. 2,000 97
Honda Motor Co., Ltd 2,300 85
Magna International Inc.,
"A" 600 38
Simpson Industries 3,000 35
Superior Industries
International 2,000 54
U.S. Industries 1,450 44
------------------------------------------------------
394
</TABLE>
74
<PAGE> 147
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES--6.7%
- ----------------------------------------------------------
(a) American Italian Pasta Co. 700 $ 18
Arbor Drugs 1,275 24
(a) Boston Chicken 2,610 17
Coca Cola Co. 800 53
(a) Emmis Broadcasting Corp. 700 32
Flowserve Corp. 1,440 40
Imperial Tobacco Group, ADR 375 5
Independent Newspapers, PLC 6,938 38
Kimberly-Clark de Mexico,
S.A. de C.V. 17,600 83
Koninklijke Ahold, N.V. 2,600 68
(a) Lone Star Steakhouse &
Saloon 1,950 34
McDonald's Corp. 2,700 129
(a) MSC Industrial Direct 400 17
Newell Co. 2,500 106
Ocular Sciences, Inc. 500 13
PepsiCo 1,500 55
Philip Morris Cos. 7,600 344
Procter & Gamble Co. 1,300 104
Star Buffet, Inc. 200 2
UST, Inc. 7,500 277
(a) Whole Foods Market 1,000 51
-----------------------------------------------------
1,510
- ----------------------------------------------------------
ENERGY--3.4%
- ----------------------------------------------------------
AMOCO Corp. 700 60
Atlantic Richfield Co. 700 56
Atmos Energy Corp. 900 27
British Petroleum 4,246 56
Chevron Corp. 400 31
Columbia Gas System 500 39
(a) Dawson Geophysical Co. 1,900 31
Elf Aquitaine 639 75
Enron Oil & Gas Co. 800 33
Exxon Corp. 900 55
Giant Industries 1,620 31
KCS Energy 1,170 24
Petro-Canada 4,925 90
Repsol, S.A. 960 41
Royal Dutch Petroleum 1,534 84
(a) Tesoro Petroleum Corp. 1,760 27
-----------------------------------------------------
760
- ----------------------------------------------------------
FINANCE--12.6%
- ----------------------------------------------------------
American General Corp. 1,000 54
AmerUS Life Holdings, Inc. 1,500 55
ARM Financial Corp. 2,000 53
Astoria Financial Corp. 690 38
AXA-UAP, S.A. 500 39
Banco Bilbao Vizcaya 2,166 70
Banco Popular Espanol 941 66
Banc One Corp. 900 49
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCE--CONTINUED
- ----------------------------------------------------------
BankAmerica Corp. 400 $ 29
Bankers Trust New York Corp. 400 45
Bank of Ireland 4,796 73
Barnett Banks 600 43
Bear Stearns Companies 1,400 67
BRE Properties, Inc. 800 23
CITIC Pacific, Ltd. 13,500 54
Commercial Federal Corp. 950 34
Compass Bancshares 900 39
Del Webb Corp. 1,800 47
Excel Realty Trust, Inc. 1,120 35
Executive Risk 400 28
Federal Home Loan Mortgage
Corp. 3,400 143
Federal National Mortgage
Association 3,700 211
Financial Federal Corp. 1,500 35
First Chicago NBD Corp. 500 42
First Commerce Corp. 620 42
First Union Corp. 1,560 80
Fleet Financial Group, Inc. 200 15
General Re Corp. 500 106
Hartford Financial Services 600 56
Hibernia Corp. 4,000 75
HSBC Holdings, PLC 4,855 120
Imperial Credit Industries 1,490 31
ING Groep, N.V. 1,087 46
Jefferson-Pilot Corp. 500 39
Kansas City Southern
Industries 600 19
KeyCorp 200 14
LaSalle Partners 500 18
Meditrust 720 26
Merrill Lynch & Co. 1,100 80
MGIC Investment Corp. 1,400 93
Morgan Stanley, Dean Witter,
Discover & Co. 1,000 59
NationsBank 2,200 134
PennCorp Financial Group 1,050 37
PNC Bank Corp. 900 51
Post Properties 800 33
Protective Life Insurance
Co. 400 24
Republic NY Corp. 200 23
Resource Bancshares Mortgage
Group 2,657 43
Safeco Corp. 1,200 59
Texas Regional Bancshares 150 5
Torchmark Corp. 600 25
United Companies Financial Corp. 1,370 21
Vedior, N.V. 2,014 36
Washington Mutual, Inc. 500 32
Wells Fargo & Co. 100 34
-----------------------------------------------------
2,848
</TABLE>
75
<PAGE> 148
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
HEALTH CARE--7.3%
- ----------------------------------------------------------
Abbott Laboratories 1,200 $ 79
ALZA Corp. 4,400 140
American Home Products Corp. 2,800 214
Astra, A.B., ADR 5,400 93
Baxter International 600 30
Becton Dickinson & Co. 600 30
(a) Biogen 1,400 51
Bristol-Myers Squibb Co. 700 66
(a) British Biotech, PLC 8,148 14
Concentra Managed Care, Inc. 557 19
(a) CONMED Corp. 1,850 49
C.R. Bard 1,000 31
Crescendo Pharamaceutical 125 1
(a) Dura Pharamaceuticals 600 28
Glaxo Wellcome, PLC 2,521 60
(a) Hanger Orthopedic Group 2,000 26
(a) HealthCare COMPARE Corp. 1,450 74
(a) Healthworld Corp. 2,000 24
Mallinckrodt Group 1,500 57
Merck & Co. 1,300 138
Novartis 31 50
(a) PAREXEL International Corp. 1,000 37
RehabCare Group 1,300 34
Roche Holding, A.G. 7 70
(a) Safeskin Corp. 900 51
(a) Sofamor-Danek Group 800 52
United Healthcare Corp. 1,600 80
Zeneca Group, PLC 1,466 52
-----------------------------------------------------
1,650
- ----------------------------------------------------------
TECHNOLOGY--11.9%
- ----------------------------------------------------------
AMP, Inc. 600 25
(a) Analog Devices 1,000 28
(a) Applied Materials, Inc. 4,300 130
(a) Ascend Communications, Inc. 1,400 34
(a) Atmel Corp. 2,600 48
Belden, Inc. 850 30
Canon, Inc. 1,700 40
(a) Cisco Systems 3,600 201
Compaq Computer Corp. 2,675 151
(a) Computer Sciences Corp. 1,620 135
(a) Comverse Technology 300 12
Diebold 2,500 127
ESS Technologies, Inc. 2,300 17
First Data Corp. 1,000 29
Fuji Photo Film Co., Ltd. 1,000 38
(a) Gartner Group 400 15
Getronics 1,230 39
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
Hewlett-Packard Co. 300 $ 19
HMT Technology Corp. 2,300 30
Intel Corp. 2,800 197
(a) Jones Intercable, Inc. 2,080 37
(a) KLA-Tencor Corp. 300 12
(a) Learning Co. 2,700 43
Linear Technology Corp. 1,800 104
(a) Microchip Technology 3,900 117
(a) MRV Communications 300 7
(a) Novellus Systems 2,100 68
(a) Parametric Technology Corp. 2,100 99
Pittway Corp. 200 14
(a) Quantum Corp. 4,600 92
(a) Read-Rite Corp. 1,940 31
Reynolds & Reynolds Co. 6,500 120
(a) Sanmina Corp. 400 27
(a) Seagate Technology 1,500 29
(a) Sun Microsystems 4,100 163
(a) Tech-Sym Corp. 110 3
Telecom Italia Spa 8,600 55
(a) Teradyne, Inc. 4,000 128
(a) 3Com Corp. 4,525 158
(a) Western Digital Corp. 1,900 31
-----------------------------------------------------
2,683
- ----------------------------------------------------------
TRANSPORTATION--.2%
- ----------------------------------------------------------
Canadian National Railway
Co. 800 38
(a) Knight Transportation 200 6
-----------------------------------------------------
44
- ----------------------------------------------------------
UTILITIES--2.2%
- ----------------------------------------------------------
GTE Corp. 1,200 63
Southern Co. 2,200 57
Telecom Italia Mobile 15,820 73
Telefonica de Espana, S.A. 2,194 63
Veba, A.G. 1,000 68
(a) WorldCom, Inc. 5,500 166
-----------------------------------------------------
490
-----------------------------------------------------
TOTAL COMMON STOCKS--60.4%
(Cost: $12,509) 13,624
-----------------------------------------------------
TOTAL INVESTMENTS--98.8%
(Cost: $21,117) 22,276
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.2% 277
-----------------------------------------------------
NET ASSETS--100% $22,553
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER HORIZON 10+ PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $21,117,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $1,709,000, the
gross unrealized depreciation was $550,000 and the net unrealized appreciation
on investments was $1,159,000.
See accompanying Notes to Financial Statements.
