<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
KEMPER HIGH INCOME TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
<PAGE> 1
September 1997
Kemper
Important News
for Kemper Closed-End Fund Shareholders
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE IS A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.
================================================================================
Q&A
QUESTIONS AND ANSWERS
Q WHAT IS HAPPENING?
A Zurich Insurance Company, the parent of your Fund's investment manager (Zurich
Kemper Investments, Inc. or "ZKI") has entered into an agreement with Scudder,
Stevens & Clark, Inc. ("Scudder") whereby Zurich will acquire approximately 70%
of Scudder. Upon completion of the transaction, Scudder will change its name to
Scudder Kemper Investments, Inc. ("SKI") and ZKI will be integrated into SKI.
Because of the transaction, it is necessary for your Fund to approve a new
investment management agreement.
The following pages elaborate on Scudder, the proposed new investment management
agreement and the Fund Board's evaluation of Zurich and Scudder. A vote is also
being sought on the election of board members and the selection of independent
auditors.
Q WHAT IS SCUDDER?
A Scudder is one of America's oldest and largest investment management firms. It
manages assets invested in equities, fixed income and money market instruments
in both developed and emerging markets. Scudder provides investment services for
open-end and closed-end funds, and private and institutional clients.
Q WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT MANAGEMENT
AGREEMENT?
A The Investment Company Act of 1940 requires a vote whenever there is a change
in control of an investment manager. The Zurich/Scudder transaction is such a
change of control and requires a fund shareholder vote upon a new investment
management agreement with each Fund.
Q HOW WILL THE ZURICH/SCUDDER TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A Your Fund and your Fund investment will not change. You will still own the
same shares in the same Fund. If the new investment management agreement is
approved, your Fund shares will not change and the advisory fees charged to your
Fund will not change.
Zurich and Scudder have committed to provide all resources necessary to provide
your Fund with top quality investment management and shareholder services.
[KEMPER LOGO]
<PAGE> 2
Q WILL THE INVESTMENT
ADVISORY FEES
BE THE SAME?
A Yes, the investment advisory fees paid by your Fund will remain the
same.
Q HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A After careful consideration, the board members of your Fund, including
all of the independent members, recommend that you vote "For" all the
items on the enclosed proxy card.
Q WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
A ZKI--not your Fund--is paying all costs of the Funds' shareholder
meeting and proxy solicitation.
Q WHOM DO I CALL FOR MORE INFORMATION?
A Please call Shareholder Services at 1-800-621-1048.
ABOUT THE PROXY CARD
[PROXY CARD SAMPLE] Because each Fund must vote separately, you are being
sent a proxy card for each Fund account that you have.
Please vote all issues shown on each proxy card that you receive.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each proxy card. On Item 1 (election of board
members), mark--For All, Withhold All or For All Except. If you mark an X in
the For All Except box, you should print the number(s) relating to the
individual(s) for whom you wish to withhold authority. On all other Items,
mark--For, Against or Abstain. Then sign, date and return each of your proxy
cards in the accompanying postage-paid envelope. All registered owners of an
account, as shown in the address on the proxy card, must sign the proxy card.
If you are signing for a corporation, trust or estate, please indicate your
title or position.
We appreciate your continuing support and look forward to serving your future
investment needs.
THANK YOU FOR MAILING YOUR
PROXY CARD PROMPTLY!
<PAGE> 3
KEMPER CLOSED-END FUNDS
================================================================================
KEMPER CLOSED-END FUNDS
- - Kemper High Income Trust
- - Kemper Intermediate Government Trust
- - Kemper Municipal Income Trust
- - Kemper Multi-Market Income Trust
- - Kemper Strategic Municipal Income Trust
- - The Growth Fund of
Spain, Inc.
- - Kemper Strategic Income Fund
(LOGO)Printed on recycled paper
<PAGE> 4
KEMPER CLOSED-END FUNDS
222 South Riverside Plaza Chicago, Illinois 60606
Telephone (800) 621-1048
, 1997
Dear Kemper Fund Shareholder:
As you read in the Questions and Answers (Q & A) on the outside cover, Zurich
Insurance Company ("Zurich") has entered into an agreement with Scudder, Stevens
& Clark, Inc. ("Scudder") pursuant to which Zurich will acquire approximately
70% of Scudder. Upon completion of the transaction, Scudder will change its name
to Scudder Kemper Investments, Inc. ("SKI"), and your Fund's investment manager,
Zurich Kemper Investments, Inc. ("ZKI") will be combined with SKI. Because of
the transaction, it is necessary for your Fund to approve a new investment
management agreement.
If the new investment management agreement is approved, YOUR FUND SHARES WILL
NOT CHANGE AND THE ADVISORY FEES CHARGED TO YOUR FUND WILL NOT CHANGE. FURTHER,
YOU SHOULD CONTINUE TO RECEIVE THE HIGH QUALITY INVESTMENT MANAGEMENT AND
SHAREHOLDER SERVICES THAT YOU HAVE COME TO EXPECT OVER THE YEARS.
Your Fund Board has unanimously approved the proposals and recommends them for
your approval. I encourage you to vote in favor of the proposals.
As always, we thank you for your confidence and support.
Sincerely,
/s/ Stephen B. Timbers
Stephen B. Timbers
President [KEMPER LOGO]
<PAGE> 5
KEMPER CLOSED-END FUNDS
222 South Riverside Plaza Chicago, Illinois 60606
Telephone (800) 621-1048
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 3, 1997 AND PROXY STATEMENT
, 1997
To the Shareholders:
You are invited to attend a joint special meeting of shareholders of the
following Kemper Closed-End Funds (each a "Fund" and collectively the "Funds"):
KEMPER HIGH INCOME TRUST ("KHI")
KEMPER INTERMEDIATE GOVERNMENT TRUST ("KGT")
KEMPER MUNICIPAL INCOME TRUST ("KMM")
KEMPER MULTI-MARKET INCOME TRUST ("KTF")
KEMPER STRATEGIC MUNICIPAL INCOME TRUST ("KSM")
THE GROWTH FUND OF SPAIN, INC. ("GSP")
KEMPER STRATEGIC INCOME FUND ("KST")
The meeting will be held in the Presentation Room on the 32nd Floor at the
offices of the Funds, 222 South Riverside Plaza, Chicago, Illinois on Wednesday,
December 3, 1997 at 2:30 p.m., Chicago time, for the following purposes and to
transact such other business as may properly come before the meeting or any
adjournment of the meeting:
1. To elect two (2) additional Members to the Board of each Fund.
2. To ratify or reject the selection of Ernst & Young LLP as independent
auditors for the current fiscal year.
3A. To approve or disapprove a new investment management agreement with Scudder
Kemper Investments, Inc. ("SKI") (or with Zurich Kemper Investments, Inc.
("ZKI") transferable to SKI).
3B. [For GSP only] To approve or disapprove a new sub-advisory agreement with
BSN Gestion de Patrimonios, S.A., S.G.C. ("BSN").
Approval of Item 3B is conditional upon approval of Item 3A for GSP.
<PAGE> 6
The Board of each Fund has selected the close of business on September 22, 1997
as the record date for the determination of shareholders of each Fund entitled
to notice of and to vote at the meeting. Shareholders are entitled to one vote
for each share held.
- ------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
- ------------------------------------------------------------------------------
<PAGE> 7
The accompanying proxy is solicited by the Boards of Trustees, or Directors in
the case of GSP, (the "Boards") of the Funds for voting at the joint special
meeting of shareholders of the Funds to be held on Wednesday, December 3, 1997,
and at any and all adjournments thereof (the "Meeting"). This proxy statement
was first mailed to shareholders on or about , 1997.
The shareholders of each Fund are being asked to vote on three items. The Board
of each Fund recommends an affirmative vote on all items. The vote required to
approve each item is described under the section of this proxy statement
entitled "Miscellaneous."
The following table indicates which shareholders are solicited with respect to
each Item:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
ITEM KHI KGT KMM KTF KSM GSP KST
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
1. Elect Board members X X X X X X X
- -----------------------------------------------------------------------------
2. Ratify selection of X X X X X X X
auditors
- -----------------------------------------------------------------------------
3A. Approval of New Investment X X X X X X X
Management Agreement with
Scudder Kemper Investments,
Inc.
- -----------------------------------------------------------------------------
3B. Approval of New X
Sub-advisory Agreement with
BSN Gestionn de
Patrimonios, S.A., SGC
- -----------------------------------------------------------------------------
</TABLE>
The Board of each Fund has fixed the close of business on September 22, 1997 as
the record date for the determination of shareholders of each Fund entitled to
notice of and to vote at the Meeting. As of September 22, 1997, shares of the
Funds were issued and outstanding as follows:
<TABLE>
<CAPTION>
FUND SHARES
- ---- -------
<S> <C>
KHI...................................
