<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 1995.
1933 ACT REGISTRATION NO. 33-30876
1940 ACT REGISTRATION NO. 811-5896
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 20 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 22 /X/
</TABLE>
(Check appropriate box or boxes)
------------------
KEMPER TARGET EQUITY FUND
(Exact name of Registrant as Specified in Charter)
120 South LaSalle Street, Chicago, Illinois 60603
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 781-1121
<TABLE>
<S> <C>
Philip J. Collora With a copy to:
Vice President and Secretary Charles F. Custer
Kemper Target Equity Fund Vedder, Price, Kaufman & Kammholz
120 South LaSalle Street 222 North LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois 60601
(Name and Address of Agent for Service)
</TABLE>
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's fiscal year ended June 30, 1994
was filed on or about August 22, 1994.
It is proposed that this filing will become effective (check appropriate
box)
/ / immediately upon filing pursuant to paragraph (b)
/X/ on May 1, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE> 2
KEMPER TARGET EQUITY FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER
OF FORM N-1A LOCATION IN PROSPECTUS
<S> <C> <C>
1. Cover Page............................. Cover Page
2. Synopsis............................... Summary; Summary of Expenses
3. Condensed Financial Information........ Performance
4. General Description of Registrant...... Summary; Investment Objectives, Policies and
Risk Factors; Capital Structure
5. Management of the Fund................. Summary; Investment Manager and Underwriter
5A. Management's Discussion of
Fund Performance....................... Inapplicable
6. Capital Stock and Other Securities..... Summary; Investment Objectives, Policies and
Risk Factors; Dividends and Taxes; Net Asset
Value; Purchase of Shares; Capital Structure
7. Purchase of Securities Being Offered... Summary; Investment Manager and Underwriter;
Net Asset Value; Purchase of Shares; Special
Features
8. Redemption or Repurchase............... Summary; Redemption or Repurchase of Shares
9. Pending Legal Proceedings.............. Inapplicable
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
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<TABLE>
<S> <C>
Summary 1
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Summary of Expenses 2
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Investment Objectives, Policies and Risk 3
Factors
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Investment Manager and Underwriter 9
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Dividends and Taxes 12
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Net Asset Value 13
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Purchase of Shares 13
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Redemption or Repurchase of Shares 17
- ------------------------------------------------
Special Features 19
- ------------------------------------------------
Performance 22
- ------------------------------------------------
Capital Structure 22
- ------------------------------------------------
Account Application
- ------------------------------------------------
</TABLE>
This prospectus contains information about the Fund that you should know before
investing and should be retained for future reference. A Statement of Additional
Information dated May 1, 1995, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. It is available upon request
without charge from the Fund at the address or telephone number on this cover or
the firm from which this prospectus was received.
Fund shares are not deposits or obligations of, or guaranteed or endorsed by,
any bank, nor are they federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. Investment in Fund
shares involves risk, including the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
(LOGO)
KEMPER
RETIREMENT
FUND
SERIES VI
PROSPECTUS MAY 1, 1995
KEMPER RETIREMENT FUND SERIES VI
120 South LaSalle Street, Chicago, Illinois 60603 1-800-621-1048. The objectives
of Kemper Retirement Fund Series VI (the "Fund") are to provide a guaranteed
return of investment on the Maturity Date (May 15, 2006) to investors who
reinvest all dividends and hold their shares to the Maturity Date, and to
provide long-term growth of capital. The Fund pursues its objectives by
investing a portion of its assets in "zero coupon" U.S. Treasury obligations and
the balance of its assets primarily in common stocks. The Fund is intended for
long-term investors and is not appropriate for investors seeking current income.
The assurance that investors who reinvest dividends and hold their shares until
the Maturity Date will receive on the Maturity Date at least their original
investment is provided by the par value of the zero coupon U.S. Treasury
obligations in the Fund's portfolio on that date as well as by a guarantee from
Kemper Financial Services, Inc., the Fund's investment manager. There is no
assurance that the Fund's objective of long-term growth of capital will be
achieved. The Fund's shares are not guaranteed by the U.S. Government. The Fund
is a series of Kemper Target Equity Fund.
<PAGE> 4
KEMPER RETIREMENT FUND SERIES VI
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603, TELEPHONE 1-800-621-1048
SUMMARY
INVESTMENT OBJECTIVES; PERMITTED INVESTMENTS. Kemper Retirement Fund Series VI
(the "Fund") is a diversified series of Kemper Target Equity Fund (the "Trust"),
which is an open-end, management investment company that may issue shares in one
or more series. The Fund's investment objectives are to provide a guaranteed
return of investment on the Maturity Date (May 15, 2006) to investors who
reinvest all dividends and hold their shares to the Maturity Date, and to
provide long-term growth of capital. The Fund pursues its objectives by
investing a portion of its assets in "zero coupon" U.S. Treasury Obligations
("Zero Coupon Treasuries") and the balance of its assets primarily in common
stocks. The assurance that investors who reinvest all dividends and hold their
shares until the Maturity Date will receive on the Maturity Date at least their
original investment is provided by the par value of the Zero Coupon Treasuries
as well as by a guarantee from Kemper Financial Services, Inc., the Fund's
investment manager. The Fund's returns will fluctuate and there is no assurance
that the Fund will achieve its objective of long-term capital growth. The Zero
Coupon Treasuries are normally purchased at a substantial discount and represent
the right to receive par value at a fixed date from the U.S. Government. The
amount invested in common stocks provides appreciation potential. See
"Investment Objectives, Policies and Risk Factors."
SPECIAL RISK FACTORS. The Fund is intended for long-term investors and is not
appropriate for investors seeking current income. The Fund is designed so that
shareholders who reinvest all dividends and hold their shares until the Maturity
Date will receive on the Maturity Date an amount at least equal to their
investment, including any sales charge ("Investment Protection"), even if the
value of the investments of the Fund other than the Zero Coupon Treasuries were
to decrease to zero, which the Fund's investment manager considers highly
unlikely. The Fund does not seek to provide a specific return on investors'
capital or to protect principal on an after-tax or present value basis. An
investor who reinvested all dividends and who, upon redemption at the Maturity
Date, received only the principal amount invested, would have received a zero
rate of return on such investment. Investors who do not reinvest all dividends
or who redeem all or part of their shares in the Fund prior to the Maturity Date
will not benefit from the Fund's Investment Protection, and upon redemption may
receive more or less than their original investment; provided, however, in the
event of a partial redemption, the Fund's Investment Protection will continue as
to that part of the original investment that remains invested (with all
dividends thereon reinvested) until the Maturity Date. The government guarantee
of the Zero Coupon Treasuries in the Fund's portfolio does not guarantee the
market value of the Zero Coupon Treasuries or the shares of the Fund, whose net
asset value will fluctuate. Zero Coupon Treasuries normally are subject to
substantially greater price fluctuations during periods of changing interest
rates than are securities of comparable quality that make regular interest
payments. Investors subject to tax should be aware that any portion of the
amount returned to them upon redemption of shares that constitutes accretion of
interest on the Zero Coupon Treasuries will have been taxable as ordinary income
over the period that the shares were held. The Fund may invest a small portion
of its assets in options and foreign securities and may engage in financial
futures and foreign currency transactions. See "Investment Objectives, Policies
and Risk Factors" and "Dividends and Taxes."
INVESTMENT MANAGER AND UNDERWRITER. Kemper Financial Services, Inc. ("KFS") is
the Fund's investment manager. KFS is paid an investment management fee at the
annual rate of .50 of 1% of average daily net assets of the Fund. Kemper
Distributors, Inc. ("KDI"), an affiliate of KFS, is the Fund's principal
underwriter and administrator. Administrative services are provided to
shareholders under an administrative services agreement with KDI. The Fund pays
an administrative services fee at the annual rate of up to .25 of 1% of average
daily net assets of the Fund, which KDI pays to financial services firms. See
"Investment Manager and Underwriter."
PURCHASES AND REDEMPTIONS. Investors may purchase the Fund's shares only during
a limited offering period (the "Offering Period"). Purchases may be made at net
asset value plus a maximum sales charge of 5.0% of the offering price. Reduced
sales charges apply to purchases of $100,000 or more. The minimum initial
investment is $1,000 and the minimum subsequent investment is $100. The minimum
initial investment for an employee benefit plan or
1
<PAGE> 5
Individual Retirement Account is $250 and the minimum subsequent investment is
$50. It is anticipated that the Offering Period will continue until May 15, 1996
but the period may be shortened or extended at the option of the Fund.
Shareholders will still be permitted to reinvest dividends in shares of the Fund
after the end of the Offering Period. Shares may be redeemed without charge or
penalty at net asset value, which may be more or less than original cost. The
redemption within one year of shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a 1% contingent deferred
sales charge. See "Purchase of Shares" and "Redemption or Repurchase of Shares."
INVESTORS IN THE FUND. The Fund is designed for long-term investors who seek
principal protection as well as the opportunity for capital growth, such as
investors who want to provide for future health care costs, fund college
education costs or fund IRAs or other tax-qualified retirement plans. Through a
single investment in shares of the Fund, investors receive the benefits of
diversification, professional management and liquidity, and relief from
administrative details such as accounting for distributions and the safekeeping
of securities.
DIVIDENDS. The Fund normally distributes annual dividends of net investment
income and any net realized short-term and long-term capital gains. Investors
may have income and capital gain dividends automatically reinvested in the Fund
without a sales charge and must do so in order to receive the benefit of the
Fund's Investment Protection. See "Dividends and Taxes."
GENERAL INFORMATION AND CAPITAL. The Trust is organized as a business trust
under the laws of Massachusetts and may issue an unlimited number of shares of
beneficial interest in one or more series, one of such series being the Fund.
Shares are fully paid and nonassessable when issued, are transferable without
restriction and have no preemptive or conversion rights. The Trust is not
required to hold annual shareholder meetings; but it will hold special meetings
as required or deemed desirable for such purposes as electing trustees, changing
fundamental policies or approving an investment management agreement. See
"Capital Structure."
SUMMARY OF EXPENSES
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)
Maximum Sales Charge on Purchases (as a percentage of offering price)................... 5.0 %
Maximum Sales Charge on Reinvested Dividends............................................ None
Deferred Sales Charge................................................................... None (2)
Redemption Fees......................................................................... None
Exchange Fee............................................................................ None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees......................................................................... .50 %
12b-1 Fees.............................................................................. None
Other Expenses (estimated).............................................................. .60 %
-----
Total Operating Expenses................................................................ 1.10 %
======
</TABLE>
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(1) Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details. Reduced sales charges apply to purchases of $100,000
or more. See "Purchase of Shares."
(2) The redemption within one year of shares purchased at net asset value under
the Large Order NAV Purchase Privilege may be subject to a 1% contingent
deferred sales charge. See "Purchase of Shares."
EXAMPLE
<TABLE>
<CAPTION>
You would pay the following expenses on a $1,000 investment, assuming 1 YEAR 3 YEARS
<S> <C> <C>
(1) 5% annual return and (2) redemption at the end of each time period: $61 $83
</TABLE>
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The Example assumes a 5% annual rate of return pursuant to
requirements of the Securities and Exchange Commission. This hypothetical rate
of return is not intended to be representative of past or future performance of
the Fund. "Other Expenses" is an estimate for the current fiscal year. The
Example should not be considered to be a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
2
<PAGE> 6
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
OBJECTIVES. The objectives of the Fund are to provide a guaranteed return of
investment on the Maturity Date (May 15, 2006) to investors who reinvest all
dividends and hold their shares to the Maturity Date and to provide long-term
growth of capital. As a fundamental policy, the Fund pursues its objectives by
investing a portion of its assets in "zero coupon" U.S. Treasury obligations
("Zero Coupon Treasuries") and the balance of its assets primarily in common
stocks ("Equity Securities").
The Fund is intended for long-term investors who seek principal protection as
well as the opportunity for capital growth, such as investors who want to
provide for future health care costs, fund college education costs or fund IRAs
or other tax-qualified retirement plans. The Fund is designed so that
shareholders who reinvest all dividends and hold their investment until the
Maturity Date will receive on the Maturity Date an amount at least equal to
their original investment, including any sales charge ("Investment Protection").
This will occur even if the value of the investments of the Fund other than the
Zero Coupon Treasuries were to decrease to zero, which the investment manager
considers highly unlikely. The assurance that investors who reinvest all
dividends and hold their shares until the Maturity Date will receive on the
Maturity Date at least their original investment is provided by the par value of
the Zero Coupon Treasuries in the Fund's portfolio as well as by a guarantee
from Kemper Financial Services, Inc. ("KFS"), the Fund's investment manager. See
"How the Fund Works" below. Investors who do not reinvest all dividends or who
redeem part or all of their investment in the Fund other than on the Maturity
Date will not receive the benefit of the Fund's Investment Protection, and upon
the redemption may receive more or less than the amount of their original
investment; provided, however, in the event of a partial redemption, the Fund's
Investment Protection will continue as to that part of the original investment
that remains invested (with all dividends thereon reinvested) until the Maturity
Date. The Fund may not be appropriate for investors who expect to redeem their
investment in the Fund prior to the Maturity Date or who will require cash
distributions from the Fund. Since the benefit of Investment Protection is an
inherent characteristic of the Fund's shares, it continues in the event of a
transfer of the shares by gift, under a will or otherwise, provided dividends on
the shares continue to be reinvested and the shares continue to be held until
the Maturity Date.
The opportunity for capital growth for an investor arises to the extent that the
value of the Fund's assets, including Equity Securities, is greater than the par
value of the Zero Coupon Treasuries on the Maturity Date. Thus, the Fund in
effect will have two major portfolio segments: one consisting of Zero Coupon
Treasuries to pursue Investment Protection and the other consisting of Equity
Securities to pursue long-term capital growth. The Fund's returns and net asset
value will fluctuate. There is no assurance that the Fund will achieve its
objective of long-term capital growth.
HOW THE FUND WORKS. As noted above, the Fund will invest in Zero Coupon
Treasuries and Equity Securities in pursuing its objectives. Zero Coupon
Treasuries evidence the right to receive a fixed payment at a specific future
date from the U.S. Government. The Fund will offer its shares during a limited
offering period (the "Offering Period") at net asset value plus the applicable
sales charge. See "Purchase of Shares." The Zero Coupon Treasuries that the Fund
acquires with the proceeds of the sale of its shares during the Offering Period
will be selected so as to mature at a specific par value on or about the
Maturity Date. The Fund's investment manager will continuously adjust the
proportion of the Fund's assets that are invested in Zero Coupon Treasuries so
that the value of the Zero Coupon Treasuries on the Maturity Date (i.e., the
aggregate par value of the Zero Coupon Treasuries in the portfolio) will be
sufficient to enable investors who reinvest all dividends and hold their
investment in the Fund until the Maturity Date to receive on the Maturity Date
the full amount of such investment, including any sales charge. Thus, the
minimum par value of Zero Coupon Treasuries per Fund share necessary to provide
for the Fund's Investment Protection will be continuously determined and
maintained.
In order to provide further assurance that the Fund's Investment Protection will
be maintained, KFS, the Fund's investment manager, has entered into a Guaranty
Agreement. Under the Guaranty Agreement, KFS has agreed to make sufficient
payments on the Maturity Date to enable shareholders who have reinvested all
dividends and held their investment in the Fund until the Maturity Date to
receive on the Maturity Date an aggregate amount of
3
<PAGE> 7
redemption proceeds and payments under the Guaranty Agreement equal to the
amount of their original investment, including any sales charge.
The portion of the Fund's assets that will be allocated to the purchase of Zero
Coupon Treasuries will fluctuate during the Offering Period. This is because the
value of the Zero Coupon Treasuries and Equity Securities, and therefore the
offering price of the Fund's shares, will fluctuate with changes in interest
rates and other market value fluctuations. If the offering price of the Fund's
shares increases during the Offering Period, the minimum par value of Zero
Coupon Treasuries per Fund share necessary to provide for the Fund's Investment
Protection will increase and this amount will be fixed by the highest offering
price during the Offering Period. The Fund may hold Zero Coupon Treasuries in an
amount in excess of the amount necessary to provide for the Fund's Investment
Protection in the discretion of the Fund's investment manager. During the first
year of operations, under normal market conditions, the proportion of the Fund's
portfolio invested in Zero Coupon Treasuries may be expected to range from 50%
to 65%; but a greater or lesser percentage is possible.
As the percentage of Zero Coupon Treasuries in the Fund's portfolio increases,
the percentage of Equity Securities in the portfolio will necessarily decrease.
This will result in less potential for capital growth from equity securities. In
order to help ensure at least a minimum level of exposure to the equity markets
for shareholders, the Fund will cease offering its shares if their continued
offering would cause more than 70% of its assets to be allocated to Zero Coupon
Treasuries. After the Offering Period is over, no additional assets will be
allocated to the purchase of Zero Coupon Treasuries. However, since the values
of the Zero Coupon Treasuries and Equity Securities are often affected in
different ways by changes in interest rates and other market conditions and will
often fluctuate independently, the percentage of the Fund's net asset value
represented by Zero Coupon Treasuries will continue to fluctuate after the end
of the Offering Period. Zero Coupon Treasuries may be liquidated before the
Maturity Date to meet redemptions and pay cash dividends, provided that the
minimum amount necessary to provide for the Fund's Investment Protection is
maintained.
Shareholders who elect to receive dividends in cash are in effect withdrawing a
portion of the accreted income on the Zero Coupon Treasuries that are held to
protect their original principal investment at the Maturity Date. These
shareholders will receive the same net asset value per share for any Fund shares
redeemed at the Maturity Date as shareholders who reinvest dividends, but they
will have fewer shares to redeem than shareholders similarly situated who had
reinvested all dividends. Shareholders who redeem some or all of their shares
before the Maturity Date lose the benefit of Investment Protection with respect
to those shares redeemed. Thus, investors are encouraged to reinvest all
dividends and to evaluate their need to receive some or all of their investment
prior to the Maturity Date before making an investment in the Fund.
ZERO COUPON TREASURIES. The Zero Coupon Treasuries held by the Fund will
consist of U.S. Treasury notes or bonds that have been stripped of their
unmatured interest coupons or will consist of unmatured interest coupons from
U.S. Treasury notes or bonds. The Zero Coupon Treasuries evidence the right to
receive a fixed payment at a future date (i.e., the Maturity Date) from the U.S.
Government, and are backed by the full faith and credit of the U.S. Government.
The guarantee of the U.S. Government does not apply to the market value of the
Zero Coupon Treasuries owned by the Fund or to the shares of the Fund. The
market value of Zero Coupon Treasuries generally will fluctuate inversely with
changes in interest rates. As interest rates rise, the value of the Zero Coupon
Treasuries will tend to decline and as interest rates fall the value of the Zero
Coupon Treasuries will tend to increase. Zero Coupon Treasuries are purchased at
a deep discount because the buyer obtains only the right to a fixed payment at a
fixed date in the future and does not receive any periodic interest payments.
The effect of owning deep discount bonds that do not make current interest
payments (such as the Zero Coupon Treasuries) is that a fixed yield is earned
not only on the original investment but also, in effect, on all earnings during
the life of the discount obligation. This implicit reinvestment of earnings at
the same rate eliminates the risk of being unable to reinvest the income on such
obligations at a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest at higher rates
in the future. For this reason, the Zero Coupon Treasuries normally are subject
to substantially greater price fluctuations during periods of changing interest
rates than are securities of comparable quality that make regular interest
payments. As the maturity of the Zero Coupon Treasuries
4
<PAGE> 8
becomes shorter (i.e., as the period to the Maturity Date is shorter), the
degree of price fluctuation will become less. Additional information concerning
Zero Coupon Treasuries appears in the Statement of Additional Information of the
Fund under "Investment Policies and Techniques."
EQUITY SECURITIES. With respect to Fund assets not invested in Zero Coupon
Treasuries, the Fund will seek long-term capital growth through professional
management and diversification of investments in securities the Fund's
investment manager believes to have possibilities for capital growth. In seeking
to achieve capital growth, it will be the Fund's policy to invest assets not
otherwise invested in Zero Coupon Treasuries primarily in securities that the
Fund's investment manager believes offer the potential for increasing the Fund's
total asset value. While it is anticipated that most investments will be in
common stocks of companies with above-average growth prospects, investments may
also be made to a limited degree in other common stocks, warrants and in
convertible securities, such as bonds and preferred stocks. Factors that the
Fund's investment manager may consider in making its equity investments are
patterns of growth in sales and earnings, the development of new or improved
products or services, a favorable outlook for growth in the industry, the
probability of increased operating efficiencies, emphasis on research and
development, cyclical conditions, and other signs that a company is expected to
show greater than average capital growth and earnings growth. The Fund's
investment policy with respect to these assets may involve a somewhat greater
risk than is inherent in some other investment securities. Also, any income
received from such securities will be incidental.
In seeking to obtain capital growth, the Fund may trade to some degree in
securities for the short-term. To this extent, the Fund will be engaged in
trading operations based on short-term market considerations as distinct from
long-term investment based upon fundamental valuation of securities.
The Fund may also purchase options on securities and index options, may purchase
and sell financial futures contracts and options on financial futures contracts,
may purchase foreign securities and engage in related foreign currency
transactions and may at times lend its portfolio securities. There may also be
times when a significant portion of the Fund's assets not invested in Zero
Coupon Treasuries may be held temporarily in cash or defensive type securities
such as high-grade debt securities, securities of the U.S. Government and its
agencies and high quality money market instruments, including repurchase
agreements, depending upon the investment manager's analysis of business and
economic conditions and the outlook for security prices.
SPECIAL RISK FACTORS. The value of the Zero Coupon Treasuries and the Equity
Securities in the Fund's portfolio will fluctuate prior to the Maturity Date and
the value of the Zero Coupon Treasuries will equal their par value on the
Maturity Date. As noted previously (see "Zero Coupon Treasuries"), the value of
the Zero Coupon Treasuries may be expected to experience more volatility than
U.S. Government securities that have similar yields and maturities but that make
current distributions of interest. Thus, the net asset value of the Fund's
shares will fluctuate with changes in interest rates and other market conditions
prior to the Maturity Date. As an open-end investment company, the Fund will
redeem its shares at the request of a shareholder at the net asset value per
share next determined after a request is received in proper form. Thus,
shareholders who redeem their shares prior to the Maturity Date may receive more
or less than their acquisition cost, including any sales charge, whether or not
they reinvest their dividends. Such shares, therefore, would not receive the
benefit of the Fund's Investment Protection. Any shares not redeemed prior to
the Maturity Date by a shareholder would continue to receive the benefit of the
Fund's Investment Protection provided that all dividends with respect to such
shares are reinvested. Accordingly, the Fund may not be appropriate for
investors who expect to redeem their investment in the Fund prior to the
Maturity Date.