76
<PAGE> 149
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER HORIZON 5 PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------
PRINCIPAL
AMOUNT OR
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- -----------------------------------------------------------
<S> <C> <C>
U. S. TREASURY SECURITIES--50.0%
- -----------------------------------------------------------
Notes 8.875%, 2000 $1,470 $ 1,574
8.50%, 2000 1,100 1,180
6.75%, 2000 1,249 1,277
5.875%, 2000 340 341
5.50%, 2000 400 398
8.00%, 2001 200 214
6.625%, 2001 550 566
6.50%, 2001 1,120 1,147
6.25%, 2002 200 204
7.875%, 2004 200 224
------------------------------------------------------
7,125
- -----------------------------------------------------------
MORTGAGE BACKED SECURITIES--7.9%
- -----------------------------------------------------------
FHLMC, 6.00%, 2006 139 139
FHLMC, 6.50%, 2014 141 142
FNMA, 6.01%, 2000 350 351
GNMA, 7.00%, 2015 489 494
------------------------------------------------------
1,126
------------------------------------------------------
TOTAL GOVERNMENT
OBLIGATIONS--57.9%
(Cost: $8,207) 8,251
------------------------------------------------------
COMMON STOCKS
- -----------------------------------------------------------
BASIC INDUSTRIES--1.3%
- -----------------------------------------------------------
AK Steel Holding Corp. 530 shs. 9
AMCOL International 960 15
Champion International Corp. 100 5
Dow Chemical Co. 200 20
Eastman Chemical Co. 200 12
Georgia-Pacific Corp. 100 6
Louisiana-Pacific Corp. 900 17
Nucor Corp. 200 10
Oregon Metallurgical Corp. 540 18
Rentokil Initial, PLC 3,200 14
Sonoco Products Co. 800 28
Technip, S.A. 169 18
Timber Co. 100 2
Toray Industries 1,500 7
Union Camp Corp. 200 11
-----------------------------------------------------
192
- -----------------------------------------------------------
CAPITAL GOODS--2.8%
- -----------------------------------------------------------
Applied Industrial
Technologies 600 16
B.F. Goodrich Co. 200 8
Blount International, "A" 800 21
Casella Waste System, Inc. 1,000 26
Emerson Electric Co. 500 28
General Electric Co. 1,400 103
(a) Littelfuse, Inc. 400 10
Mannesmann, A.G. 42 21
Murata Manufacturing 700 18
Noble International, Ltd. 200 2
Pacific Scientific Co. 1,070 26
Raytheon Co. 400 20
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
GOVERNMENT OBLIGATIONS OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------
CAPITAL GOODS--CONTINUED
- ----------------------------------------------------------
Sony Corp. 400 $ 36
Trinity Industries 290 13
(a) USA Waste Services 630 25
(a) U.S. Filter Corp. 1,000 30
-----------------------------------------------------
403
- ----------------------------------------------------------
CONSUMER CYCLICALS--5.5%
- ----------------------------------------------------------
(a) American Coin Merchandising 5,000 88
American Greetings Corp. 800 31
(a) AutoZone 600 17
Borg-Warner Automotive, Inc. 240 12
(a) Bright Horizons Children's
Centers, Inc. 1,300 24
Brown Group, Inc. 730 10
(a) CapStar Hotel Co. 600 21
Carnival Corp. 800 44
Carrefour, S.A. 38 20
(a) Consolidated Graphics, Inc. 350 16
Dillard Department Stores 800 28
(a) Education Management Corp. 500 16
Femsa "B" Fomento Economico
Mexicano, S.A. 2,300 18
Finish Line 745 10
Four Seasons Hotels, Inc. 800 25
(a) Friedman's, Inc. 840 11
(a) Hearst-Argyle Television,
Inc. 500 15
Hertz Corp. 300 12
Hudson's Bay Co. 1,550 35
May Department Stores Co. 200 11
(a) Men's Wearhouse 500 17
Meredith Corp. 200 7
(a) MGM Grand 200 7
(a) Neiman-Marcus 600 18
NIKE 1,500 59
(a) Nine West Group 1,000 26
(a) Outdoor Systems, Inc. 300 12
(a) Outsource International 200 2
(a) Preview Travel, Inc. 200 2
Sears, Roebuck & Co. 1,000 45
(a) SOS Staffing Services 400 8
(a) SportsLine USA, Inc. 700 8
(a) Tommy Hilfiger Corp. 1,000 35
Trammell Crow Co. 700 18
V.F. Corp. 200 9
Walt Disney Co. 500 50
-----------------------------------------------------
787
- ----------------------------------------------------------
CONSUMER DURABLES--1.1%
- ----------------------------------------------------------
BBA Group, PLC 2,440 16
Ford Motor Co. 900 44
Honda Motor Co., Ltd 600 22
Magna International Inc.,
"A" 200 13
Simpson Industries 1,060 12
Superior Industries
International 1,000 27
U.S. Industries 800 24
-----------------------------------------------------
158
</TABLE>
77
<PAGE> 150
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
CONSUMER STAPLES--4.4%
- ----------------------------------------------------------
(a) American Italian Pasta Co. 600 $ 15
Arbor Drugs 675 12
Avon Products 500 31
(a) Boston Chicken 950 6
(a) Emmis Broadcasting Corp. 400 18
Flowserve Corp. 519 14
Independent Newspapers, PLC 1,585 9
Kimberly-Clark de Mexico,
S.A. de C.V. 9,900 47
Koninklijke Ahold, N.V. 988 26
(a) Lone Star Steakhouse &
Saloon 705 12
McDonald's Corp. 1,500 72
(a) MSC Industrial Direct 200 8
Newell Co. 1,300 55
Ocular Sciences, Inc. 100 3
Philip Morris Cos. 3,700 168
Procter & Gamble Co. 400 32
Star Buffet, Inc. 100 1
UST, Inc. 2,600 96
-----------------------------------------------------
625
- ----------------------------------------------------------
ENERGY--2.3%
- ----------------------------------------------------------
AMOCO Corp. 400 34
Atlantic Richfield Co. 300 24
Atmos Energy Corp. 320 10
British Petroleum 1,146 15
Chevron Corp. 300 23
Columbia Gas System 100 8
(a) Dawson Geophysical Co. 500 8
Elf Aquitaine 363 42
Exxon Corp. 500 31
Giant Industries 590 11
KCS Energy 420 9
Kerr-McGee Corp. 400 25
Petro-Canada 1,600 29
Repsol, S.A. 390 17
Royal Dutch Petroleum 636 35
(a) Tesoro Petroleum Corp. 650 10
-----------------------------------------------------
331
- ----------------------------------------------------------
FINANCE--7.3%
- ----------------------------------------------------------
American General Corp. 200 11
AmerUS Life Holdings, Inc. 100 4
ARM Financial Corp. 1,200 32
Astoria Financial Corp. 250 14
AXA-UAP, S.A. 115 9
Banco Popular Espanol 170 12
Banc One Corp. 300 16
BankAmerica Corp. 200 15
Bankers Trust New York Corp. 100 11
Bank of Ireland 3,425 52
Barnett Banks 200 14
Bear Stearns Cos. 400 19
BRE Properties, Inc. 300 8
CITIC Pacific, Ltd. 6,000 24
Commercial Federal Corp. 400 14
Compass Bancshares 320 14
Del Webb Corp. 650 17
Excel Realty Trust, Inc. 410 13
Executive Risk 200 14
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
FINANCE--CONTINUED
- ----------------------------------------------------------
Federal Home Loan Mortgage
Corp. 1,600 $ 67
Federal National Mortgage
Association 1,400 80
Financial Federal Corp. 1,000 24
First Chicago NBD Corp. 200 17
First Commerce Corp. 220 15
First Union Corp. 620 32
General Re Corp. 200 42
Hartford Financial Services 300 28
Hibernia Corp. 1,500 28
HSBC Holdings, PLC 814 20
Imperial Credit Industries 550 11
ING Groep, N.V. 551 23
Jefferson-Pilot Corp. 250 19
Kansas City Southern
Industries 300 10
KeyCorp 200 14
LaSalle Partners 300 11
Meditrust 360 13
Merrill Lynch & Co. 200 15
MGIC Investment Corp. 500 33
Morgan Stanley, Dean Witter,
Discover & Co. 500 30
NationsBank 650 40
PennCorp Financial Group 380 14
PNC Bank Corp. 500 29
Post Properties 400 16
Protective Life Insurance
Co. 200 12
Republic NY Corp. 50 6
Resource Bancshares Mortgage
Group 945 15
Safeco Corp. 500 24
Texas Regional Bancshares 150 5
Torchmark Corp. 200 8
United Companies Financial
Corp. 480 7
Vedior, N.V. 455 8
Washington Mutual, Inc. 200 13
-----------------------------------------------------
1,042
- ----------------------------------------------------------
HEALTH CARE--4.8%
- ----------------------------------------------------------
Abbott Laboratories 600 39
ALZA Corp. 2,000 64
American Home Products Corp. 800 61
Astra, A.B., ADR 1,600 28
Baxter International 400 20
Becton Dickinson & Co. 400 20
(a) Biogen 600 22
Bristol-Myers Squibb Co. 300 28
(a) British Biotech, PLC 3,550 6
Concentra Managed Care, Inc. 278 9
(a) CONMED Corp. 685 18
C.R. Bard 300 9
Crescendo Pharmaceutical 50 1
(a) Dura Pharmaceuticals 400 18
Glaxo Wellcome, PLC 1,225 29
(a) Hanger Orthopedic Group 500 6
(a) HealthCare COMPARE Corp. 500 26
(a) Healthworld Corp. 1,200 14
Mallinckrodt Group 600 23
Merck & Co. 500 53
Novartis 14 23
(a) PAREXEL International Corp. 500 19
</TABLE>
78
<PAGE> 151
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
HEALTH CARE--CONTINUED
- ----------------------------------------------------------
RehabCare Group 300 $ 8
Roche Holding, A.G. 3 30
(a) Safeskin Corp. 500 28
(a) Sofamor-Danek Group 300 20
United Healthcare Corp. 600 30
Zeneca Group, PLC 780 28
-----------------------------------------------------
680
- ----------------------------------------------------------
TECHNOLOGY--9.0%
- ----------------------------------------------------------
(a) Adaptec, Inc. 1,000 37
AMP, Inc. 300 13
(a) Analog Devices 1,000 28
(a) Applied Materials, Inc. 2,000 60
(a) Ascend Communications, Inc. 600 15
(a) Atmel Corp. 2,400 45
Belden, Inc. 150 5
Canon, Inc. 400 9
(a) Cisco Systems 1,650 92
Compaq Computer Corp. 1,100 62
(a) Computer Sciences Corp. 800 67
(a) Comverse Technology 200 8
Diebold 1,000 51
ESS Technologies, Inc. 830 6
Fuji Photo Film Co., Ltd. 2,000 77
(a) Gartner Group 200 7
Getronics 480 15
Hewlett-Packard Co. 100 6
HMT Technology Corp. 800 10
Intel Corp. 900 63
(a) Jones Intercable, Inc. 750 13
(a) KLA-Tencor Corp. 200 8
(a) Learning Co. 970 16
Linear Technology Corp. 700 40
(a) Microchip Technology 1,100 33
(a) MRV Communications 300 7
(a) Natural MicroSystems Corp. 100 5
(a) Novellus Systems 800 26
(a) Parametric Technology Corp. 1,000 47
Pittway Corp. 100 7
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--CONTINUED
- ----------------------------------------------------------
(a) Quantum Corp. 1,400 $ 28
(a) Read-Rite Corp. 700 11
Reynolds & Reynolds Co. 3,100 57
(a) Sanmina Corp. 150 10
(a) Seagate Technology 600 12
(a) Sun Microsystems 1,800 72
(a) Tech-Sym Corp. 40 1
Telecom Italia Spa 4,500 29
(a) Teradyne, Inc. 1,800 58
(a) 3Com Corp. 2,400 84
(a) VIASOFT, Inc. 100 4
(a) Western Digital Corp. 1,200 19
Xerox Corp. 250 18
-----------------------------------------------------
1,281
- ----------------------------------------------------------
TRANSPORTATION--.2%
- ----------------------------------------------------------
Canadian National Railway
Co. 400 19
(a) Knight Transportation 100 3
-----------------------------------------------------
22
- ----------------------------------------------------------
UTILITIES--1.6%
- ----------------------------------------------------------
GTE Corp. 600 31
Southern Co. 900 23
Telecom Italia Mobile 6,180 29
Telefonica de Espana, S.A. 883 25
Veba, A.G. 451 31
(a) WorldCom, Inc. 3,000 91
-----------------------------------------------------
230
-----------------------------------------------------
TOTAL COMMON STOCKS--40.3%
(Cost: $5,326) 5,751
-----------------------------------------------------
TOTAL INVESTMENTS--98.2%
(Cost: $13,533) 14,002
-----------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--1.8% 256
-----------------------------------------------------
NET ASSETS--100% $14,258
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER HORIZON 5 PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $13,533,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $697,000, the gross
unrealized depreciation was $228,000 and the net unrealized appreciation on
investments was $469,000.
See accompanying Notes to Financial Statements.