KGT...................................
KTF
Common..............................
Preferred...........................
KMM...................................
KSM...................................
GSP...................................
KST...................................
</TABLE>
2
<PAGE> 8
KTF ONLY. Pursuant to the Agreement and Declaration of Trust of KTF, the Board
may authorize separate classes of shares of beneficial interest. The Board has
authorized and KTF has issued common shares of beneficial interest (the "Common
Shares") and preferred shares of beneficial interest, Series A through D (the
"Preferred Shares"). The Common Shares and the Preferred Shares have different
powers, rights, preferences and privileges, qualifications, limitations and
restrictions with respect to, among other things, dividends, liquidation,
redemption and voting as more fully set forth in the Certificate of Designation
for Preferred Shares that established the Preferred Shares. The Common Shares
were first issued on October 20, 1988 and the Preferred Shares were first issued
on July 24, 1989. At the Meeting, the holders of the Common Shares and the
Preferred Shares will vote together as a single class.
ITEM 1. ELECTION OF BOARD MEMBERS
At the Meeting, two (2) Board members are to be elected to the Board of each
Fund. One to fill a vacancy and the other to replace Mr. Stephen Timbers, who
intends to resign from the Boards upon the consummation of the Transaction.
It is intended that the proxies will be voted for the election as Board members
of the nominees described below. The nominees, if elected, will take office upon
consummation of the Transaction and their election and qualification is
contingent upon consummation of the Transaction. The term of each person elected
as a Board member will be from the date of the consummation of the Transaction
until the next meeting of shareholders, if any, called for the purpose of
electing Board members (for GSP, of the class of which such person is a Member)
and until the election and qualification of a successor or until such Board
member sooner dies, resigns or is removed as provided in the organizational
documents of each Fund. If the Transaction is not consummated, the current Board
members of each Fund will continue to serve as that Fund's Board (which are
those identified as such below, along with Mr. Stephen B. Timbers, the president
and chief executive officer of ZKI).
KTF ONLY. Holders of the Preferred Shares are entitled to elect two of the
Board members. Messrs. Kelsey and Timbers were elected by the holders of the
Preferred Shares. The five other current Board members (Messrs. Akins,
Gottschalk, Renwick, Tingleff and Weithers) were elected by holders of the
Common Shares and the Preferred Shares, voting together as a single class. Mr.
Pierce is to be elected by the holders of the Preferred Shares. Mr. Villani is
to be elected by holders of the Common Shares and the Preferred Shares, voting
together as a single class.
3
<PAGE> 9
GSP ONLY. Pursuant to the organizational documents of GSP, the Board is divided
into three classes, each class having a term of three years. At the annual
meeting of shareholders in each year, the term of one class of Board members
expires. Accordingly, only those Board members in one class may be changed in
any one year, and it would require two years to change a majority of the Board.
This system of electing Board members may have the effect of maintaining the
continuity of management and, thus, make it more difficult for the Fund's
shareholders to change the majority of Board members. Pursuant to the Fund's
organizational documents, the number of Board members shall be apportioned among
the classes so as to maintain the classes as nearly equal in number as possible.
Mr. Villani has been nominated as a Class III Board member for a term to expire
at the 2000 annual meeting and Mr. Pierce has been nominated as a Class II Board
member for a term to expire at the 1999 annual meeting. The others listed below
are not nominees and will continue as Board members of GSP. Messrs. Kelsey and
Renwick are Class I Board members, whose terms expire in 1998. Messrs.
Gottschalk and Weithers are Class II Board members, whose terms expire in 1999.
Messrs. Akins and Tingleff are Class III Board members, whose terms expire in
2000.
Both the nominees listed below have consented to serve as board members of the
respective Funds, if elected. In case any nominee shall be unable or shall fail
to act as a board member by virtue of an unexpected occurrence, the proxies may
be voted for such other person(s) as shall be determined by the persons acting
under the proxies in their discretion.
BOARD MEMBER NOMINEES FOR EACH FUND
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL SHARES BENEFICIALLY OWNED
OCCUPATION AND AFFILIATIONS AS OF , 1997
------------------------------- -------------------------
<S> <C>
*Daniel Pierce (03/18/84)
Chairman of the Board and Managing
Director, Scudder; Director,
Fiduciary Trust Company; Director,
Fiduciary Company Incorporated; Board
member of 14 investment companies
advised by Scudder.
*Edmond D. Villani (03/04/47)
President, Chief Executive Officer
and Managing Director, Scudder.
</TABLE>
4
<PAGE> 10
CONTINUING BOARD MEMBERS OF EACH FUND
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME OWNED AS OF
OCCUPATION AND AFFILIATIONS A BOARD MEMBER , 1997
------------------------------- ----------------- -------------------
<S> <C> <C>
James B. Akins (10/15/26) 1995 -- All.
Consultant on International,
Political and Economic Affairs;
formerly, a career United States
Foreign Service Officer; Energy
Adviser for the White House; United
States Ambassador
to Saudi Arabia.
Arthur R. Gottschalk (02/13/25) 1988 -- KGT, KTF; KHI-- KGT--
Retired; formerly, President, 1989 -- KHI, KMM, KMM-- KTF--
Illinois Manufacturers Association; KSM, GSP; KSM-- GSP--
Trustee, Illinois Masonic Medical 1994 -- KST. KST--
Center; Member, Board of Governors,
Heartland Institute/Illinois;
formerly, Illinois State Senator;
formerly, Vice President, the Ruben
H. Donnelly Corp.
Frederick T. Kelsey (04/25/27) 1988 -- KTF; KHI-- KGT--
Retired; formerly, consultant to 1989 -- KHI, KGT, KMM-- KTF--
Goldman, Sachs & Co.; formerly, KMM, KSM, GSP; GSP--
President, Treasurer and Trustee of 1994 -- KST.
Institutional Liquid Assets and its
affiliated mutual funds; Trustee of
the Benchmark Funds and the Pilot
Funds.
</TABLE>
5
<PAGE> 11
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME OWNED AS OF
OCCUPATION AND AFFILIATIONS A BOARD MEMBER , 1997
------------------------------- ----------------- -------------------
<S> <C> <C>
Fred B. Renwick (02/02/30) 1995 -- All.
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, 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) 1991 -- All Funds KHI-- KGT--
Retired; formerly, President, except KST; KMM-- KTF--
Tingleff & Associates (management 1994 -- KST. KSM-- GSP--
consulting firm); formerly, Senior KST--
Vice President, Continental Illinois
National Bank & Trust Company.
John G. Weithers (08/08/33) 1993 -- All Funds KHI-- KGT--
Retired; formerly, Chairman of the except KST; KMM-- KTF--
Board and Chief Executive Officer, 1994 -- KST. KSM-- GSP--
Chicago Stock Exchange; Director, KST--
Federal Life Insurance Company;
President of the Members of the
Corporation and Trustee, DePaul
University; Director, Systems
Imagineering, Inc.
</TABLE>
- ---------------
* Interested persons of Scudder as defined in the Investment Company Act of
1940.
All the Board members serve as board members of thirteen Kemper Funds. Mr.
Pierce and Mr. Villani have each been nominated to serve as a board member of
thirty-nine Kemper Funds. A "Kemper Fund" is an investment company for which ZKI
or its affiliates serve as investment manager.
6
<PAGE> 12
Each Board has an audit and governance committee that is composed of Messrs.
Akins, Gottschalk, Kelsey, Renwick, Tingleff and Weithers. The committee of each
Fund met times during the fiscal year ended November 30, 1996. In 1996, KGT
changed fiscal years from November 30 to December 31. The information included
in this proxy statement is for KGT's fiscal year ended November 30, 1996 and
does not include information for its short fiscal period (one-month) ended
December 31, 1996. The committee makes recommendations regarding the selection
of independent auditors for each Fund, confers with the independent auditors
regarding each Fund's financial statements, the results of audits and related
matters, seeks and reviews nominees for Board membership and performs such other
tasks as the respective Board assigns. The committee also proposes the nominees
for election by the shareholders. Shareholders wishing to submit the name of a
candidate for consideration by the committee should submit their recommendations
to the secretary of the applicable Fund.
Each Fund pays Board members who are not "interested persons" of such Fund an
annual retainer fee, plus expenses, and an attendance fee for each Fund Board
meeting and committee meeting attended. As reflected above, the Board members
currently serve as Board members of various investment companies for which ZKI
or its affiliates serve as investment manager. Board members or officers who are
"interested persons" receive no compensation from such Fund. The Board of each
Fund met
times during the fiscal year ended November 30, 1996. Each then current Board
member attended 75% or more of the respective meetings of the Board and the
audit and governance committee (if then a member thereof) held during the fiscal
year ended November 30, 1996.