Each year the Fund will be required to accrue an increasing amount of income on
its Zero Coupon Treasuries utilizing the effective interest method. However, to
maintain its tax status as a pass-through entity under Subchapter M of the
Internal Revenue Code and also to avoid imposition of excise taxes, the Fund
will be required to distribute dividends equal to substantially all of its net
investment income, including the accrued income on its Zero Coupon Treasuries
for which it receives no payments in cash prior to their maturity. Dividends of
the Fund's investment income and short-term capital gains will be taxable to
shareholders as ordinary income for federal income tax
5
<PAGE> 9
purposes, whether received in cash or reinvested in additional shares. See
"Dividends and Taxes." However, shareholders who elect to receive dividends in
cash, instead of reinvesting these amounts in additional shares of the Fund, may
realize an amount upon redemption of their investment on the Maturity Date that
is less or greater than their acquisition cost and, therefore, will not receive
the benefit of the Fund's Investment Protection. Accordingly, the Fund may not
be appropriate for investors who will require cash distributions from the Fund
in order to meet current tax obligations resulting from their investment or for
other needs.
As noted previously, the Fund will maintain a minimum par value of Zero Coupon
Treasuries per share in order to provide for the Fund's Investment Protection.
In order to generate sufficient cash to meet dividend requirements and other
operational needs and to redeem Fund shares on request, the Fund may be required
to limit reinvestment of capital on the disposition of Equity Securities and may
be required to liquidate Equity Securities at a time when it is otherwise
disadvantageous to do so, which may result in the realization of losses on the
disposition of such securities, and may also be required to borrow money to
satisfy dividend and redemption requirements. The liquidation of Equity
Securities and the expenses of borrowing money in such circumstances could
impair the ability of the Fund to meet its objective of long-term capital
growth.
The Fund provides Investment Protection to investors who reinvest all dividends
and do not redeem their shares before the Maturity Date. In addition, as noted
above, dividends from the Fund will be taxable to shareholders whether received
in cash or reinvested in additional shares. Thus, the Fund does not provide a
specific return on investors' capital or protect principal on an after-tax or
present value basis. An investor who reinvested all dividends and who, upon
redemption at the Maturity Date, received only the original amount invested
including any sales charge, would have received a zero rate of return on such
investment. This could only happen if the value of the Fund's investments other
than Zero Coupon Treasuries were to decrease to zero, an event that the Fund's
investment manager considers highly unlikely. The present value of $1,000 on the
Maturity Date discounted for inflation assumed to be at an annual rate of 4% is
approximately $676 on the date of this prospectus.
Investors subject to tax should be aware that any portion of the amount returned
to them upon redemption of shares that constitutes accretion of interest on the
Zero Coupon Treasuries will have been taxable each year as ordinary income over
the period during which shares were held. See "Dividends and Taxes."
The Fund may purchase options on securities and index options, may purchase and
sell financial futures contracts and options on financial futures contracts, may
purchase foreign securities and engage in related foreign currency transactions
and may at times lend its portfolio securities. See "Additional Investment
Information" below for a discussion of these investment techniques and the
related risks.
MATURITY DATE. The Board of Trustees of the Trust may in its sole discretion
elect, without shareholder approval, to continue the operation of the Fund after
the Maturity Date with a new maturity date ("New Maturity Date"). Such a
decision may be made to provide shareholders with the opportunity of continuing
their investment in the Fund for a new term without recognizing any taxable
capital gains as a result of a redemption. In that event, shareholders of the
Fund may either continue as such or redeem their shares in the Fund.
Shareholders who reinvest all dividends and hold their shares to the Maturity
Date will be entitled to the benefit of the Fund's Investment Protection on the
Maturity Date whether they continue as shareholders or redeem their shares. If
this alternative were to be elected, the Fund would at the Maturity Date collect
the proceeds of the Zero Coupon Treasuries that mature on such date and, after
allowing for any redemption requests by shareholders, reinvest such proceeds in
Zero Coupon Treasuries and Equity Securities as necessary to provide for the
Fund's Investment Protection benefit on the New Maturity Date. For such
purposes, the principal investment of shareholders then in the Fund would be
deemed to be the net asset value of their investment in the Fund at the current
Maturity Date. Thus, in effect, the total value of such shareholders' investment
in the Fund on the current Maturity Date will be treated as an investment for
the new term and will benefit from the Fund's Investment Protection for the new
term if they reinvest all dividends and maintain their investment in the Fund
until the New Maturity Date. If the Board of Trustees elects to continue the
Fund, shareholders will be given 60 days' prior notice of such election and the
New Maturity Date. In that event, it is
6
<PAGE> 10
anticipated that the offering of the Fund's shares would commence again after
the Maturity Date with a new prospectus for such period as the Board of Trustees
shall determine.
On the Maturity Date, the Fund may also be terminated at the election of the
Board of Trustees of the Trust in its sole discretion and without approval by
shareholders, upon 60 days' prior notice to shareholders. In such event, the
proceeds of the Zero Coupon Treasuries maturing on such date shall be collected
and the Equity Securities and other assets then owned by the Fund shall be sold
or otherwise reduced to cash, the liabilities of the Fund will be discharged or
otherwise provided for, the Fund's outstanding shares will be mandatorily
redeemed at the net asset value per share determined on the Maturity Date and,
within seven days thereafter, the Fund's net assets will be distributed to
shareholders and the Fund shall be thereafter terminated. Termination of the
Fund may require the disposition of the Equity Securities at a time when it is
otherwise disadvantageous to do so and may involve selling securities at a
substantial loss. The estimated expenses of liquidation and termination of the
Fund, however, are not expected to affect materially the ability of the Fund to
provide for its Investment Protection benefit. In the event of termination of
the Fund as noted above, the redemption of shares effected in connection with
such termination would for current federal income tax purposes constitute a sale
upon which a gain or loss may be realized depending upon whether the value of
the shares being redeemed is more or less than the shareholder's adjusted cost
basis of such shares.
Subject to shareholder approval, other alternatives may be pursued by the Fund
after the Maturity Date. For instance, the Board of Trustees may consider the
possibility of a tax-free reorganization between the Fund and another registered
open-end management investment company or any other series of the Trust. The
Board of Trustees has not considered any possibilities regarding the operation
of the Fund after the Maturity Date.
ADDITIONAL INVESTMENT INFORMATION. The annual turnover rate of the Fund's
portfolio may vary from year to year, and may also be affected by cash
requirements for redemptions and repurchases of Fund shares, and by the
necessity of maintaining the Fund as a regulated investment company under the
Internal Revenue Code in order to receive certain favorable tax treatment. It is
anticipated that, under normal circumstances, the Fund's portfolio turnover rate
will be less than 100%.
The Fund may not borrow money except as a temporary measure for extraordinary or
emergency purposes, and then only in an amount up to one-third of the value of
its total assets, in order to meet redemption requests without immediately
selling any portfolio securities or other assets. If, for any reason, the
current value of the Fund's total assets falls below an amount equal to three
times the amount of its indebtedness from money borrowed, the Fund will, within
three days (not including Sundays and holidays), reduce its indebtedness to the
extent necessary. The Fund will not borrow for leverage purposes. The Fund may
pledge up to 15% of its total assets to secure any such borrowings. The Fund
will not purchase illiquid securities, including repurchase agreements maturing
in more than seven days, if, as a result thereof, more than 10% of the Fund's
net assets, valued at the time of the transaction, would be invested in such
securities.
The Trust has adopted for the Fund certain fundamental investment restrictions
which are presented in the Statement of Additional Information and which,
together with its investment objectives and any policies of the Fund
specifically designated in this prospectus as fundamental, cannot be changed
without approval by holders of a majority of its outstanding voting shares. As
defined in the Investment Company Act of 1940, this means the lesser of the vote
of (a) 67% of the shares of the Fund present at a meeting where more than 50% of
the outstanding shares are present in person or by proxy; or (b) more than 50%
of the outstanding shares of the Fund. Policies of the Fund that are neither
designated as fundamental nor incorporated into any of the fundamental
investment restrictions referred to above may be changed by the Board of
Trustees of the Fund without shareholder approval. Notwithstanding the
foregoing, the Board of Trustees may, in its discretion and without shareholder
approval, determine that the Fund should be terminated on the Maturity Date or
continued thereafter with a New Maturity Date as more fully described under
"Maturity Date" above.
Options and Financial Futures Transactions. The Fund may invest up to five
percent of its net assets in put and call options on securities. A put option
gives the holder (buyer) the right to sell a security at a specified price (the
7
<PAGE> 11
exercise price) at any time until a certain date (the expiration date). A call
option gives the holder (buyer) the right to purchase a security or other asset
at a specified price (the exercise price) at any time until a certain date (the
expiration date). The Fund will only invest in options that are traded on
securities exchanges and for which it pays a premium (cost of option). As part
of its options transactions, the Fund may also purchase options on securities
indices in an attempt to hedge against market conditions affecting the values of
securities that the Fund owns or intends to purchase, and not for speculation.
Options on securities indices are similar to options on a security except that,
rather than the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the
securities index upon which the option is based is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option. In
connection with its foreign securities investments, the Fund may also purchase
foreign currency options. The Fund may enter into closing transactions, exercise
its options or permit them to expire.
The Fund may engage in financial futures transactions. Financial futures
contracts are commodity contracts that obligate the long or short holder to take
or make delivery of a specified quantity of a financial instrument, such as a
security, or the cash value of a securities index during a specified future
period at a specified price. The Fund will "cover" futures contracts sold by the
Fund and maintain in a segregated account certain liquid assets in connection
with futures contracts purchased by the Fund as described under "Investment
Policies and Techniques" in the Statement of Additional Information. In
connection with its foreign securities investments, the Fund may also engage in
foreign currency financial futures transactions.
The Fund may engage in financial futures transactions as an attempt to hedge
against market risks. For example, when the near-term market view is bearish but
the portfolio composition is judged satisfactory for the longer term, exposure
to temporary declines in the market may be reduced by entering into futures
contracts to sell securities or the cash value of a securities index.
Conversely, where the near-term view is bullish, but the Fund is believed to be
well positioned for the longer term with a high cash position, the Fund can
hedge against market increases by entering into futures contracts to buy
securities or the cash value of a securities index. In either case, the use of
futures contracts would tend to reduce portfolio turnover and facilitate the
Fund's pursuit of its investment objectives.
Futures contracts entail risks. If the investment manager's judgment about the
general direction of interest rates, markets or exchange rates is wrong, the
overall performance may be poorer than if no such contracts had been entered
into. There may be an imperfect correlation between movements in prices of
futures contracts and portfolio assets being hedged. In addition, the market
prices of futures contracts may be affected by certain factors. For example, if
participants in the futures market elect to close out their contracts rather
than meet margin requirements, distortions in the normal relationship between
the underlying assets and futures markets could result. Price distortions also
could result if investors in futures contracts decide to make or take delivery
of underlying securities or other assets rather than engage in closing
transactions because of the resultant reduction in the liquidity of the futures
market. In addition, because, from the point of view of speculators, margin
requirements in the futures market are less onerous than margin requirements in
the cash market, increased participation by speculators in the futures market
could cause temporary price distortions. Due to the possibility of price
distortions in the futures market and because of the imperfect correlation
between movements in the prices of securities or other assets and movements in
the prices of futures contracts, a correct forecast of market trends by the
investment manager still may not result in a successful hedging transaction. If
any of these events should occur, the Fund could lose money on the financial
futures contracts and also on the value of its portfolio assets. The costs
incurred in connection with futures transactions could reduce the Fund's return.
Index options involve risks similar to those risks relating to transactions in
financial futures contracts described above. Also, an option purchased by the
Fund may expire worthless, in which case the Fund would lose the premium paid
therefor.
8
<PAGE> 12
The Fund may engage in futures transactions only on commodities exchanges or
boards of trade. The Fund will not engage in transactions in financial futures
contracts or related options for speculation, but only as an attempt to hedge
against changes in market conditions affecting the values of securities that the
Fund owns or intends to purchase.
Risk Considerations. Options, financial futures transactions and forward
foreign currency contracts are derivatives. The Statement of Additional
Information contains further information about the characteristics, risks and
possible benefits of options and futures transactions. See "Investment Policies
and Techniques" in the Statement of Additional Information. The principal risks
are: (a) possible imperfect correlation between movements in the prices of
options or futures contracts and movements in the prices of the securities or
currencies hedged or used for cover; (b) lack of assurance that a liquid
secondary market will exist for any particular option or futures contract at any
particular time; (c) the need for additional skills and techniques beyond those
required for normal portfolio management; (d) losses on futures contracts
resulting from market movements not anticipated by the investment manager; and
(e) the possible need to defer closing out certain options or futures contracts
in order to continue to qualify for beneficial tax treatment afforded "regulated
investment companies" under the Internal Revenue Code.
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities (principally to
broker-dealers) without limit where such loans are callable at any time and are
continuously secured by segregated collateral (cash or U.S. Government
securities) equal to no less than the market value, determined daily, of the
securities loaned. The Fund will receive amounts equal to dividends or interest
on the securities loaned. It will also earn income for having made the loan. Any
cash collateral pursuant to these loans will be invested in short-term money
market instruments. As with other extensions of credit, there are risks of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. However, the loans would be made only to firms
deemed by the Fund's investment manager to be of good standing, and when the
Fund's investment manager believes the potential earnings to justify the
attendant risk. Management will limit such lending to not more than one-third of
the value of the Fund's total assets.
Foreign Securities. Although the Fund will invest primarily in securities that
are publicly traded in the United States, it has the discretion to invest a
portion of its assets in foreign securities that are traded principally in
securities markets outside the United States. The Fund currently limits
investment in foreign securities not publicly traded in the United States to
less than 10% of its total assets. The Fund may also invest in U.S. Dollar
denominated American Depository Receipts ("ADRs"), which are bought and sold in
the United States and are not subject to the preceding limitation. Foreign
securities present certain risks in addition to those presented by domestic
securities, including risks associated with currency fluctuations, possible
imposition of foreign governmental regulations or taxes adversely affecting
portfolio securities and generally different degrees of liquidity, market
volatility and availability of information. However, the Fund intends to invest
in foreign securities only when the potential benefits to it are deemed by the
Fund's investment manager to outweigh those risks. The Fund may make investments
in developing countries that are in the initial stages of their
industrialization cycle. In the past, markets of developing countries have been
more volatile than the markets of developed countries; however such markets
often have provided higher rates of return to investors. Investments in foreign
securities may include securities issued by enterprises that have undergone or
are currently undergoing privatization. In connection with its foreign
securities investments, the Fund may, to a limited extent, engage in foreign
currency exchange transactions, purchase foreign currency options and purchase
and sell foreign currency futures contracts. More complete information
concerning foreign securities and related techniques is contained under
"Investment Policies and Techniques--Foreign Securities and Foreign Currency
Transactions" in the Statement of Additional Information.
INVESTMENT MANAGER AND UNDERWRITER
INVESTMENT MANAGER. Kemper Financial Services, Inc. ("KFS"), 120 South LaSalle
Street, Chicago, Illinois 60603, is the investment manager of the Fund and
provides the Fund with continuous professional investment supervision. KFS is
one of the largest investment managers in the country and has been engaged in
the management of
9
<PAGE> 13
investment funds for more than forty-five years. KFS and its affiliates provide
investment advice and manage investment portfolios for the Kemper Funds, the
Kemper insurance companies, Kemper Corporation and other corporate, pension,
profit-sharing and individual accounts representing approximately $60 billion
under management. KFS acts as investment manager for 24 open-end and seven
closed-end investment companies, with 60 separate investment portfolios,
representing more than 3 million shareholder accounts. KFS is a wholly-owned
subsidiary of Kemper Financial Companies, Inc., which is a financial services
holding company that is more than 96% owned by Kemper Corporation, a diversified
insurance and financial services holding company.
Kemper Corporation has entered into an agreement in principle with an investor
group led by Zurich Insurance Company ("Zurich") pursuant to which Kemper
Corporation would be acquired by the investor group in a merger transaction. As
part of the transaction, Zurich or an affiliate would purchase KFS.
A definitive agreement is expected in early May, 1995, subject to the completion
of the investor group's due diligence. Consummation of the transaction is
subject to a number of contingencies, including approval by the board and
stockholders of Kemper Corporation and the Zurich board and regulatory
approvals. Because the transaction would constitute an assignment of the Fund's
investment management agreement with KFS under the Investment Company Act of
1940, and therefore a termination of such agreement, it is anticipated that KFS
would seek approval of a new agreement from the Fund's board and shareholders
prior to consummation of the transaction. The transaction is expected to close
early in the fourth quarter of 1995.
After consummation of the transaction, it is anticipated that the KFS management
team and the Kemper Fund portfolio managers would remain in place and that the
Kemper Funds would be operated in the same manner as they are currently.
Responsibility for overall management of the Fund rests with the Board of
Trustees and officers of the Trust. Professional investment supervision is
provided by KFS. The investment management agreement provides that KFS shall act
as the Fund's investment adviser, manage its investments and provide it with
various services and facilities. KFS will utilize the services of Kemper
Investment Management Company Limited, 1 Fleet Place, London EC4M 7RQ, a
wholly-owned subsidiary of KFS, with respect to foreign securities investments
of the Fund, including analysis, research, execution and trading services.
Tracy McCormick Chester is the portfolio manager of the Trust. She has served in
this capacity since 1994. Ms. McCormick Chester joined KFS in September 1994.
Prior to coming to KFS, she was a senior vice president and portfolio manager of
an investment management company and prior thereto, she managed private
accounts. She received a B.A. and a M.B.A. in Finance from Michigan State
University, East Lansing, Michigan.
KFS has an Equity Investment Committee that determines overall investment
strategy for equity portfolios managed by KFS. The Equity Investment Committee
is currently comprised of the following members: Daniel J. Bukowski, Tracy
McCormick Chester, C. Beth Cotner, James H. Coxon, Richard A. Goers, Karen A.
Hussey, Frank D. Korth, Gary A. Langbaum, James R. Neel, Thomas M. Regner and
Stephen B. Timbers. The portfolio managers work together as a team with the
Equity Investment Committee and various equity analysts and equity traders to
manage the Fund's investments. Equity analysts--through research, analysis and
evaluation--work to develop investment ideas appropriate for the Fund. These
ideas are studied and debated by the Equity Investment Committee and, if
approved, are added to a list of eligible investments. The portfolio managers
use the list of eligible investments to help them structure the Fund's portfolio
in a manner consistent with the Fund's objective. The KFS International Equity
Investments area, directed by Mr. Dennis H. Ferro, provides research and
analysis regarding foreign investments to the portfolio managers. After
investment decisions are made, equity traders execute the portfolio manager's
instructions through various broker-dealer firms.
The Fund pays KFS an investment management fee, payable monthly, at the annual
rate of .50 of 1% of average daily net assets of the Fund. The investment
management agreement provides that the Fund shall pay the charges and expenses
of its operations, including the fees and expenses of the trustees (except those
affiliated with KFS),
10
<PAGE> 14
independent auditors, counsel, custodian and transfer agent and the cost of
share certificates, reports and notices to shareholders, brokerage commissions
or transaction costs, costs of calculating net asset value, taxes and membership
dues.
PRINCIPAL UNDERWRITER. Pursuant to an underwriting agreement, Kemper
Distributors, Inc. ("KDI"), an affiliate of KFS, is the principal underwriter of
the Fund's shares and acts as agent of the Fund in the sale of its shares. KDI
receives no compensation from the Fund as principal underwriter and pays all
expenses of distribution of the Fund's shares under the underwriting agreement
not otherwise paid by dealers or other financial services firms. The Fund bears
the expense of registration of its shares with the Securities and Exchange
Commission, while KDI, as underwriter, pays the cost of qualifying and
maintaining the qualification of the Fund's shares for sale under the securities
laws of the various states. As indicated under "Purchase of Shares," KDI retains
the sales charge upon the purchase of shares and pays or allows concessions or
discounts to firms for the sale of Fund shares.
ADMINISTRATOR. KDI also provides information and administrative services for
Fund shareholders pursuant to an administrative services agreement
("administrative agreement"). KDI enters into related arrangements with various
financial services firms, such as broker-dealer firms or banks ("firms"), that
provide services and facilities for their customers or clients who are
shareholders of the Fund. Such administrative services and assistance may
include, but are not limited to, establishing and maintaining shareholder
accounts and records, processing purchase and redemption transactions, answering
routine inquiries regarding the Fund and its special features, and such other
services as may be agreed upon from time to time and permitted by applicable
statute, rule or regulation. KDI bears all its expenses of providing services
pursuant to the administrative agreement, including the payment of any service
fees. For services under the administrative agreement, the Fund pays KDI a fee,
payable monthly, at the annual rate of up to .25 of 1% of average daily net
assets of the Fund. KDI then pays each firm a service fee at an annual rate of
up to .25 of 1% of net assets of those accounts in the Fund that it maintains
and services. Firms to which service fees may be paid include broker-dealers
affiliated with KDI. A firm becomes eligible for the service fee based on assets
in the accounts in the month following the month of purchase and the fee
continues until terminated by KDI or the Fund. The fees are calculated monthly
and paid quarterly.
KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for the Fund. Currently, the
administrative services fee payable to KDI is based only upon Fund assets in
accounts for which there is a firm listed on the Fund's records and it is
intended that KDI will pay all the administrative services fees that it receives
from the Fund to firms in the form of service fees. The effective administrative
services fee rate to be charged against all assets of the Fund while this
procedure is in effect would depend upon the proportion of Fund assets that is
in accounts for which there is a firm of record.
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, as custodian, and
the United Missouri Bank, n.a., Tenth and Grand Streets, Kansas City, Missouri
64106 and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodians, have custody of all securities and cash
of the Fund maintained in the United States. The Chase Manhattan Bank, N.A.,
Chase MetroTech Center, Brooklyn, New York 11245, as custodian, has custody of
all securities and cash of the Fund held outside the United States. They attend
to the collection of principal and income, and payment for and collection of
proceeds of securities bought and sold by the Fund. IFTC also is the Fund's
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Kemper Service Company, an affiliate of KFS, serves as "Shareholder
Service Agent" of the Fund and, as such, performs all of IFTC's duties as
transfer agent and dividend paying agent. For a description of transfer agent
and shareholder service agent fees payable to IFTC and the Shareholder Service
Agent, see "Investment Manager and Underwriter" in the Statement of Additional
Information.
PORTFOLIO TRANSACTIONS. KFS places all orders for purchases and sales of the
Fund's securities. Subject to seeking best execution of orders, KFS may consider
sales of shares of the Fund and other funds managed by KFS as a factor in
selecting broker-dealers. See "Portfolio Transactions" in the Statement of
Additional Information.
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<PAGE> 15
DIVIDENDS AND TAXES
DIVIDENDS. The Fund will normally distribute annual dividends of net investment
income and any net realized short-term and long-term capital gains.
Income dividends and capital gain dividends, if any, will be credited to
shareholder accounts in full and fractional Fund shares at net asset value on
the reinvestment date without sales charge except that, upon written request to
the Shareholder Service Agent, a shareholder may select one of the following
options:
(1) To receive income and short-term capital gain dividends in cash and
long-term capital gain dividends in shares at net asset value; or
(2) To receive income and capital gain dividends in cash.
Any dividends that are reinvested will be reinvested in shares of the Fund. Upon
written request by a shareholder to the Shareholder Service Agent, a share
certificate will be issued for any or all full shares credited to the
shareholder's account. As noted previously (see "Investment Objectives, Policies
and Risk Factors--How the Fund Works and Special Risk Factors"), only
shareholders who reinvest all their dividends in the Fund and hold their shares
until the Maturity Date will receive the benefit of the Fund's Investment
Protection.