79
<PAGE> 152
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER BLUE CHIP PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
NUMBER
COMMON STOCKS OF SHARES VALUE
- ------------------------------------------------------------
<S> <C> <C>
BASIC INDUSTRIES--3.1%
- ------------------------------------------------------------
Betz Dearborn, Inc. 2,800 $ 171
Imperial Chemical Industries,
ADR 2,700 175
PPG Industries 3,700 211
Temple-Inland, Inc. 300 16
-------------------------------------------------------
573
- ------------------------------------------------------------
CAPITAL GOODS--4.4%
- ------------------------------------------------------------
Boeing Co. 1,500 73
Emerson Electric Co. 1,600 90
General Electric Co. 600 44
Raytheon Co. 3,343 167
Sundstrand Corp. 4,500 227
(a) U.S. Industries 6,750 203
-------------------------------------------------------
804
- ------------------------------------------------------------
CONSUMER CYCLICALS--9.6%
- ------------------------------------------------------------
CBS Corp. 5,000 147
(a) Clear Channel Communications 1,300 103
(a) Consolidated Stores Corp. 600 26
Dillard Department Stores 3,000 106
Harcourt General 2,650 145
J.C. Penney Co. 2,500 151
May Department Stores Co. 4,000 211
(a) MGM Grand 3,500 126
Newell Co., convertible
preferred 3,000 155
R.R. Donnelley & Sons Co. 7,300 272
Service Corporation
International 4,500 166
(a) Toys R Us 5,300 167
-------------------------------------------------------
1,775
- ------------------------------------------------------------
CONSUMER DURABLES--3.1%
- ------------------------------------------------------------
Federal-Mogul Corp.,
convertible preferred 2400 121
GM Corp. 4,500 166
Stanley Works 5,900 278
-------------------------------------------------------
565
- ------------------------------------------------------------
CONSUMER STAPLES--9.3%
- ------------------------------------------------------------
Dial Corp. 7,300 152
General Mills, Inc. 1,600 115
Gillette Co. 1,000 100
H.J. Heinz Co. 2,400 122
International Flavors &
Fragrances 4,200 216
Kimberly-Clark Corp. 1,700 84
McCormick & Co. 9,000 252
PepsiCo 3,000 109
Procter & Gamble Co. 1,000 80
Seagram Co. 2,000 65
Unilever, N.V., ADR 2,000 125
UST, Inc. 5,000 185
Whitman Corp. 4,000 104
-------------------------------------------------------
1,709
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------
<S> <C> <C>
ENERGY--5.6%
- ------------------------------------------------------------
Baker Hughes, Inc. 2,900 $ 127
Chevron Corp. 3,000 231
Enron Corp. 6,000 248
Exxon Corp. 2,100 128
MCN Energy Group, Inc.,
convertible preferred 2,000 125
Mobil Corp. 1,200 87
Pennzoil Co. 100 7
Unocal Corp. 2,000 78
-------------------------------------------------------
1,031
- ------------------------------------------------------------
FINANCE--18.8%
- ------------------------------------------------------------
American Express Co. 1,100 98
American General Corp. 4,900 265
Beneficial Corp. 2,000 166
Compass Bancshares 4,000 175
Federal National Mortgage
Association 2,000 114
First Chicago NBD Corp. 4,000 334
First Union Corp. 1,200 62
Fleet Financial Group, Inc. 2,570 193
General Growth Properties,
Inc. 2,200 79
H.F. Ahmanson & Co. 1,500 100
Hibernia Corp. 4,000 75
Highwood Properties, Inc. 4,000 149
Jefferson-Pilot Corp. 3,400 265
KeyCorp 3,000 212
Mid Ocean, Ltd. 3,900 212
Morgan Stanley, Dean Witter,
Discover & Co. 1,200 71
NationsBank 3,000 182
PNC Bank Corp. 2,500 143
Safeco Corp. 5,000 244
Spieker Properties, Inc. 3,000 128
Summit Bancorp 3,150 168
Wilmington Trust Corp. 600 37
-------------------------------------------------------
3,472
- ------------------------------------------------------------
HEALTH CARE--9.2%
- ------------------------------------------------------------
Abbott Laboratories 3,000 197
ALZA Corp. 3,000 95
American Home Products Corp. 3,600 275
Baxter International, Inc. 4,200 212
Bristol-Myers Squibb Co. 1,500 142
(a) Crescendo Pharmaceutical
Corp. 150 2
(a) HealthCare COMPARE Corp. 700 36
(a) HEALTHSOUTH Corp. 4,100 114
McKesson Corp., convertible
preferred 1,000 75
McKesson Corp. 700 76
Merck & Co. 2,200 234
(a) Tenet Healthcare Corp. 5,000 166
United Healthcare Corp. 1,300 65
-------------------------------------------------------
1,689
</TABLE>
80
<PAGE> 153
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY--15.2%
- ------------------------------------------------------------
AMP, Inc. 5,500 $ 231
(a) Analog Devices 5,700 158
(a) Cisco Systems 3,150 176
Computer Associates
International 900 48
(a) Computer Sciences Corp. 3,000 251
Diebold 3,400 172
(a) Gartner Group 3,500 130
Harris Corp. 3,800 174
Hewlett-Packard Co. 5,900 369
International Business
Machines Corp. 2,500 261
(a) National Semiconductor Corp. 4,500 117
(a) Newbridge Networks Corp. 2,000 70
(a) Parametric Technology Corp. 3,500 166
Pitney Bowes 300 27
(a) Sterling Commerce, Inc. 4,000 154
(a) Sun Microsystems 6,000 239
(a) Teradyne, Inc. 2,000 64
-------------------------------------------------------
2,807
- ------------------------------------------------------------
TRANSPORTATION--3.3%
- ------------------------------------------------------------
Canadian Pacific, Ltd. 5,000 136
CSX Corp. 4,800 259
(a) Federal Express Corp. 1,000 61
Norfolk Southern Corp. 5,000 154
-------------------------------------------------------
610
- ------------------------------------------------------------
UTILITIES--3.9%
- ------------------------------------------------------------
AirTouch Communications,
convertible preferred 1,900 118
Ameritech Corp. 1,500 121
AT&T 1,200 74
Cincinnati Bell, Inc. 6,000 186
SBC Communications, Inc. 2,900 212
-------------------------------------------------------
711
-------------------------------------------------------
TOTAL COMMON STOCKS--85.5%
(Cost: $15,218) 15,746
-------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
NUMBER
OF SHARES
OR PRINCIPAL
CORPORATE OBLIGATIONS AMOUNT VALUE
- ------------------------------------------------------------
<S> <C> <C>
HEALTH CARE--.5%
- ------------------------------------------------------------
ALZA Corp., 5.00%, 2006 100 $ 104
- ------------------------------------------------------------
ENERGY--.5%
- ------------------------------------------------------------
Diamond Offshore Drilling,
Inc., 3.75%, 2007 65 88
-------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--1.0%
(Cost: $184) 192
-------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield--5.60% to 5.75%
Due--January, 1998
Federal Home Loan Bank $ 650 647
Federal Home Loan Mortgage
Corp. 2,050 2,045
Federal National Mortgage
Association 1,700 1,697
-------------------------------------------------------
TOTAL MONEY MARKET
INSTRUMENTS--23.8%
(Cost: $4,389) 4,389
-------------------------------------------------------
TOTAL INVESTMENTS--110.3%
(Cost: $19,791) 20,327
-------------------------------------------------------
LIABILITIES, LESS CASH AND
OTHER ASSETS--(10.3)% (1,906)
-------------------------------------------------------
NET ASSETS--100% $18,421
-------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER BLUE CHIP PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $19,791,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $800,000, the gross
unrealized depreciation was $264,000 and the net unrealized appreciation on
investments was $536,000.
See accompanying Notes to Financial Statements.
81
<PAGE> 154
PORTFOLIO OF INVESTMENTS
INVESTORS FUND SERIES KEMPER GLOBAL INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS AT DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
LOCAL CURRENCY U.S. DOLLAR
CURRENCY ISSUER PRINCIPAL VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. DOLLAR--20.0% U.S. Treasury Notes
5.75%, 2003 320 $ 320
6.25%, 2007 105 109
----------------------------------------------------------------------------
429
- -------------------------------------------------------------------------------------------------------------------------
AUSTRALIAN DOLLAR--18.1% Commonwealth of Australia
9.75%, 2002 90 68
Federal National Mortgage Association
6.50%, 2002 140 94
New South Wales Treasury Corp.
7.00%, 2004 200 136
Queensland Treasury Corp.
6.50%, 2005 135 90
----------------------------------------------------------------------------
388
- --------------------------------------------------------------------------------------------------------------------------
JAPANESE YEN--12.2% Int'l Bank for Recon. and Dev.
4.75%, 2004 10,000 93
Italian Treasury
5.00%, 2004 9,000 84
Kingdom of Spain
3.10%, 2006 10,000 84
----------------------------------------------------------------------------
261
- --------------------------------------------------------------------------------------------------------------------------
BRITISH POUND--11.5% Export-Import Bank of the United States
6.00%, 2004 47 75
IBRD World Bank
7.125%, 2007 46 79
United Kingdom
8.50%, 2005 50 93
----------------------------------------------------------------------------
247
- --------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND DOLLAR--10.1% New Zealand Government
10.00%, 2002 200 128
8.00%, 2004 145 88
----------------------------------------------------------------------------
216
- --------------------------------------------------------------------------------------------------------------------------
FRENCH FRANC--10.0% French Treasury
6.75%, 2003 176 32
6.75%, 2004 1,000 183
----------------------------------------------------------------------------
215
- --------------------------------------------------------------------------------------------------------------------------
GERMAN MARK--6.6% Federal Republic of Germany
6.50%, 2003 110 66
Government of Ireland
7.25%, 2003 125 76
----------------------------------------------------------------------------
142
</TABLE>
82
<PAGE> 155
PORTFOLIO OF INVESTMENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
LOCAL CURRENCY U.S. DOLLAR
CURRENCY ISSUER PRINCIPAL VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CANADIAN DOLLAR--4.8% Government of Canada
4.75%, 1999 105 $ 73
8.00%, 2027 35 31
----------------------------------------------------------------------------
104
----------------------------------------------------------------------------
TOTAL INVESTMENTS--93.3%
(Cost: $2,062) 2,002
----------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--6.7% 143
----------------------------------------------------------------------------
NET ASSETS--100% $2,145
----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO KEMPER GLOBAL INCOME PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
The Fund is a non-diversified investment company and may invest a relatively
high percentage of its assets in the obligations of a limited number of issuers.
Based on the cost of investments of $2,062,000 for federal income tax purposes
at December 31, 1997, the gross unrealized appreciation was $11,000, the gross
unrealized depreciation was $71,000 and the net unrealized depreciation on
investments was $60,000.
See accompanying Notes to Financial Statements.
83
<PAGE> 156
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
<TABLE>
<S> <C>
(i) Financial Statements included in Part A of the Registration
Statement:
Money Market, Total Return, High Yield, Growth, Government
Securities, International, Small Cap Growth, Investment
Grade Bond, Contrarian, Small Cap Value, Value+Growth,
Horizon 20+, Horizon 10+, Horizon 5, Blue Chip and Global
Income Portfolios -- Financial Highlights
High Return Equity, Financial Services, Global Blue Chip,
and International Growth and Income Portfolios -- None
(ii) Financial Statements included in Part B of the Registration
Statement:
Money Market, Total Return, High Yield, Growth, Government
Securities, International, Small Cap Growth, Investment
Grade Bond, Contrarian, Small Cap Value, Value+Growth,
Horizon 20+, Horizon 10+, Horizon 5, Blue Chip and Global
Income Portfolios:
None
High Return Equity, Financial Services, Global Blue Chip,
and International Growth and Income Portfolios
Report of Independent Auditors (April , 1998)
Statement of Net Assets (April , 1998)
</TABLE>
Schedules I, II, III, IV and V have been omitted as the required
information is not present.
(b) Exhibits:
<TABLE>
<S> <C>
99.b1. Amended and Restated Agreement and Declaration of Trust.+
99.b2. By-laws.(1)
99.b3. Not Applicable.
99.b4. Text of Share certificate.(1)
99.b5.(a) Investment Management Agreements (Money Market, Total
Return, High Yield, Growth, Government Securities,
International, Small Cap Growth, Investment Grade Bond,
Value+Growth, Horizon 20+, Horizon 10+, Horizon 5,
Contrarian, Small Cap Value, Blue Chip and Global Income
Portfolios.)
99.b5.(b) Investment Management Agreements (High Return Equity,
Financial Services, Global Blue Chip, and International
Growth and Income Portfolios)+
99.b5.(c) Sub-Advisory Agreements (International and Global Income
Portfolios).
99.b6. Underwriting Agreement.
99.b7. Not Applicable.
99.b8.(a) Custody Agreement (each Portfolio other than High Return
Equity, Financial Services, Global Blue Chip, and
International Growth and Income Portfolios).(1)
99.b8.(b) Foreign Custodian Agreement.(1)
99.b8.(c) Custody Agreement (High Return Equity and Financial Services
Portfolios)+
99.b8.(d) Custody Agreement (Global Blue Chip and International Growth
and Income Portfolios)+
99.b9.(a) Agency Agreement.(1)
99.b9.(b) Fund Accounting Agreements (each Portfolio other than High
Return Equity, Financial Services, Global Blue Chip, and
International Growth and Income Portfolios).
</TABLE>
C-1
<PAGE> 157
<TABLE>
<S> <C>
99.b9.(c) Fund Accounting Agreements (High Return Equity, Financial Services, Global Blue Chip,
and International Growth and Income Portfolios).+
99.b10. Not Applicable.
99.b11. Not Applicable.
99.b12. Not Applicable.
99.b13. Not Applicable.
99.b14. Not Applicable.
99.b15. Not Applicable.
99.b17. Not Applicable.
99.b18. Not Applicable.
99.b24. Powers of Attorney.
27.1 Financial Data Schedule.+
</TABLE>
- ---------------
+ To be filed by amendment.
(1) Incorporated herein by reference to Post-Effective Amendment No. 14 to the
Registration Statement filed on April 27, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Shares of the Registrant will be offered and sold to Kemper Investors Life
Insurance Company ("KILICO"), a stock insurance company organized under the laws
of Illinois, and its separate investment accounts, "KILICO Variable Separate
Account" and "KILICO Variable Annuity Separate Account". Shares of the
Registrant will also be offered and sold to Allmerica Financial Life Insurance
and Annuity Company ("Allmerica"), a life insurance company organized under the
laws of Delaware, and to its separate investment accounts, "Separate Account
KGC" and "Separate Account KG". Shares of the Registrant will also be offered
and sold to Cova Financial Services Life Insurance Company and Cova Financial
Life Insurance Company (collectively, "Cova") and to Cova's separate investment
accounts, "Cova Variable Account One" and "Cova Variable Account Five". The
purchasers of insurance contracts and annuity contracts issued in connection
with such accounts will have the right to instruct KILICO, Allmerica or Cova, as
the case may be, with respect to the voting of the Registrant's shares held by
the Separate Accounts. Subject to such voting instruction rights, KILICO and its
Separate Accounts control 79.55% of the Registrant, Allmerica and its Separate
Accounts control 20.45% of the Registrant and Cova and its separate account
control 0.01% of the Registrant as of March 2, 1998. KILICO is a wholly-owned
subsidiary of Zurich Kemper Life Insurance Companies, Inc.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of March 2, 1998, there were four holders of record of shares of each
series of the Registrant other than the Government Securities, Small Cap Growth
and Small Cap Value Portfolios. As of March 2, 1998, there were six holders of
record of shares of the Government Securities, Small Cap Growth and Small Cap
Value Portfolios.