The table below shows, for each Board member entitled to receive compensation
from the Funds, the aggregate compensation paid or accrued during each Fund's
fiscal year ended November 30, 1996 and the total compensation that the Kemper
Funds paid or accrued during calendar year 1996.
<TABLE>
<CAPTION>
Total
Compensation
Kemper Funds
Paid to Board
Name of Board Member KHI KGT KTF KMM KSM GSP KST Members(2)
-------------------- ------ ------ ------ ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James E. Akins............. $3,700 $4,400 $7,400 $3,800 $3,200 $3,900 $2,500 $ 94,300
Arthur R. Gottschalk(1).... 4,700 5,300 8,400 4,700 4,100 4,200 2,600 102,700
Frederick T. Kelsey(1)..... 4,100 4,700 7,900 4,200 3,500 3,900 2,600 106,800
Fred B. Renwick............ 3,700 4,400 7,400 3,800 3,200 3,900 2,500 94,300
John B. Tingleff........... 3,700 4,400 7,400 3,800 3,200 3,900 2,500 94,300
John G. Weithers........... 3,700 4,400 7,400 3,800 3,200 3,900 2,500 94,300
</TABLE>
- ---------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with certain Kemper funds. Deferred amounts accrue
interest monthly at a rate equal to the yield of
7
<PAGE> 13
Zurich Money Funds -- Zurich Money Market Fund. Total deferred fees and
interest accrued for the latest and all prior fiscal years are $10,500,
$10,600, $12,200, $10,400, $10,000 and $4,200 for Mr. Gottschalk and $15,200
$15,600, $18,800, $15,100, $14,400 and $7,500 for Mr. Kelsey from KHI, KGT,
KTF, KMM, KSM and KST, respectively. In addition, for GSP, total deferred
fees and interest accrued are $10,400 for Mr. Gottschalk.
(2) Includes compensation for service on the boards of 13 Kemper funds with 36
fund portfolios during calendar year 1996. Each Board member currently
serves as a board member of 13 Kemper funds with 46 fund portfolios.
FUND OFFICERS. Information about the executive officers of the Funds, with their
respective dates of birth and terms as Fund officers indicated, is set forth
below.
J. Patrick Beimford, Jr. (05/25/50), vice president of KMM since 02/17/93 and
KST since 04/14/94, is of ZKI.
Dale R. Burrow (10/16/56), vice president of KSM since 05/05/93, is first vice
president of ZKI.
Elizabeth A. Byrnes (02/08/57), vice president of KGT since 09/08/94, is first
vice president of ZKI.
Robert S. Cessine (01/05/50), vice president of KMM since 05/04/95, is senior
vice president of ZKI since January 1993; prior thereto, senior corporate bond
analyst at an investment management company.
Phillip J. Collora (11/15/45) has been vice president of each Fund except KST
since 02/01/90 and KST since 03/02/90, and secretary of each Fund since
03/25/95. Mr. Collora is senior vice president and assistant secretary of ZKI.
Jerome L. Duffy (06/29/36), treasurer of KHI and KGT since 05/28/87, KMM, KTF
and KSM since 08/03/88, GSP since 12/18/89 and KST since 03/02/90, is senior
vice president of ZKI.
Charles R. Manzoni, Jr. (01/23/47), vice president of each Fund since 09/04/96,
is executive vice president, secretary and general counsel of ZKI; secretary,
ZKI Holding Corp.; secretary, ZKI Agency, Inc.; and formerly, Partner, Gardner,
Carton & Douglas.
Michael A. McNamara (12/28/44), vice president of KHI since 02/21/91 and KMM and
KST since 05/04/95, is senior vice president of ZKI.
Christopher J. Mier (08/11/56), vice president of KTF and KSM since 02/21/91, is
senior vice president of ZKI.
8
<PAGE> 14
John E. Neal (03/09/50), vice president of each Fund since 01/17/96, is
president of Kemper Funds Group, a unit of ZKI, and director of ZKI, Zurich
Kemper Value Advisors, Inc. ("ZKVA") and Zurich Kemper Distributors, Inc.
("ZKDI"); prior thereto, senior vice president of Kemper Real Estate Management
Company.
Harry E. Resis, Jr. (11/24/45), vice president of KHI since 02/17/93 and KMM and
KST since 05/04/95, is senior vice president of ZKI.
Stephen B. Timbers (08/08/44), president of each Fund since [03/11/95], is
president, chief executive officer, chief investment officer and director of ZKI
and director of ZKDI, ZKVA and LTV Corporation. Mr. Timbers is also a Board
member of each of the Funds.
Jonathan W. Trutter (11/29/57), vice president of KMM and KST since 05/04/95, is
first vice president of ZKI.
Richard L. Vandenberg (11/16/49), vice president of KGT, KMM and KST since
03/06/96, is senior vice president of ZKI; prior thereto, senior vice president
and portfolio manager of an investment management firm.
The officers of each Fund are elected by the Board of the Fund on an annual
basis to serve until their successors are elected and qualified. It is
anticipated that, after consummation of the Transaction, the Boards of the Funds
will elect new officers who are expected to include persons currently affiliated
with Scudder.
SHAREHOLDINGS
As of , 1997, the Board members and officers of the Funds as a group
owned beneficially shares of KHI, shares of KGT,
shares of KMM, shares of KTF, shares of KSM, shares
of GSP and shares of KST, which, in each case, is less than
% of the outstanding shares of each Fund. As of , 1997, no person
is known to any Fund to have owned beneficially more than five percent of the
shares of such Fund, except that owned shares of , which
constituted approximately % of the Fund's outstanding shares.
SECTION 16 REPORTING COMPLIANCE
Section 30(f) of the 1940 Act and Section 16(a) of the Securities Exchange Act
of 1934 require each Fund's officers and Board members, investment manager,
affiliated persons of the investment manager and persons who own more than ten
percent of a registered class of the Funds' equity securities to file forms
reporting their affiliation with that Fund and reports of ownership and changes
in ownership of that Fund's shares with the Securities and Exchange Commission
(the "SEC") and the New York Stock Exchange. These persons and entities are
required by
9
<PAGE> 15
SEC regulation to furnish the Fund with copies of all Section 16(a) forms they
file. Based upon a review of these forms furnished to each Fund, each Fund
believes that, during the fiscal year ended November 30, 1996 (and the fiscal
period ended December 31, 1996 for KGT), there was compliance with all Section
16(a) filing requirements applicable to that Fund's officers and Board members,
the investment manager and affiliated persons of the investment manager.
ITEM 2. SELECTION OF INDEPENDENT AUDITORS
A majority of the members of each Board who are not "interested" persons of the
Fund has selected Ernst & Young LLP, independent auditors, to audit the books
and records of the Fund for the current fiscal year. This firm has served in
this capacity for each Fund since the Fund was organized and has no direct or
indirect financial interest in a Fund except as independent auditors. The
selection of Ernst & Young LLP as independent auditors of each Fund is being
submitted to the shareholders for ratification. A representative of Ernst &
Young LLP is expected to be present at the Meeting and will be available to
respond to any appropriate questions raised at the Meeting and may make a
statement.
BOARD RECOMMENDATION
The Board of each Fund recommends that shareholders vote FOR the ratification of
the selection of independent auditors.
ITEMS 3A. AND 3B. NEW INVESTMENT MANAGEMENT AGREEMENT AND, FOR GSP ONLY, NEW
SUB-ADVISORY AGREEMENT
INTRODUCTION
Zurich Kemper Investments, Inc. ("ZKI") is the investment adviser and manager
for each Fund. ZKI and its indirect parent, Zurich Insurance Company ("Zurich"),
entered into a transaction agreement with Scudder, Stevens & Clark, Inc.
("Scudder") whereby Zurich will acquire approximately 70% of Scudder. Upon
completion of the Transaction, Scudder will change its name to Scudder Kemper
Investments, Inc. ("SKI") and ZKI will be combined with SKI.
As discussed above, consummation of the Transaction would constitute an
"assignment," as that term is defined in the Investment Company Act of 1940 (the
"1940 Act"), of each Fund's current investment management agreement with ZKI. As
required by the 1940 Act, each current investment management agreement provides
for its automatic termination in the event of its assignment. In anticipation of
the Transaction, a new investment management agreement ("management agreement")
between each Fund and SKI is being proposed for approval by shareholders of each
10
<PAGE> 16
Fund. (Depending on the timing of the combination of the Scudder and ZKI
organizations, the new investment management agreement may initially be between
the Fund and ZKI for some period following the Transaction and then be
transferred to SKI without further action required on the part of shareholders
of the Fund. SKI or ZKI, as party to the new investment management agreement, is
sometimes referred to in this proxy statement as the "investment manager.") A
copy of the form of the new management agreement is attached hereto as Exhibit
A.