TAXES. The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code ("Code") and, if so qualified, will
not be liable for federal income taxes to the extent its earnings are
distributed. Dividends derived from net investment income and net short-term
capital gains are taxable to shareholders as ordinary income and long-term
capital gain dividends are taxable to shareholders as long-term capital gain
regardless of how long the shares have been held and whether received in cash or
shares. Long-term capital gain dividends received by individual shareholders are
taxed at a maximum rate of 28%. Dividends declared in October, November or
December to shareholders of record as of a date in one of those months and paid
during the following January are treated as paid on December 31 of the calendar
year declared. It is anticipated that a portion of the ordinary income dividends
paid by the Fund will qualify for the dividends received deduction available to
corporate shareholders.
The Zero Coupon Treasuries will be treated as bonds that were issued to the Fund
at an original issue discount. Original issue discount is treated as interest
for federal income tax purposes and the amount of original issue discount
generally will be the difference between the bond's purchase price and its
stated redemption price at maturity. The Fund will be required to include in
gross income for each taxable year the daily portions of original issue discount
attributable to the Zero Coupon Treasuries held by the Fund as such original
issue discount accrues. Dividends derived from such original issue discount that
accrues for such year will be taxable to shareholders as ordinary income. In
general, original issue discount accrues daily under a constant interest rate
method which takes into account the semi-annual compounding of accrued interest.
In the case of the Zero Coupon Treasuries, this method will generally result in
an increasing amount of income to the Fund each year.
A dividend received by a shareholder shortly after the purchase of shares
reduces the net asset value of the shares by the amount of the dividend and,
although in effect a return of capital, will be taxable to the shareholder. If
the net asset value of shares were reduced below the shareholder's cost by
dividends representing gains realized on sales of securities, such dividends
would be a return of investment though taxable as stated above.
Fund dividends that are derived from interest on the Zero Coupon Treasuries and
other direct obligations of the U.S. Government and certain of its agencies and
instrumentalities may be exempt from state and local taxes in certain states. In
other states, arguments can be made that such distributions should be exempt
from state and local taxes based on federal law, 31 U.S.C. Section 3124, and the
U.S. Supreme Court's interpretation of that provision in American Bank and Trust
Co. v. Dallas County, 463 U.S. 855 (1983). The Fund currently intends to advise
shareholders of the proportion of its dividends that consists of such interest.
Shareholders should consult their tax advisers regarding the possible exclusion
of such portion of their dividends for state and local income tax purposes.
12
<PAGE> 16
The Fund is required by law to withhold 31% of taxable dividends and redemption
proceeds paid to certain shareholders who do not furnish a correct taxpayer
identification number (in the case of individuals, a social security number) and
in certain other circumstances. Trustees of qualified retirement plans and
403(b)(7) accounts are required by law to withhold 20% of the taxable portion of
any distribution that is eligible to be "rolled over." The 20% withholding
requirement does not apply to distributions from Individual Retirement Accounts
("IRAs") or any part of a distribution that is transferred directly to another
qualified retirement plan, 403(b)(7) account, or IRA. Shareholders should
consult their tax advisers regarding the 20% withholding requirement.
After each transaction, shareholders will receive a confirmation statement
giving complete details of the transaction except that statements will be sent
quarterly for dividend reinvestment, periodic investment and redemption programs
and reinvestment programs for unit investment trusts underwritten by KDI or an
affiliate. Information for income tax purposes will be provided after the end of
the calendar year. Shareholders are encouraged to retain copies of their account
confirmation statements or year-end statements for tax reporting purposes.
However, those who have incomplete records may obtain historical account
transaction information at a reasonable fee.
NET ASSET VALUE
The net asset value per share is determined by calculating the total value of
the Fund's assets, which will normally be composed chiefly of investment
securities, deducting total liabilities and dividing the result by the number of
shares outstanding. Fixed income securities, including Zero Coupon Treasuries,
are valued by using market quotations, or independent pricing services that use
prices provided by market makers or estimates of market values obtained from
yield data relating to instruments or securities with similar characteristics.
Portfolio securities that are traded on a domestic securities exchange or
securities listed on the NASDAQ National Market are valued at the last sale
price on the exchange or market where primarily traded or listed or, if there is
no recent last sale price available, at the last current bid quotation.
Portfolio securities that are primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges where primarily traded. Securities not so traded or listed
are valued at the last current bid quotation if market quotations are available.
Equity options are valued at the last sale price unless the bid price is higher
or the asked price is lower, in which event such bid or asked price is used.
Financial futures and options thereon are valued at the settlement price
established each day by the board of trade or exchange on which they are traded.
Other securities and assets are valued at fair value as determined in good faith
by the Board of Trustees. For purposes of determining the Fund's net asset
value, all assets and liabilities initially expressed in foreign currency values
will be converted into U.S. Dollar values at the mean between the bid and
offered quotations of such currencies against U.S. Dollars as last quoted by a
recognized dealer. If an event were to occur after the value of a security was
so established but before the net asset value per share was determined, which
was likely to materially change the net asset value, then that security would be
valued using fair value considerations by the Board of Trustees or its
delegates. On each day the New York Stock Exchange (the "Exchange") is open for
trading, the net asset value is determined as of the earlier of 3:00 p.m.
Chicago time or the close of the Exchange.
PURCHASE OF SHARES
Shares of the Fund may be purchased from investment dealers during the Offering
Period described below at the public offering price, which is the net asset
value next determined plus a sales charge that is a percentage of the public
offering price and varies as shown below. The minimum initial investment is
$1,000 and the minimum subsequent investment is $100. The minimum initial
investment for an Individual Retirement Account or employee
13
<PAGE> 17
benefit plan account is $250 and the minimum subsequent investment is $50. These
minimum amounts may be changed at any time in management's discretion.
<TABLE>
<CAPTION>
Sales Charge
------------------------------------------------------------
Allowed to
Dealers as a
As a Percentage As a Percentage Percentage of
Amount of Purchase of Offering Price of Net Asset Value* Offering Price
- ------------------------------------------------- ----------------- ------------------- --------------
<S> <C> <C> <C>
Less than $100,000............................... 5.00% 5.26% 4.50%
$100,000 but less than $250,000.................. 4.00 4.17 3.60
$250,000 but less than $500,000.................. 3.00 3.09 2.70
$500,000 but less than $1 million................ 2.00 2.04 1.80
$1 million and over.............................. 0.00** 0.00** ***
</TABLE>
- ---------------
* Rounded to the nearest one-hundredth percent.
** Redemption of shares may be subject to a contingent deferred sales charge as
discussed below.
*** Commission is payable by KDI as discussed below.
Shares will only be offered to the public during the Offering Period, which is
expected to end on May 1, 1996. The Fund may at its option extend or shorten the
Offering Period. The offering of shares of the Fund shall be subject to
suspension or termination as provided under "Investment Objectives, Policies and
Risk Factors--How the Fund Works." In addition, the offering of Fund shares may
be suspended from time to time during the Offering Period in the discretion of
KDI. During any period in which the public offering of shares is suspended or
terminated, shareholders will still be permitted to reinvest dividends in shares
of the Fund.
Share certificates will not be issued unless requested in writing. It is
recommended that investors not request share certificates unless needed for a
specific purpose. You cannot redeem shares by telephone or wire transfer or use
the telephone exchange privilege if share certificates have been issued. A lost
or destroyed certificate is difficult to replace and can be expensive to the
shareholder (a bond worth 2% or more of the certificate value is normally
required).
The Fund receives the entire net asset value of all shares sold. KDI, the Fund's
principal underwriter, retains the sales charge from which it allows discounts
from the applicable public offering price to investment dealers, which discounts
are uniform for all dealers in the United States and its territories. The normal
discount allowed to dealers is set forth in the above table. Upon notice to all
dealers with whom it has sales agreements, KDI may reallow up to the full
applicable sales charge, as shown in the above table, during periods and for
transactions specified in such notice and such reallowances may be based upon
attainment of minimum sales levels. During periods when 90% or more of the sales
charge is reallowed, such dealers may be deemed to be underwriters as that term
is defined in the Securities Act of 1933.
Banks and other financial services firms may provide administrative services
related to order placement and payment to facilitate transactions in shares of
the Fund for their clients, and KDI may pay them a transaction fee up to the
level of the discount or other concession allowable to dealers as described
above. Banks currently are prohibited under the Glass-Steagall Act from
providing certain underwriting or distribution services. Banks or other
financial services firms may be subject to various state laws regarding the
services described above and may be required to register as dealers pursuant to
state law. If banking firms were prohibited from acting in any capacity or
providing any of the described services, management would consider what action,
if any, would be appropriate. Management does not believe that termination of a
relationship with a bank would result in any material adverse consequences to
the Fund.
In addition to the discounts or commissions described above, KDI will, from time
to time, pay or allow additional discounts or promotional incentives, in the
form of cash or other compensation, to firms that sell shares of the Fund.
Non-cash compensation includes luxury merchandise and trips to luxury resorts.
In some instances, such discounts or other incentives will be offered only to
certain firms that sell or are expected to sell during specified
time periods certain minimum amounts of shares of the Fund, or other funds
underwritten by KDI.
14
<PAGE> 18
Shares of the Fund may be purchased at net asset value to the extent that the
amount invested represents the net proceeds from a redemption of shares of a
mutual fund for which Kemper Financial Services, Inc. does not serve as
investment manager ("non-Kemper fund") provided that: (a) the investor has
previously paid either an initial sales charge in connection with the purchase
of the non-Kemper fund shares redeemed or a contingent deferred sales charge in
connection with the redemption of the non-Kemper fund shares, and (b) the
purchase of Fund shares is made within 90 days after the date of such
redemption. To make such a purchase at net asset value, the investor or the
investor's dealer must, at the time of purchase, submit a request that the
purchase be processed at net asset value pursuant to this privilege. The
redemption of the shares of the non-Kemper fund is, for federal income tax
purposes, a sale upon which a gain or loss may be realized.
Shares of the Fund may be purchased at net asset value by: (a) any purchaser
provided that the amount invested in the Fund or other Kemper Mutual Funds
described under "Special Features--Combined Purchases" totals at least
$1,000,000 including purchases pursuant to the "Combined Purchases," "Letter of
Intent" and "Cumulative Discount" features described under "Special Features";
or (b) a participant-directed qualified retirement plan described in Code
Section 401(a) or a participant-directed non-qualified deferred compensation
plan described in Code Section 457 provided in either case that such plan has
not less than 200 eligible employees (the "Large Order NAV Purchase Privilege").
A contingent deferred sales charge of 1% may be imposed upon redemption of
shares of the Fund that are purchased under the Large Order NAV Purchase
Privilege if they are redeemed within one year of purchase. The charge will not
be imposed upon redemption of reinvested dividends or share appreciation. The
charge is applied to the value of the shares redeemed excluding amounts not
subject to the charge. The contingent deferred sales charge will be waived in
the event of (a) redemptions by a participant-directed qualified retirement plan
described in Code Section 401(a) or a participant-directed non-qualified
deferred compensation plan described in Code Section 457; (b) redemptions by
employer sponsored employee benefit plans using the subaccount record keeping
system made available through KDI; (c) redemption of shares of a shareholder
(including a registered joint owner) who has died; (d) redemption of shares of a
shareholder (including a registered joint owner) who after purchase of the
shares being redeemed becomes totally disabled (as evidenced by a determination
by the federal Social Security Administration); and (e) redemptions under the
Fund's Systematic Withdrawal Plan at a maximum of 10% per year of the net asset
value of the account.
Shares of the Fund purchased under the Large Order NAV Purchase Privilege may be
exchanged for shares of another Kemper Mutual Fund or a Money Market Fund under
the exchange privilege described under "Special Features--Exchange Privilege"
without paying any contingent deferred sales charge at the time of exchange. If
the shares received on exchange are redeemed thereafter, a contingent deferred
sales charge may be imposed in accordance with the foregoing requirements
provided that the shares redeemed will retain their original cost and purchase
date for purposes of the contingent deferred sales charge.
KDI may in its discretion compensate investment dealers or other financial
services firms in connection with the sale of shares of the Fund to employer
sponsored employee benefit plans using the subaccount recordkeeping system made
available through KDI at net asset value in accordance with the Large Order NAV
Purchase Privilege up to the following amounts: 1.00% of the net asset value of
shares sold on amounts up to $5 million in any calendar year, .50% on the next
$5 million and .25% on amounts over $10 million in such calendar year. KDI may
in its discretion compensate investment dealers or other financial services
firms in connection with the sale of shares of the Fund to other purchasers at
net asset value in accordance with the Large Order NAV Purchase Privilege up to
the following amounts: 1.00% of the net asset value of shares sold on amounts up
to $3 million, .50% on the next $2 million and .25% on amounts over $5 million.
For purposes of determining the appropriate commission percentage to be applied
to a particular sale under the foregoing schedule, KDI will consider the
cumulative amount invested by the purchaser in the Fund and other Kemper Mutual
Funds listed under "Special Features--Combined Purchases," including purchases
pursuant to the "Combined Purchases," "Letter of Intent" and "Cumulative
Discount" features referred to above. The privilege of purchasing shares of the
Fund at net asset value under the Large Order NAV Purchase Privilege is not
available if another net asset value purchase privilege is also applicable.
15
<PAGE> 19
Shares may be sold to officers, trustees, directors, employees (including
retirees) and sales representatives of the Fund, its investment manager, its
principal underwriter or certain affiliated companies, for themselves or members
of their families, or to any trust, pension, profit-sharing or other benefit
plan for only such persons at net asset value and in any amount. Shares may be
sold at net asset value in any amount to registered representatives and
employees of broker-dealers having selling group agreements with KDI and
officers, directors and employees of service agents of the Fund, for themselves
or their spouses or dependent children, or to any trust or pension,
profit-sharing or other benefit plan for only such persons. Shares may be sold
at net asset value in any amount to selected employees (including their spouses
and dependent children) of banks and other financial services firms that provide
administrative services related to order placement and payment to facilitate
transactions in shares of the Fund for their clients pursuant to an agreement
with KDI or one of its affiliates. Only those employees of such banks and other
firms who as part of their usual duties provide services related to transactions
in Fund shares may purchase Fund shares at net asset value hereunder. Shares may
be sold at net asset value in any amount to unit investment trusts underwritten
by KDI or an affiliate of KDI. In addition, unitholders of unit investment
trusts underwritten by KDI or an affiliate of KDI may purchase Fund shares at
net asset value through reinvestment programs described in the prospectuses of
such trusts which have such programs. Shares of the Fund may be sold at net
asset value through certain investment advisers registered under the Investment
Advisers Act of 1940 and other financial services firms that adhere to certain
standards established by KDI, including a requirement that such shares be sold
for the benefit of their clients participating in a "wrap account" or similar
program under which such clients pay a fee to the investment adviser or other
firm. Such shares are sold for investment purposes and on the condition that
they will not be resold except through redemption or repurchase by the Fund. The
Fund may also issue shares at net asset value in connection with the acquisition
of the assets of or merger or consolidation with another investment company, or
to shareholders in connection with the investment or reinvestment of income and
capital gain dividends.
The sales charge scale is applicable to purchases made at one time by any
"purchaser" which includes an individual, or an individual, his or her spouse
and children under the age of 21; or a trustee or other fiduciary of a single
trust estate or single fiduciary account; or an organization exempt from federal
income tax under Section 501(c)(3) or (13) of the Code; or a pension,
profit-sharing or other employee benefit plan whether or not qualified under
Section 401 of the Code; or other organized group of persons whether
incorporated or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase of redeemable
securities of a registered investment company at a discount. In order to qualify
for a lower sales charge, all orders from an organized group will have to be
placed through a single investment dealer or other firm and identified as
originating from a qualifying purchaser.
Investment dealers and other firms provide varying arrangements for their
clients to purchase and redeem Fund shares. Some may establish higher minimum
investment requirements than set forth above. Firms may arrange with their
clients for other investment or administrative services. Such firms may
independently establish and charge additional amounts to their clients for such
services, which charges would reduce the clients' return. Firms also may hold
Fund shares in nominee or street name as agent for and on behalf of their
customers. In such instances, the Fund's transfer agent will have no information
with respect to or control over accounts of specific shareholders. Such
shareholders may obtain access to their accounts and information about their
accounts only from their firm. Certain of these firms may receive compensation
from the Fund through the Shareholder Service Agent for recordkeeping and other
expenses relating to these nominee accounts. In addition, certain privileges
with respect to the purchase and redemption of shares or the reinvestment of
dividends may not be available through such firms. Some firms may participate in
a program allowing them access to their clients' accounts for servicing
including, without limitation, transfers of registration and dividend payee
changes; and may perform functions such as generation of confirmation statements
and disbursement of cash dividends. Such firms, including affiliates of KDI, may
receive compensation from the Fund through the Shareholder Service Agent for
these services. This prospectus should be read in connection with such firms'
material regarding their fees and services.
16
<PAGE> 20
Orders for the purchase of shares of the Fund will be confirmed at a price based
on the net asset value next determined after receipt by KDI of the order
accompanied by payment. However, orders received by dealers or other firms prior
to the determination of net asset value (see "Net Asset Value") and received by
KDI prior to the close of its business day will be confirmed at a price based on
the net asset value effective on that day. The Fund reserves the right to
determine the net asset value more frequently than once a day if deemed
desirable. Dealers and other financial services firms are obligated to transmit
orders promptly. Collection may take significantly longer for a check drawn on a
foreign bank than for a check drawn on a domestic bank. Therefore, if an order
is accompanied by a check drawn on a foreign bank, funds must normally be
collected before shares will be purchased. See "Purchase and Redemption of
Shares" in the Statement of Additional Information.
The Fund reserves the right to withdraw all or any part of the offering made by
this prospectus and to reject purchase orders.
Shareholders should direct their inquiries to Kemper Service Company, 811 Main
Street, Kansas City, Missouri 64105-2005 or to the firm from which they received
this prospectus.
REDEMPTION OR REPURCHASE OF SHARES
GENERAL. Any shareholder may require the Fund to redeem his or her shares. When
shares are held for the account of a shareholder by the Fund's transfer agent,
the shareholder may redeem them by making a written request with signatures
guaranteed to Kemper Mutual Funds, Attention: Redemption Department, P.O. Box
419557, Kansas City, Missouri 64141-6557. When certificates for shares have been
issued, they must be mailed to or deposited with the Shareholder Service Agent,
along with a duly endorsed stock power and accompanied by a written request for
redemption. Redemption requests and a stock power must be endorsed by the
account holder with signatures guaranteed by a commercial bank, trust company,
savings and loan association, federal savings bank, member firm of a national
securities exchange or other eligible financial institution. The redemption
request and stock power must be signed exactly as the account is registered
including any special capacity of the registered owner. Additional documentation
may be requested, and a signature guarantee is normally required, from
institutional and fiduciary account holders, such as corporations, custodians
(e.g., under the Uniform Transfers to Minors Act), executors, administrators,
trustees or guardians. As noted previously (see "Investment Objectives, Policies
and Risk Factors--How the Fund Works and Special Risk Factors"), only
shareholders who hold their shares in the Fund until the Maturity Date and
reinvest their dividends in the Fund will necessarily receive the benefit of the
Fund's Investment Protection.
The redemption price will be the net asset value next determined following
receipt by the Shareholder Service Agent of a properly executed request with any
required documents as described above. Payment for shares redeemed will be made
in cash as promptly as practicable but in no event later than seven days after
receipt of a properly executed request accompanied by any outstanding share
certificates in proper form for transfer. When the Fund is requested to redeem
shares for which it may not have yet received good payment, it may delay
transmittal of redemption proceeds until it has determined that collected funds
have been received for the purchase of such shares, which will be up to 15 days
from receipt by the Fund of the purchase amount. The redemption within one year
of shares purchased at net asset value under the Large Order NAV Purchase
Privilege may be subject to a 1% contingent deferred sales charge (see "Purchase
of Shares").
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions and EXPRESS-Transfer transactions (see "Special Features")
and exchange transactions for individual and institutional accounts and
pre-authorized telephone redemption transactions for certain institutional
accounts. Shareholders may choose these privileges on the account application or
by contacting the Shareholder Service Agent for appropriate instructions. Please
note that the telephone exchange privilege is automatic unless the shareholder
refuses it on the account application. Neither the Fund nor its agents will be
liable for any loss, expense or cost arising out of any telephone request
pursuant to these privileges, including any fraudulent or unauthorized request,
and THE SHAREHOLDER WILL BEAR THE RISK OF LOSS, so long as the Fund or its agent
reasonably believes, based upon reasonable
17
<PAGE> 21
verification procedures, that the telephonic instructions are genuine. The
verification procedures include recording instructions, requiring certain
identifying information before acting upon instructions and sending written
confirmations.
TELEPHONE REDEMPTIONS. If the proceeds of the redemption are $50,000 or less and
the proceeds are payable to the shareholder of record at the address of record,
normally a telephone request or a written request by any one account holder
without a signature guarantee is sufficient for redemptions by individual or
joint account holders, and trust, executor and guardian account holders
(excluding custodial accounts for gifts and transfers to minors), provided the
trustee, executor or guardian is named in the account registration. Other
institutional account holders and guardian account holders of custodial accounts
for gifts and transfers to minors may exercise this special privilege of
redeeming shares by telephone request or written request without signature
guarantee subject to the same conditions as individual account holders and
subject to the limitations on liability described under "General" above,
provided that this privilege has been pre-authorized by the institutional or
guardian account holder by written instruction to the Shareholder Service Agent
with signatures guaranteed. Telephone requests may be made by calling
1-800-621-1048. Shares purchased by check or through EXPRESS-Transfer may not be
redeemed under this privilege of redeeming shares by telephone request until
such shares have been owned for at least 15 days. This privilege of redeeming
shares by telephone request or by written request without a signature guarantee
may not be used to redeem shares held in certificated form and may not be used
if the shareholder's account has had an address change within 30 days of the
redemption request. During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to use the telephone
redemption privilege, although investors can still redeem by mail. The Fund
reserves the right to terminate or modify this privilege at any time.
REPURCHASES (CONFIRMED REDEMPTIONS). A request for repurchase may be
communicated by a shareholder through a securities dealer or other financial
services firm to KDI, which the Fund has authorized to act as its agent. There
is no charge by KDI with respect to repurchases; however, dealers or other firms
may charge customary commissions for their services. Dealers and other financial
services firms are obligated to transmit orders promptly. The repurchase price
will be the net asset value next determined after receipt of a request by KDI.
However, requests for repurchases received by dealers or other firms prior to
the determination of net asset value (see "Net Asset Value") and received by KDI
prior to the close of KDI's business day will be confirmed at the net asset
value effective on that day. The offer to repurchase may be suspended at any
time. Requirements as to stock powers, certificates, payments and delay of
payments are the same as for redemptions.