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
C-2
<PAGE> 158
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the questions whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding Corp.
("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens & Clark,
Inc. ("Scudder") and the representatives of the beneficial owners of the capital
stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich became the majority
stockholder in the Scudder with an approximately 70% interest, and ZKI was
combined with Scudder ("Transaction"). In connection with the trustees
evaluation of the Transaction, Zurich agreed to indemnify the Registrant and the
trustees who were not interested persons of ZKI or Scudder (the "Independent
Trustees") for and against any liability and expenses based upon any action or
omission by the Independent Trustees in connection with their consideration of
an action with respect to the Transaction. In addition, Scudder has agreed to
indemnify the Registrant and the Independent Trustees for and against any
liability and expenses based upon any misstatements or omissions by Scudder to
the Independent Trustees in connection with their consideration of the
Transaction.
C-3
<PAGE> 159
Item 28b(i) Business or Other Connections of Investment Adviser
Scudder Kemper Investments, Inc. has stockholders and employees who are
denominated officers but do not as such have corporation-wide responsibilities.
Such persons are not considered officers for the purpose of this Item 28.
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ---------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.
Director and President, Scudder Capital Asset Corporation
Director and President, Scudder Capital Stock Corporation
Director and President, Scudder Capital Planning Corporation
Director and President, SS&C Investment Corporation
Director and President, SIS Investment Corporation
Director and President, SRV Investment Corporation
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investment, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zunica Insurance Company of Switzerland
Director, ZKI Holding Corporation
Steven Gluckstern Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zurich Insurance Company of Switzerland
Director, Zurich Holding Company of America
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc. **
Member Corporate Executive Board, Zurich Insurance Company of Switzerland
Director, Chairman of the Board, Zurich Holding Company of America
Director, ZKI Holding Corporation
Kathryn L. Quirk Director, Chief Legal Officer, Chief Compliance Officer and Secretary,
Scudder Kemper Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services,
Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.
***
Director, Scudder, Stevens & Clark Japan, Inc.###
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada,
Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services
Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc.x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.
Director, Vice President and Secretary, Scudder Defined Contribution
Services, Inc.
Director, Vice President and Secretary, Scudder Capital Asset Corporation
</TABLE>
<PAGE> 160
<TABLE>
<S> <C>
Director, Vice President and Secretary, Scudder Capital Stock Corporation
Director, Vice President and Secretary, Scudder Capital Planning Corporation
Director, Vice President and Secretary, SS&C Investment Corporation
Director, Vice President and Secretary, SIS Investment Corporation
Director, Vice President and Secretary, SRV Investment Corporation
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.
Director, Korea Bond Fund Management Co., Ltd.
Markus Rohrbasser Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zurich Insurance Company of Switzerland
President, Director, Chairman of the Board, ZKI Holding Corporation
Cornelia M. Small Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President, Chief Executive Officer, Scudder Kemper Investments,
Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President & Director, Scudder, Stevens & Clark Overseas Corporationo oo
President & Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy
of Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Socjete Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B
34.564
*** Toronto, Ontario, Canada
XXX Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
</TABLE>
<PAGE> 161
Item 28(b)(ii) FOR DREMAN VALUE MANAGEMENT, L.L.C.
John E. Peters, President,
Dreman Value Management, LLC
Joseph W. Sullivan, IV, Chief Operating Officer,
Dreman Value Management, LLC
David N. Dreman, Chairman & Chief Investment Officer,
Dreman Value Management, LLC
Nelson P. Woodard, Executive Vice President,
Dreman Value Management, LLC
Dorothy Silverman, Senior Vice President,
Dreman Value Management, LLC
Rock Albers, Senior Vice President,
Dreman Value Management, LLC
Michael M. Hemberger, Vice President,
Dreman Value Management, LLC
Peter B. Seligman, Vice President,
Dreman Value Management, LLC
C-5
<PAGE> 162
ITEM 28 b(ii) Business or Other Connections of Investment Sub-Adviser
ZURICH INVESTMENT MANAGEMENT LIMITED
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrants Sub-Adviser
- ---- ---------------------------------------
<S> <C>
Dennis M. Farro Chief Executive Officer, Zurich Investment Management Limited
Gordon K. Johne Managing Director, Zurich Investment Management Limited
Richard Haas Finance Director, Zurich Investment Management Limited
Andrew Mason Director, Zurich Investment Management Limited
Edith Thouin Director, Zurich Investment Management Limited
Terrence Prideaux Director, Zurich Investment Management Limited
Tony Charlwood Director, Zurich Investment Management Limited
Barry Johnston Director, Zurich Investment Management Limited
Steve Wallis Director, Zurich Investment Management Limited
</TABLE>
<PAGE> 163
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and acts as principal underwriter of the Kemper Funds.
(b) Information on the officers and directors of Kemper
Distributors, Inc., principal underwriter for the Registrant is set forth
below. The principal business address is 222 South Riverside Plaza, Chicago,
Illinois 60606.
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
---- ---------------- ----------
<S> <C> <C>
James L. Greenawalt President None
Thomas W. Littauer Director, Chief Executive Officer Vice President
Kathryn L. Quirk Director, Secretary, Chief Legal
Officer & Vice President Vice President
James J. McGovern Chief Financial Officer
& Vice President None
Linda J. Wondrack Vice President & Chief
Compliance Officer None
Paula Gaccione Vice President None
Michael E. Harrington Vice President None
Robert A. Rudell Vice President None
William M. Thomas Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Todd N. Gierke Assistant Treasurer None
Philip J. Collora Assistant Secretary Vice President,
Secretary & Treasurer
Paul J. Elmlinger Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
Daniel Pierce Director, Chairman Director
Mark S. Casady Director, Vice Chairman President
Stephen R. Beckwith Director None
</TABLE>
(c) Not applicable.
<PAGE> 164
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All such accounts, books and other documents are maintained at the offices
of the Registrant, at the offices of the Registrant's investment manager,
Scudder Kemper Investments, Inc., and Kemper Distributors Inc., the Registrant's
principal underwriter, 222 South Riverside Plaza, Chicago, Illinois 60606, at
the offices of the custodian, Investors Fiduciary Trust Company, 801
Pennsylvania Avenue, Kansas City, Missouri 64105 or at the offices of the
custodian, The Chase Manhattan Bank, Chase MetroTech Center, Brooklyn, New York
11245.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered, a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
C-25
<PAGE> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois, on the 26th day of
March, 1998.
INVESTORS FUND SERIES
By /s/ MARK S. CASADY
------------------------------------
Mark S. Casady, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on March 26, 1998 on behalf of the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ MARK S. CASADY President
- -----------------------------------------------------
Mark S. Casady
/s/ DANIEL PIERCE* Chairman and Trustee
- -----------------------------------------------------
/s/ JAMES E. AKINS* Trustee
- -----------------------------------------------------
/s/ ARTHUR R. GOTTSCHALK* Trustee
- -----------------------------------------------------
/s/ FREDERICK T. KELSEY* Trustee
- -----------------------------------------------------
/s/ FRED B. RENWICK* Trustee
- -----------------------------------------------------
/s/ JOHN B. TINGLEFF* Trustee
- -----------------------------------------------------
/s/ EDMOND D. VILLANI* Trustee
- -----------------------------------------------------
/s/ JOHN G. WEITHERS* Trustee
- -----------------------------------------------------
/s/ PHILIP J. COLLORA Treasurer
- -----------------------------------------------------
Philip J. Collora
</TABLE>
* Philip J. Collora signs this document pursuant to powers of attorney filed
herewith.
/s/ PHILIP J. COLLORA
--------------------------------------
Philip J. Collora
<PAGE> 166
INDEX TO EXHIBITS
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
------- -----
<S> <C>
99.b1. Amended and Restated Agreement and Declaration of Trust.+
99.b2. By-laws.(1)
99.b3. Not Applicable.
99.b4. Text of Share certificate.(1)
99.b5.(a) Investment Management Agreements (Money Market, Total
Return, High Yield, Growth, Government Securities,
International, Small Cap Growth, Investment Grade Bond,
Value+Growth, Horizon 20+, Horizon 10+, Horizon 5,
Contrarian, Small Cap Value, Blue Chip and Global Income
Portfolios.)
99.b5.(b) Investment Management Agreements (High Return Equity,
Financial Services, Global Blue Chip, and International
Growth and Income Portfolios)+
99.b5.(c) Sub-Advisory Agreements (International and Global Income
Portfolios).
99.b6. Underwriting Agreement.
99.b7. Not Applicable.
99.b8.(a) Custody Agreement (each Portfolio other than High Return
Equity, Financial Services, Global Blue Chip, and
International Growth and Income Portfolios).(1)
99.b8.(b) Foreign Custodian Agreement.(1)
99.b8.(c) Custody Agreement (High Return Equity and Financial Services
Portfolios)+
99.b8.(d) Custody Agreement (Global Blue Chip and International Growth
and Income Portfolios)+
99.b9.(a) Agency Agreement.(1)
99.b9.(b) Fund Accounting Agreements (each Portfolio other than High
Return Equity, Financial Services, Global Blue Chip, and
International Growth and Income Portfolios).
99.b9.(c) Fund Accounting Agreements (High Return Equity, Financial
Services, Global Blue Chip, and International Growth and
Income Portfolios).+
99.b10. Not Applicable.
99.b11. Not Applicable.
99.b12. Not Applicable.
99.b13. Not Applicable.
99.b14. Not Applicable.
99.b15. Not Applicable.
99.b17. Not Applicable.
99.b18. Not Applicable.
99.b24. Powers of Attorney.
27.1 Financial Data Schedule.+
</TABLE>
- ---------------
+ To be filed by amendment.
(1) Incorporated herein by reference to Post-Effective Amendment No. 14 to the
Registration Statement filed on April 27, 1995.
<PAGE> 1
EX-99.B5(a)(1)
INVESTMENT MGMT AGMT - MONEY MARKET PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Money Market Portfolio
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
(the "Shares"), in separate series, or funds. The Board of Trustees
has authorized Kemper Money Market Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 2
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, 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 investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers,
2
<PAGE> 3
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
may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel
3
<PAGE> 4
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 disbursing agents and registrars; payment for
portfolio pricing or valuation services
4
<PAGE> 5
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 Fund shall pay you in United States Dollars on the last
day of each month the unpaid balance of a fee equal to the excess of
(a) 1/12 of .50 of 1 percent of the 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) on each day on which the net asset value of the
5
<PAGE> 6
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.
6
<PAGE> 7
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 April 1, 1998, 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.
7
<PAGE> 8
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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.
8
<PAGE> 9
If you are in agreement with the foregoing, please execute the form
of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Money Market Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-------------------------------
Vice President
9
<PAGE> 10
EX-99.B5(a)(2)
INVESTMENT MGMT AGMT - TOTAL RETURN PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Total Return Portfolio
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 (the
"Shares"), in separate series, or funds. The Board of Trustees has
authorized Kemper Total Return Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 11
(a) Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, 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 investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers,
2
<PAGE> 12
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
may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel
3
<PAGE> 13
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 disbursing agents and registrars; payment for
portfolio pricing or valuation services
4
<PAGE> 14
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 .55 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) on each day on which the net asset value of the
5
<PAGE> 15
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.
6
<PAGE> 16
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 April 1, 1998, 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.
7
<PAGE> 17
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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.
8
<PAGE> 18
If you are in agreement with the foregoing, please execute the form
of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Total Return Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
9
<PAGE> 19
EX-99.B5(a)(3)
INVESTMENT MGMT AGMT - HIGH YIELD PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper High Yield Portfolio
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 (the
"Shares"), in separate series, or funds. The Board of Trustees has
authorized Kemper High Yield Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 20
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof(the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, 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 investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers,
2
<PAGE> 21
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
may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel
3
<PAGE> 22
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 disbursing agents and registrars; payment for
portfolio pricing or valuation services
4
<PAGE> 23
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 .60 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) on each day on which the net asset value of the
5
<PAGE> 24
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.