BOARD RECOMMENDATION
The Board of each Fund met on July 8, 1997, July 15, 1997, August 18-19, 1997
and September 19-20, 1997 to consider the Transaction and its anticipated
effects upon ZKI and the investment management and other services provided to
the Funds by ZKI and its affiliates. In addition, the Independent Board members
also met separately with counsel on a number of occasions to discuss the
Transaction. On September 20, 1997 the Board of each Fund, including a majority
of the Board members who are not parties to such agreement or interested persons
of any such party, voted unanimously to approve the new management agreement and
to recommend it to shareholders for their approval.
For information about each Board's deliberations and the reasons for its
recommendation, please see "Board Evaluation" near the end of this Item 3.
The Board of each Fund recommends that shareholders vote FOR approval of the new
management agreement.
THE CURRENT INVESTMENT MANAGEMENT AGREEMENT
Each current management agreement provides that the Fund's investment manager
acts as investment adviser, manages the Fund's investments, administers the
Fund's business affairs, furnishes offices, necessary facilities and equipment,
provides clerical, bookkeeping and administrative services, provides shareholder
and information services and permits any of its officers or employees to serve
without compensation as trustees or officers of the Fund if duly elected to such
positions. Under the current management agreement, the Fund agrees to assume and
pay the charges and expenses of its operations including, by way of example, the
compensation of the trustees other than those affiliated with the investment
manager, charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, of any registrar of the Fund and of the
custodian (including fees for safekeeping of securities), costs of calculating
net asset value, all costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, costs of share
certificates, membership dues in the Investment Company
11
<PAGE> 17
Institute or any similar organization, reports and notices to shareholders,
other like miscellaneous expenses and all taxes and fees to federal, state or
other governmental agencies.
For the services and facilities furnished, each Fund pays an investment
management fee, payable monthly, at the respective annual rate shown below,
based upon average weekly net assets. The management fees for KHI, KGT, KMM, GSP
and KST are higher than those charged by most other investment companies.
Exhibit E reflects the management fees paid by each Fund to ZKI for the most
recently completed fiscal year.
<TABLE>
<CAPTION>
FUND MANAGEMENT FEE
---- --------------
<S> <C>
KHI.............................. 0.85 of 1%
KGT.............................. 0.80 of 1%
KTF.............................. 0.55 of 1%
KMM.............................. 0.85 of 1%
KSM.............................. 0.60 of 1%
GSP.............................. 1.00 of 1%
KST.............................. 0.85 of 1%
</TABLE>
Each management agreement provides that the Fund's investment manager shall not
be liable for any error of judgment or of law, or for any loss suffered by the
Fund in connection with the matters to which the management agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Fund's investment manager in the performance of its
obligations and duties or by reason of its reckless disregard of its obligations
and duties under the management agreement.
Each management agreement may be terminated for such Fund without penalty upon
sixty (60) days written notice by either party, or by a majority vote of the
outstanding shares of the Fund or series thereof, and automatically terminates
in the event of its assignment.
ZKI has acted as investment adviser and manager for each Fund since it commenced
public offering of its shares as shown below. Also shown is the date of each
current management agreement, the date when the current management agreement was
last approved by the Board and the shareholders of each Fund, and the date to
which the current management agreement continues. For each Fund, the current
management agreement was last submitted to shareholders for approval in
connection with the Zurich/Kemper merger.
12
<PAGE> 18
<TABLE>
<CAPTION>
APPROVAL OF CURRENT CURRENT
COMMENCEMENT DATE OF AGREEMENT BY AGREEMENT
OF INVESTMENT CURRENT ----------------------- CONTINUED BY
FUND OPERATIONS AGREEMENT BOARD SHAREHOLDERS BOARD
---- ------------- --------- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
KHI.................. 04/21/88 01/04/96 03/11/97 09/19/95 04/01/98
KGT.................. 07/21/88 01/04/96 03/11/97 09/19/95 04/01/98
KTF.................. 10/20/88 01/04/96 03/11/97 09/19/95 04/01/98
KMM.................. 01/23/89 01/04/96 03/11/97 09/19/95 04/01/98
KSM.................. 03/22/89 01/04/96 03/11/97 09/19/95 04/01/98
GSP.................. 02/14/90 01/04/96 03/11/97 09/19/95 04/01/98
KST.................. 04/29/94 01/04/96 01/21/97 09/19/95 04/01/98
</TABLE>
SUB-ADVISER -- BSN (GSP ONLY)
ZKI uses the investment management services of BSN Gestion de Patrimonios, S.A.,
S.G.C. ("BSN") with respect to investments in Spanish securities pursuant to the
sub-advisory agreement between ZKI and BSN described below. The current
sub-advisory agreement is dated January 4, 1996, was last approved by
shareholders on September 19, 1995, was last approved for continuation by the
Board on March 1, 1997, and will continue, unless replaced or otherwise
terminated, until April 1, 1998. The current sub-advisory agreement was last
submitted to shareholders for approval in connection with the Zurich/Kemper
merger.
BSN is a wholly-owned subsidiary of Banco Santander de Negocios, which is wholly
owned by Banco Santander. Banco Santander, together with its subsidiaries and
associated companies, is engaged principally in commercial and retail banking
operations in Spain and other countries.
Under the terms of the sub-advisory agreement between ZKI and BSN with respect
to GSP, BSN will provide such investment advice, research and assistance as ZKI
may request with respect to investments by GSP in Spanish securities. For its
services, BSN receives from ZKI a monthly fee at the annual rate of .35% of the
Fund's average weekly net assets. BSN has agreed to pay the fees and expenses of
any officer, Board member or employee of the Fund affiliated with BSN, except
that the Fund shall bear the travel expenses of directors, officers or employees
of BSN or any of its affiliates to the extent that such expenses relate to
attendance as a Board member at meetings of the Board. During the fiscal year
ended November 30, 1996, ZKI incurred fees of $ to BSN.
BSN has an advisory committee, comprised of representatives from ZKI and its
affiliates and two representatives from BSN. The advisory committee meets
periodically to advise ZKI regarding investments in Spanish securities and the
Spanish securities markets and reports directly to ZKI. Currently, the advisory
committee is composed of Messrs. and of ZKI and its
affiliates and Messrs. and of BSN.
13
<PAGE> 19
The sub-advisory agreement provides that BSN 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 sub-advisory agreement relates, except loss resulting
from willful misfeasance, bad faith or gross negligence on the part of BSN in
the performance of its obligations and duties or by reason of its reckless
disregard of its obligations and duties under the sub-advisory agreement.
The sub-advisory agreement may be terminated without penalty upon sixty (60)
days written notice by either party. The sub-advisory agreement will
automatically terminate in the event of the termination of the management
agreement or in the event of its assignment.
The new sub-advisory agreement will be dated as of the date of the consummation
of the Transaction and will be in effect for an initial term ending on the same
date as would the current sub-advisory agreement but for the Transaction and may
continue thereafter from year to year if such continuance is specifically
approved at least annually by vote of a "majority of the outstanding voting
securities" of GSP, as defined under the 1940 Act, or the Board, including, in
either event, the vote of a majority of Board members who are not parties to the
agreement or interested persons of any such party, cast in person at a meeting
called for such purpose. A copy of the form of new sub-advisory agreement is
attached hereto as Exhibit B.
SUB-ADVISER -- ZIML
KHI, KGT, KMM, KST and GSP each use the investment management services of Zurich
Investment Management Limited ("ZIML"), 1 Fleet Place, London, UK, ECM4, 7RQ, an
indirect subsidiary of Zurich and an affiliate of ZKI, with respect to
investments in foreign securities pursuant to the sub-advisory agreements
between ZKI and ZIML described below. The current sub-advisory agreements are
dated December 1, 1996, and will continue, unless replaced or otherwise
terminated, until April 1, 1998.
As with the investment management agreements, the sub-advisory agreements with
ZIML will terminate upon consummation of the Transaction. New sub-advisory
agreements, however, are not being proposed; rather, it is expected that the
investment manager would assume responsibility for the portion of those Fund's
assets invested in foreign securities.