EXPEDITED WIRE TRANSFER REDEMPTIONS. If the account holder has given
authorization for expedited wire redemption to the account holder's brokerage or
bank account, shares can be redeemed and proceeds sent by federal wire transfer
to a single previously designated account. Requests received by the Shareholder
Service Agent prior to the determination of net asset value will result in
shares being redeemed that day at the net asset value effective on that day and
normally the proceeds will be sent to the designated account the following
business day. Delivery of the proceeds of a wire redemption request of $250,000
or more may be delayed by the Fund for up to seven days if KFS deems it
appropriate under then current market conditions. Once authorization is on file,
the Shareholder Service Agent will honor requests by telephone at 1-800-621-1048
or in writing, subject to the limitations on liability described under "General"
above. The Fund is not responsible for the efficiency of the federal wire system
or the account holder's financial services firm or bank. The Fund currently does
not charge the account holder for wire transfers. The account holder is
responsible for any charges imposed by the account holder's firm or bank. There
is a $1,000 wire redemption minimum. To change the designated account to receive
wire redemption proceeds, send a written request to the Shareholder Service
Agent with signatures guaranteed as described above or contact the firm through
which shares of the Fund were purchased. Shares purchased by check or through
EXPRESS-Transfer may not be redeemed by wire transfer until such shares have
been owned for at least 15 days. Account holders may not use this procedure to
redeem shares held in certificated form. During periods when it is difficult to
contact the Shareholder Service Agent by telephone, it may be difficult to use
the expedited redemption privilege. The Fund reserves the right to terminate or
modify this privilege at any time.
18
<PAGE> 22
REINVESTMENT PRIVILEGE. A shareholder who has redeemed shares of the Fund or
any other Kemper Mutual Fund listed under "Special Features--Combined Purchases"
may reinvest up to the full amount redeemed at net asset value at the time of
the reinvestment in shares of the Fund or in shares of the other listed Kemper
Mutual Funds. A shareholder of the Fund or any other Kemper Mutual Fund who
redeems shares purchased under the Large Order NAV Purchase Privilege (see
"Purchase of Shares") and incurs a contingent deferred sales charge may reinvest
up to the full amount redeemed at net asset value at the time of the
reinvestment in shares of the Fund or shares of other Kemper Mutual Funds. The
amount of any contingent deferred sales charge also will be reinvested. These
reinvested shares will retain their original cost and purchase date for purposes
of the contingent deferred sales charge. Also, a holder of Class B shares of
another Kemper Mutual Fund who has redeemed shares of that fund may reinvest up
to the full amount redeemed, less any applicable contingent deferred sales
charge that may have been imposed upon the redemption of such shares, at net
asset value in the Fund or in Class A shares of the other Kemper Mutual Funds
listed under "Special Features--Combined Purchases." Purchases through the
reinvestment privilege are subject to the minimum investment requirements
applicable to the shares being purchased and may only be made for funds
available for sale in the shareholder's state of residence as listed under
"Special Features--Exchange Privilege." The reinvestment privilege can be used
only once as to any specific shares and reinvestment must be effected within six
months of the redemption. If a loss is realized on the redemption of Fund
shares, the reinvestment may be subject to the "wash sale" rules if made within
30 days of the redemption, resulting in the postponement of the recognition of
such loss for federal income tax purposes. The reinvestment privilege may be
terminated or modified at any time and is subject to the limited Offering Period
of the Fund.
SPECIAL FEATURES
COMBINED PURCHASES. The Fund's shares may be purchased at the rate applicable to
the discount bracket attained by combining concurrent investments in Class A
shares (or the equivalent) of any of the following funds: Kemper Technology
Fund, Kemper Total Return Fund, Kemper Growth Fund, Kemper Small Capitalization
Equity Fund, Kemper Income and Capital Preservation Fund, Kemper Municipal Bond
Fund, Kemper Diversified Income Fund, Kemper High Yield Fund, Kemper U.S.
Government Securities Fund, Kemper International Fund, Kemper State Tax-Free
Income Series, Kemper Adjustable Rate U.S. Government Fund, Kemper Blue Chip
Fund, Kemper Global Income Fund, Kemper Target Equity Fund (series are subject
to a limited offering period) Kemper Intermediate Municipal Bond Fund, Kemper
Cash Reserves Fund (available only upon exchange or conversion from Class A
shares of another Kemper Mutual Fund), Kemper U.S. Mortgage Fund and Kemper
Short-Intermediate Government Fund ("Kemper Mutual Funds"). Except as noted
below, there is no combined purchase credit for direct purchases of shares of
Kemper Money Market Fund, Cash Equivalent Fund, Tax-Exempt California Money
Market Fund, Cash Account Trust, Tax-Exempt New York Money Market Fund or
Investors Cash Trust ("Money Market Funds"), which are not considered "Kemper
Mutual Funds" for purposes hereof. For purposes of the Combined Purchases
feature described above, as well as for the Letter of Intent and Cumulative
Discount features described below, employer sponsored employee benefit plans
using the subaccount record keeping system made available through KFS may
include (a) Money Market Funds as "Kemper Mutual Funds," (b) all classes of
shares of any Kemper Mutual Fund and (c) the value of any other plan investment,
such as guaranteed investment contracts and employer stock, maintained on such
subaccount record keeping system.
LETTER OF INTENT. The same reduced sales charges, as shown in the applicable
prospectus, also apply to the aggregate amount of purchases of such Kemper
Mutual Funds listed above made by any purchaser within a 24-month period under a
written Letter of Intent ("Letter") provided by KDI. As noted under "Purchase of
Shares," the Offering Period for the purchase of shares of the Fund is limited.
However, shares of other Kemper Mutual Funds noted above would be available
beyond that period. The Letter, which imposes no obligation to purchase or sell
additional shares, provides for a price adjustment depending upon the actual
amount purchased within such period. The Letter provides that the first purchase
following execution of the Letter must be at least 5% of the amount of the
intended purchase, and that 5% of the amount of the intended purchase normally
will be held in escrow in the form of shares pending completion of the intended
purchase. If the total investments under the Letter are less than the intended
amount and thereby qualify only for a higher sales charge than actually paid,
the appropriate number of escrowed
19
<PAGE> 23
shares will be redeemed and the proceeds used toward satisfaction of the
obligation to pay the increased sales charge. The Letter for an employer
sponsored employee benefit plan maintained on the subaccount record keeping
system available through KFS may have special provisions regarding payment of
any increased sales charge resulting from a failure to complete the intended
purchase under the Letter. A shareholder may include the value (at the maximum
offering price) of all shares of such Kemper Mutual Funds held of record as of
the initial purchase date under the Letter as an "accumulation credit" toward
the completion of the Letter, but no price adjustment will be made on such
shares.
CUMULATIVE DISCOUNT. The Fund's shares also may be purchased at the rate
applicable to the discount bracket attained by adding to the cost of Fund shares
being purchased the value of all shares of the above mentioned Kemper Mutual
Funds (computed at the maximum offering price at the time of the purchase for
which the discount is applicable) already owned by the investor.
AVAILABILITY OF QUANTITY DISCOUNTS. An investor or the investor's dealer or
other financial services firm must notify the Shareholder Service Agent or KDI
whenever a quantity discount or reduced sales charge is applicable to a
purchase. Upon such notification, the investor will receive the lowest
applicable sales charge. Quantity discounts described above may be modified or
terminated at any time.
EXCHANGE PRIVILEGE. Subject to the following limitations, shares of the Kemper
Mutual Funds and Money Market Funds listed under "Special Features--Combined
Purchases" above may be exchanged for each other at their relative net asset
values. Shares of Money Market Funds that were acquired by purchase (not
including shares acquired by dividend reinvestment) are subject to the
applicable sales charge on exchange. Shares purchased by check or through
EXPRESS-Transfer may not be exchanged until they have been owned for at least 15
days. In addition, shares of a Kemper Mutual Fund acquired by exchange from
another Kemper Mutual Fund, or from a Money Market Fund, may not be exchanged
thereafter until they have been owned for 15 days. A series of Kemper Target
Equity Fund will be available on exchange only during the Offering Period for
such series as described in the applicable prospectus. Cash Equivalent Fund,
Tax-Exempt California Money Market Fund, Cash Account Trust, Tax-Exempt New York
Money Market Fund and Investors Cash Trust are available on exchange but only
through a financial services firm having a services agreement with KDI.
Exchanges may only be made for funds that are available for sale in the
shareholder's state of residence. Currently, Tax-Exempt California Money Market
Fund is available for sale only in California and Tax-Exempt New York Money
Market Fund is available for sale only in New York, Connecticut, New Jersey and
Pennsylvania.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged.
Exchanges are made based on relative dollar values of the shares involved in the
exchange. There is no service fee for an exchange; however, dealers or other
firms may charge for their services in effecting exchange transactions.
Exchanges will be effected by redemption of shares of the fund held and purchase
of shares of the other fund. For federal income tax purposes, any such exchange
constitutes a sale upon which a gain or loss may be realized, depending upon
whether the value of the shares being exchanged is more or less than the
shareholder's adjusted cost basis of such shares. Shareholders interested in
exercising the exchange privilege may obtain prospectuses of the other funds
from dealers, other firms or KDI. Exchanges may be accomplished by a written
request to Kemper Mutual Funds, Attention: Exchange Department, P.O. Box 419557,
Kansas City, Missouri 64141-6557, or by telephone if the shareholder has given
authorization. Once the authorization is on file, the Shareholder Service Agent
will honor requests by telephone at 1-800-621-1048 or in writing, subject to the
limitations on liability under "Redemption or Repurchase of Shares--General."
Any share certificates must be deposited prior to any exchange of such shares.
During periods when it is difficult to contact the Shareholder Service Agent by
telephone, it may be difficult to use the telephone exchange privilege. The
exchange privilege is not a right and may be suspended, terminated or modified
at any time. Except as otherwise permitted by applicable regulations, 60 days'
prior written notice of any termination or material change will be provided.
EXPRESS-TRANSFER. EXPRESS-Transfer permits the transfer of money via the
Automated Clearing House System (minimum $100 and maximum $2,500) from a
shareholder's bank, savings and loan, or credit union account to
20
<PAGE> 24
purchase shares in the Fund. Shareholders can also redeem shares (minimum $500
and maximum $2,500) from their Fund account and transfer the proceeds to their
bank, savings and loan, or credit union checking account. By enrolling in
EXPRESS-Transfer, the shareholder authorizes the Shareholder Service Agent to
rely upon telephone instructions from ANY PERSON to transfer the specified
amounts between the shareholder's Fund account and the predesignated bank,
savings and loan or credit union account, subject to the limitations on
liability under "Redemption or Repurchase of Shares--General." Once enrolled in
EXPRESS-Transfer, a shareholder can initiate a transaction by calling Kemper
Shareholder Services toll free at 1-800-621-1048 Monday through Friday, 8:00
a.m. to 3:00 p.m. Chicago time. Shareholders may terminate this privilege by
sending written notice to Kemper Service Company, P.O. Box 419415, Kansas City,
Missouri 64141-6415. Termination will become effective as soon as the
Shareholder Service Agent has had a reasonable time to act upon the request.
EXPRESS-Transfer cannot be used with passbook savings accounts or for
tax-deferred plans such as Individual Retirement Accounts ("IRAs").
SYSTEMATIC WITHDRAWAL PLAN. The owner of $5,000 or more of the Fund's shares at
the offering price (net asset value plus the sales charge) may provide for the
payment from the owner's account of any requested dollar amount to be paid to
the owner or a designated payee monthly, quarterly, semiannually or annually.
The $5,000 minimum account size is not applicable to Individual Retirement
Accounts. The minimum periodic payment is $100. Shares are redeemed so that the
payee will receive payment approximately the first of the month. Any income and
capital gain dividends will be automatically reinvested at net asset value. A
sufficient number of full and fractional shares will be redeemed to make the
designated payment. Depending upon the size of the payments requested and
fluctuations in the net asset value of the shares redeemed, redemptions for the
purpose of making such payments may reduce or even exhaust the account.
The purchase of shares while participating in a systematic withdrawal plan
ordinarily will be disadvantageous to the investor because the investor will be
paying a sales charge on the purchase of shares at the same time that the
investor is redeeming shares upon which a sales charge may already have been
paid. Therefore, the Fund will not knowingly permit additional investments of
less than $2,000 if the investor is at the same time making systematic
withdrawals. (See "Purchase of Shares" regarding the limited Offering Period for
the Fund's shares.) The right is reserved to amend the systematic withdrawal
plan on 30 days' notice. The plan may be terminated at any time by the investor
or the Fund. As noted previously (see "Investment Objectives, Policies and Risk
Factors--How the Fund Works and Special Risk Factors"), only shareholders who
hold their shares in the Fund until the Maturity Date and reinvest their
dividends in the Fund will necessarily receive the benefit of the Fund's
Investment Protection.
TAX-SHELTERED RETIREMENT PLANS. KFS provides retirement plan services and
documents and KDI can establish investor accounts in any of the following types
of retirement plans:
- - Individual Retirement Accounts ("IRAs") trusteed by IFTC. This includes
Simplified Employee Pension Plan ("SEP") IRA accounts and prototype documents.
- - 403(b)(7) Custodial Accounts also trusteed by IFTC. This type of plan is
available to employees of most non-profit organizations.
- - Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum annual contribution per participant is the lesser of
25% of compensation or $30,000.
Brochures describing the above plans as well as model defined benefit plans,
target benefit plans, 457 plans, 401(k) plans and materials for establishing
them are available from KDI upon request. The brochures for plans trusteed by
IFTC describe the current fees payable to IFTC for its services as trustee.
Investors should consult with their own tax advisers before establishing a
retirement plan. In view of the limited Offering Period of the Fund (see
"Purchase of Shares"), the Fund may not be appropriate for periodic contribution
plans.
21
<PAGE> 25
PERFORMANCE
The Fund may advertise several types of performance information, including
"average annual total return" and "total return." Each of these figures is based
upon historical results and is not representative of the future performance of
the Fund.
Average annual total return and total return figures measure both the net
investment income generated by, and the effect of any realized and unrealized
appreciation or depreciation of, the underlying investments in the Fund's
portfolio for the period referenced, assuming the reinvestment of all dividends.
Thus, these figures reflect the change in the value of an investment in the Fund
during a specified period. Average annual total return will be quoted for at
least the one, five and ten year periods ending on a recent calendar quarter (or
if such periods have not yet elapsed, at the end of a shorter period
corresponding to the life of the Fund). Average annual total return figures
represent the average annual percentage change over the period in question.
Total return figures represent the aggregate percentage or dollar value change
over the period in question.
The Fund's performance may be compared to that of the Consumer Price Index or
various unmanaged indexes including the Standard & Poor's 500 Stock Index, the
Russell 1000(R) Growth Index and the Wilshire 750 Mid-Cap Growth Index. The
Fund's performance may also be compared to the performance of other mutual funds
or mutual fund indexes as reported by independent mutual fund reporting services
such as Lipper Analytical Services, Inc. ("Lipper"). Lipper performance
calculations are based upon changes in net asset value with all dividends
reinvested and do not include the effect of any sales charges.
The Fund may quote information from publications such as Morningstar, Inc., The
Wall Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago
Tribune, USA Today, Institutional Investor and Registered Representative. Also,
investors may want to compare the historical returns of various investments,
performance indexes of those investments or economic indicators, including but
not limited to stocks, bonds, certificates of deposit, money market funds and
U.S. Treasury obligations. Bank product performance may be based upon, among
other things, the BANK RATE MONITOR National Index(TM) or various certificate of
deposit indexes. Money market fund performance may be based upon, among other
things, the IBC/Donoghue Money Fund Report(R) or Money Market Insight(R),
reporting services on money market funds. Performance of U.S. Treasury
obligations may be based upon, among other things, various U.S. Treasury bill
indexes. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured.
The Fund may depict the historical performance of the securities in which the
Fund may invest over periods reflecting a variety of market or economic
conditions either alone or in comparison with alternative investments,
performance indexes of those investments or economic indicators. The Fund may
also describe its portfolio holdings and depict its size or relative size
compared to other mutual funds, the number and make-up of its shareholder base
and other descriptive factors concerning the Fund.
The Fund's shares are sold at net asset value plus a maximum sales charge of
5.0% of the offering price. While the maximum sales charge is normally reflected
in the Fund's performance figures, certain total return calculations may not
include such charge and those results would be reduced if it were included. The
Fund's returns and net asset value will fluctuate. Shares of the Fund are
redeemable by an investor at the then current net asset value, which may be more
or less than original cost. Additional information concerning the Fund's
performance and concerning the historical performance of various types of
investments that may be used to provide for retirement needs appears in the
Statement of Additional Information. Additional information about the Fund's
performance also appears in its Annual Report to Shareholders, which is
available without charge from the Fund.
CAPITAL STRUCTURE
The Trust is an open-end, management investment company, organized as a business
trust under the laws of Massachusetts on August 3, 1988. Effective May 1, 1994,
the Trust changed its name from Kemper Retirement Fund to Kemper Target Equity
Fund. The Trust may issue an unlimited number of shares of beneficial interest
in one or
22
<PAGE> 26
more series, all having no par value. The Trust has established seven series of
shares: Kemper Retirement Fund Series I, Series II, Series III, Series IV and
Series V, which are no longer offered, Kemper Retirement Fund Series VI, which
is the Fund, and Kemper Worldwide 2004 Fund. The Board of Trustees may authorize
the issuance of additional series if deemed desirable, each with its own
investment objective, policies and restrictions. Since the Trust may offer
multiple series, it is known as a "series company." Shares of a series have
equal noncumulative voting rights and equal rights with respect to dividends,
assets and liquidation of such series. Shares are fully paid and nonassessable
when issued, are transferable without restriction and have no preemptive or
conversion rights. The Trust is not required to hold annual shareholders'
meetings and does not intend to do so. However, it will hold special meetings as
required or deemed desirable for such purposes as electing trustees, changing
fundamental policies or approving an investment management agreement. Subject to
the Agreement and Declaration of Trust of the Trust, shareholders may remove
trustees. Shareholders will vote by series and not in the aggregate except when
voting in the aggregate is required under the Investment Company Act of 1940,
such as for the election of trustees. Any series of the Trust, including the
Fund, may be divided by the Board of Trustees into classes of shares, subject to
receipt of an appropriate order from the Securities and Exchange Commission. The
Trust's shares currently are not divided into classes. Shares of a series would
be subject to any preferences, rights or privileges of any classes of shares of
the series. Generally each class of shares issued by a particular series of the
Trust would differ as to the allocation of certain expenses of the series such
as distribution and administrative expenses permitting, among other things,
different levels of service or methods of distribution among various classes.
23
<PAGE> 27
KEMPER
RETIREMENT
FUNDS
SERIES VI
PROSPECTUS
AND APPLICATION
MAY 1, 1995
(LOGO)
INVESTMENT MANAGER
Kemper Financial Services, Inc.
PRINCIPAL UNDERWRITER
Kemper Distributors, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
1-800-621-1048
KRF-1 5/95 (LOGO)printed on recycled paper
(LOGO)
KEMPER
<PAGE> 28
KEMPER TARGET EQUITY FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER LOCATION IN STATEMENT OF
OF FORM N-1A ADDITIONAL INFORMATION
- ----------------------------------------------- ---------------------------------------------
<S> <C> <C>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Inapplicable
13. Investment Objectives and Policies....... Investment Restrictions; Investment Policies
and Techniques
14. Management of the Fund................... Investment Manager and Underwriter;
Officers and Trustees
15. Control Persons and Principal Holders of
Securities............................... Officers and Trustees
16. Investment Advisory and Other Services... Investment Manager and Underwriter
17. Brokerage Allocation and Other
Practices................................ Portfolio Transactions
18. Capital Stock and Other Securities....... Dividends and Taxes;
Shareholder Rights
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Purchase and Redemption of Shares
20. Tax Status............................... Dividends and Taxes
21. Underwriters............................. Investment Manager and Underwriter
22. Calculation of Performance Data.......... Performance
23. Financial Statements..................... Report of Independent Auditors; Statement
of Net Assets
</TABLE>
<PAGE> 29
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
KEMPER RETIREMENT FUND SERIES VI
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
1-800-621-1048
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus of Kemper Retirement Fund Series VI (the
"Fund") dated May 1, 1995. The prospectus may be obtained without charge from
the Fund. The Fund is a series of Kemper Target Equity Fund.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Restrictions............................................ B-1
Investment Policies and Techniques................................. B-2
Dividends and Taxes................................................ B-9
Performance........................................................ B-11
Investment Manager and Underwriter................................. B-11
Portfolio Transactions............................................. B-13
Purchase and Redemption of Shares.................................. B-14
Officers and Trustees.............................................. B-15
Shareholder Rights................................................. B-16
Report of Independent Auditors..................................... B-18
Statement of Net Assets............................................ B-19
</TABLE>
KRF 13 5/95 (LOGO)printed on recycled paper
<PAGE> 30
INVESTMENT RESTRICTIONS
Kemper Target Equity Fund (the "Trust") has adopted the following fundamental
investment restrictions which cannot be changed with respect to Kemper
Retirement Fund Series VI (the "Fund"), without approval of a "majority" of its
outstanding shares, which means the lesser of (1) 67% of the Fund's shares
present at a meeting at which the holders of more than 50% of the outstanding
shares are present in person or by proxy; or (2) more than 50% of the Fund's
outstanding shares.
The Fund may not, as a fundamental policy:
(1) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the U.S. Government, its agencies or instrumentalities) if, as a result,
more than 5% of the total value of the Fund's assets would be invested in
securities of that issuer.
(2) Purchase more than 10% of any class of voting securities of any issuer.
(3) Make loans to others provided that the Fund may purchase debt obligations or
repurchase agreements and it may lend its securities in accordance with its
investment objectives and policies.
(4) Borrow money except as a temporary measure for extraordinary or emergency
purposes, and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
portfolio securities. If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Fund will, within three days (not including Sundays and
holidays), reduce its indebtedness to the extent necessary. The Fund will not
borrow for leverage purposes and will not purchase securities or make
investments while borrowings are outstanding.
(5) Pledge, hypothecate, mortgage or otherwise encumber more than 15% of its
total assets and then only to secure borrowings permitted by restriction 4
above. (The collateral arrangements with respect to options, financial futures
and delayed delivery transactions and any margin payments in connection
therewith are not deemed to be pledges or other encumbrances.)
(6) Purchase securities on margin, except to obtain such short-term credits as
may be necessary for the clearance of transactions; however, the Fund may make
margin deposits in connection with options and financial futures transactions.
(7) Make short sales of securities or other assets or maintain a short position
for the account of the Fund unless at all times when a short position is open it
owns an equal amount of such securities or other assets or owns securities
which, without payment of any further consideration, are convertible into or
exchangeable for securities or other assets of the same issue as, and equal in
amount to, the securities or other assets sold short and unless not more than
10% of the Fund's total assets is held as collateral for such sales at any one
time.
(8) Write or sell put or call options, combinations thereof or similar options;
nor may the Fund purchase put or call options if more than 5% of the Fund's net
assets would be invested in premiums on put and call options, combinations
thereof or similar options; however, the Fund may buy or sell options on
financial futures contracts.
(9) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Trust or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more than
5% of the securities of such issuer.
(10) Invest for the purpose of exercising control or management of another
issuer.
(11) Purchase securities (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if as a result of such purchase
25% or more of the Fund's total assets would be invested in any one industry.
B-1
<PAGE> 31
(12) Invest in commodities or commodity futures contracts, although it may buy
or sell financial futures contracts and options on such contracts, and engage in
foreign currency transactions; or in real estate (including real estate limited
partnerships), although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate including
real estate investment trusts.