6
<PAGE> 25
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 April 1, 1998, 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.
7
<PAGE> 26
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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.
8
<PAGE> 27
If you are in agreement with the foregoing, please execute the form
of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Your very truly,
INVESTORS FUND SERIES, on behalf of
Kemper High Yield Portfolio
By: /s/ John E. Neal
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-------------------------------
Vice President
9
<PAGE> 28
EX-99.B5(a)(4)
INVESTMENT MGMT AGMT - KEMPER GROWTH PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Growth Portfolio
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 (the
"Shares"), in separate series, or funds. The Board of Trustees has
authorized Kemper Growth Portfolio (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
<PAGE> 29
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, 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.
2
<PAGE> 30
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers, foreign
currency dealers, futures commission merchants or others pursuant to
your determinations and all in accordance with Fund policies as
expressed in the Registration Statement. You shall determine what
portion of the Fund s portfolio shall be invested in securities and
other assets and what portion, if any, should be held uninvested.
You shall furnish to the Trust's 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
3
<PAGE> 31
agents of the Fund; assisting in establishing the accounting policies
of the Fund; assisting in the resolution of accounting issues that
may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel and the Fund's
other agents as necessary in connection therewith; establishing and
monitoring the Fund's operating expense budgets; reviewing the Fund's
bills; processing the payment of bills that have been approved by an
authorized person; assisting the Fund in determining the amount of
dividends and distributions available to be paid by the Fund to its
shareholders, preparing and arranging for the printing of dividend
notices to shareholders, and providing the transfer and dividend
paying agent, the custodian, and the accounting agent with such
information as is required for such parties to effect the payment of
dividends and distributions; and otherwise assisting the Trust 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
4
<PAGE> 32
accounting agent for which the Trust is responsible pursuant to the
terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and, except as provided
below in this section 4, other expenses in connection with the
issuance, offering, distribution, sale, redemption or repurchase of
securities issued by 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 .60 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.
5
<PAGE> 33
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York
time) on each day on which the net asset value of the Fund is
determined consistent with the provisions of Rule 22c-1 under the
1940 Act or, if the Fund lawfully determines the value of its net
assets as of some other time on each business day, as of such time.
The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration 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
6
<PAGE> 34
that in some cases this procedure may adversely affect the size of
the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust
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 April 1, 1998, 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
7
<PAGE> 35
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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.
8
<PAGE> 36
If you are in agreement with the foregoing, please execute the form
of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Growth Portfolio
By: /s/ John E. Neal
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
------------------------------
Vice President
9
<PAGE> 37
EX-99.B5(a)(5)
INVESTMENT MGMT AGMT - GOVERNMENT SECURITIES
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Government Securities Portfolio
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 (the
"Shares"), in separate series, or funds. The Board of Trustees has
authorized Kemper Government Securities Portfolio (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
<PAGE> 38
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
1. 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.
2
<PAGE> 39
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers, foreign
currency dealers, futures commission merchants or others pursuant to
your determinations and all in accordance with Fund policies as
expressed in the Registration Statement. You shall determine what
portion of the Fund's portfolio shall be invested in securities and
other assets and what portion, if any, should be held uninvested.
You shall furnish to the Trust's 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.
2. 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
3
<PAGE> 40
agents of the Fund; assisting in establishing the accounting policies
of the Fund; assisting in the resolution of accounting issues that
may arise with respect to the Fund's operations and consulting with
the Fund s independent accountants, legal counsel and the Fund's
other agents as necessary in connection therewith; establishing and
monitoring the Fund's operating expense budgets; reviewing the Fund's
bills; processing the payment of bills that have been approved by an
authorized person; assisting the Fund in determining the amount of
dividends and distributions available to be paid by the Fund to its
shareholders, preparing and arranging for the printing of dividend
notices to shareholders, and providing the transfer and dividend
paying agent, the custodian, and the accounting agent with such
information as is required for such parties to effect the payment of
dividends and distributions; and otherwise assisting the Trust 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
4
<PAGE> 41
accounting agent for which the Trust is responsible pursuant to the
terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and, except as provided
below in this section 4, other expenses in connection with the
issuance, offering, distribution, sale, redemption or repurchase of
securities issued by 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 .55 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.
5
<PAGE> 42
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York
time) on each day on which the net asset value of the Fund is
determined consistent with the provisions of Rule 22c-1 under the
1940 Act or, if the Fund lawfully determines the value of its net
assets as of some other time on each business day, as of such time.
The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration 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
6
<PAGE> 43
that in some cases this procedure may adversely affect the size of
the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust
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 April 1, 1998, 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
7
<PAGE> 44
and regulations thereunder and any applicable SEC exemptive
order therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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
8
<PAGE> 45
and return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Government Securities Portfolio
By: /s/ John E. Neal
-----------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
----------------------------------
Vice President
9
<PAGE> 46
EX-99.B5(a)(6)
INVESTMENT MGMT AGMT - INTERNATIONAL PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper International Portfolio
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 (the
"Shares"), in separate series, or funds. The Board of Trustees has
authorized Kemper International Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 47
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, 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 investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers,
2
<PAGE> 48
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
may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel
3
<PAGE> 49
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 disbursing agents and registrars; payment for
portfolio pricing or valuation services
4
<PAGE> 50
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 .75 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) on each day on which the net asset value of the
5
<PAGE> 51
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.
6
<PAGE> 52
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 April 1, 1998, 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.
7
<PAGE> 53
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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.
8
<PAGE> 54
If you are in agreement with the foregoing, please execute the form
of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper International Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
9
<PAGE> 55
EX-99.B5(a)(7)
INVESTMENT MGMT AGMT - SMALL CAP GROWTH PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Small Cap Growth Portfolio
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 (the
"Shares"), in separate series, or funds. The Board of Trustees has
authorized Kemper Small Cap Growth Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 56
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, 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 investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers,
2
<PAGE> 57
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
may arise with respect to the Fund's operations and consulting with
the Fund's independent accountants, legal counsel
3
<PAGE> 58
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 disbursing agents and
4
<PAGE> 59
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 .65 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.
5
<PAGE> 60
(New York time) on each day on which the net asset value of the Fund
is determined consistent with the provisions of Rule 22c-1 under the
1940 Act or, if the Fund lawfully determines the value of its net
assets as of some other time on each business day, as of such time.
The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration 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.
6
<PAGE> 61
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 April 1, 1998, 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.
7
<PAGE> 62
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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.
8
<PAGE> 63
If you are in agreement with the foregoing, please execute the form
of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Your very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Small Cap Growth
By: /s/ John E. Neal
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-------------------------------
Vice President
9
<PAGE> 64
EX-99.B5(a)(8)
INVESTMENT MGMT AGMT - INVESTMENT GRADE PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Investment Grade Bond Portfolio
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 (the
"Shares"), in separate series, or funds. The Board of Trustees has
authorized Kemper Investment Grade Bond Portfolio (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
<PAGE> 65
properly certified or authenticated of each of the following
additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the und selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if
any, to the foregoing, including the Prospectus, the SAI and the
Registration Statement.
2. Portfolio Management Services. As manager of the assets of the
Fund, 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.
2
<PAGE> 66
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or entered
into by the Fund and place orders with broker-dealers, foreign
currency dealers, futures commission merchants or others pursuant to
your determinations and all in accordance with Fund policies as
expressed in the Registration Statement. You shall determine what
portion of the Fund s portfolio shall be invested in securities and
other assets and what portion, if any, should be held uninvested.
You shall furnish to the Trust's 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
3
<PAGE> 67
agents of the Fund; assisting in establishing the accounting policies
of the Fund; assisting in the resolution of accounting issues that
may arise with respect to the Fund's operations and consulting with
the Fund s independent accountants, legal counsel and the Fund's
other agents as necessary in connection therewith; establishing and
monitoring the Fund's operating expense budgets; reviewing the Fund's
bills; processing the payment of bills that have been approved by an
authorized person; assisting the Fund in determining the amount of
dividends and distributions available to be paid by the Fund to its
shareholders, preparing and arranging for the printing of dividend
notices to shareholders, and providing the transfer and dividend
paying agent, the custodian, and the accounting agent with such
information as is required for such parties to effect the payment of
dividends and distributions; and otherwise assisting the Trust 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
4
<PAGE> 68
accounting agent for which the Trust is responsible pursuant to the
terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and, except as provided
below in this section 4, other expenses in connection with the
issuance, offering, distribution, sale, redemption or repurchase of
securities issued by 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 .60 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.
5
<PAGE> 69
The "average daily net assets" of the Fund shall mean the average of
the values placed on the Fund's net assets as of 4:00 p.m. (New York
time) on each day on which the net asset value of the Fund is
determined consistent with the provisions of Rule 22c-1 under the
1940 Act or, if the Fund lawfully determines the value of its net
assets as of some other time on each business day, as of such time.
The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration 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
6
<PAGE> 70
that in some cases this procedure may adversely affect the size of
the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Trust
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 April 1, 1998, 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'
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
7
<PAGE> 71
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of
which, together with all amendments thereto, is on file in the Office
of the Secretary of the Commonwealth of Massachusetts, provides that
the name "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.
8
<PAGE> 72
If you are in agreement with the foregoing, please execute the form
of acceptance on the accompanying counterpart of this letter and
return such counterpart to the Trust, whereupon this letter shall
become a binding contract effective as of the date of this Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Investment Grade Bond Portfolio
By: /s/ John E. Neal
-----------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
------------------------------------
Vice President
9
<PAGE> 73
EX-99.B5(a)(9)
INVESTMENT MGMT AGMT - VALUE + GROWTH PORTROLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Value+Growth Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Value+Growth Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 74
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
2
<PAGE> 75
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 may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
3
<PAGE> 76
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 disbursing agents and
registrars; payment for portfolio pricing or valuation services
4
<PAGE> 77
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 .75 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) on each day on which the net asset value of the
5
<PAGE> 78
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.
6
<PAGE> 79
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 April 1, 1998, 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.
7
<PAGE> 80
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "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.
8
<PAGE> 81
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES,on behalf of
Kemper Value+Growth Portfolio
By: /s/ John E. Neal
-------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
9
<PAGE> 82
EX-99.B5(a)(10)
IVESTMENT MANAGEMENT AGMT - HORIZON 20 + PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Horizon 20+ Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Horizon 20+ Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 83
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 investments to be purchased, sold or
2
<PAGE> 84
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
3
<PAGE> 85
issues that may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith;
establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that
have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available
to be paid by the Fund to its shareholders, preparing and
arranging for the printing of dividend notices to shareholders,
and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and
distributions; and otherwise assisting the Trust 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
4
<PAGE> 86
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering
or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and
other charges in connection with the shipment of the Fund's
portfolio securities; the compensation and all expenses
(specifically including travel expenses relating to Trust
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 .60 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.
5
<PAGE> 87
The "average daily net assets" of the Fund shall mean the average
of the values placed on the Fund s net assets as of 4:00 p.m.
(New York time) on each day on which the net asset value of the
Fund is determined consistent with the provisions of Rule 22c-1
under the 1940 Act or, if the Fund lawfully determines the value
of its net assets as of some other time on each business day, as
of such time. The value of the net assets of the Fund shall
always be determined pursuant to the applicable provisions of the
Declaration 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
6
<PAGE> 88
a manner believed by you to be equitable. The Fund recognizes
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the
Trust 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 April 1, 1998, 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
7
<PAGE> 89
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "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.
8
<PAGE> 90
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Horizon 20+ Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
9
<PAGE> 91
EX-99.B5(a)(11)
INVESTMENT MGMT AGMT - HORIZON 10 + PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Horizon 10+ Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Horizon 10+ Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 92
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
2
<PAGE> 93
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 may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
3
<PAGE> 94
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 disbursing agents and
registrars; payment for portfolio pricing or valuation services
4
<PAGE> 95
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 .60 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) on each day on which the net asset value of the
5
<PAGE> 96
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.
6
<PAGE> 97
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 April 1, 1998, 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.
7
<PAGE> 98
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "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.