Under the terms of the Sub-Advisory Agreement for a Fund, ZIML renders
investment advisory and management services with regard to that portion of the
Fund's portfolio as may be allocated to ZIML by ZKI from time to time for
management of foreign securities, including foreign currency transactions and
related investments. For its services, ZIML receives from ZKI (not from the
Funds) a monthly fee at the following
14
<PAGE> 20
annual rates on the portion of the average daily net assets allocated by ZKI to
ZIML for management:
<TABLE>
<S> <C>
GSP............................................... .35%
KHI, KGT, KMM, KST................................ .30%
</TABLE>
Each Sub-Advisory Agreement provides that ZIML will not be liable for any error
of judgment or mistake of law or for any loss suffered by any Fund in connection
with matters to which the Sub-Advisory Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
ZIML in the performance of its duties or from reckless disregard by ZIML of its
obligations and duties under the Sub-Advisory Agreement.
Each Sub-Advisory Agreement is for a term ending March 1, 1998 and 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. Each Sub-Advisory
Agreement may be terminated at any time for a Fund upon 60 days notice by ZKI,
ZIML or the Board of Trustees or by a majority vote of the outstanding shares of
the Fund, and will terminate automatically upon assignment or upon the
termination of the Fund's investment management agreement. No sub-advisory fees
were paid by ZKI to ZIML for each Fund's 1996 fiscal year, although in prior
fiscal years ZKI has paid ZIML for its services to ZKI with respect to foreign
securities investments of certain Funds.
NEW INVESTMENT MANAGEMENT AGREEMENT
The new investment management agreement for each Fund is substantially similar
to the current investment management agreement. While the form of the agreement
is different (i.e., a form generally used by Scudder), there is no material
difference in the substance of the obligations of the investment manager under
the agreement except that, under a separate agreement with Scudder Fund
Accounting Corporation ("SFAC"), a subsidiary of Scudder, SFAC, rather than SKI
as investment manager, will compute the net asset value for each Fund. SFAC will
not charge the Funds for this service and has no current intention to do so;
however, subject to Board approval, at some time in the future, SFAC may seek
payment for its services under the agreement.
The new management agreement for each Fund will be dated as of the date of the
consummation of the Transaction, which is expected to occur in the fourth
quarter of 1997, but in no event later than February 28, 1998. The new
management agreement will be for an initial term ending on the same date as
would the current management agreement but for the Transaction, and may continue
thereafter from year to year if specifically
15
<PAGE> 21
approved at least annually by the vote of "a majority of the outstanding voting
securities" of such Fund, as defined under the 1940 Act, or by the Board and, in
either event, the vote of a majority of the Board members who are not parties to
the agreement or interested persons of any such party, cast in person at a
meeting called for such purpose.
BOARD EVALUATION
On June 27, 1997, the Board of each Fund was informed of the Transaction.
Thereafter, each Board was given extensive information about the Transaction and
Scudder. The Boards met with senior management personnel of Zurich and Scudder
and had extended discussions regarding Zurich's and Scudder's plans for ZKI, SKI
and the Funds. Throughout the process, the Independent Trustees of each Board
had the assistance of legal counsel, who prepared, among other things, an
analysis of the Board's fiduciary obligations. The Boards met on July 8, 1997,
July 15, 1997, August 18-19, 1997 and September 19-20, 1997 to consider the
Transaction and its effects on the Funds. The Independent Board members also met
separately with counsel on a number of occasions to discuss the Transaction. As
a result of its review and consideration of the Transaction and the proposed new
management agreements, at its meeting on September 20, 1997, the Board of each
Fund voted unanimously to approve the new management agreement and to recommend
it to the shareholders of each Fund for their approval.
In connection with its review, each Board obtained substantial information
regarding: the management, financial position and business of Scudder; the
history of Scudder's business and operations; the investment performance of the
investment companies and private accounts advised by Scudder; the anticipated
effect of the Transaction on the Funds and their shareholders; and future plans
of Zurich and Scudder with respect to ZKI, SKI and the Funds. Each Board also
received information regarding the terms of the Transaction and comprehensive
financial information, including: employment agreements with senior Scudder
executives; incentive stock compensation to be given to key ZKI personnel; and
anticipated SKI management and board of directors.
In connection with their deliberations, the Boards of the Funds obtained certain
assurances from Zurich and Scudder, including the following:
- - Zurich and Scudder have provided to the Boards such information as is
reasonably necessary to evaluate the new management and other agreements.
- - Zurich looks upon SKI as the core of Zurich's global asset management
strategy. With that focus, Zurich will devote to SKI and its affairs all
attention and resources that are necessary to provide for each Fund top
16
<PAGE> 22
quality investment management, shareholder, administrative and product
distribution services.
- - Scudder looks upon the Kemper Funds as a core part of Scudder's global asset
management strategy. With that focus, Scudder will devote to the Kemper Funds
and their affairs all attention and resources that are necessary to provide
for each Fund top quality investment management, shareholder, administrative
and product distribution services.
- - The Transaction will not result in any change in any Fund's investment
objectives or policies.
- - The Transaction is not expected to result in any adverse change in the
investment management or operations of the Funds; and neither Zurich nor
Scudder plans to make any material change in the manner in which investment
advisory services or other services are rendered to each Fund which has the
potential to have a material adverse effect upon any Fund.
- - Zurich and Scudder are committed to the continuance, without interruption, of
services to the Funds of the type and quality currently provided by ZKI and
its subsidiaries, or superior thereto.
- - Zurich and Scudder plan to maintain or enhance the SKI facilities and
organization.
- - In order to retain and attract key personnel, Zurich and Scudder intend for
SKI to maintain overall compensation policies and practices at market levels
or better.
- - Zurich and Scudder intend to maintain the distinct brand identity of the
Kemper and Scudder Funds and are committed to strengthening and enhancing both
brands and the distribution channels for both families of Funds, while
maintaining their separate brand identity.
- - Scudder has in place a detailed and comprehensive plan of action to
effectively deal with the year 2000 issue for all SKI operations. The Kemper
Funds will not be transferred from their current systems unless certain
conditions are met.
- - Zurich and Scudder will promptly advise the Boards of decisions materially
affecting the SKI organization as they relate to the Funds. Neither this, nor
any of the other above commitments will be altered by Zurich or Scudder
without the Board's prior consideration.
Zurich and Scudder assured each Board that they intend to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of its affiliated persons to
receive any amount or benefit in connection with a change in control of the
investment adviser so long as two conditions are
17
<PAGE> 23
met. First, for a period of three years after the Transaction, at least 75% of
the board members of the investment company must not be "interested persons" of
such investment adviser. The composition of the Board of each Fund, currently
and as proposed, would be in compliance with this provision of Section 15(f).
(See Item 1 -- "Election of Board Members.") Second, an "unfair burden" must not
be imposed upon the investment company as a result of such transaction or any
express or implied terms, conditions or understandings applicable thereto. The
term "unfair burden" is defined in Section 15(f) to include any arrangement
during the two-year period after the Transaction whereby the investment adviser,
or any interested person of any such adviser, receives or is entitled to receive
any compensation, directly or indirectly, from the investment company or its
shareholders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company). Zurich and Scudder are not aware of any express or implied
term, condition, arrangement or understanding that would impose an "unfair
burden" on any Fund as a result of the Transaction. Zurich and Scudder have
agreed that they, and their affiliates, will take no action that would have the
effect of imposing an "unfair burden" on any Fund as a result of the
Transaction. In furtherance thereof, ZKI has undertaken to pay the costs of
preparing and distributing proxy materials to and of holding the meetings of the
Funds' shareholders as well as other fees and expenses in connection with the
Transaction, including the fees and expenses of legal counsel to the Funds and
the Independent Board members, and Zurich has agreed to indemnify each Fund and
the Independent Board members for and against any liability and expenses based
upon any action or omission by the Independent Board members in connection with
their consideration of and action with respect to the Transaction. In addition,
Scudder has agreed to indemnify each Fund and the Independent Board members for
and against any liability and expenses based upon any misstatements or omissions
by Scudder to the Independent Board members in connection with their
consideration of the Transaction.
In evaluating each new management agreement, each Board took into account that
the fees and expenses payable by each Fund under the new management agreement
are the same as under the current management agreement, that the services
provided to the Fund are the same (except for services to be provided under a
separate Fund accounting Agreement as described above) and that the other terms
are substantially similar. Each Board also took into consideration the extent to
which portfolio managers and research personnel would continue their functions
with SKI. Each Board also considered Scudder's representation that the Funds'
shareholder service providers and the terms of the shareholder service
18
<PAGE> 24
agreements or not being proposed to be changed. Each Board noted that, in
previously approving the continuation of the current management agreements, the
Board had considered a number of factors, including the nature and quality of
services provided by ZKI; investment performance, both of the Fund itself and
relative to that of competitive investment companies; investment management fees
and expense ratios of the Fund and competitive investment companies; ZKI
profitability from managing the Funds; fall-out benefits to ZKI from its
relationship to the Funds, including revenues derived from services provided to
the Funds by affiliates of ZKI; and the potential benefits to ZKI and to the
Funds and their shareholders of receiving research services from broker/dealer
firms in connection with the allocation of portfolio transactions to such firms.