(13) Invest in interests in oil or gas exploration or development programs,
although it may invest in the securities of issuers which invest in or sponsor
such programs.
(14) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities.
(15) Issue senior securities as defined in the Investment Company Act of 1940.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The Fund did
not borrow money as permitted by investment restriction number (4) in the latest
fiscal period and it has no present intention of borrowing during the current
year. The Fund has adopted the following non-fundamental restrictions, which may
be changed by the Board of Trustees without shareholder approval.
The Fund may not, as a non-fundamental policy:
(i) Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York or American Stock
Exchanges. Warrants acquired in units or attached to securities may be deemed to
be without value for such purposes.
(ii) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
(iii) Invest in oil, gas or other mineral leases.
(iv) Invest more than 5% of the Fund's total assets in securities of issuers
(other than obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities) which with their predecessors have a record of less than
three years continuous operation and equity securities of issuers which are not
readily marketable.
(v) Invest more than 5% of its total assets in restricted securities, excluding
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid pursuant to
procedures adopted by the Board of Trustees, provided that the total amount of
Fund assets invested in restricted securities will not exceed 10% of total
assets.
(vi) Invest more than 10% of its total assets in securities of real estate
investment trusts.
INVESTMENT POLICIES AND TECHNIQUES
GENERAL. The Fund may invest in Zero Coupon Treasuries and Equity Securities (as
defined in the prospectus) and engage in futures and options transactions and
other investment techniques in accordance with its investment objectives and
policies. See "Investment Objectives, Policies and Risk Factors" in the
prospectus. Supplemental information concerning the Fund's investments and
certain investment techniques is set forth below.
ZERO COUPON TREASURIES. There are currently two basic types of zero coupon
securities, those created by separating the interest and principal components of
a previously issued interest-paying security and those originally issued in the
form of a face amount only security paying no interest. Zero coupon securities
of the U.S. Government and certain of its agencies and instrumentalities and of
private corporate issuers are currently available, although the Fund will
purchase only those that represent direct obligations of the U.S. Government.
B-2
<PAGE> 32
Zero coupon securities of the U.S. Government that are currently available are
called STRIPS (Separate Trading of Registered Interest and Principal of
Securities) or CUBES (Coupon Under Book-Entry Safekeeping). STRIPS and CUBES are
issued under programs introduced by the U.S. Treasury and are direct obligations
of the U.S. Government. The U.S. Government does not issue zero coupon
securities directly. The STRIPS program, which is ongoing, is designed to
facilitate the secondary market stripping of selected Treasury notes and bonds
into individual interest and principal components. Under the program, the U.S.
Treasury continues to sell its notes and bonds through its customary auction
process. However, a purchaser of those notes and bonds who has access to a
book-entry account at a Federal Reserve bank may separate the specified Treasury
notes and bonds into individual interest and principal components. The selected
Treasury securities may thereafter be maintained in the book-entry system
operated by the Federal Reserve in a manner that permits the separate trading
and ownership of the interest and principal payments. The Federal Reserve does
not charge a fee for this service; however, the book-entry transfer of interest
or principal components is subject to the same fee schedule generally applicable
to the transfer of Treasury securities.
Under the program, in order for a book-entry Treasury security to be separated
into its component parts, the face amount of the security must be an amount
which, based on the stated interest rate of the security, will produce a
semi-annual interest payment of $1,000 or a multiple of $1,000. Once a
book-entry security has been separated, each interest and principal component
may be maintained and transferred in multiples of $1,000 regardless of the face
amount initially required for separation or the resulting amount required for
each interest payment.
CUBES, like STRIPS, are direct obligations of the U.S. Government. CUBES are
coupons that have previously been physically stripped from Treasury notes and
bonds, but which were deposited with the Federal Reserve and are now carried and
transferable in book-entry form only. Only stripped Treasury coupons maturing on
or after January 15, 1988, that were stripped prior to January 5, 1987, were
eligible for conversion to book-entry form under the CUBES program.
Investment banks may also strip Treasury securities and sell them under
proprietary names. These securities may not be as liquid as STRIPS and CUBES and
the Fund has no present intention of investing in these instruments.
STRIPS and CUBES are purchased at a discount from $1,000. Absent a default by
the U.S. Government, a purchaser will receive face value for each of the STRIPS
and CUBES provided the STRIPS and CUBES are held to their due dates. While
STRIPS and CUBES can be purchased on any business day, they all currently come
due on February 15, May 15, August 15 or November 15.
FINANCIAL FUTURES CONTRACTS. The Fund may enter into financial futures contracts
for the future delivery of a financial instrument, such as a security, or an
amount of foreign currency or the cash value of a securities index. This
investment technique is designed primarily to hedge (i.e., protect) against
anticipated future changes in market conditions or foreign exchange rates which
otherwise might adversely affect the value of securities or other assets which
the Fund holds or intends to purchase. A "sale" of a futures contract means the
undertaking of a contractual obligation to deliver the securities or the cash
value of an index or foreign currency called for by the contract at a specified
price during a specified delivery period. A "purchase" of a futures contract
means the undertaking of a contractual obligation to acquire the securities or
cash value of an index or foreign currency at a specified price during a
specified delivery period. At the time of delivery, in the case of fixed income
securities pursuant to the contract, adjustments are made to recognize
differences in value arising from the delivery of securities with a different
interest rate than that specified in the contract. In some cases, securities
called for by a futures contract may not have been issued at the time the
contract was written. The Fund will not enter into any futures contracts or
options on futures contracts if the aggregate of the contract value of the
outstanding futures contracts of the Fund and futures contracts subject to
outstanding options written by the Fund would exceed 50% of the total assets of
the Fund.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities or other assets, in most cases a party
will close out the contractual commitment before delivery without having to make
or take delivery of the underlying assets by purchasing (or selling, as the case
may be) on a commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, if effected through a member
B-3
<PAGE> 33
of an exchange, cancels the obligation to make or take delivery of the
securities or other assets. All transactions in the futures market are made,
offset or fulfilled through a clearing house associated with the exchange on
which the contracts are traded. The Fund will incur brokerage fees when it
purchases or sells contracts, and will be required to maintain margin deposits.
At the time the Fund enters into a futures contract, it is required to deposit
with its custodian, on behalf of the broker, a specified amount of cash or
eligible securities, called "initial margin." The initial margin required for a
futures contract is set by the exchange on which the contract is traded.
Subsequent payments, called "variation margin," to and from the broker are made
on a daily basis as the market price of the futures contract fluctuates. The
costs incurred in connection with futures transactions could reduce the Fund's
return. Futures contracts entail risks. If the investment manager's judgment
about the general direction of markets or exchange rates is wrong, the overall
performance may be poorer than if no such contracts had been entered into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio assets being hedged. In addition, the market prices of
futures contracts may be affected by certain factors. If participants in the
futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the assets and futures markets could result. Price
distortions could also result if investors in futures contracts decide to make
or take delivery of underlying securities or other assets rather than engage in
closing transactions because of the resultant reduction in the liquidity of the
futures market. In addition, because, from the point of view of speculators, the
margin requirements in the futures market are less onerous than margin
requirements in the cash market, increased participation by speculators in the
futures market could cause temporary price distortions. Due to the possibility
of price distortions in the futures market and because of the imperfect
correlation between movements in the prices of securities or other assets and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment manager may still not result in a successful hedging
transaction. If any of these events should occur, the Fund could lose money on
the financial futures contracts and also on the value of its assets.
OPTIONS ON FINANCIAL FUTURES CONTRACTS. The Fund may purchase and write call and
put options on financial futures contracts. An option on a futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract at a specified exercise price at any time during
the period of the option. Upon exercise, the writer of the option delivers the
futures contract to the holder at the exercise price. The Fund would be required
to deposit with its custodian initial margin and maintenance margin with respect
to put and call options on futures contracts written by it. The Fund will
establish segregated accounts or will provide cover with respect to written
options on financial futures contracts in a manner similar to that described
under "Options on Securities" below. Options on futures contracts involve risks
similar to those risks relating to transactions in financial futures contracts
described above. Also, an option purchased by the Fund may expire worthless, in
which case the Fund would lose the premium paid therefor.
OPTIONS ON SECURITIES. The Fund may invest in put and call options on
securities. The Fund will only invest in options which are traded on securities
exchanges and for which it pays a premium (cost of option). The Fund may enter
into closing transactions, exercise its options or permit them to expire. A put
option gives the holder (buyer) the "right to sell" a security at a specified
price (the exercise price) at any time until a certain date (the expiration
date). A call option gives the holder (buyer) the "right to purchase" a security
at a specified price (the exercise price) at any time until a certain date (the
expiration date). The Fund may purchase spread options which are options for
which the exercise price may be a fixed dollar spread or yield spread between
the security underlying the option and another security it does not own, but
that is used as a bench mark. Options traded on national securities exchanges
are issued by The Options Clearing Corporation.
In effect, the buyer of a put option who also owns the related security is
protected by ownership of the put option against any decline in that security's
price below the exercise price less the amount paid for the option. The ability
to purchase put options allows the Fund to protect capital gains in an
appreciated security it owns, without being required to sell that security.
B-4
<PAGE> 34
At times the Fund may wish to establish a position in a security upon which call
options are available. By purchasing a call option the Fund is able to fix the
cost of acquiring the security, this being the cost of the call option plus the
exercise price of the option. This procedure also provides some protection from
an unexpected downturn in the market because the Fund would be at risk only for
the amount of the premium paid for the call option which it can, if it chooses,
permit to expire.
When the Fund purchases a call option it pays a premium. The Fund will benefit
only if the market price of the related investment is above the call price plus
the premium during the exercise period and the call is either exercised or sold
at a profit. If it is not exercised or sold, it will become worthless at its
expiration date and the Fund will lose its premium payment. If the Fund buys a
put option, it also pays a premium. If the market price of the related
investment is above the exercise price and, as a result, the put is not
exercised or sold, the put will become worthless at its expiration date.
OPTIONS ON SECURITIES INDICES. The Fund also may purchase call and put options
on securities indices in an attempt to hedge against market conditions affecting
the value of securities that the Fund owns or intends to purchase, and not for
speculation. Through the purchase of index options, the Fund can achieve many of
the same objectives as through the use of options on individual securities.
Options on securities indices are similar to options on a security except that,
rather than the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the
securities index upon which the option is based is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option.
This amount of cash is equal to the difference between the closing price of the
index and the exercise price of the option. The writer of the option is
obligated, in return for the premium received, to make delivery of this amount.
Unlike security options, all settlements are in cash and gain or loss depends
upon price movements in the market generally (or in a particular industry or
segment of the market) rather than upon price movements in individual
securities. Price movements in securities that the Fund owns or intends to
purchase will probably not correlate perfectly with movements in the level of an
index since the prices of such securities may be affected by somewhat different
factors. Therefore, the Fund bears the risk that a loss on an index option would
not be completely offset by movements in the price of such securities.
Options on a securities index involve risks similar to those risks relating to
transactions in financial futures contracts described above. Also, an option
purchased by the Fund may expire worthless, in which case the Fund would lose
the premium paid therefor.
REGULATORY RESTRICTIONS. To the extent required to comply with SEC Release No.
IC-10666, when purchasing a futures contract or entering into a forward foreign
currency exchange purchase, the Fund will maintain in a segregated account cash,
U.S. Government securities or liquid high-grade debt obligations equal to the
value of such contracts. The Fund will use cover in connection with selling a
futures contract.
The Fund will not engage in transactions in financial futures contracts or
options thereon for speculation, but only to attempt to hedge against changes in
market conditions affecting the values of securities or other assets which the
Fund holds or intends to purchase.
FOREIGN SECURITIES. Although the Fund will invest primarily in securities that
are publicly traded in the United States, it has the discretion to invest a
portion of its assets in foreign securities that are traded principally in
securities markets outside the United States. The Fund currently limits
investment in foreign securities not publicly traded in the United States to
less than 10% of its total assets. As discussed below, American Depository
Receipts are publicly traded in the United States and, therefore, are not
subject to the preceding limitation. The Fund intends to invest in foreign
securities that are not publicly traded in the United States only when the
potential benefits to the Fund are deemed to outweigh the risks.
Foreign securities involve currency risks. The U.S. Dollar value of a foreign
security tends to decrease when the value of the U.S. Dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the dollar falls against such currency. Fluctuations in exchange
rates may also affect the earning
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power and asset value of the foreign entity issuing the security. Dividend and
interest payments may be repatriated based on the exchange rate at the time of
disbursement, and restrictions on capital flows may be imposed.
Foreign securities may be subject to foreign government taxes that reduce their
attractiveness. Other risks of investing in such securities include political or
economic instability in the country involved, the difficulty of predicting
international trade patterns and the possible imposition of exchange controls.
The prices of such securities may be more volatile than those of domestic
securities and the markets for foreign securities may be less liquid. In
addition, there may be less publicly available information about foreign issuers
than about domestic issuers. Many foreign issuers are not subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers. There is generally less regulation of stock
exchanges, brokers, banks and listed companies abroad than in the United States.
Settlement of Foreign Securities trades may take longer and present more risk
than for domestic securities. With respect to certain foreign countries, there
is a possibility of expropriation or diplomatic developments that could affect
investment in these countries. Losses and other expenses may be incurred in
converting between various currencies in connection with purchases and sales of
foreign securities.
Emerging Markets. While the Fund's investments in foreign securities will
principally be in developed countries, the Fund may invest a portion of its
assets in developing or "emerging" markets, which involve exposure to economic
structures that are generally less diverse and mature than in the United States,
and to political systems that may be less stable. A developing or emerging
market country can be considered to be a country that is in the initial stages
of its industrialization cycle. Currently, emerging markets generally include
every country in the world other than the United States, Canada, Japan,
Australia, New Zealand, Hong Kong, Singapore and most Western European
countries. Currently, investing in many emerging markets may not be desirable or
feasible because of the lack of adequate custody arrangements for the Fund's
assets, overly burdensome repatriation and similar restrictions, the lack of
organized and liquid securities markets, unacceptable political risks or other
reasons. As opportunities to invest in securities in emerging markets develop,
the Fund may expand and further broaden the group of emerging markets in which
it invests. In the past, markets of developing countries have been more volatile
than the markets of developed countries; however, such markets often have
provided higher rates of return to investors. The investment manager believes
that these characteristics can be expected to continue in the future.
Many of the risks described above relating to foreign securities generally will
be greater for emerging markets than for developed countries. For instance,
economies in individual developing markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging markets have
experienced substantial rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain developing markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries with which they
trade.
Also, the securities markets of developing countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure, regulatory and
accounting standards in many respects are less stringent than in the United
States and other developed markets. There also may be a lower level of
monitoring and regulation of developing markets and the activities of investors
in such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States; this is particularly true with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct
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such transactions. Such settlement problems may cause emerging market securities
to be illiquid. The inability of the Fund to make intended securities purchases
due to settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser. Certain
emerging markets may lack clearing facilities equivalent to those in developed
countries. Accordingly, settlements can pose additional risks in such markets
and ultimately can expose the Fund to the risk of losses resulting from the
Fund's inability to recover from a counterparty.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. The Fund's portfolio securities in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the Board of Trustees.
Investment in certain emerging market securities is restricted or controlled to
varying degrees. These restrictions or controls may at times limit or preclude
foreign investment in certain emerging market securities and increase the cost
and expenses of the Fund. Emerging markets may require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments, the market could impose temporary
restrictions on foreign capital remittances.
Privatized Enterprises. The governments of certain foreign countries have, to
varying degrees, embarked on privatization programs contemplating the sale of
all or part of their interests in state enterprises. The Fund's investments in
the securities of privatized enterprises include privately negotiated
investments in a government- or state-owned or controlled company or enterprise
that has not yet conducted an initial equity offering, investments in the
initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.
In certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.
In the case of the enterprises in which the Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization of management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as the enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which the Fund may
invest enjoy the protection of and receive preferential treatment from the
respective sovereigns that own or control them. After making an initial equity
offering these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition.
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Depository Receipts. For many foreign securities, there are U.S.
Dollar-denominated American Depository Receipts ("ADRs"), which are bought and
sold in the United States and are generally issued by domestic banks. ADRs
represent the right to receive securities of foreign issuers deposited in the
domestic bank or a correspondent bank. ADRs do not eliminate all the risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the Fund will
avoid currency risks during the settlement period for either purchases or sales.
In general, there is a large, liquid market in the United States for most ADRs.
The Fund may also invest in European Depository Receipts ("EDRs"), which are
receipts evidencing an arrangement with a European bank similar to that for ADRs
and are designed for use in the European securities markets. EDRs are not
necessarily denominated in the currency of the underlying security.
FOREIGN CURRENCY TRANSACTIONS. As indicated above (see "Foreign Securities"),
the Fund may invest a limited portion of its assets in securities denominated in
foreign currencies. The value of the assets of the Fund invested in such
securities as measured in U.S. Dollars may be affected favorably or unfavorably
by changes in foreign currency exchange rates and exchange control regulations,
and the Fund may incur costs in connection with conversions between various
currencies. The Fund will conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date at a price
set at the time of the contract.
By entering into a forward contract in U.S. Dollars for the purchase or sale of
the amount of foreign currency involved in an underlying security transaction,
the Fund is able to protect itself against a possible loss between trade and
settlement dates resulting from an adverse change in the relationship between
the U.S. Dollar and such foreign currency. However, this tends to limit gains
which might result from a positive change in such currency relationships.
When KFS believes that the currency of a particular foreign country may suffer a
substantial decline against the U.S. Dollar, it may enter into a forward
contract to sell an amount of foreign currency approximating the value of some
or all of the Fund's portfolio securities denominated in such foreign currency.
It is extremely difficult to forecast short-term currency market movements, and
whether such a short-term hedging strategy would be successful is highly
uncertain.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a contract. Accordingly, it may be
necessary for the Fund to purchase additional currency on the spot market (and
bear the expense of such purchase) if the market value of the security is less
than the amount of foreign currency the Fund is obligated to deliver when a
decision is made to sell the security and make delivery of the foreign currency
in settlement of a forward contract. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction with respect to a forward contract, the Fund will incur a gain or a
loss (as described below) to the extent that there has been movement in forward
contract prices. If the Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign currency.
Should forward prices decline during the period between the Fund's entering into
a forward contract for the sale of foreign currency and the date it enters into
an offsetting contract for the purchase of the foreign currency, the Fund would
realize a gain to the extent the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund would suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. Although such contracts tend to minimize the risk of loss due to
a decline in the value of the hedged currency, they also tend to limit any gain
which might result should the value of such currency increase. The Fund may have
to convert its holdings of foreign currencies into U.S. Dollars from time to
time in order to meet such needs as Fund expenses and redemption requests.
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The Fund does not enter into forward contracts or maintain a net exposure in
such contracts where the Fund would be obligated to deliver an amount of foreign
currency in excess of the value of the Fund's portfolio securities or other
assets denominated in that currency. The Fund does not intend to enter into
forward contracts for the purchase of a foreign currency if the Fund would have
more than 5% of the value of its total assets committed to such contracts. The
Fund segregates cash or liquid high-grade securities in an amount not less than
the value of the Fund's total assets committed to forward foreign currency
exchange contracts entered into for the purchase of a foreign currency. If the
value of the securities segregated declines, additional cash or securities are
added so that the segregated amount is not less than the amount of the Fund's
commitments with respect to such contracts. The Fund generally does not enter
into a forward contract with a term longer than one year.
The Fund may also hedge its foreign currency exchange rate risk by engaging in
foreign currency financial futures transactions and by purchasing foreign
currency options. A foreign currency call rises in value if the underlying
currency appreciates. Conversely, a put rises in value if the underlying
currency depreciates. Through the purchase or sale of foreign currency financial
futures contracts, the Fund may be able to achieve many of the same objectives
as through forward foreign currency exchange contracts more effectively and
perhaps at a lower cost. Unlike forward foreign currency exchange contracts,
foreign currency futures contracts and options on foreign currency futures
contracts are standardized as to amount and delivery period and are traded on
boards of trade and commodities exchanges. Such contracts may provide greater
liquidity and lower cost than forward foreign currency exchange contracts. For
additional information concerning options transactions and financial futures
transactions, please see "Investment Objectives, Policies and Risk
Factors--Additional Investment Information" in the prospectus and related
subsections above under "Investment Policies and Techniques."
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements, which are
instruments under which the Fund acquires ownership of a security from a
broker-dealer or bank that agrees to repurchase the security at a mutually
agreed upon time and price (which price is higher than the purchase price),
thereby determining the yield during the Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement, the Fund
might incur expenses in enforcing its rights, and could experience losses,
including a decline in the value of the underlying securities and loss of
income. The securities underlying a repurchase agreement will be marked-to-
market every business day so that the value of such securities is at least equal
to the investment value of the repurchase agreement, including any accrued
interest thereon. The Fund currently does not intend to invest more than 5% of
its net assets in repurchase agreements during the current year.
SHORT SALES AGAINST-THE-BOX. The Fund may make short sales against-the-box for
the purpose of deferring realization of gain or loss for federal income tax
purposes. A short sale "against-the-box" is a short sale in which the Fund owns
at least an equal amount of the securities or other assets sold short or
securities convertible into or exchangeable for, without payment of any further
consideration, securities or other assets of the same issue as, and at least
equal in amount to, the securities or other assets sold short. The Fund may
engage in such short sales only to the extent that not more than 10% of the
Fund's total assets (determined at the time of the short sale) is held as
collateral for such sales. The Fund currently does not intend, however, to
engage in such short sales to the extent that more than 5% of its net assets
will be held as collateral therefor during the current year.
DIVIDENDS AND TAXES
DIVIDENDS. The Fund will normally distribute annual dividends of net investment
income and any net realized short-term and long-term capital gains. The Fund may
at any time vary the foregoing dividend practice and, therefore, reserves the
right from time to time either to distribute or to retain for reinvestment such
of its net investment income and its net short-term and long-term capital gains
as the Board of Trustees of the Trust determines appropriate under then current
circumstances. In particular, and without limiting the foregoing, the Fund may
make additional distributions of net investment income or capital gain net
income in order to satisfy the minimum distribution requirements contained in
the Internal Revenue Code (the "Code"). Dividends will be reinvested in shares
of the Fund unless shareholders indicate in writing that they wish to receive
them in cash or in shares of other Kemper Funds. As reflected in the prospectus
(see "Dividends and Taxes"), shareholders must
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reinvest all dividends and hold their shares until the Maturity Date in order to
be assured of the benefit of the Fund's Investment Protection.
TAXES. The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code and, if so qualified, will not be liable for federal
income taxes to the extent its earnings are distributed. One of the Subchapter M
requirements to be satisfied is that less than 30% of the Fund's gross income
during the fiscal year must be derived from gains (not reduced by losses) from
the sale or other disposition of securities and certain other investments held
for less than three months. The Fund may be limited in its options, futures and
foreign currency transactions in order to prevent recognition of such gains.
The Fund's options, futures and foreign currency transactions are subject to
special tax provisions that may accelerate or defer recognition of certain gains
or losses, change the character of certain gains or losses, or alter the holding
periods of certain of the Fund's securities.