8
<PAGE> 99
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Horizon 10+ Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
9
<PAGE> 100
EX-99.B5(a)(12)
INVESTMENT MANAGEMENT AGMT - HORIZON 5 PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Horizon 5 Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Horizon 5 Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 101
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 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
<PAGE> 102
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 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
<PAGE> 103
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 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
<PAGE> 104
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 .60 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) 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
<PAGE> 105
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.
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
<PAGE> 106
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 April 1, 1998, 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 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.
<PAGE> 107
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.
<PAGE> 108
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Horizon 5 Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
------------------------------
Vice President
<PAGE> 109
EX-99.B5(a)(13)
INVESTMENT MANAGEMENT AGMT - VALUE PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Value Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Value Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 110
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
2
<PAGE> 111
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 may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
3
<PAGE> 112
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 disbursing agents and
registrars; payment for portfolio pricing or valuation services
4
<PAGE> 113
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 .75 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) on each day on which the net asset value of the
5
<PAGE> 114
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.
6
<PAGE> 115
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 April 1, 1998, 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.
7
<PAGE> 116
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "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.
8
<PAGE> 117
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Value Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
9
<PAGE> 118
EX-99.B5(a)(14)
INVESTMENT MGMT AGMT - SMALL CAP VALUE PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Small Cap Value Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Small Cap Value Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 119
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
2
<PAGE> 120
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 may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
3
<PAGE> 121
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 disbursing agents and
registrars; payment for portfolio pricing or valuation services
4
<PAGE> 122
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 .75 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) on each day on which the net asset value of the
5
<PAGE> 123
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.
6
<PAGE> 124
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 April 1, 1998, 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.
7
<PAGE> 125
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "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.
8
<PAGE> 126
if you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Small Cap Value
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
--------------------------------
Vice President
9
<PAGE> 127
EX-99.B5(a)(15)
INVESTMENT MANAGEMENT AGMT - BLUE CHIP PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Blue Chip Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Blue Chip Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 128
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
2
<PAGE> 129
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 may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
3
<PAGE> 130
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 disbursing agents and
registrars; payment for portfolio pricing or valuation services
4
<PAGE> 131
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 .65 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) on each day on which the net asset value of the
5
<PAGE> 132
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.
6
<PAGE> 133
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 April 1, 1998, 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.
7
<PAGE> 134
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "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.
8
<PAGE> 135
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Blue Chip Portfolio
By: /s/ John E. Neal
----------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
-----------------------------
Vice President
9
<PAGE> 136
EX-99.B5(a)(16)
INVESTMENT MGMT AGMT - GLOBAL INCOME PORTFOLIO
INVESTMENT MANAGEMENT AGREEMENT
Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
December 31, 1997
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper Global Income Portfolio
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 (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper Global Income Portfolio (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 authenticated of each of the following
additional documents related to the Trust and the Fund:
<PAGE> 137
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of the Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Fund, 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 investments to be purchased, sold or
entered into by the Fund and place orders with broker-dealers,
2
<PAGE> 138
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 may arise with respect to the Fund's operations and
consulting with the Fund's independent accountants, legal counsel
3
<PAGE> 139
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.
5. 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 disbursing agents and
registrars; payment for portfolio pricing or valuation services
4
<PAGE> 140
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.
6. 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 .75 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) on each day on which the net asset value of the
5
<PAGE> 141
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.
7. 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.
6
<PAGE> 142
8. 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.
9. Duration and Termination of This Agreement. This Agreement
shall remain in force until April 1, 1998, 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.
10. 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.
7
<PAGE> 143
11. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "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.
12. 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.
8
<PAGE> 144
If you are in agreement with the foregoing, please execute the
form of acceptance on the accompanying counterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS FUND SERIES, on behalf of
Kemper Global Income Portfolio
By: /s/ John E. Neal
--------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Lynn S. Birdsong
------------------------------
Vice President
9
<PAGE> 1
EX-99.B5(c)(1)
SUB-ADVISORY AGREEMENT - INTERNATIONAL PORTFOLIO
SUB-ADVISORY AGREEMENT
AGREEMENT made this 31st day of December, 1997, 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 the Kemper International Portfolio
(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
<PAGE> 2
orders, the Sub-Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board of
Trustees of the Fund determines and subject to satisfying the
requirements of Section 28(e) of the Securities Exchange Act of
1934, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the
Fund to pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determined in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of either that particular
transaction or the Sub-Adviser's overall responsibilities with
respect to the clients of the Sub-Adviser as to which the Sub-
Adviser exercises investment discretion. The Adviser recognizes
that all research services and research that the Sub-Adviser
receives are available for all clients of the Sub-Adviser, and
that the Fund and other clients of the Sub-Adviser may benefit
thereby. The investment of funds shall be subject to all
applicable restrictions of the Agreement and Declaration of Trust
and By-Laws of the Fund as may from time to time be in force.
The Sub-Adviser accepts such employment and agrees during such
period to render such investment management services, to furnish
related office facilities and equipment and clerical, bookkeeping
and administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as trustees
or officers of the Fund if elected to such positions and to
assume the obligations herein set forth for the compensation
herein provided. The Sub-Adviser shall for all purposes herein
provided be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized, shall have no
authority to act for or represent the Fund or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser.
It is understood and agreed that the Sub-Adviser, by separate
agreements with the Fund, may also serve the Fund in other
capacities.
The Sub-Adviser will keep the Fund and the Adviser informed of
developments materially affecting the Fund and shall, on the Sub-
Adviser s own initiative and as reasonably requested by the
Adviser or the Fund, furnish to the Fund and the Adviser from
time to time whatever information the Adviser reasonably believes
appropriate for this purpose. The Sub-Adviser agrees that, in
the performance of the duties required of it by this Agreement,
it will comply with the Investment Advisers Act of 1940 and the
Investment Company Act of 1940, and all rules and regulations
thereunder, and all applicable laws and regulations and with any
applicable procedures adopted by the Fund's Board of Trustees and
identified in writing to the Sub-Adviser.
<PAGE> 3
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
<PAGE> 4
Fund as a Non-Private Customer as defined by IMRO. The Sub-
Adviser agrees to maintain the completeness and accuracy of its
registration on Form ADV in accordance with all legal
requirements relating to that Form. The Sub-Adviser acknowledges
that it is an "investment adviser" to the Fund within the meaning
of the Investment Company Act of 1940 and the Investment Advisers
Act of 1940.
The Sub-Adviser shall be responsible for maintaining an
appropriate compliance program to ensure that the services
provided by it under this Agreement are performed in a manner
consistent with applicable laws and the terms of this Agreement.
Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser.
Sub-Adviser agrees to provide such reports and certifications
regarding its compliance program as the Adviser or the Fund shall
reasonably request from time to time.
2. In the event that there are, from time to time, one or more
additional series of the Fund with respect to which the Adviser
desires to retain the Sub-Adviser to render investment advisory
and management services hereunder, the Adviser shall notify the
Sub-Adviser in writing. If the Sub-Adviser is willing to render
such services, it shall notify the Adviser in writing whereupon
such additional series shall become subject to this Agreement.
3. For the services and facilities described in Section 1, the
Adviser will pay to the Sub-Adviser, at the end of each calendar
month, a sub-advisory fee computed at an annual rate of .35% 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 determine from time to time in accordance with the
provisions of the Investment Company Act of 1940. On each day
<PAGE> 5
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 April 1, 1998, 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
<PAGE> 6
jurisdiction that the Sub-Adviser or any officer or director of
the Sub-Adviser has taken any action which results in a breach of
the covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the
compensation described in Section 3 earned prior to such
termination.
10. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
11. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
12. This Agreement shall be construed in accordance with
applicable federal law and the laws of the Commonwealth of
Massachusetts.
13. This Agreement is the entire contract between the parties
relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter
hereof.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused
this Agreement to be executed as of the day and year first above
written.
SCUDDER KEMPER INVESTMENTS, INC.
By:
---------------------------------
Title:
------------------------------
ZURICH INVESTMENT MANAGEMENT LIMITED
By:
---------------------------------
Title:
-------------------------------
<PAGE> 7
EX-99.B5(c)(2)
SUB-ADVISORY AGREEMENT - GLOBAL INCOME PORTFOLIO
SUB-ADVISORY AGREEMENT
AGREEMENT made this 31st day of December, 1997, 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 the Kemper Global Income Portfolio
(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
<PAGE> 8
payments of cash for the account of the Fund. In connection with
the selection of such brokers or dealers and the placing of such
orders, the Sub-Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board of
Trustees of the Fund determines and subject to satisfying the
requirements of Section 28(e) of the Securities Exchange Act of
1934, the Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the
Fund to pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Sub-Adviser determined in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of either that particular
transaction or the Sub-Adviser s overall responsibilities with
respect to the clients of the Sub-Adviser as to which the Sub-
Adviser exercises investment discretion. The Adviser recognizes
that all research services and research that the Sub-Adviser
receives are available for all clients of the Sub-Adviser, and
that the Fund and other clients of the Sub-Adviser may benefit
thereby. The investment of funds shall be subject to all
applicable restrictions of the Agreement and Declaration of Trust
and By-Laws of the Fund as may from time to time be in force.
The Sub-Adviser accepts such employment and agrees during such
period to render such investment management services, to furnish
related office facilities and equipment and clerical, bookkeeping
and administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as trustees
or officers of the Fund if elected to such positions and to
assume the obligations herein set forth for the compensation
herein provided. The Sub-Adviser shall for all purposes herein
provided be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized, shall have no
authority to act for or represent the Fund or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser.
It is understood and agreed that the Sub-Adviser, by separate
agreements with the Fund, may also serve the Fund in other
capacities.
The Sub-Adviser will keep the Fund and the Adviser informed of
developments materially affecting the Fund and shall, on the Sub-
Adviser's own initiative and as reasonably requested by the
Adviser or the Fund, furnish to the Fund and the Adviser from
time to time whatever information the Adviser reasonably believes
appropriate for this purpose. The Sub-Adviser agrees that, in
the performance of the duties required of it by this Agreement,
it will comply with the Investment Advisers Act of 1940 and the
Investment Company Act of 1940, and all rules and regulations
thereunder, and all applicable laws and regulations and with any
applicable procedures adopted by the Fund's Board of Trustees and
identified in writing to the Sub-Adviser.
<PAGE> 9
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
<PAGE> 10
Fund as a Non-Private Customer as defined by IMRO. The Sub-
Adviser agrees to maintain the completeness and accuracy of its
registration on Form ADV in accordance with all legal
requirements relating to that Form. The Sub-Adviser acknowledges
that it is an "investment adviser" to the Fund within the meaning
of the Investment Company Act of 1940 and the Investment Advisers
Act of 1940.
The Sub-Adviser shall be responsible for maintaining an
appropriate compliance program to ensure that the services
provided by it under this Agreement are performed in a manner
consistent with applicable laws and the terms of this Agreement.
Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser.
Sub-Adviser agrees to provide such reports and certifications
regarding its compliance program as the Adviser or the Fund shall
reasonably request from time to time.
2. In the event that there are, from time to time, one or more
additional series of the Fund with respect to which the Adviser
desires to retain the Sub-Adviser to render investment advisory
and management services hereunder, the Adviser shall notify the
Sub-Adviser in writing. If the Sub-Adviser is willing to render
such services, it shall notify the Adviser in writing whereupon
such additional series shall become subject to this Agreement.
3. For the services and facilities described in Section 1, the
Adviser will pay to the Sub-Adviser, at the end of each calendar
month, a sub-advisory fee computed at an annual rate of .30% 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 determine from time to time in accordance with the
provisions of the Investment Company Act of 1940. On each day
<PAGE> 11
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 April 1, 1998, 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
<PAGE> 12
jurisdiction that the Sub-Adviser or any officer or director of
the Sub-Adviser has taken any action which results in a breach of
the covenants of the Sub-Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the
compensation described in Section 3 earned prior to such
termination.
10. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
11. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
12. This Agreement shall be construed in accordance with
applicable federal law and the laws of the Commonwealth of
Massachusetts.
13. This Agreement is the entire contract between the parties
relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter
hereof.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused
this Agreement to be executed as of the day and year first above
written.
SCUDDER KEMPER INVESTMENTS, INC.