The Board also considered that Scudder has a current policy of not paying higher
brokerage commissions solely for receipt of market, statistical and other
research services, that SKI is expected to adopt the same policy.
The Board discussed the Transaction with the senior management of ZKI, Scudder
and Zurich and among themselves. The Board considered that Zurich is a large,
well-established company with substantial resources, and, as noted above, has
undertaken to devote such resources to SKI as are necessary to provide each Fund
with top quality services. The Board also considered that Scudder is a large,
well-established investment advisory firm with a substantial number of highly
rated funds.
As a result of their review and consideration of the Transaction and the new
management agreements, at its meeting on September 20, 1997, the Board of each
Fund voted unanimously to approve the new management agreement and to recommend
it to the shareholders of the Fund for their approval.
The Board of each Fund recommends that shareholders vote FOR approval of the new
management agreement.
OTHER INFORMATION
ZKI. Zurich Kemper Investments, Inc. ("ZKI"), 222 South Riverside Plaza,
Chicago, Illinois 60606, is the investment manager of each Fund and provides
each Fund with continuous professional investment supervision. ZKI is one of the
largest investment managers in the country and has been engaged in the
management of investment funds for more than forty-nine years. ZKI and its
affiliates provide investment advice and manage investment portfolios for the
Kemper Funds, affiliated insurance companies and other corporate, pension,
profit-sharing and individual accounts representing approximately $85 billion
under management. ZKI acts as investment manager or principal underwriter for 32
open-end and seven closed-end investment companies, with 86 separate investment
portfolios, representing more than 2.5 million shareholder accounts. ZKI
19
<PAGE> 25
is an indirect subsidiary of Zurich Insurance Company, a leading internationally
recognized provider of insurance and financial services in property/casualty and
life insurance, reinsurance and structured financial solutions as well as asset
management ("Zurich").
The investment companies to which ZKI and its affiliates render investment
management services, and the related management fees, are identified in Exhibit
C.
The names, addresses and principal occupations of the principal executive
officer and the directors of ZKI are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Stephen B. Timbers, Chief President, Chief Executive
Executive Officer and Director Officer and Chief Investment
222 South Riverside Plaza Officer, ZKI
Chicago, Illinois 60606
John E. Neal, Director President, Kemper Funds Group
222 South Riverside Plaza
Chicago, Illinois 60606
William E. Chapman II, Director President, Kemper Retirement
222 South Riverside Plaza Plans Group
Chicago, Illinois 60606
</TABLE>
ZIML. Zurich Investment Management Limited ("ZIML"), 1 Fleet Place, London,
U.K. EC4M 7RQ, is an indirect subsidiary of Zurich. The names, addresses and
principal occupations of the principal executive officer and the directors of
ZIML are as follows:
BSN. BSN Gestion de Patrimonios, S.A., S.G.C. ("BSN"), [address], is the
sub-advisor for GSP. The names, addresses and principal occupations of the
principal officers and directors of the BSN are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
</TABLE>
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, as custodian, and
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02210, as sub-custodian, have custody of all securities and cash of each Fund
maintained in the United States. The
20
<PAGE> 26
Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York 11245, as
custodian, has custody of all securities and cash of KHI, KGT, KMM and KST held
outside the United States. Banco Santander ("Spanish Custodian"), Central
Contable Electronica, Carretera de Barcelona Km. 11,700, P.O. Box 50760, 28022
Madrid, as custodian, has custody of all securities and cash of GSP held in
Spain. The custodians attend to the collection of principal and income, and
payment for and collection of proceeds of securities bought and sold by the
Funds. IFTC is also each Fund's transfer agent and divided-paying agent.
Pursuant to a Services Agreement with IFTC, Zurich Kemper Service Company
("ZKSC"), an affiliate of ZKI, serves as "Shareholder Service Agent."
IFTC receives an annual fee, payable monthly, as custodian for each Fund of
$.085 per $1,000 of average monthly net assets of such Fund held in custody by
IFTC plus certain transaction charges and an out-of-pocket expense
reimbursement. In addition, there is an annual charge of $15 for each security
held in a Fund's portfolio. IFTC currently receives from each Fund as transfer
agent and pays to ZKSC annual account maintenance fees at a maximum rate of
$7.50 per account plus transaction charges and out-of-pocket expense
reimbursement. IFTC's fee is reduced by certain earnings credits in favor of the
Funds.
Set forth in Exhibit E are the shareholder service fees IFTC remitted to ZKSC
during each Fund's last fiscal year. It is anticipated that ZKSC will continue
to provide transfer agent services after consummation of the Transaction.
GSP ONLY. The Spanish Custodian owns a controlling interest in Banco Santander
de Negocios, which wholly owns BSN. The Spanish Custodian currently receives an
annual fee as custodian for GSP, payable quarterly, at a rate of .12 of 1% of
the market value of the securities of the Fund held in custody by the Spanish
Custodian plus certain transaction costs and out-of-pocket expense
reimbursement. For its services as custodian for the Fund for the fiscal year
ended November 30, 1996, the Spanish Custodian earned $ .
PORTFOLIO TRANSACTIONS. ZKI is the investment manager for the Funds and ZKI and
its affiliates furnish investment management services for the Kemper Funds and
other clients including affiliated insurance companies. Zurich Investment
Management Limited ("ZIML") is the sub-adviser for KHI, KGT, KMM, KST and GSP.
ZKI and its affiliates share some common research and trading facilities. ZIML
is the sub-adviser for other Kemper Funds as well. BSN is the sub-adviser for
GSP. (Each of ZKI, ZIML and BSN are referred to as an "Adviser.") At times
investment decisions may be made to purchase or sell the same investment
securities for a Fund and for one or more of the other clients managed by an
Adviser or its affiliates. When two or more of such clients are simultaneously
engaged in the purchase or sale of the same security, through the
21
<PAGE> 27
same trading facility, the transactions are allocated as to amount and price in
a manner considered equitable to each.
The Advisers, in effecting purchases and sales of portfolio securities for the
account of a Fund, will implement the Fund's policy of seeking best execution of
orders. The Advisers may be permitted to pay higher brokerage commissions for
research services as described below. Consistent with this policy, orders for
portfolio transactions are placed with broker-dealer firms giving consideration
to the quality, quantity and nature of each firm's professional services, which
include execution, financial responsibility, responsiveness, clearance
procedures, wire service quotations and statistical and other research
information provided to a Fund and the Advisers and their affiliates. Subject to
seeking best execution of an order, brokerage is allocated on the basis of all
services provided. Any research benefits derived are available for all clients
of the Advisers and their affiliates. In selecting among firms believed to meet
the criteria for handling a particular transaction, the Advisers may give
consideration to those firms that have sold or are selling shares of the Funds
and of other funds managed by the Advisers and their affiliates, as well as to
those firms that provide market, statistical and other research information to a
Fund and the Advisers and their affiliates, although the Advisers are not
authorized to pay higher commissions to firms that provide such services, except
as described below.
ALL FUNDS, EXCEPT GSP. The Advisers may in certain instances be permitted to
pay higher brokerage commissions solely for receipt of market, statistical and
other research services as defined in Section 28(e) of the Securities Exchange
Act of 1934 and interpretations thereunder. Such services may include, among
other things: economic, industry or company research reports or investment
recommendations; computerized databases; quotation and execution equipment and
software; and research or analytical computer software and services. Where
products or services have a "mixed use," a good faith effort is made to make a
reasonable allocation of the cost of the products or services in accordance with
the anticipated research and non-research uses, and the cost attributable to
non-research use is paid by the Adviser or one of its affiliates in cash.
Subject to Section 28(e) and procedures adopted by the Board of each Fund, a
Fund could pay a firm that provides research services commissions for effecting
a securities transaction for the Fund in excess of the amount other firms would
have charged for the Transaction if an Adviser determines in good faith that the
greater commission is reasonable in relation to the value of the brokerage and
research services provided by the executing firm viewed in terms either of a
particular transaction or the Adviser's overall responsibilities to the Fund and
other clients. Not all such research services may be useful or of value in
advising a particular
22
<PAGE> 28
Fund. Research benefits will be available for all clients of the Advisers and
their affiliates. The investment management fee paid by a Fund to an Adviser is
not reduced because these research services are received.