A 4% excise tax is imposed on the excess of the required distribution for a
calendar year over the distributed amount for such calendar year. The required
distribution is the sum of 98% of the Fund's net investment income for the
calendar year plus 98% of its capital gain net income for the one-year period
ending October 31, plus any undistributed net investment income from the prior
calendar year, plus any undistributed capital gain net income from the one year
period ended October 31 in the prior calendar year, minus any overdistribution
in the prior calendar year. For purposes of calculating the required
distribution, foreign currency gains or losses occurring after October 31 are
taken into account in the following calendar year. The Fund intends to declare
or distribute dividends during the appropriate periods of an amount sufficient
to prevent imposition of the 4% excise tax.
A portion of the ordinary income dividends from the Fund may be eligible for the
dividends received deduction available to corporate shareholders. The aggregate
amount eligible for the dividends received deduction may not exceed the
aggregate qualifying dividends received by the Fund for the fiscal year.
A shareholder who redeems shares of the Fund will recognize capital gain or loss
for federal income tax purposes measured by the difference between the value of
the shares redeemed and the adjusted cost basis of the shares. Any loss
recognized on the redemption of Fund shares held six months or less will be
treated as long-term capital loss to the extent that the shareholder has
received any long-term capital gain dividends on such shares. A shareholder who
has redeemed shares of the Fund or any other Kemper Mutual Fund listed in the
prospectus under "Special Features--Combined Purchases" may reinvest the amount
redeemed at net asset value at the time of the reinvestment in shares of the
Fund or in shares of the other Kemper Mutual Funds within six months of the
redemption as described in the prospectus under "Redemption or Repurchase of
Shares--Reinvestment Privilege." If the redeemed shares were held less than 91
days, then the lesser of (a) the sales charge waived on the reinvestment shares,
or (b) the sales charge incurred on the redeemed shares, is included in the
basis of the reinvestment shares and is not included in the basis of the
redeemed shares. If a shareholder realizes a loss on the redemption or exchange
of Fund shares and reinvests in Fund shares within 30 days before or after the
redemption or exchange, the transactions may be subject to the wash sale rules
resulting in a postponement of the recognition of such loss for federal income
tax purposes. An exchange of Fund shares for shares of another fund is treated
as a redemption and reinvestment for federal income tax purposes.
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PERFORMANCE
As described in the prospectus, the Fund's historical performance or return may
be shown in the form of "average annual total return" and "total return"
figures. These various measures of performance are described below.
The Fund's average annual total return quotation is computed in accordance with
a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for the Fund for a specific period
is found by first taking a hypothetical $1,000 investment ("initial investment")
in the Fund's shares on the first day of the period, adjusting to deduct the
maximum sales charge, and computing the "redeemable value" of that investment at
the end of the period. The redeemable value is then divided by the initial
investment, and this quotient is taken to the Nth root (N representing the
number of years in the period) and 1 is subtracted from the result, which is
then expressed as a percentage. The calculation assumes that all income and
capital gains dividends paid by the Fund have been reinvested at net asset value
on the reinvestment dates during the period.
Calculation of the Fund's total return is not subject to a standardized formula,
except when calculated for the Fund's "Financial Highlights" table in the Fund's
financial statements. Total return performance for a specific period is
calculated by first taking an investment (normally assumed to be $10,000)
("initial investment") in the Fund's shares on the first day of the period,
either adjusting or not adjusting to deduct the maximum sales charge, and
computing the "ending value" of that investment at the end of the period. The
total return percentage is then determined by subtracting the initial investment
from the ending value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
and capital gains dividends paid by the Fund have been reinvested at net asset
value on the reinvestment dates during the period. Total return may also be
shown as the increased dollar value of the hypothetical investment over the
period. Total return calculations that do not include the effect of the sales
charge would be reduced if such charge were included.
The Fund's performance figures are based upon historical results and are not
representative of future performance. The Fund's shares are sold at net asset
value plus a maximum sales charge of 5.0% of the offering price. Returns and net
asset value will fluctuate. Factors affecting the Fund's performance include
general market conditions, operating expenses and investment management. Any
additional fees charged by a dealer or other financial services firm would
reduce returns described in this section. Shares of the Fund are redeemable at
the then current net asset value, which may be more or less than original cost.
INVESTMENT MANAGER AND UNDERWRITER
INVESTMENT MANAGER. Kemper Financial Services, Inc. ("KFS"), 120 South LaSalle
Street, Chicago, Illinois 60603, is the Fund's investment manager. Pursuant to
an investment management agreement, KFS acts as the Fund's investment adviser,
manages its investments, administers its business affairs, furnishes office
facilities and equipment, provides clerical, bookkeeping and administrative
services, and permits any of its officers or employees to serve without
compensation as trustees or officers of the Trust if elected to such positions.
The investment management agreement provides that the Fund shall pay the charges
and expenses of its operations, including the fees and expenses of the trustees
(except those who are officers or employees of KFS), independent auditors,
counsel, custodian and transfer agent and the cost of share certificates,
reports and notices to shareholders, brokerage commissions or transaction costs,
costs of calculating net asset value, taxes and membership dues. The Fund bears
the expenses of registration of its shares with the Securities and Exchange
Commission, while the principal underwriter, pays the cost of qualifying and
maintaining the qualification of the Fund's shares for sale under the securities
laws of the various states. Kemper Retirement Fund Series I, Series II, Series
III, Series IV and Series V (which are no longer being offered), and the Fund
are subject to the investment management agreement. The Trust's expenses are
generally allocated among the series on the basis of relative net assets at the
time of allocation, except that expenses directly attributable to a particular
series are charged to that series.
The Fund pays KFS an investment management fee, payable monthly, at an annual
rate of .50 of 1% of average daily net assets of the Fund. KFS has agreed to
reimburse the Fund to the extent required by applicable state expense
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<PAGE> 41
limitations should all operating expenses of the Fund, including the investment
management fees of KFS but excluding taxes, interest, distribution fees,
extraordinary expenses, brokerage commissions or transaction costs and any other
properly excludable expenses, exceed the applicable state expense limitations.
The Fund believes that the most restrictive state expense limitation currently
in effect would require that such operating expenses not exceed 2.5% of the
first $30 million of average daily net assets, 2% of the next $70 million and
1.5% of average daily net assets over $100 million. Under such state expense
limitation, custodian costs attributable to foreign securities that are in
excess of similar domestic custodian costs are excluded from operating expenses.
The investment management agreement provides that KFS shall not be liable for
any error of judgment or of law, or for any loss suffered by the Fund in
connection with the matters to which the agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
KFS in the performance of its obligations and duties, or by reason of its
reckless disregard of its obligations and duties under the agreement.
The investment management agreement continues in effect from year to year for
each series subject to the agreement so long as its continuation is approved at
least annually by (a) a majority of the trustees who are not parties to such
agreement or interested persons of any such party except in their capacity as
trustees of the Trust and (b) by the shareholders of each series or the Board of
Trustees. It may be terminated at any time upon 60 days' notice by either party,
or by a majority vote of the outstanding shares of a series with respect to that
series, and will terminate automatically upon assignment. If continuation is not
approved for a series, the investment management agreement nevertheless may
continue in effect for the series for which it is approved and KFS may continue
to serve as investment manager for the series for which it is not approved to
the extent permitted by the Investment Company Act of 1940. The management fee
and the expense limitation are computed based upon the average daily net assets
of all series subject to the agreement and are allocated among such series based
upon the relative net assets of each such series. Additional series may be
subject to the same or a different agreement. Kemper Worldwide 2004 Fund, a
series of the Trust, has a different agreement.
PRINCIPAL UNDERWRITER. Kemper Distributors, Inc. ("KDI"), an affiliate of KFS,
is the principal underwriter for shares of the Trust and acts as agent of the
Trust in the continuous offering of its shares. The Trust pays the cost for the
prospectus and shareholder reports to be set in type and printed for existing
shareholders, and KDI pays for the printing and distribution of copies thereof
used in connection with the offering of shares to prospective investors. KDI
also pays for supplementary sales literature and advertising costs. Terms of
continuation, termination and assignment under the underwriting agreement are
identical to those described above with regard to the investment management
agreement, except that termination other than upon assignment requires six
months' notice and continuation, amendment and termination need not be on a
series by series basis.
ADMINISTRATIVE SERVICES. Administrative services are provided to the Trust under
an administrative services agreement ("administrative agreement") with KDI. KDI
bears all its expenses of providing services pursuant to the administrative
agreement between KDI and the Trust, including the payment of any service fees.
The Trust pays KDI an administrative services fee, payable monthly, at the
annual rate of up to .25 of 1% of average daily net assets of the Trust.
KDI enters into related arrangements with various financial services firms, such
as broker-dealers or banks ("firms"), that provide services and facilities for
their customers or clients who are shareholders of the Trust. The firms shall
provide such office space and equipment, telephone facilities and personnel as
is necessary or appropriate for providing information and services to their
clients. Such services and assistance may include, but are not limited to,
establishing and maintaining shareholder accounts and records, processing
purchase and redemption transactions, answering routine inquiries regarding the
Trust, and such other services as may be agreed upon from time to time and
permitted by applicable statute, rule or regulation. KDI pays such firms a
service fee, payable quarterly, at an annual rate of up to .25 of 1% of the net
assets in Trust accounts that they maintain and service commencing with the
month after investment. Firms to which service fees may be paid include
broker-dealers affiliated with KDI.
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KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for the Trust. Currently, the
administrative services fee payable to KDI is based only upon Trust assets in
accounts for which there is a firm listed on the Trust's records and it is
intended that KDI will pay all the administrative services fees that it receives
from the Trust to firms in the form of service fees. The effective
administrative services fee rate to be charged against all assets of the Trust
while this procedure is in effect would depend upon the proportion of Trust
assets that is in accounts for which there is a firm of record. The Board of
Trustees of the Trust, in its discretion, may approve basing the fee to KDI on
all Trust assets in the future.
Certain trustees or officers of the Trust are also directors or officers of KFS
and/or KDI as indicated under "Officers and Trustees."
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, as custodian, and
the United Missouri Bank, n.a., Tenth and Grand Streets, Kansas City, Missouri
64106 and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodians, have custody of all securities and cash
of the Trust maintained in the United States. The Chase Manhattan Bank, N.A.,
Chase MetroTech Center, Brooklyn, New York 11245, as custodian, has custody of
all securities and cash of the Trust held outside the United States. They attend
to the collection of principal and income, and payment for and collection of
proceeds of securities bought and sold by the Fund. IFTC is also the Trust's
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Kemper Service Company ("KSVC"), an affiliate of KFS, serves as
"Shareholder Service Agent" of the Fund, and, as such, performs all of IFTC's
duties as transfer agent and dividend paying agent. IFTC receives from the Fund
as transfer agent, and pays to KSVC, annual account fees of $6 per account plus
account set up, transaction, maintenance and disaster recovery charges and
out-of-pocket expense reimbursement. IFTC's fee is reduced by certain earnings
credits in favor of the Fund.
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Trust's independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Fund's annual financial statements, review certain
regulatory reports and the Fund's federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Trust. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
PORTFOLIO TRANSACTIONS
KFS is the investment manager for the Kemper Funds and KFS and its affiliates
also furnish investment management services to other clients including Kemper
Corporation and the Kemper insurance companies. KFS is the sole shareholder of
Kemper Asset Management Company and Kemper Investment Management Company
Limited. These three entities share some common research and trading facilities.
At times investment decisions may be made to purchase or sell the same
investment securities for the Fund and for one or more of the other clients
advised by KFS. When two or more of such clients are simultaneously engaged in
the purchase or sale of the same security, the transactions are allocated as to
amount and price in a manner considered equitable to each and so that each
receives, to the extent practicable, the average price of such transactions.
The above mentioned factors may have a detrimental effect on the quantities or
prices of securities and options and futures contracts available to the Fund. On
the other hand, the ability of the Fund to participate in volume transactions
may produce better executions for the Fund in some cases. The Board of Trustees
of the Trust believes that the benefits of KFS's organization outweigh any
limitations that may arise from simultaneous transactions or position
limitations.
KFS, in effecting purchases and sales of portfolio securities for the account of
the Fund, will implement the Fund's policy of seeking best execution of orders,
which includes best net prices, except to the extent that KFS may be permitted
to pay higher brokerage commissions for research services as described below.
Consistent with this
B-13
<PAGE> 43
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, clearance procedures, wire
service quotations and statistical and other research information provided to
the Fund and KFS. Any research benefits derived are available for all clients,
including clients of affiliated companies. Since it is only supplementary to
KFS's own research efforts and must be analyzed and reviewed by KFS's staff, the
receipt of research information is not expected to materially reduce expenses.
In selecting among firms believed to meet the criteria for handling a particular
transaction, KFS may give consideration to those firms that have sold or are
selling shares of the Fund and other funds managed by KFS, as well as to those
firms that provide market, statistical and other research information to the
Fund and KFS, although KFS is not authorized to pay higher commissions or, in
the case of principal trades, higher prices to firms that provide such services,
except as provided below.
KFS may in certain instances be permitted to pay higher brokerage commissions
(not including principal trades) solely for receipt of market, statistical and
other research services. Subject to Section 28(e) of the Securities Exchange Act
of 1934 and procedures adopted by the Board of Trustees of the Trust, the Fund
could pay a firm that provides research services to KFS commissions for
effecting a securities transaction for the Fund in excess of the amount other
firms would have charged for the transaction if KFS determines in good faith
that the greater commission is reasonable in relation to the value of the
research services provided by the executing firm viewed in terms either of a
particular transaction or KFS's overall responsibilities to the Fund or other
clients. Research benefits will be available for all clients of KFS and its
subsidiaries. The investment management fee paid by the Fund to KFS is not
reduced because KFS receives these research services.
PURCHASE AND REDEMPTION OF SHARES
During the Offering Period described in the prospectus (see "Purchase of
Shares"), Fund shares are sold at their public offering price, which is the net
asset value next determined after an order is received in proper form plus a
sales charge as described in the Fund's prospectus. The minimum initial
investment is $1,000 and the minimum subsequent investment is $100, but such
minimum amounts may be changed at any time. See the prospectus for certain
exceptions to these minimums. An order for the purchase of shares that is
accompanied by a check drawn on a foreign bank (other than a check drawn on a
Canadian bank in U.S. Dollars) will not be considered in proper form and will
not be processed unless and until the Fund determines that it has received
payment of the proceeds of the check. The time required for such determination
will vary and cannot be determined in advance. The amount received by a
shareholder upon redemption or repurchase may be more or less than the amount
paid for such shares depending on the market value of the Fund's portfolio
securities at the time; provided, however, shareholders who hold their shares to
the Maturity Date and reinvest their dividends will receive the benefit of the
Fund's Investment Protection.
Upon receipt by the Shareholder Service Agent of a request for redemption,
shares will be redeemed by the Fund at the applicable net asset value as
described in the Fund's prospectus. The redemption within one year of shares
purchased at net asset value under the Large Order NAV Purchase Privilege
described in the prospectus may be subject to a 1% contingent deferred sales
charge (see "Purchase of Shares" in the prospectus). When the Fund is asked to
redeem shares for which it may not yet have received good payment, it may delay
the mailing of a redemption check until it has determined that collected funds
have been received for the purchase of such shares, which will be up to 15 days.
Scheduled variations in or the elimination of the sales charge for purchases by
certain classes of persons or through certain types of transactions as described
in the prospectus is provided because of expected economies in sales and
sales-related efforts.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange (the "Exchange") is
closed other than customary weekend and holiday closings or during any period in
which trading on the Exchange is restricted, (b) during any period when an
emergency exists as a result of which (i) disposal of the Fund's investments is
not reasonably practicable, or (ii) it is not reasonably
B-14
<PAGE> 44
practicable for the Fund to determine the value of its net assets, or (c) for
such other periods as the Securities and Exchange Commission may by order permit
for the protection of the Fund's shareholders.
Although it is the Fund's present policy to redeem in cash, if the Board of
Trustees determines that a material adverse effect would be experienced by the
remaining shareholders if payment were made wholly in cash, the Fund will
satisfy the redemption request in whole or in part by a distribution of
portfolio securities in lieu of cash, in conformity with the applicable rules of
the Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
occurred, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition would incur certain
transaction costs. Such a redemption would not be as liquid as a redemption
entirely in cash. The Trust has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940 pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets of
the Fund during any 90-day period for any one shareholder of record.
OFFICERS AND TRUSTEES
The officers and trustees of the Trust, their principal occupations and their
affiliations, if any, with Kemper Financial Services, Inc., the Fund's
investment adviser and Kemper Distributors, Inc., the Fund's principal
underwriter, are as follows (The number following each person's title is the
number of investment companies managed by Kemper Financial Services, Inc. for
which he or she holds similar positions):
ARTHUR R. GOTTSCHALK, Trustee (10), 10642 Brookridge Drive, Frankfort, Illinois;
Retired; formerly, President, Illinois Manufacturers Association; Trustee,
Illinois Masonic Medical Center; Member, Board of Governors, Heartland
Institute/Illinois; formerly, Illinois State Senator.
FREDERICK T. KELSEY, Trustee (10), 3133 Laughing Gull Court, John's Island,
South Carolina; Retired; formerly, consultant to Goldman, Sachs & Co.; formerly,
President, Treasurer and Trustee of Institutional Liquid Assets and its
affiliated mutual funds; Trustee of the Benchmark Fund and the Pilot Fund.
DAVID B. MATHIS, TRUSTEE* (28), Kemper Center, Long Grove, Illinois; Chairman,
Chief Executive Officer and Director of Kemper Corporation; Director, Kemper
Financial Services, Inc. and Kemper Financial Companies, Inc.; Director, IMC
Global Inc.
STEPHEN B. TIMBERS, President and Trustee* (31), 120 S. LaSalle St., Chicago,
Illinois; President, Chief Operating Officer and Director, Kemper Corporation;
Chairman, Chief Executive Officer, Chief Investment Officer and Director, Kemper
Financial Services, Inc.; Director, Kemper Financial Companies, Inc. and Kemper
Securities, Inc.; Director, Gillett Holdings, Inc. and LTV Corporation.
JOHN B. TINGLEFF, Trustee (10), 2015 South Lake Shore Drive, Harbor Springs,
Michigan; Retired; formerly President, Tingleff & Associates (management
consulting firm); formerly, Senior Vice President, Continental Illinois National
Bank & Trust Company.
JOHN G. WEITHERS, Trustee (10), 311 Springlake, Hinsdale, Illinois; Retired;
formerly, Chairman of the Board and Chief Executive Officer, Chicago Stock
Exchange; Director, Federal Life Insurance Company; Vice Chairman and Trustee,
DePaul University.
JOHN E. PETERS, Vice President* (31), 120 South LaSalle Street, Chicago,
Illinois; Senior Executive Vice President, Kemper Financial Services, Inc;
President and Director, Kemper Distributors, Inc.
C. BETH COTNER, Vice President* (6), 120 South LaSalle Street, Chicago,
Illinois; Executive Vice President and Director of Domestic Equity Portfolio
Management, Kemper Financial Services, Inc.
TRACY McCORMICK CHESTER, Vice President* (2), 120 South LaSalle Street, Chicago,
Illinois; Senior Vice President and Portfolio Manager, Kemper Financial
Services, Inc.; formerly, Portfolio Manager for Fiduciary Management; prior
thereto, independent consultant managing private accounts.
B-15
<PAGE> 45
DENNIS H. FERRO, Vice President* (3), 120 South LaSalle Street, Chicago,
Illinois; Executive Vice President and Director of International Equity
Investments, Kemper Financial Services, Inc.; prior thereto, President, Managing
Director and Chief Investment Officer of an international investment advisory
firm.
CHARLES F. CUSTER, Vice President and Assistant Secretary* (31), 222 North
LaSalle Street, Chicago, Illinois; Partner, Vedder, Price, Kaufman & Kammholz
(attorneys), Legal Counsel to the Fund.
JEROME L. DUFFY, Treasurer* (31), 120 South LaSalle Street, Chicago, Illinois;
Senior Vice President, Kemper Financial Services, Inc.
PHILIP J. COLLORA, Vice President and Secretary* (31), 120 South LaSalle Street,
Chicago, Illinois; Attorney, Senior Vice President and Assistant Secretary,
Kemper Financial Services, Inc.
ELIZABETH C. WERTH, Assistant Secretary* (23), 120 South LaSalle Street,
Chicago, Illinois; Vice President and Director of State Registrations, Kemper
Financial Services, Inc.
* Interested persons as defined in the Investment Company Act of 1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Fund, except that Mr. Custer's law firm
receives fees from the Fund as counsel to the Fund. The table below shows
amounts estimated to be paid or accrued to those trustees who are not designated
"interested persons" during the Fund's 1995 fiscal year except that the
information in the last column is for calendar year 1994. The Fund pays trustees
who are not designated above as "interested persons" an annual retainer of
$1,500 plus an attendance fee of $200 per Board meeting and $100 per committee
meeting attended.
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT BENEFITS KEMPER FUNDS
COMPENSATION ACCRUED AS PART OF PAID TO
NAME OF TRUSTEE FROM FUND FUND EXPENSES TRUSTEES**
- ------------------------------------------------ ------------ ------------------- ------------
<S> <C> <C> <C>
Arthur R. Gottschalk*........................... $2,500 $ 0 $ 65,000
Frederick T. Kelsey*............................ $2,500 $ 0 $ 66,800
John B. Tingleff................................ $2,500 $ 0 $ 63,500
John G. Weithers................................ $2,500 $ 0 $ 63,100
</TABLE>
- ---------------
* Includes deferred fees and interest thereon pursuant to deferred compensation
agreements with the Fund. Deferred amounts accrue interest monthly at a rate
equal to the yield of Kemper Money Market Fund -- Money Market Portfolio.
** Includes compensation for service for calendar year 1994 on the boards of 10
Kemper funds with 21 fund portfolios. Also includes amounts for new funds
estimated as if the fund had existed at the beginning of the year.
As of April 30, 1995, the trustees and officers as a group owned less than 1% of
the outstanding shares of the Fund and KFS owned of record all of the
outstanding shares of the Fund.