By:
---------------------------------
Title:
------------------------------
ZURICH INVESTMENT MANAGEMENT LIMITED
By:
----------------------------------
Title:
-------------------------------
<PAGE> 1
EX-99.B6
UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT
AGREEMENT made as of this 31st day of December, 1997 between
INVESTORS FUND SERIES, a Massachusetts business trust
(hereinafter called the "Fund"), and KEMPER DISTRIBUTORS, INC., a
Delaware corporation (hereinafter called the "Underwriter");
WITNESSETH:
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto
as follows:
1. The Fund hereby appoints the Underwriter its agent for
the distribution of shares of beneficial interest (hereinafter
called "shares") of the Fund in jurisdictions wherein shares of
the Fund may legally be offered for sale; provided, however, that
the Fund in its absolute discretion may (a) issue or sell shares
directly to holders of shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may
determine, whether in connection with the distribution of
subscription or purchase rights, the payment or reinvestment of
dividends or distributions, or otherwise; or (b) issue or sell
shares at net asset value to the shareholders of any other
investment company, for which the Underwriter shall act as
exclusive distributor, who wish to exchange all or a portion of
their investment in shares of such other investment company for
shares of the Fund.
2. The Underwriter hereby accepts appointment as agent for
the distribution of the shares of the Fund and agrees that it
will use its best efforts with reasonable promptness to sell such
part of the authorized shares of the Fund remaining unissued as
from time to time shall be effectively registered under the
Securities Act of 1933 ("Securities Act"), at prices determined
as hereinafter provided and on terms hereinafter set forth, all
subject to applicable Federal and state laws and regulations and
to the Agreement and Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to
keep effectively registered under the Securities Act for sale as
herein contemplated such shares as the Underwriter shall
reasonably request and as the Securities and Exchange Commission
shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund
may terminate, suspend or withdraw the offering of shares
<PAGE> 2
whenever, in its sole discretion, it deems such action to be
desirable.
5. The Underwriter shall sell shares of the Fund to or
through qualified dealers or others in such manner, not
inconsistent with the provisions hereof and the then effective
registration statement of the Fund under the Securities Act (and
related prospectus), as the Underwriter may determine from time
to time, provided that no dealer or other person shall be
appointed or authorized to act as agent of the Fund without the
prior consent of the Fund. It is mutually agreed that, in
addition to sales made by it as agent of the fund, the
Underwriter may, in its discretion, also sell shares of the Fund
as principal to persons with whom it does not have dealer selling
group agreements.
6. Shares of the Fund offered for sale or sold by the
Underwriter shall be so offered or sold at a price per share
determined in accordance with the then current prospectus
relating to the sale of such shares except as departure from such
prices shall be permitted by the rules and regulations of the
Securities and Exchange Commission; provided, however, that any
public offering price for shares of the Fund shall be the net
value per share. The net asset value per share shall be
determined in the manner and at the times set forth in the then
current prospectus of the Fund relating to such shares.
7. The price the Fund shall receive for all shares
purchased from the Fund shall be the net asset value used in
determining the public offering price applicable to the sale of
such shares.
8. The Underwriter shall issue and deliver on behalf of
the Fund such confirmations of sales made by it as agent pursuant
to this agreement as may be required. At or prior to the time of
issuance of shares, the Underwriter will pay or cause to be paid
to the Fund the amount due the Fund for the sale of such shares.
Certificates shall be issued or shares registered on the transfer
books of the Fund in such names and denominations as the
Underwriter may specify.
9. The Fund will execute any and all documents and furnish
any and all information which may be reasonably necessary in
connection with the qualification of its shares for sale
(including the qualification of the Fund as a dealer where
necessary or advisable) in such states as the Underwriter may
reasonably request (it being understood that the Fund shall not
be required without its consent to comply with any requirement
which in its opinion is unduly burdensome).
10. The Fund will furnish to the Underwriter from time to
time such information with respect to the Fund and its shares as
2
<PAGE> 3
the Underwriter may reasonably request for use in connection with
the sale of shares of the Fund. The Underwriter agrees that it
will not use or distribute or authorize the use, distribution or
dissemination by its dealers or others in connection with the
sale of such shares any statements, other than those contained in
the Fund's current prospectus, except such supplemental
literature or advertising as shall be lawful under Federal and
state securities law and regulations, and that it will furnish
the Fund with copies of all such material.
11. The Underwriter shall order shares of the Fund from the
Fund only to the extent that it shall have received purchase
orders therefor. The Underwriter will not make, or authorize any
dealers or others to make any short sales of shares of the Fund.
12. The Underwriter, as agent of and for the account of the
Fund, may repurchase the shares of the Fund at such prices and
upon such terms and conditions as shall be specified in the
current prospectus of the Fund.
13. In selling or reacquiring shares of the Fund for the
account of the Fund, the Underwriter will in all respects conform
to the requirements of all state and Federal laws and the Rules
of Fair Practice of the National Association of Securities
Dealers, Inc., relating to such sale or reacquisition, as the
case may be, and will indemnify and save harmless the Fund from
any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the
Underwriter. The Underwriter will observe and be bound by all
the provisions of the Agreement and Declaration of Trust of the
Fund (and of any fundamental policies adopted by the Fund
pursuant to the Investment Company Act of 1940, notice of which
shall have been given to the Underwriter) which at the time in
any way require, limit, restrict or prohibit or otherwise
regulate any action on the part of the Underwriter.
14. The Underwriter will require each dealer to conform to
the provisions hereof and the Registration Statement (and related
prospectus) at the time in effect under the Securities Act with
respect to the public offering price of the Fund's shares, and
neither the Underwriter nor any such dealers shall withhold the
placing of purchases orders so as to make a profit thereby.
15. The Fund will pay or cause to the paid expenses
(including the fees and disbursements of its own counsel) and all
taxes and fees payable to the Federal, state or other
governmental agencies on account of the registration or
qualifications of securities issued by the Fund or otherwise.
The Fund will also pay or cause to be paid expenses incident to
the issuance of shares of beneficial interest, such as the cost
of share certificates, issue taxes, and fees for the transfer
agent. The Underwriter will pay all expenses (other than
3
<PAGE> 4
expenses which one or more dealers may bear pursuant to any
agreement with the Underwriter) incident to the sale and
distribution of the shares issued or sold hereunder, including,
without limiting the generality of the foregoing, all expenses of
printing and distributing or disseminating any other literature,
advertising and selling aids in connection with the offering of
the shares for sale (except that such expenses need not include
expenses incurred by the Fund in connection with the preparation,
typesetting, printing and distribution of any registration
statement or report or other communication to stockholders in
their capacity as such) and expenses of advertising in connection
with such offering.
16. The agreement shall become effective on the date hereof
and shall continue in effect until April 1, 1998 and from year to
year thereafter, but only so long as such continuance is approved
in the manner required by the Investment Company Act of 1940.
Either party hereto may terminate this agreement on any date by
giving the other party at least six months prior written notice
of such termination specifying the date fixed therefor. Without
prejudice to any other remedies of the Fund in any such event the
Fund may terminate this agreement at any time immediately upon
any failure of fulfillment of any of the obligations of the
Underwriter hereunder.
17. This agreement shall automatically terminate in the
event of its assignment.
18. Any notice under this agreement shall be in writing,
addressed and delivered or mailed, postage postpaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
19. All parties hereto are expressly put on notice of the
Fund's Agreement and Declaration of Trust dated January 22, 1987
and all amendments thereto, all of which are on file with the
Secretary of The Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained
therein. This Agreement has been executed by and on behalf of
the Fund by its representatives as such representatives and not
individually, and the obligations of the Fund hereunder are not
binding upon any of the Trustees, officers or shareholders of the
Fund individually but are binding upon only the assets and
property of the Fund. With respect to any claim by Underwriter
for recovery of any liability of the Fund arising hereunder
allocated to a particular series or portfolio ("Portfolio") of
the Fund if there be more than one, whether in accordance with
the express terms hereof or otherwise, the Underwriter shall
have recourse solely against the assets of that Portfolio to
satisfy such claim and shall have no recourse against the assets
of any other Portfolio for such purpose.
4
<PAGE> 5
IN WITNESS WHEREOF, the Fund and the Underwriter have each
caused this agreement to be executed on its behalf by an officer
thereunto duly authorized and its seal to be affixed on the day
and year first above written.
INVESTORS FUND SERIES
By: /s/ John E. Neal
----------------------------
Title: Vice President
-------------------------
ATTEST:
/s/ Philip J. Collora
------------------------------
Title: Secretary
------------------------
KEMPER DISTRIBUTORS, INC.
By: /s/ James L. Greenawalt
---------------------------
Title: President
------------------------
ATTEST:
/s/ Charles R. Manzoni
-------------------------------
Title: Secretary
-------------------------
5
<PAGE> 1
EX-99.B9(b)(1)
FUND ACCTG SRVCS AGMT - MONEY MARKET PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Money
Market Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 2
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
f. Perform a mark-to-market appraisal in accordance with
procedures by the Board of Trustees pursuant to Rule
2a-7 under the 1940 Act.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
2
<PAGE> 3
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
3
<PAGE> 4
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
4
<PAGE> 5
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
5
<PAGE> 6
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Money
Market Portfolio
By:
-------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
7
<PAGE> 8
EX-99.B9(b)(2)
FUND ACCTG SERVICES AGMT - TOTAL RETURN PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Total
Return Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 9
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 10
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 11
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 12
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 13
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Total Return
Portfolio
By:
-------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 14
EX-99.B9(3)
FUND ACCTG SERVICES AGMT - HIGH YIELD PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper High
Yield Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 15
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 16
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 17
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 18
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 19
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper High Yield
Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 20
EX-99.B9(b)(4)
FUND ACCOUNTING SERVICES AGMT - GROWTH PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Growth
Portfolio (hereinafter called the "Portfolio"), a registered
open-end management investment company with its principal place
of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its
principal place of business in Boston, Massachusetts (hereinafter
called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 21
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 22
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 23
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 24
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 25
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Growth
Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 26
EX-99.B9(b)(5)
FUND ACCTG SERVICES AGMT - GOVERNMENT SECURITIES
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper
Government Securities Portfolio (hereinafter called the
"Portfolio"), a registered open-end management investment company
with its principal place of business in 222 South Riverside
Plaza, Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 27
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 28
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 29
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 30
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 31
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Government
Securities Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 32
EX-99.B9(b)(6)
FUND ACCTG SERVICES AGMT - INTERNATIONAL PROTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper
International Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 33
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 34
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 35
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 36
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 37
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper International
Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 38
EX-99.B9(b)(7)
FUND ACCTG SERVICES AGMT - SMALL CAP GROWTH PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Small Cap
Growth Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 39
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 40
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 41
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 42
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 43
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Small Cap
Growth Portfolio
By:
-------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 44
EX-99.B9(b)(8)
FUND ACCTG SERVICES AGMT - INVESTMENT GRADE BOND
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper
Investment Grade Bond Portfolio (hereinafter called the
"Portfolio"), a registered open-end management investment company
with its principal place of business in 222 South Riverside
Plaza, Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 45
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 46
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 47
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 48
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 49
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Investment
Grade Bond Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 50
EX-99.B9(b)(9)
FUND ACCTG SERVICES AGMT - VALUE+GROWTH PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper
Value+Growth Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 51
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 52
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 53
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 54
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 55
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Value+Growth
Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 56
EX-99.B9(b)(10)
FUND ACCOUNTING SERVICES AGMT - HORIZON 20+
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Horizon
20+ Portfolio (hereinafter called the "Portfolio"), a registered
open-end management investment company with its principal place
of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its
principal place of business in Boston, Massachusetts (hereinafter
called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 57
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 58
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 59
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 60
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 61
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Horizon 20+
Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 62
EX-99.B9(b)(11)
FUND ACCOUNTING SERVICES AGMT - KEMPER HORIZON 10+
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Horizon
10+ Portfolio (hereinafter called the "Portfolio"), a registered
open-end management investment company with its principal place
of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its
principal place of business in Boston, Massachusetts (hereinafter
called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 63
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 64
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 65
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 66
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 67
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Horizon 10+
Portfolio
By:
--------------------------------
Vice President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 68
EX-99.B9(b)(12)
FUND ACCOUNTING SERVICES AGMT - HORIZON 5
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Horizon 5
Portfolio (hereinafter called the "Portfolio"), a registered
open-end management investment company with its principal place
of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its
principal place of business in Boston, Massachusetts (hereinafter
called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 69
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 70
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 71
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 72
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 73
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Horizon 5
Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 74
EX-99.B9(b)(13)
FUND ACCOUNTING SERVICES AGMT - VALUE PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Value
Portfolio (hereinafter called the "Portfolio"), a registered
open-end management investment company with its principal place
of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its
principal place of business in Boston, Massachusetts (hereinafter
called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 75
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 76
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 77
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 78
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 79
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Value
Portfolio
By:
-------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 80
EX-99.B9(b)(14)
FUND ACCTG SRVS AGMT - SMALL CAP VALUE PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Small Cap
Value Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 81
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 82
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 83
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 84
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 85
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Small Cap
Value Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 86
EX-99.B9(B)(15)
FUND ACCTG SERVICES AGMT - BLUE CHIP PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Blue Chip
Portfolio (hereinafter called the "Portfolio"), a registered
open-end management investment company with its principal place
of business in 222 South Riverside Plaza, Chicago, Illinois
60606 and Scudder Fund Accounting Corporation, with its
principal place of business in Boston, Massachusetts (hereinafter
called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 87
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 88
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 89
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 90
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 91
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Blue Chip
Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 92
EX-99.B9(b)(16)
FUND ACCTG SERVICES AGMT - GLOBAL INCOME PORTFOLIO
FUND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made on the 31st day of December, 1997 between
Investors Fund Series (the "Fund"), on behalf of Kemper Global
Income Portfolio (hereinafter called the "Portfolio"), a
registered open-end management investment company with its
principal place of business in 222 South Riverside Plaza,
Chicago, Illinois 60606 and Scudder Fund Accounting
Corporation, with its principal place of business in Boston,
Massachusetts (hereinafter called "FUND ACCOUNTING").