GSP ONLY. Subject to GSP's policy of seeking best execution of orders, GSP may
execute portfolio transactions through direct or indirect affiliates of BSN in
accordance with procedures adopted by GSP's Board pursuant to Rule 17e-1 of the
1940 Act. Of the brokerage commissions paid by GSP during the fiscal year ended
November 30, 1996, $ was paid to BSN Sociedad de Valores y Bolsa, an
affiliate of BSN ("Affiliated Broker"). The Affiliated Broker was paid
approximately % of the total brokerage commissions paid during the period
noted above and approximately % of the aggregate dollar amount of portfolio
transactions for the period were effected through the Affiliated Broker.
SKI. It is expected that SKI (including ZKI under SKI's ownership) will
implement portfolio transaction policies that are substantially similar to those
currently used by the Advisers, except that SKI does not intend 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, and, with respect to the practice of
selecting firms to handle a particular transaction based upon the sales of
Kemper Mutual Fund shares, SKI intends to only consider sales of shares of the
Fund in question. In addition, to the maximum extent feasible, it is expected
that SKI will place orders for portfolio transactions through Scudder Investor
Services, Inc., Two International Place, Boston, Massachusetts 02110 ("SIS") (a
corporation registered as a broker/dealer and a subsidiary of Scudder), which
will in turn place orders on behalf of the Funds with issuers, underwriters or
other brokers and dealers. SIS will not receive any commission, fee or other
remuneration from a Fund for this service.
Set forth in Exhibit E are the total brokerage commissions paid by each Fund for
its most recently completed fiscal year, as well as the percentage of such
amounts that was allocated to broker-dealer firms on the basis of research
information or on the basis of sales of Kemper Mutual Fund shares.
SCUDDER. Scudder, Stevens & Clark, Inc. ("Scudder"), 345 Park Avenue, New York,
New York 10154, is one of America's oldest and largest investment management
firms. It manages approximately $125 billion in assets globally, about $50
billion of which are invested in equities and the balance in fixed income and
money market investments. Scudder manages approximately $45 billion in a variety
of open-end and closed-end funds for nearly two million shareholder accounts.
The firm also provides investment services for private and institutional
clients, such as trusts, endowments, and corporate employee benefit plans.
Scudder manages
23
<PAGE> 29
more than $22 billion internationally in both developed and emerging markets.
The firm is one of the world's largest managers of pension fund assets invested
overseas.
Scudder manages two families of pure no-load mutual funds. The Scudder Family of
Funds (approximately $23 billion) comprises 46 money market, bond and equity
mutual funds. The AARP Investment Program from Scudder, a family of 15 funds
(approximately $14 billion), is designed to address the needs of the more than
33 million members of the American Association of Retired Persons. The balance
of the funds under management (approximately $7 billion) comprises closed-end,
offshore, variable life insurance and other kinds of funds.
The investment companies to which Scudder renders investment management
services, and the related fees, are identified in Exhibit D.
The names, addresses and principal occupations of the principal executive
officer and the directors of Scudder are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Daniel Pierce, Director Chairman of the Board and
Two International Place Managing Director, Scudder
Boston, Massachusetts 02110
Edmond D. Villani, Chief President, Chief Executive
Executive Officer and Director Officer and Managing Director,
345 Park Avenue Scudder
New York, New York 10154
Stephen R. Beckwith, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Lynn S. Birdsong, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Nicholas Bratt, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
E. Michael Brown, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Mark S. Casady, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
</TABLE>
24
<PAGE> 30
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Linda C. Coughlin, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Margaret D. Hadzima, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Jerard K. Hartman, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Richard A. Holt, Director Managing Director, Scudder
Two Prudential Plaza
180 North Stetson, Suite 5400
Chicago, Illinois
John T. Packard, Director Managing Director, Scudder
101 California Street
San Francisco, California
Kathryn L. Quirk, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Cornelia M. Small, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Stephen A. Wohler, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
</TABLE>
After consummation of the Transaction, it is anticipated that the principal
executive officer and directors of SKI will be as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Lynn Birdsong, Director Senior Executive Officer --
345 Park Avenue International Operations, SKI
New York, New York 10154
Lawrence Cheng, Director Member of Corporate Executive
Mythenquai 2 Board and Chief Investment
Zurich, Switzerland Officer for Investments and
International Asset Management,
Zurich
</TABLE>
25
<PAGE> 31
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- -------------------------------
<S> <C>
Member of Corporate Executive
Steven Gluckstern, Director Board and responsible for
Mythenquai 2 Reinsurance, Structured
Zurich, Switzerland Finance, Capital Market
Products and Strategic
Investments, Zurich
Rolf Hueppi, Director Chairman and Chief Executive
Mythenquai 2 Officer, Zurich; Chairman of
Zurich, Switzerland Board of Directors, SKI
Markus Rohrbasser, Director Chief Financial Officer and
Mythenquai 2 Member of Corporate Executive
Zurich, Switzerland Board, Zurich
Cornelia Small, Director Senior Executive Officer --
345 Park Avenue Investment Management, SKI
New York, New York 10154
Edmond Villani, Chief Executive Chief Executive Officer, SKI
Officer and Director
345 Park Avenue
New York, New York 10154
</TABLE>
MISCELLANEOUS
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by ZKI, including any additional solicitation made by
letter, telephone or telegraph. In addition to solicitation by mail, certain
officers and representatives of the Funds, officers and employees of ZKI and
certain financial services firms and their representatives, who will receive no
extra compensation for their services, may solicit proxies by telephone,
telegram or personally. In addition, ZKI has retained First Data Corp. to
solicit proxies on behalf of each Fund's Board and the boards of the other
Kemper Funds, the fee for which will be borne by ZKI. A COPY OF YOUR FUND'S
ANNUAL REPORT AND ANY MORE RECENT SEMI-ANNUAL REPORT ARE AVAILABLE WITHOUT
CHARGE UPON REQUEST BY WRITING TO THE FUND, 222 SOUTH RIVERSIDE PLAZA, CHICAGO,
ILLINOIS 60606 OR BY CALLING 1-800-621-1048.
PROPOSALS OF SHAREHOLDERS. Any shareholder proposal that may properly be
included in the proxy solicitation material for a Fund's next annual shareholder
meeting, if any, must be received by such Fund no later than December 12, 1997.
26
<PAGE> 32
OTHER MATTERS TO COME BEFORE THE MEETING. The Boards are not aware of any
matters that will be presented for action at the Meeting other than those set
forth herein. Should any other matters requiring a vote of shareholders arise,
the proxy in the accompanying form will confer upon the person or persons
entitled to vote the shares represented by such proxy the discretionary
authority to vote the shares with respect to any such other matters in
accordance with their best judgment in the interest of the Fund.
VOTING, QUORUM
Each share of a Fund is entitled to one vote on each matter submitted to a vote
of the shareholders of that Fund at the Meeting; no shares have cumulative
voting rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR the election of the persons who have been nominated as additional Board
Members for such Fund and FOR Items 2 and 3. Shareholders who execute proxies
may revoke them at any time before they are voted, either by writing to the Fund
or in person at the time of the Meeting. Proxies given by telephone or
electronically transmitted instruments may be counted if obtained pursuant to
procedures designed to verify that such instructions have been authorized.
Item 1 (election of Board Members) requires a plurality vote of the shares of
each Fund. This means that the two nominees receiving the largest number of
votes will be elected. Item 2 (ratification of selection of independent
auditors) requires the affirmative vote of a majority of the shares voting on
the matter. Items 3A and 3B (approval of new investment management agreement
and, for GSP only, approval of new sub-advisory agreement) require the
affirmative vote of a "majority of the outstanding voting securities" of the
applicable Fund. The term "majority of the outstanding voting securities" as
defined in the 1940 Act means: the affirmative vote of the lesser of (1) 67% of
the voting securities of the Fund present at the meeting if more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (2) more
than 50% of the outstanding shares of the Fund. Approval of Item 3B is
conditional upon approval of Item 3A for GSP. As noted previously, the holders
of the Common Shares and the Preferred Shares of KTF will vote together as a
single class on all items.
At least 50% of the shares of a Fund must be present, in person or by proxy, in
order to constitute a quorum for that Fund. Thus, the meeting for a particular
Fund could not take place on its scheduled date if less than 50% of the shares
of that Fund were represented. If, by the time
27
<PAGE> 33
scheduled for the meeting, a quorum of shareholders of a Fund is not present or
if a quorum is present but sufficient votes in favor of any of the items are not
received, the persons named as proxies may propose one or more adjournments of
the meeting for that Fund to permit further soliciting of proxies from its
shareholders. Any such adjournment will require the affirmative vote of a
majority of the shares of the Fund as to which the meting is being adjourned,
present (in person or by proxy) at the session of the meeting to be adjourned.