SHAREHOLDER RIGHTS
The Trust generally is not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust of the Trust ("Declaration of Trust"),
however, shareholder meetings will be held in connection with the following
matters: (a) the election or removal of trustees if a meeting is called for such
purpose; (b) the adoption of any contract for which approval by shareholders is
required by the Investment Company Act of 1940 ("1940 Act"); (c) any termination
of the Trust, a series or a class to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other than
amendments changing the name of the Trust, establishing a series, supplying any
omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision thereof); (e) as to whether a court action,
proceeding or claim should or should not be
B-16
<PAGE> 46
brought or maintained derivatively or as a class action on behalf of the Trust
or the shareholders, to the same extent as the stockholders of a Massachusetts
business corporation; and (f) such additional matters as may be required by law,
the Declaration of Trust, the By-laws of the Trust, or any registration of the
Trust with the Securities and Exchange Commission or any state, or as the
trustees may consider necessary or desirable. The shareholders also would vote
upon changes in fundamental investment objectives, policies or restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of a
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described below) or a majority
of the trustees. In accordance with the 1940 Act (a) the Trust will hold a
shareholder meeting for the election of trustees at such time as less than a
majority of the trustees have been elected by shareholders, and (b) if, as a
result of a vacancy in the Board of Trustees, less than two-thirds of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10% of the
outstanding shares. Upon the written request of ten or more shareholders who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of the Trust stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting in
person or by proxy of at least 30% of the shares entitled to vote on a matter
shall constitute a quorum. Thus, a meeting of shareholders of the Trust could
take place even if less than a majority of the shareholders were represented on
its scheduled date. Shareholders would in such a case be permitted to take
action which does not require a larger vote than a majority of a quorum, such as
the election of trustees and ratification of the selection of auditors. Some
matters requiring a larger vote under the Declaration of Trust, such as
termination or reorganization of the Trust and certain amendments of the
Declaration of Trust, would not be affected by this provision; nor would matters
which under the 1940 Act require the vote of a "majority of the outstanding
voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or any series or class) by notice to the shareholders
without shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Trust. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust and the
Trust will be covered by insurance which the trustees consider adequate to cover
foreseeable tort claims. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered by KFS and KDI as remote
and not material, since it is limited to circumstances in which a disclaimer is
inoperative and the Trust itself is unable to meet its obligations.
B-17
<PAGE> 47
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholder
Kemper Target Equity Fund--
Kemper Retirement Fund Series VI
We have audited the accompanying statement of net assets of Kemper Target Equity
Fund--Kemper Retirement Fund Series VI as of April 17, 1995. This statement of
net assets is the responsibility of the Trust's management. Our responsibility
is to express an opinion on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of net assets is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement of net assets. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall statement of net assets
presentation. We believe that our audit of the statement of net assets provides
a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents fairly,
in all material respects, the financial position of Kemper Target Equity
Fund--Kemper Retirement Fund Series VI at April 17, 1995 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 17, 1995
B-18
<PAGE> 48
KEMPER TARGET EQUITY FUND--
KEMPER RETIREMENT FUND SERIES VI
STATEMENT OF NET ASSETS--APRIL 17, 1995
<TABLE>
<S> <C>
ASSETS
Cash.................................................................................. $100,000
========
NET ASSETS
Net assets, applicable to 11,111.111 shares of beneficial interest outstanding,
equivalent to $9.00 per share (unlimited number of shares authorized, no par
value).............................................................................. $100,000
========
THE PRICING OF SHARES
Net asset value and redemption price per share ($100,000 / 11,111.111 shares
outstanding)........................................................................ $ 9.00
Maximum offering price per share (net asset value, plus 5.26% of net asset value or
5.00% of offering price)............................................................ $ 9.47
</TABLE>
- ---------------
NOTES:
Kemper Target Equity Fund (the "Trust") was organized as a business trust under
the laws of The Commonwealth of Massachusetts on August 3, 1988; all shares of
beneficial interest of Kemper Retirement Fund Series VI (the "Fund") of the
Trust were issued to Kemper Financial Services, Inc. ("KFS"), the investment
manager for the Fund, on April 17, 1995 for $100,000 cash. The Trust may
establish multiple series; currently seven series have been established. The
Fund has no prior operating history.
The costs of organization of the Fund will be paid by KFS.
B-19
<PAGE> 49
KEMPER TARGET EQUITY FUND
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements--Kemper Retirement Fund Series VI
(i) Financial Statements included in Part A of the Registration
Statement: None.
(ii) Financial Statements included in Part B of the Registration
Statement:
Statement of Net Assets.
Schedules I, II, III, IV and V are omitted as the required information
is not present.
(b) Exhibits
<TABLE>
<S> <C>
99.B1.(a) Amended and Restated Agreement and Declaration of Trust.
99.B1.(b) Written Instrument Establishing and Designating Kemper Retirement Fund Series
VI.
99.B2. By-Laws.
99.B3. Inapplicable.
99.B4. Text of Share Certificate.
99.B5.(a) Investment Management Agreement (Kemper Retirement Fund Series).
99.B5.(b) Notification of Additional Portfolio (Series VI).
99.B5.(c) Investment Management Agreement (Kemper Worldwide 2004 Fund).
99.B6.(a) Underwriting Agreement.
99.B6.(b) Form of Selling Group Agreement.
99.B6.(c) Assignment and Assumption Agreement.
99.B7. Inapplicable.
99.B8.(a) Custody Agreement.
99.B8.(b) Foreign Custody Agreement.
99.B9.(a) Agency Agreement.
99.B9.(b) Supplement to Agency Agreement.
99.B9.(c) Administrative Services Agreement.
99.B9.(d) Guaranty Agreement--Kemper Retirement Fund Series I.
99.B9.(e) Guaranty Agreement--Kemper Retirement Fund Series II.
99.B9.(f) Guaranty Agreement--Kemper Retirement Fund Series III.
99.B9.(g) Guaranty Agreement--Kemper Retirement Fund Series IV.
99.B9.(h) Guaranty Agreement--Kemper Retirement Fund Series V.
99.B9.(i) Guaranty Agreement--Kemper Retirement Fund Series VI.
99.B9.(j) Guaranty Agreement--Kemper Worldwide 2004 Fund.
99.B9.(k) Assignment and Assumption Agreement.
99.B10.(a) Opinion and Consent of Vedder, Price, Kaufman & Kammholz.
99.B10.(b) Opinion and Consent of Ropes & Gray.
99.B11. Consent of Independent Auditors.
99.B12. Inapplicable.
99.B13. Subscription Agreement--Series VI.
99.B14.(a) Kemper Retirement Plan Prototype.(1)
99.B14.(b) Model Individual Retirement Account.(1)
99.B15. Inapplicable.
99.B16. Performance Calculations.
99.B17. Powers of Attorney.
99.B27. Financial Data Schedule. Not applicable.
99.485(b) Representation of Counsel (Rule 485(b) ).
</TABLE>
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 10 to the
Registration Statement of Registrant on Form N-1A filed on or about
November 6, 1992.
C-1
<PAGE> 50
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of April 12, 1995 there were holders of record of the shares of
Registrant as follows:
<TABLE>
<CAPTION>
SERIES NUMBER
-------------------------------------------------- ------
<S> <C>
Kemper Retirement Fund Series I................... 7,013
Kemper Retirement Fund Series II.................. 11,782
Kemper Retirement Fund Series III................. 9,410
Kemper Retirement Fund Series IV.................. 11,894
Kemper Retirement Fund Series V................... 11,259
Kemper Retirement Fund Series VI.................. 0
Kemper Worldwide 2004 Fund........................ 2,632
</TABLE>
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28.(A) BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information pertaining to business and other connections of the
Registrant's investment adviser is hereby incorporated by reference to the
section of the Prospectus captioned "Investment Manager and Underwriter," and to
the section of the Statement of Additional Information captioned "Investment
Manager and Underwriter."
C-2
<PAGE> 51
Kemper Financial Services, Inc., investment adviser of the Registrant, is
investment adviser of the following:
Kemper Mutual Funds:
Kemper Technology Fund
Kemper Total Return Fund
Kemper Growth Fund
Kemper Small Capitalization Equity Fund
Kemper Income and Capital Preservation Fund
Kemper Money Market Fund
Kemper National Tax-Free Income Series
Kemper Diversified Income Fund
Kemper High Yield Fund
Cash Equivalent Fund
Kemper U.S. Government Securities Fund
Kemper International Fund
Kemper Portfolios
Kemper State Tax-Free Income Series
Tax-Exempt California Money Market Fund
Kemper Adjustable Rate U.S. Government Fund
Kemper Blue Chip Fund
Kemper Global Income Fund
Kemper Target Equity Fund
Cash Account Trust
Investors Cash Trust
Tax-Exempt New York Money Market Fund
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
Kemper Financial Services, Inc. also furnishes investment advice to and
manages investment portfolios for other clients including Kemper Investors Fund,
Sterling Funds and Kemper International Bond Fund.
C-3
<PAGE> 52
Item 28(b) Business and Other Connections of Officers
and Directors of Kemper Financial Services Inc.,
the Investment Advisor
BORIS, JAMES R.
Director, Kemper Financial Services, Inc.
Director, INVEST Financial Corporation Holding Company
Director, INVEST Financial Corporation
Executive Vice President, Kemper Corporation
Director, Executive Vice President, Kemper Financial Companies, Inc.
Director, Kemper Investors Life Insurance Company
Director, Kemper Sales Company
Director, Chairman and Chief Executive Officer, Kemper Securities, Inc.
MATHIS, DAVID B.
Director, Kemper Financial Services, Inc.
Director, Federal Kemper Life Assurance Company
Director, Fidelity Life Association
Director, Chairman and Chief Executive Officer, Kemper Corporation
Director, Kemper Financial Companies, Inc.
Director, Kemper Investors Life Insurance Company
Director, Kemper Securities Holdings, Inc.
Director, Kemper Securities, Inc.
Director, IMC Global Inc.
Trustee, Kemper Mutual Funds
Trustee, Kemper Closed-End Funds
Trustee, Kemper International Bond Fund
TIMBERS, STEPHEN B.
Director, Chairman, Chief Executive Officer and Chief Investment Officer
Kemper Financial Services, Inc.
Director, Vice President, Kemper Asset Holdings, Inc.
Director, Kemper Distributors, Inc.
Director, Chairman, Kemper Asset Management Company
Director, Chairman, Kemper Service Company
Director, Federal Kemper Life Assurance Company
Director, Vice President, FKLA Loire Court, Inc.
Director, Vice President, FKLA Realty Corporation
Director, President, Galaxy Offshore, Inc.
Director, Vice President, FLA First Nationwide, Inc.
Director, Vice President, FLA Plate Building, Inc.
Director, Vice President, FLA Realty Corp.
Trustee and President, Kemper Closed-End Funds
Director, President and Chief Operating Officer, Kemper
Corporation
Director, Chairman, President and Chief Executive Officer, Kemper Financial
Companies, Inc.
Director, President, Kemper International Management, Inc.
Trustee and Vice President, Kemper Investors Fund
Director, Kemper Investors Life Insurance Company
Trustee and President, Kemper Mutual Funds
Director, Vice President, Kemper Portfolio Corp.
C-4
<PAGE> 53
Director, Vice President, Kemper Real Estate, Inc.
Director, Senior Vice President, Kemper Real Estate Management Company
Director, Kemper Securities, Inc.
Director, Kemper Securities Holdings, Inc.
Director, Vice President, Kemper/Cymrot Management, Inc.
Director, Vice President, Kemper/Cymrot, Inc.
Director, Vice President, KFC Portfolio Corp.
Director, Vice President, KI Aaron Rents, Inc.
Director, Vice President, KI Arnold Industrial, Inc.
Director, Vice President, KI Canyon Park, Inc.
Director, Vice President, KI Dublin Boulevard, Inc.
Director, Vice President, KI LaFiesta Square, Inc.
Director, Vice President, KI Monterey Research, Inc.
Director, Vice President, KI Olive Street, Inc.
Director, Vice President, KI Sutter Street, Inc.
Director, Vice President, KI Thornton Boulevard, Inc.
Director, Vice President, KILICO Realty Corporation
Director, Vice President, KR 77 Fitness Center, Inc.
Director, Vice President, KR Avondale Redmond, Inc.
Director, Vice President, KR Black Mountain, Inc.
Director, Vice President, KR Brannan Resources, Inc.
Director, Vice President, KR Clay Capital, Inc.
Director, Vice President, KR Cranbury, Inc.
Director, Vice President, KR Delta Wetlands, Inc.
Director, Vice President, KR Gainesville, Inc.
Director, Vice President, KR Hotels, Inc.
Director, Vice President, KR Lafayette Apartments, Inc.
Director, Vice President, KR Lafayette BART, Inc.
Director, Vice President, KR Palm Plaza, Inc.
Director, Vice President, KR Red Hill Associates, Inc.
Director, Vice President, KR Seagate/Gateway North, Inc.
Director, Vice President, KR Venture Way, Inc.
Director, Vice President, KR Walnut Creek, Inc.
Trustee, Vice President, Sterling Funds
Director, The LTV Corporation
Director, Gillett Holdings, Inc.
Director, Investment Analysts Society of Chicago
C-5
<PAGE> 54
NEAL, JOHN E.
President and Chief Operating Officer, Kemper Financial Services, Inc.
Director, Kemper Distributors, Inc.
Director, Kemper Asset Management Company
Director, President, Kemper Service Company
Director, Supervised Service Company
Director, Ardenwood Financial Corporation
Director, Avondale Redmond Inc.
Director, Bedford Holding Company
Director, Black Mountain, Inc.
Director, Brannan Resources, Inc.
Director, Butterfield Financial Corporation
Director, Camelot Financial Corporation
Director, Clay Capital, Inc.
Director, Concord Aviation, Inc.
Director, Coast Broadcasting Company
Director, Crow Canyon, Inc.
Director, Hawaii Kai Development Company
Director, Kacor Gateway, Inc.
Director, Kailua Associates, Inc.
Director, Kacor Trust Deed Company
Director, Community Investment Corporation
Director, Continental Community Development Corporation
Director, President, FKLA Loire Court, Inc.
Director, President, FKLA Realty Corporation
Director, President, FLA First Nationwide, Inc.
Director, President, FLA Plate Building, Inc.
Director, President, FLA Realty Corporation
Director, Kemper/Lumbermens Properties, Inc.
Director, Senior Vice President, Kemper Real Estate Management Company
Director, KRDC, Inc.
Director, Lafayette Apartments
Director, Lafayette Hills, Inc.
Director, Margarita Village Retirement Community
Director, Mesa Homes
Director, Mesa Homes Brokerage Company
Director, Mount Doloroes Corporation
Director, Montgomery Gallery, Inc.
Director, Monterey Research Park, Inc.
Director, One Business Centre
Director, Pacific Homes, Inc.
Director, Palomar Triad, Inc.
Director, Pine/Battery Properties, Inc.
Director, Rancho and Industrial Property Brokerage, Inc.
Director, Rancho California, Inc.
Director, Rancho Regional Shopping Center, Inc.
Director, Red Hill Associates, Inc.
Director, Seagate Associates, Inc.
Director, Seattle Gateway, Inc.
Director, Sutter Street, Inc.
Director, Technology Way, Inc.
Director, Time DC, Inc.
Director, Tourelle, Inc.
Director, Two Corporate Center
Director, Venture Way, Inc.
Director, President, Kemper Portfolio Corporation
Director, President, KFC Portfolio Corporation
Director, President, KILICO Realty Corporation
Director, President, KI Arnold Industrial, Inc.
Director, President, KI Canyon Park, Inc.
Director, President, KI Dublin Boulevard, Inc.
Director, President, KI La Fiesta Square, Inc.
Director, President, KI Lafayette BART, Inc.
Director, President, KI Monterey Research, Inc.
Director, President, KI Olive Street, Inc.
Director, President, KI Thornton Boulevard, Inc.
Director, President, KI Sutter Street, Inc.
Director, President, KR 77 Fitness Center, Inc.
Director, President, KR Avondale Redmond, Inc.
Director, President, KR Black Mountain, Inc.
Director, President, KR Brannan Resources, Inc.
Director, President, KR Clay Capital, Inc.
Director, President, KR Cranbury, Inc.
Director, President, KR Delta Wetlands, Inc.
Director, President, KR Gainesville, Inc.
Director, President, KR Hotels, Inc.
Director, President, KR Lafayette Apartments, Inc.
Director, President, KR Palm Plaza, Inc.
Director, President, KR Red Hill Associates, Inc.
Director, President, KR Seagate/Gateway North, Inc.
Director, President, KR Venture Way, Inc.
Director, President, KR Walnut Creek, Inc.
Director, K-P Greenway, Inc.
Director, K-P Enterprise Centers, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
Director, KRDC, Inc.
Director, President, SMS Realty Corp.
C-6
<PAGE> 55
PETERS, JOHN E.
Director, Senior Executive Vice President, Kemper Financial
Services, Inc.
Director, President, Kemper Distributors, Inc.
Director, President, Kemper Sales Company
Vice President, Kemper Asset Management Company
Vice President, Kemper Closed-End Funds
Vice President, Kemper International Bond Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Mutual Funds
Vice President, Kemper Target Equity Fund
Director, Kemper Service Company
Vice President, Sterling Funds
FITZPATRICK, JOHN H.
Chief Financial Officer, Kemper Financial Services, Inc.
Director, Ardenwood Financial Corporation
Director, Camelot Financial Corporation
Director, Crow Canyon, Inc.
Director, Hawaii Kai Development Company
Director, Kacor Gateway, Inc.
Director, Kacor Trust Deed Company
Director, Senior Vice President, and Chief Financial Officer, Federal Kemper
Life Assurance Company
Senior Vice President, Chief Financial Officer, Fidelity Life Association
Director, Vice President, FKLA Loire Court, Inc.
Director, Vice President, FLA First Nationwide, Inc.
Director, Vice President, FLA Plate Building, Inc.
Director, Executive Vice President and Chief Financial Officer,
Kemper Corporation
Director, Executive Vice President and Chief Financial Officer,
Kemper Financial Companies, Inc.
Senior Vice President, Kemper Investors Life Insurance Company
Director, Senior Vice President, Kemper Real Estate Management
Company
Director, Vice President, Kemper/Cymrot Management, Inc.
Director, Vice President, Kemper/Cymrot, Inc.
Director, Vice President Kemper/Lumbermens Properties, Inc.
Director, Senior Vice President, Kemper Real Estate Management Company
Director, KRDC, Inc.
Director, Margarita Retirement Community, Inc.
Director, Mesa Homes
Director, Mesa Homes Brokerage Company
Director, Montgomery Gallery, Inc.
Director, One Corporate Centre, Inc.
Director, Pacific Homes, Inc.
Director, Palomar Triad, Inc.
Director, Pine/Battery Property, Inc.
Director, Rancho and Industrial Property Brokerage, Inc.
Director, Rancho California, Inc.
Director, Rancho Regional Shopping Center, Inc.
Director, Seattle Gateway, Inc.
Director, SMS Realty Corp.
Director, Sutter Street, Inc.
Director, Time DC, Inc.
Director, Two Corporate Center
Director, Vice President, KFC Portfolio Corp.
Director, Vice President, KI Aaron Rents, Inc.
Director, Vice President, KI Arnold Industrial, Inc.
Director, Vice President, KI Canyon Park, Inc.
Director, Vice President, KI Dublin Boulevard, Inc.
Director, Vice President, KI Lafayette BART, Inc.
Director, Vice President, KI LaFiesta Square, Inc.
Director, Vice President, KI Monterey Research, Inc.
Director, Vice President, KI Olive Street, Inc.
Director, Vice President, KI Thornton Boulevard, Inc.
Director, Vice President, KILICO Realty Corporation
Director, Vice President, KR 77 Fitness Center, Inc.
Director, Vice President, KR Avondale Redmond, Inc.
Director, Vice President, KR Black Mountain, Inc.
Director, Vice President, KR Brannan Resources, Inc.
Director, Vice President, KR Clay Capital, Inc.
Director, Vice President, KR Cranbury, Inc.
Director, Vice President, KR Delta Wetlands, Inc.
Director, Vice President, KR Gainesville, Inc.
Director, Vice President, KR Hotels, Inc.
Director, Vice President, KR Lafayette Apartments, Inc.
Director, Vice President, KR Palm Plaza, Inc.
Director, Vice President, KR Red Hill Associates, Inc.
Director, Vice President, KR Seagate/Gateway North, Inc.
Director, Vice President, KR Venture Way, Inc.
C-7
<PAGE> 56
Director, Vice President, KR Walnut Creek, Inc.
BEIMFORD, JR., JOSEPH P.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Galaxy Offshore, Inc.
Vice President, Investors Cash Trust
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Global Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper International Bond Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Money Market Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper National Tax-Free Income Series
Vice President, Kemper Municipal Income Trust
Vice President, Kemper Portfolios
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Income Fund
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Kemper U.S. Government Securities Fund
Vice President, Sterling Funds
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
CHAPMAN II, WILLIAM E.
Executive Vice President, Kemper Financial Services, Inc.
Director, Executive Vice President, Kemper Distributors, Inc.
COTNER, C. BETH
Executive Vice President, Kemper Financial Services, Inc.
Trustee, Kemper Financial Services, Inc., Profit Sharing Plan
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Growth Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Small Capitalization Equity Fund
Vice President, Kemper Target Equity Fund
Vice President, Kemper Technology Fund
Vice President, Kemper Total Return Fund
Vice President, Sterling Funds
COXON, JAMES H.
Executive Vice President, Kemper Financial Services, Inc.
Director, Vice President, Galaxy Offshore, Inc.
Executive Vice President, Kemper Asset Management Company
FERRO, DENNIS H.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Kemper International Fund
C-8
<PAGE> 57
Director, Managing Director - Equities, Kemper Investment
Management Company Limited
Vice President, Kemper Investors Fund
Vice President, Kemper Target Equity Fund
Vice President, The Growth Fund of Spain, Inc.
GREENAWALT, JAMES L.
Executive Vice President, Kemper Financial Services, Inc.
Director, Executive Vice President, Kemper Distributors, Inc.
Director, Kemper Sales Company
JOHNS, GORDON K.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Global Income Fund
Vice President, Kemper International Bond Fund
Vice President, Kemper International Management, Inc.
Managing Director and Joint Secretary, Kemper Investment
Management Company Limited
Director, Thames Heritage Parade Limited
LANGBAUM, GARY A.
Executive Vice President, Kemper Financial Services, Inc.
SILIGMUELLER, DALE S.
Executive Vice President, Kemper Financial Services, Inc.
Director, Executive Vice President, Kemper Service Company
Director, Executive Vice President, Supervised Service Company, Inc.
BUKOWSKI, DANIEL J.
Senior Vice President, Kemper Financial Services, Inc.
BUTLER, DAVID H.
Senior Vice President, Kemper Financial Services, Inc.
CESSINE, ROBERT S.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Income and Capital Preservation Fund
CHESTER, TRACY McCORMICK
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Target Equity Fund
COLLECCHIA, FRANK E.
Senior Vice President, Kemper Financial Services, Inc.
Senior Investment Officer, Federal Kemper Life Assurance
Company
Senior Investment Officer, Fidelity Life Association
Vice President, FKLA Loire Court, Inc.
Vice President, FLA First Nationwide, Inc.
Vice President, FLA Plate Building, Inc.
Vice President, Galaxy Offshore, Inc.
Senior Investment Officer, Kemper Investors Life Insurance
Company
Vice President, KI Aaron Rents, Inc.
Vice President, KI Arnold Industrial, Inc.
Vice President, KI Canyon Park, Inc.
Vice President, KI Dublin Boulevard, Inc.
Vice President, KI Lafayette BART, Inc.
Vice President, KI LaFiesta Square, Inc.
Vice President, KI Monterey Research, Inc.
Vice President, KI Olive Street, Inc.
Vice President, KI Thornton Boulevard, Inc.
Vice President, KR 77 Fitness Center, Inc.
Vice President, KR Avondale Redmond, Inc.
Vice President, KR Black Mountain, Inc.
Vice President, KR Brannan Resources, Inc.
Vice President, KR Clay Capital, Inc.
Vice President, KR Cranbury, Inc.
C-9
<PAGE> 58
Vice President, KR Delta Wetlands, Inc.