WHEREAS, the Portfolio has need to determine its net asset value
which service FUND ACCOUNTING is willing and able to provide;
NOW THEREFORE in consideration of the mutual promises herein
made, the Fund and FUND ACCOUNTING agree as follows:
Section 1. Duties of FUND ACCOUNTING - General
FUND ACCOUNTING is authorized to act under the terms of this
Agreement to calculate the net asset value of the Portfolio
as provided in the prospectus of the Portfolio and in
connection therewith shall:
a. Maintain and preserve all accounts, books, financial
records and other documents as are required of the Fund
under Section 31 of the Investment Company Act of 1940
(the "1940 Act") and Rules 31a-1, 31a-2 and 31a-3
thereunder, applicable federal and state laws and any
other law or administrative rules or procedures which
may be applicable to the Fund on behalf of the
Portfolio, other than those accounts, books and
financial records required to be maintained by the
Fund's investment adviser, custodian or transfer agent
and/or books and records maintained by all other
service providers necessary for the Fund to conduct its
business as a registered open-end management investment
company. All such books and records shall be the
property of the Fund and shall at all times during
regular business hours be open for inspection by, and
shall be surrendered promptly upon request of, duly
authorized officers of the Fund. All such books and
records shall at all times during regular business
hours be open for inspection, upon request of duly
authorized officers of the Fund, by employees or agents
of the Fund and employees and agents of the Securities
and Exchange Commission.
<PAGE> 93
b. Record the current day's trading activity and such
other proper bookkeeping entries as are necessary for
determining that day's net asset value and net income.
c. Render statements or copies of records as from time to
time are reasonably requested by the Fund.
d. Facilitate audits of accounts by the Fund's independent
public accountants or by any other auditors employed or
engaged by the Fund or by any regulatory body with
jurisdiction over the Fund.
e. Compute the Portfolio's public offering price and/or
its daily dividend rates and money market yields, if
applicable, in accordance with Section 3 of the
Agreement and notify the Fund and such other persons as
the Fund may reasonably request of the net asset value
per share, the public offering price and/or its daily
dividend rates and money market yields.
Section 2. Valuation of Securities
Securities shall be valued in accordance with (a) the Fund's
Registration Statement, as amended or supplemented from time
to time (hereinafter referred to as the "Registration
Statement"); (b) the resolutions of the Board of Trustees of
the Fund at the time in force and applicable, as they may
from time to time be delivered to FUND ACCOUNTING, and (c)
Proper Instructions from such officers of the Fund or other
persons as are from time to time authorized by the Board of
Trustees of the Fund to give instructions with respect to
computation and determination of the net asset value. FUND
ACCOUNTING may use one or more external pricing services,
including broker-dealers, provided that an appropriate
officer of the Fund shall have approved such use in advance.
Section 3. Computation of Net Asset Value, Public Offering
Price, Daily Dividend Rates and Yields
FUND ACCOUNTING shall compute the Portfolio's net asset
value, including net income, in a manner consistent with the
specific provisions of the Registration Statement. Such
computation shall be made as of the time or times specified
in the Registration Statement.
FUND ACCOUNTING shall compute the daily dividend rates and
money market yields, if applicable, in accordance with the
methodology set forth in the Registration Statement.
Section 4. FUND ACCOUNTING's Reliance on Instructions and Advice
In maintaining the Portfolio's books of account and making
the necessary computations FUND ACCOUNTING shall be entitled
to receive, and may rely upon, information furnished it by
means of Proper Instructions, including but not limited to:
2
<PAGE> 94
a. The manner and amount of accrual of expenses to be
recorded on the books of the Portfolio;
b. The source of quotations to be used for such securities
as may not be available through FUND ACCOUNTING's
normal pricing services;
c. The value to be assigned to any asset for which no
price quotations are readily available;
d. If applicable, the manner of computation of the public
offering price and such other computations as may be
necessary;
e. Transactions in portfolio securities;
f. Transactions in capital shares.
FUND ACCOUNTING shall be entitled to receive, and shall be
entitled to rely upon, as conclusive proof of any fact or
matter required to be ascertained by it hereunder, a
certificate, letter or other instrument signed by an
authorized officer of the Fund or any other person
authorized by the Fund's Board of Trustees.
FUND ACCOUNTING shall be entitled to receive and act upon
advice of Counsel for the Fund at the reasonable expense of
the Portfolio and shall be without liability for any action
taken or thing done in good faith in reliance upon such
advice.
FUND ACCOUNTING shall be entitled to receive, and may rely
upon, information received from the Transfer Agent.
Section 5. Proper Instructions
"Proper Instructions" as used herein means any certificate,
letter or other instrument or telephone call reasonably
believed by FUND ACCOUNTING to be genuine and to have been
properly made or signed by any authorized officer of the
Fund or person certified to FUND ACCOUNTING as being
authorized by the Board of Trustees. The Fund, on behalf of
the Portfolio, shall cause oral instructions to be confirmed
in writing. Proper Instructions may include communications
effected directly between electro-mechanical or electronic
devices as from time to time agreed to by an authorized
officer of the Fund and FUND ACCOUNTING.
The Fund, on behalf of the Portfolio, agrees to furnish to
the appropriate person(s) within FUND ACCOUNTING a copy of
the Registration Statement as in effect from time to time.
FUND ACCOUNTING may conclusively rely on the Fund's most
recently delivered Registration Statement for all purposes
under this Agreement and shall not be liable to the
Portfolio or the Fund in acting in reliance thereon.
3
<PAGE> 95
Section 6. Standard of Care
FUND ACCOUNTING shall exercise reasonable care and diligence
in the performance of its duties hereunder. The Fund agrees
that FUND ACCOUNTING shall not be liable under this
Agreement for any error of judgment or mistake of law made
in good faith and consistent with the foregoing standard of
care, provided that nothing in this Agreement shall be
deemed to protect or purport to protect FUND ACCOUNTING
against any liability to the Fund, the Portfolio or its
shareholders to which FUND ACCOUNTING would otherwise be
subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties
hereunder.
Section 7. Compensation and FUND ACCOUNTING Expenses
FUND ACCOUNTING shall be paid as compensation for its
services pursuant to this Agreement such compensation as may
from time to time be agreed upon in writing by the two
parties. FUND ACCOUNTING shall be entitled, if agreed to by
the Fund on behalf of the Portfolio, to recover its
reasonable telephone, courier or delivery service, and all
other reasonable out-of-pocket, expenses as incurred,
including, without limitation, reasonable attorneys' fees
and reasonable fees for pricing services.
Section 8. Amendment and Termination
This Agreement shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be
terminated by an instrument in writing delivered or mailed
to the other party. Such termination shall take effect not
sooner than sixty (60) days after the date of delivery or
mailing of such notice of termination. Any termination date
is to be no earlier than four months from the effective date
hereof. Upon termination, FUND ACCOUNTING will turn over to
the Fund or its designee and cease to retain in FUND
ACCOUNTING files, records of the calculations of net asset
value and all other records pertaining to its services
hereunder; provided, however, FUND ACCOUNTING in its
discretion may make and retain copies of any and all such
records and documents which it determines appropriate or for
its protection.
Section 9. Services Not Exclusive
FUND ACCOUNTING's services pursuant to this Agreement are
not to be deemed to be exclusive, and it is understood that
FUND ACCOUNTING may perform fund accounting services for
4
<PAGE> 96
others. In acting under this Agreement, FUND ACCOUNTING
shall be an independent contractor and not an agent of the
Fund or the Portfolio.
Section 10. Limitation of Liability for Claims
The Fund's Amended and Restated Declaration of Trust, as
amended to date (the "Declaration"), a copy of which,
together with all amendments thereto, is on file in the
Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "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 the
Portfolio, or Trustee, officer, employee or agent of the
Fund shall be subject to claims against or obligations of
the Trust or of the Portfolio to any extent whatsoever, but
that the Trust estate only shall be liable.
FUND ACCOUNTING is expressly put on notice of the limitation
of liability as set forth in the Declaration and FUND
ACCOUNTING agrees that the obligations assumed by the Fund
and/or the Portfolio under this Agreement shall be limited
in all cases to the Portfolio and its assets, and FUND
ACCOUNTING shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the
Fund or the Portfolio or any other series of the Fund, or
from any Trustee, officer, employee or agent of the Fund.
FUND ACCOUNTING understands that the rights and obligations
of the Portfolio under the Declaration are separate and
distinct from those of any and all other series of the Fund.
Section 11. Notices
Any notice shall be sufficiently given when delivered or
mailed to the other party at the address of such party set
forth below or to such other person or at such other address
as such party may from time to time specify in writing to
the other party.
If to FUND ACCOUNTING: Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Attn: Vice President
If to the Fund - Portfolio: Investors Fund Series
222 South Riverside Plaza
Chicago, Illinois 60606
Attn: President, Secretary
or Treasurer
5
<PAGE> 97
Section 12. Miscellaneous
This Agreement may not be assigned by FUND ACCOUNTING
without the consent of the Fund as authorized or approved by
resolution of its Board of Trustees.
In connection with the operation of this Agreement, the Fund
and FUND ACCOUNTING may agree from time to time on such
provisions interpretive of or in addition to the provisions
of this Agreement as in their joint opinions may be
consistent with this Agreement. Any such interpretive or
additional provisions shall be in writing, signed by both
parties and annexed hereto, but no such provisions shall be
deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof, and supersedes
any and all prior understandings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly
authorized and its seal to be hereunder affixed as of the date
first written above.
[SEAL] INVESTORS FUND SERIES
on behalf of Kemper Global
Income Portfolio
By:
--------------------------------
President
[SEAL] SCUDDER FUND ACCOUNTING CORPORATION
By:
--------------------------------
Vice President
6
<PAGE> 1
EX-99.B24
POWERS OF ATTORNEY
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ James E. Akins Trustee March 18, 1998
----------------------
<PAGE> 2
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ Arthur R. Gottschalk Trustee March 18, 1998
------------------------
<PAGE> 3
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ Frederick T. Kelsey Trustee March 18, 1998
-----------------------
<PAGE> 4
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ Daniel Pierce Trustee March 18, 1998
----------------------
<PAGE> 5
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ Fred B. Renwick Trustee March 18, 1998
----------------------
<PAGE> 6
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ John B. Tingleff Trustee March 18, 1998
----------------------
<PAGE> 7
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ Edmond D. Villani Trustee March 18, 1998
----------------------
<PAGE> 8
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints
Kathryn L. Quirk, Caroline Pearson, and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as such person's attorney-in-fact to sign and file on
such person's behalf individually and in the capacity stated
below such registration statements, amendments, post-effective
amendments, exhibits, applications and other documents with the
Securities and Exchange Commission or any other regulatory
authority as may be desirable or necessary in connection with the
public offering of shares of Kemper Investors Fund.
Signature Title Date
/s/ John G. Weithers Trustee March 18, 1998
--------------------------