The persons named as proxies will vote in favor of any such adjournment if they
determine that such adjournment and additional solicitation are reasonable and
in the interest of the respective Fund's shareholders.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1, abstentions and broker non-votes will have no
effect; the two nominees receiving the largest number of votes will be elected.
On Item 2, abstentions and broker non-votes will not be counted as "votes cast"
and will have no effect on the result of the vote. On Items 3A and 3B
abstentions and broker non-votes will be considered to be both present at the
Meeting and issued and outstanding and, as a result, will have the effect of
being counted as voted against the Items.
The Board of each Fund recommends an affirmative vote on all items.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Boards,
Philip J. Collora
Secretary
28
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<S> <C>
Form of Investment Management Agreement.............. Exhibit A
Form of Sub-Advisory Agreement (GSP only)............ Exhibit B
Kemper Funds and Management Fees..................... Exhibit C
Scudder Funds and Fee Rates.......................... Exhibit D
Fees and Expenses.................................... Exhibit E
</TABLE>
29
<PAGE> 35
EXHIBIT A
FORM OF
INVESTMENT MANAGEMENT AGREEMENT*
[NAME OF TRUST]
222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
, 199
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
[NAME OF SERIES]
Ladies and Gentlemen:
[Name of Trust] (the "Trust") has been established as a Massachusetts business
Trust to engage in the business of an investment company. Pursuant to the
Trust's Declaration of Trust, as amended from time-to-time (the "Declaration"),
the Board of Trustees is authorized to issue the Trust's shares of beneficial
interest, par value $ per share, (the "Shares") in separate series, or
funds. The Board of Trustees has authorized [name of series] (the "Fund").
Series may be abolished and dissolved, and additional series established, from
time to time by action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the investment
manager of the Fund and to provide certain other services, as more fully set
forth below, and you have indicated that you are willing to act as such
investment manager and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Trust on behalf of the Fund agrees with
you as follows:
1. DELIVERY OF DOCUMENTS. The Trust engages in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's Registration Statement
on Form N-1A, as amended from time to
- ---------------
*For GSP, any reference to a Trust, Trustees, Declaration of Trust or similar
phrases related to a Massachusetts business trust will be deemed a reference to
a Corporation, Directors, Articles of Incorporation or similar phrases related
to a Maryland corporation.
A-1
<PAGE> 36
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:
(a) The Declaration dated , 19 , as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders of the Fund
selecting you as investment manager and approving the form of this
Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial Interest
dated , 19 relating to the Fund.
The Trust will furnish you from time to time with copies, properly certified or
authenticated, of all amendments of or supplements, if any, to the foregoing,
including the Prospectus, the SAI and the Registration Statement.
2. PORTFOLIO MANAGEMENT SERVICES. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 2, you shall
be entitled to receive and act upon advice of counsel to the Trust. You shall
also make available to the Trust promptly upon request all of the Fund's
investment records and ledgers as are necessary to assist the Trust in complying
with the requirements of the 1940 Act and other applicable laws. To the extent
required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant
A-2
<PAGE> 37
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 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
A-3
<PAGE> 38
for the Fund all books, records and reports and any other information required
under the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the Fund; assisting
in the resolution of accounting issues that may arise with respect to the Fund's
operations and consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith; establishing
and monitoring the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by an authorized person;
assisting the Fund in determining the amount of dividends and distributions
available to be paid by the Fund to its shareholders, preparing and arranging
for the printing of dividend notices to shareholders, and providing the transfer
and dividend paying agent, the custodian, and the accounting agent with such
information as is required for such parties to effect the payment of dividends
and distributions; and otherwise assisting the Trust 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
A-4
<PAGE> 39
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 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
of 1 percent of the average weekly net assets as defined below of the
Fund for such month. [SEE PAGE OF PROXY STATEMENT FOR EACH FUND'S
MANAGEMENT FEE] 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
A-5
<PAGE> 40
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
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
A-6
<PAGE> 41
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
by reason of your reckless disregard of your obligations and duties hereunder.
8. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force until , 19 , and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities of the Fund. The aforesaid requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time, without
the payment of any penalty, by the vote of a majority of the outstanding voting
securities of the Fund or by the Trust's Board of Trustees on 60 days' written
notice to you, or by you on 60 days' written notice to the Trust. This Agreement
shall terminate automatically in the event of its assignment.
This Agreement may be terminated with respect to the Fund at any time without
the payment of any penalty by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund in the event that it shall have
been established by a court of competent jurisdiction that you or any of your
officers or directors has taken any action which results in a breach of your
covenants set forth herein.
9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of
A-7
<PAGE> 42
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. [Not applicable for GSP.] The
Declaration, a copy of which, together with all amendments thereto, is on file
in the Office of the Secretary of the Commonwealth of Massachusetts, provides
that the name "[Name of Trust]" refers to the Trustees under the Declaration
collectively as Trustees and not as individuals or personally, and that no
shareholder of the Fund, or Trustee, officer, employee or agent of the Trust,
shall be subject to claims against or obligations of the Trust or of the Fund to
any extent whatsoever, but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as set
forth in the Declaration and you agree that the obligations assumed by the Trust
on behalf of the Fund pursuant to this Agreement shall be limited in all cases
to the Fund and its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or any other
series of the Trust, or from any Trustee, officer, employee or agent of the
Trust. You understand that the rights and obligations of each Fund, or series,
under the Declaration are separate and distinct from those of any and all other
series.
11. 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.
A-8
<PAGE> 43
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,
[Name of Trust]
By:
----------------------------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
----------------------------------------------
President
A-9
<PAGE> 44
EXHIBIT B
FORM OF SUB-ADVISORY AGREEMENT (GSP ONLY)
B-1
<PAGE> 45
EXHIBIT C
KEMPER FUNDS AND MANAGEMENT FEES
C-1
<PAGE> 46
EXHIBIT D
SCUDDER FUNDS AND FEE RATES
D-1
<PAGE> 47
EXHIBIT E
FEES AND EXPENSES
<TABLE>
<CAPTION>
KHI KGT KTF KMM KSM GSP KST
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year End...... 11/30/96 11/30/96 11/30/96 11/30/96 11/30/96 11/30/96 11/30/96
Management Fees Paid
to ZKI..............
Effective Management
Fee Rate............
Shareholder Service
Fees Paid by IFTC to
ZKSC................
Brokerage Commissions
Paid by Fund........
Percent of Brokerage
Commissions Paid by
Fund Allocated on
Basis of Research...
</TABLE>
E-1
<PAGE> 3
[KEMPER FUNDS LOGO]
PROXY SERVICES
P.O. BOX 9148
FARMINGDALE, NY 11735
KEMPER HIGH INCOME TRUST
FOR THE JOINT SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 3, 1997
The signers of this proxy hereby appoint
Arthur R. Gottschalk and Stephen B. Timbers and
each of them, attorneys and proxies, with power of
substitution in each, to vote all shares for the
signers at the Joint Special Meeting of
Shareholders to be held December 3, 1997, and at
any adjournments thereof, as specified herein, and
in accordance with their best judgment, on any
other business that may properly come before this
meeting. If no specification is made herein, all
shares will be voted "FOR" the proposals set forth
on this proxy.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
- --------------------------------------------------------------------------------
KEMPER HIGH INCOME TRUST
PLEASE VOTE PROMPTLY!
Your vote is needed! Please vote below and sign in the space provided.
THE PROXY IS SOLICITED BY THE BOARD OF THE FUND WHICH RECOMMENDS A VOTE "FOR"
ALL ITEMS.
<TABLE>
<S><C>
1. To elect the following as Board members: For Withhold For All
All All Except
/ / / / / /
01) Daniel Pierce, 02) Edmond D. Villani
-----------------------------------------------------------------------------------------
To withhold authority to vote on any individual nominee(s), please print the number(s)
on the line above.
2. To ratify the selection of Ernst & Young LLP
as independent auditors for the For Against Abstain
current fiscal year. / / / / / /
3A. To approve a new investment management
agreement with Scudder Kemper Investments,
Inc. ("SKI") (or with Zurich Kemper
Investments, Inc. transferable to SKI). For Against Abstain
/ / / / / /
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" ALL ITEMS.
Signature(s) (All registered owners of accounts shown above must sign.
If signing for a corporation, estate or trust, please indicate your capacity or
title.)
- ------------------------------------- ---------- ---------------------------------------- ----------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
</TABLE>
- -------------------------------------------------------------------------------