Vice President, KR Gainesville, Inc.
Vice President, KR Gulf Coast Factory Shops, Inc.
Vice President, KR Halawa Associates, Inc.
Vice President, KR Hotels, Inc.
Vice President, KR Lafayette Apartments, Inc.
Vice President, KR Palm Plaza, Inc.
Vice President, KR Red Hill Associates, Inc.
Vice President, KR Seagate/Gateway North, Inc.
Vice President, KR Venture Way, Inc.
Vice President, KR Walnut Creek, Inc.
COLLORA, PHILIP J.
Senior Vice President and Assistant Secretary, Kemper Financial Services, Inc.
Vice President and Secretary, Kemper Closed-End Funds
Assistant Secretary, Kemper International Management, Inc.
Vice President and Secretary, Kemper Investors Fund
Vice President and Secretary, Kemper Mutual Funds
Vice President and Secretary, Kemper Target Equity Fund
Vice President and Secretary, Sterling Funds
DIERENFELDT, DAVID F.
Senior Vice President, Associate General Counsel,
Assistant Secretary and Compliance Officer, Kemper Financial Services, Inc.
Director, Secretary, Kemper Advisors, Inc.
Vice President and Secretary, Kemper Distributors, Inc.
Assistant Secretary, Galaxy Offshore, Inc.
Director, Secretary, INVEST Financial Corporation
Secretary, INVEST Financial Corporation Holding Company
Assistant Secretary, Investors Brokerage Services
Insurance Agency, Inc.
Assistant Secretary, Investors Brokerage Services, Inc.
Secretary, Kemper Asset Management Company
Assistant Secretary, Kemper International Management, Inc.
Assistant Secretary, Kemper Investment Management Company Limited
Vice President and Assistant Secretary, Kemper Investors Fund
Secretary, Kemper Sales Company
Secretary, Kemper Service Company
Secretary, Supervised Service Company, Inc.
DUDASIK, PATRICK H.
Senior Vice President, Kemper Financial Services, Inc.
Director, Treasurer and Chief Financial Officer, Kemper Advisors, Inc.
Vice President and Treasurer, Kemper Asset Management Company
Treasurer and Chief Financial Officer, Kemper Distributors, Inc.
Director, Treasurer and Chief Financial Officer, Kemper Sales Company
Treasurer and Chief Financial Officer, Kemper Service Company
Treasurer and Chief Financial Officer, Supervised Service Company, Inc.
Director, Treasurer, Kemper Investment Management Company Limited
DUFFY, JEROME L.
Senior Vice President, Kemper Financial Services, Inc.
Treasurer, Kemper Closed-End Funds
Treasurer, Kemper International Bond Fund
Treasurer, Kemper Investors Fund
Treasurer, Kemper Mutual Funds
Treasurer, Kemper Target Equity Fund
Treasurer, Sterling Funds
GLASSMAN, HARVEY
Senior Vice President, Kemper Financial Services, Inc.
GOERS, RICHARD A.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Technology Fund
GUENTHER, HAROLD E.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Galaxy Offshore, Inc.
HUSSEY, KAREN A.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Investors Fund
Vice President, Kemper Small Capitalization Equity Fund
INNES, BRUCE D.
Senior Vice President, Kemper Financial Services, Inc.
Co-President, International Association of Corporate and
Professional Recruiters
KLEIN, GEORGE
Senior Vice President, Kemper Financial Services, Inc.
Director, Executive Vice President, Kemper Asset Management Company
KORTH, FRANK D.
Senior Vice President, Kemper Financial Services, Inc.
C-10
<PAGE> 59
Vice President, Kemper Technology Fund
McNAMARA, MICHAEL A.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Investors Fund
MIER, CHRISTOPHER J.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper National Tax Free Income Series
Vice President, Kemper Municipal Income Trust
Vice President, Kemper State Tax Free Income Series
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Kemper Sterling Funds
NATHANSON, IRA
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Corporation
NEEL, JAMES R.
Senior Vice President, Kemper Financial Services, Inc.
Executive Vice President, Kemper Asset Management Company
RACHWALSKI, JR. FRANK J.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Investors Cash Trust
Vice President, Kemper Investors Fund
Vice President, Kemper Money Market Fund
Vice President, Kemper Portfolios
Vice President, Sterling Funds
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
REGNER, THOMAS M.
Senior Vice President, Kemper Financial Services, Inc.
RESIS, JR., HARRY E.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Fund
Vice President, Kemper High Yield Fund
Vice President, Kemper Investors Fund
SCHUMACHER, ROBERT H.
Senior Vice President, Kemper Financial Services, Inc.
URBASZEWSKI, KENNETH T.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
C-11
<PAGE> 60
BURROW, DALE R.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Strategic Municipal Income Trust
BYRNES, ELIZABETH A.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Intermediate Government Trust
CHIEN, CHRISTINE
First Vice President, Kemper Financial Services, Inc.
DeMAIO, CHRIS C.
First Vice President, Kemper Financial Services, Inc.
Vice President and Chief Accounting Officer, Kemper Service Company
Vice President and Chief Accounting Officer, Supervised Service Company, Inc.
DEXTER, STEPHEN P.
First Vice President, Kemper Financial Services, Inc.
DOYLE, DANIEL J.
First Vice President, Kemper Financial Services, Inc.
FENGER, JAMES E.
First Vice President, Kemper Financial Services, Inc.
FISHER, REMY M.
First Vice President, Kemper Financial Services, Inc.
HALE, DAVID D.
First Vice President, Kemper Financial Services, Inc.
HARRINGTON, MICHAEL E.
First Vice President, Kemper Financial Services, Inc.
HORTON, ROBERT J.
First Vice President, Kemper Financial Services, Inc.
JACOBS, PETER M.
First Vice President, Kemper Financial Services, Inc.
KEELEY, MICHELLE M.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Portfolios
KIEL, CAROL L.
First Vice President, Kemper Financial Services, Inc.
LAUGHLIN, ANN M.
First Vice President, Kemper Financial Services, Inc.
LENTZ, MAUREEN P.
First Vice President, Kemper Financial Services, Inc.
McCRINDLE-PETRARCA, SUSAN
First Vice President, Kemper Financial Services, Inc.
C-12
<PAGE> 61
PAYNE, III, ROBERT D.
First Vice President, Kemper Financial Services, Inc.
PANOZZO, ROBERTA L.
First Vice President, Kemper Financial Services, Inc.
RATEKIN, DIANE E.
First Vice President, Assistant General Counsel and Assistant Secretary,
Kemper Financial Services, Inc.
Assistant Secretary, Kemper Distributors, Inc.
SILVIA, JOHN E.
First Vice President, Kemper Financial Services, Inc.
STUEBE, JOHN W.
First Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
THOUIN-LEERKAMP, EDITH A.
First Vice President, Kemper Financial Services, Inc.
Director - European Equities, Kemper Investment Management Company Limited
TRUTTER, JONATHAN W.
First Vice President, Kemper Financial Services, Inc.
VINCENT, CHRISTOPHER T.
First Vice President, Kemper Financial Services, Inc.
First Vice President, Kemper Asset Management Company
WILLSON, STEPHEN R.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Strategic Municipal Income Trust
WITTNEBEL, MARK E.
First Vice President, Kemper Financial Services, Inc.
CARNEY, ANNE T.
Vice President, Kemper Financial Services, Inc.
COHEN, JERRI I.
Vice President, Kemper Financial Services, Inc.
GERACI, AUGUST L.
Vice President, Kemper Financial Services, Inc.
C-13
<PAGE> 62
GERICKE, KATHLEEN E.
Vice President, Kemper Financial Services, Inc.
GOLAN, JAMES S.
Vice President, Kemper Financial Services, Inc.
HUOT, LISA L.
Vice President, Kemper Financial Services, Inc.
KARWOWSKI, KENNETH F.
Vice President, Kemper Financial Services, Inc.
KNAPP, WILLIAM M.
Vice President, Kemper Financial Services, Inc.
KOCH, DEBORAH L.
Vice President, Kemper Financial Services, Inc.
KRANZ, KATHY J.
Vice President, Kemper Financial Services, Inc.
KRUEGER, PAMELA D.
Vice President, Kemper Financial Services, Inc.
LeFEBVRE, THOMAS J.
Vice President, Kemper Financial Services, Inc.
MANGIPUDI, V. RAO
Vice President, Kemper Financial Services, Inc.
McGOVERN, KAREN B.
Vice President, Kemper Financial Services, Inc.
MILLER, MAUREEN A.
Vice President, Kemper Financial Services, Inc.
MINER, EDWARD
Vice President, Kemper Financial Services, Inc.
MITCHELL, KATHERINE H.
Vice President, Kemper Financial Services, Inc.
PANOZZO, ALBERT R.
Vice President, Kemper Financial Services, Inc.
PONTECORE, SUSAN E.
Vice President, Kemper Financial Services, Inc.
QUADRINI, LISA L.
Vice President, Kemper Financial Services, Inc.
RADIS, STEVE A.
Vice President, Kemper Financial Services, Inc.
ROKOSZ, PAUL A.
Vice President, Kemper Financial Services, Inc.
SMITH, ROBERT G.
Vice President, Kemper Financial Services, Inc.
TEPPER, SHARYN A.
Vice President, Kemper Financial Services, Inc.
C-14
<PAGE> 63
WERTH, ELIZABETH W.
Vice President, Kemper Financial Services, Inc.
Assistant Secretary, Kemper Mutual Funds
Assistant Secretary, Kemper International Bond Fund
Assistant Secretary, Kemper Target Equity Fund
Assistant Secretary, Sterling Funds
WIZER, BARBARA K.
Vice President, Kemper Financial Services, Inc.
ZURAWSKI, CATHERINE N.
Vice President, Kemper Financial Services, Inc.
KOVACS, WILLIAM P.
Vice President and Assistant Secretary, Kemper Financial
Services, Inc.
Director, Kemper Advisors, Inc.
C-15
<PAGE> 64
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Kemper Distributors, Inc. acts as principal underwriter and distributor
of the Registrant's shares and acts as principal underwriter of the Kemper
Mutual Funds, Kemper Investors Fund, Sterling Funds and Kemper International
Bond Fund.
(b) Information on the officers and directors of Kemper Distributors, Inc.,
principal underwriter for the Registrant is set forth below. The principal
business address is 120 South LaSalle Street, Chicago, Illinois 60603.
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH
NAME POSITIONS AND OFFICES WITH UNDERWRITER REGISTRANT
- ----------------------- ----------------------------------------------------- --------------
<S> <C> <C>
John E. Peters Principal, Director and President Vice President
James L. Greenawalt Director, Executive Vice President None
Patrick H. Dudasik Financial Principal, Treasurer and Chief Financial None
Officer
Linda A. Bercher Senior Vice President None
Daniel T. O'Lear Senior Vice President None
David F. Dierenfeldt Vice President, Secretary None
Thomas V. Bruns Vice President None
Carlene D. Merold Vice President None
Diane E. Ratekin Assistant Secretary None
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All such accounts, books and other documents are maintained at the offices
of the Registrant, at the offices of Registrant's investment manager, Kemper
Financial Services, Inc., 120 South LaSalle Street, Chicago, Illinois 60603, at
the offices of Registrant's principal underwriter, Kemper Distributors, Inc.,
120 South LaSalle Street, Chicago, Illinois 60603, at the offices of the
Registrant's custodian and transfer agent, Investors Fiduciary Trust Company,
127 West 10th Street, Kansas City, Missouri 64105 or at the offices of the
Registrant's shareholder services agent, Kemper Service Company, 811 Main
Street, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment containing
financial statements, with respect to Kemper Retirement Fund Series VI, which
need not be certified, within four to six months from the effective date of this
Registration Statement.
(c) Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the appropriate Fund's latest annual report to shareholders,
upon request and without charge.
C-16
<PAGE> 65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago and State of Illinois, on the 17th day
of April, 1995.
KEMPER TARGET EQUITY FUND
By: /S/ STEPHEN B. TIMBERS
-----------------------------------
Stephen B. Timbers, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on April 17, 1995 on behalf of the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<S> <C>
/S/ STEPHEN B. TIMBERS President (Principal Executive Officer) and
- --------------------------------------------- Trustee
Stephen B. Timbers
/S/ ARTHUR R. GOTTSCHALK* Trustee
- ---------------------------------------------
/S/ FREDERICK T. KELSEY* Trustee
- ---------------------------------------------
/S/ DAVID B. MATHIS* Trustee
- ---------------------------------------------
/S/ JOHN B. TINGLEFF* Trustee
- ---------------------------------------------
/S/ JOHN G. WEITHERS* Trustee
- ---------------------------------------------
/S/ JEROME L. DUFFY Treasurer (Principal Financial and
- --------------------------------------------- Accounting Officer)
Jerome L. Duffy
</TABLE>
* Philip J. Collora signs this document pursuant to powers of attorney filed
herewith.
/S/ PHILIP J. COLLORA
--------------------------------------
Philip J. Collora
<PAGE> 66
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
99.B1.(a) Amended and Restated Agreement and Declaration of Trust.
99.B1.(b) Written Instrument Establishing and Designating Kemper Retirement
Fund Series VI.
99.B2. By-Laws.
99.B3. Inapplicable.
99.B4. Text of Share Certificate.
99.B5.(a) Investment Management Agreement (Kemper Retirement Fund Series).
99.B5.(b) Notification of Additional Portfolio (Series VI).
99.B5.(c) Investment Management Agreement (Kemper Worldwide 2004 Fund).
99.B6.(a) Underwriting Agreement.
99.B6.(b) Form of Selling Group Agreement.
99.B6.(c) Assignment and Assumption Agreement.
99.B7. Inapplicable.
99.B8.(a) Custody Agreement.
99.B8.(b) Foreign Custody Agreement.
99.B9.(a) Agency Agreement.
99.B9.(b) Supplement to Agency Agreement.
99.B9.(c) Administrative Services Agreement.
99.B9.(d) Guaranty Agreement--Kemper Retirement Fund Series I.
99.B9.(e) Guaranty Agreement--Kemper Retirement Fund Series II.
99.B9.(f) Guaranty Agreement--Kemper Retirement Fund Series III.
99.B9.(g) Guaranty Agreement--Kemper Retirement Fund Series IV.
99.B9.(h) Guaranty Agreement--Kemper Retirement Fund Series V.
99.B9.(i) Guaranty Agreement--Kemper Retirement Fund Series VI.
99.B9.(j) Guaranty Agreement--Kemper Worldwide 2004 Fund.
99.B9.(k) Assignment and Assumption Agreement.
99.B10.(a) Opinion and Consent of Vedder, Price, Kaufman & Kammholz.
99.B10.(b) Opinion and Consent of Ropes & Gray.
99.B11. Consent of Independent Auditors.
99.B12. Inapplicable.
99.B13. Subscription Agreement--Series VI.
99.B14.(a) Kemper Retirement Plan Prototype.(1)
99.B14.(b) Model Individual Retirement Account.(1)
99.B15. Inapplicable.
99.B16. Performance Calculations.
99.B17. Powers of Attorney.
99.B27. Financial Data Schedule. Not applicable.
99.485(b) Representation of Counsel (Rule 485(b) ).
</TABLE>
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 10 to
the Registration Statement of Registrant on Form N-1A filed on or about
November 6, 1992.
<PAGE> 1
EXHIBIT 99.B1.(a)
AMENDED & RESTATED AGR. & DECL. OF TRUST
KEMPER TARGET EQUITY FUND
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
September 15, 1994
WHEREAS, Article IX, Section 4 of the Amended and Restated Agreement
and Declaration of Trust of Kemper Target Equity Fund dated June 29, 1989, as
amended, provides that the Agreement and Declaration of Trust may be amended at
any time by an instrument in writing signed by a majority of the then Trustees
when authorized so to do by vote of Shareholders holding a majority of the
Shares entitled to vote; and
WHEREAS, the holders of a majority of the Shares entitled to vote have
authorized this Amendment and Restatement of said Agreement and Declaration of
Trust;
NOW, THEREFORE, said Agreement and Declaration of Trust is amended and
restated to read in its entirety as follows:
WITNESSETH
WHEREAS, this Trust has been formed for the purposes of carrying on the
business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees have acquired
and may hereafter acquire assets and properties, to hold and manage as trustees
of a Massachusetts voluntary association with transferable shares in accordance
with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets and properties which they may from time to
time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose
of the same upon the following terms and conditions for the pro rata benefit of
the holders from time to time of shares in this Trust as hereinafter set
forth.
ARTICLE I
NAME AND DEFINITIONS
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NAME AND REGISTERED AGENT
SECTION 1. This Trust shall be known as Kemper Target Equity Fund and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine. The registered agent for
the Trust in Massachusetts shall be CT Corporation System whose address is 2
Oliver Street, Boston, Massachusetts or such other person as the Trustees may
from time to time designate.
DEFINITIONS
SECTION 2. Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) The "Trust" refers to the Massachusetts voluntary association
established by this Agreement and Declaration of Trust, as amended from time to
time, pursuant to Massachusetts General Laws, Chapter 182;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV and then in office;
(c) "Shares" mean the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided from
time to time or, if more than one series or class of shares is authorized under
or pursuant to Article III, the equal proportionate transferable units of
interest into which each such series or class shall be divided from time to
time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 (and
any successor statute) and the Rules and Regulations thereunder, all as amended
from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Principal Underwriter" and "vote of a majority of the
outstanding voting securities" shall have the meanings given them in the 1940
Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time;
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(i) "Net asset value" shall have the meaning set forth in Section 6 of
Article VI hereof;
(j) The terms "series" or "series of Shares" refers to the one or more
separate investment portfolios of the Trust authorized under or pursuant to
Article III into which the assets and liabilities of the Trust may be divided
and the Shares of the Trust representing the beneficial interest of
Shareholders in such respective portfolios; and
(k) The terms "class" or "class of Shares" refers to the division of
Shares representing any series into two or more classes authorized under or
pursuant to Article III.
ARTICLE II
NATURE AND PURPOSE
The Trust is a voluntary association (commonly known as a business
trust) of the type referred to in Chapter 182 of the General Laws of the
Commonwealth of Massachusetts. The Trust is not intended to be, shall not be
deemed to be, and shall not be treated as, a general or a limited partnership,
joint venture, corporation or joint stock company, nor shall the Trustees or
Shareholders or any of them for any purpose be deemed to be, or be treated in
any way whatsoever as though they were, liable or responsible hereunder as
partners or joint venturers. The purpose of the Trust is to engage in, operate
and carry on the business of an open-end management investment company and to
do any and all acts or things as are necessary, convenient, appropriate,
incidental or customary in connection therewith.
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
SECTION 1. The Shares of the Trust shall be issued in one or more
series as the Trustees may, without Shareholder approval, authorize from time
to time. Each series shall be preferred over all other series in respect of
the assets allocated to that series as hereinafter provided. The beneficial
interest in each series shall at all times be
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divided into Shares (without par value) of such series, each of which shall,
except as provided in the following sentence, represent an equal proportionate
interest in such series with each other Share of the same series, none having
priority or preference over another Share of the same series. The Trustees
may, without Shareholder approval, divide the Shares of any series into two or
more classes, Shares of each such class having such preferences and special or
relative rights or privileges (including conversion rights, if any) as the
Trustees may determine. The number of Shares authorized shall be unlimited,
and the Shares so authorized may be represented in part by fractional Shares.
The Trustees may from time to time divide or combine the shares of any series
or class into a greater or lesser number without thereby changing the
proportionate beneficial interests in the series or class. Without limiting
the authority of the Trustees set forth in this Section 1 to establish and
designate any further series or class, the Trustees hereby establish and
designate six series of Shares to be known respectively as: Kemper Retirement
Fund Series I, Kemper Retirement Fund Series II, Kemper Retirement Fund
Series III, Kemper Retirement Fund Series IV, Kemper Retirement Fund Series V
and Kemper Worldwide 2004 Fund. The establishment and designation of any
series or class of Shares in addition to the foregoing shall be effective upon
the execution by a majority of the then Trustees of an instrument setting
forth such establishment and designation and the relative rights and
preferences of such series or class. As provided in Article IX, Section 1
hereof, any series or class of Shares (whether or not there shall then be
Shares outstanding of said series or class) may be terminated by the Trustees
by written notice to the Shareholders of such series or class or by the vote of
the Shareholders of such series or class entitled to vote more than fifty
percent (50%) of the votes entitled to be cast on the matter. In the event of
any such termination, a majority of the then Trustees shall execute an
instrument setting forth the termination of such series or class.
OWNERSHIP OF SHARES
SECTION 2. The ownership and transfer of Shares shall be recorded on
the books of the Trust or its transfer or similar agent. No certificates
certifying the ownership of Shares shall be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as
they consider appropriate for the issuance of Share certificates, the transfer
of Shares and similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent of the Trust, as the case may be, shall
be conclusive as to who are the Shareholders of each
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series or class and as to the number of Shares of each series or class held
from time to time by each Shareholder.
INVESTMENT IN THE TRUST; ASSETS OF A SERIES
SECTION 3. The Trustees may issue Shares of the Trust to such persons
and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible property or
a combination thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares
of a particular series, together with all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, shall, irrevocably belong to
such series of Shares for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of the Trust and
are herein referred to as "assets of" such series. Any allocation of the
assets of a series among any classes of Shares of such series shall be made in
a manner consistent with the preferences and special or relative rights or
privileges of such classes.
RIGHT TO REFUSE ORDERS
SECTION 4. The Trust by action of its Trustees shall have the right to
refuse to accept any subscription for its Shares at any time without any cause
or reason therefore whatsoever. Without limiting the foregoing, the Trust
shall have the right not to accept subscriptions under circumstances or in
amounts as the Trustees in their sole discretion consider to be disadvantageous
to existing Shareholders and the Trust may from time to time set minimum and/or
maximum amounts which may be invested in Shares by a subscriber.
ORDER IN PROPER FORM
SECTION 5. The criteria for determining what constitutes an order in
proper form and the time of receipt of such an order by the Trust shall be
prescribed by resolution of the Trustees.
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WHEN SHARES BECOME OUTSTANDING
SECTION 6. Shares subscribed for and for which an order in proper form
has been received shall be deemed to be outstanding as of the time of
acceptance of the order therefor and the determination of the net price
thereof, which price shall be then deemed to be an asset of the Trust.
MERGER OR CONSOLIDATION
SECTION 7. In connection with the acquisition of all or substantially
all the assets or stock of another investment company, investment trust, or of
a company classified as a personal holding company under Federal Income Tax
laws, the Trustees may issue or cause to be issued Shares of a series or class
and accept in payment therefor, in lieu of cash, such assets at their market
value, or such stock at the market value of the assets held by such investment
company or investment trust, either with or without adjustment for contingent
costs or liabilities.
NO PREEMPTIVE RIGHTS, ETC.
SECTION 8. Shareholders shall have no preemptive or other right to
receive, purchase or subscribe for any additional Shares or other securities
issued by the Trust. The Shareholders shall have no appraisal rights with
respect to their Shares and, except as otherwise determined by the Trustees in
their sole discretion, shall have no exchange or conversion rights with respect
to their Shares.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
SECTION 9. Shares shall be deemed to be personal property giving only
the rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to the
terms of the Declaration of Trust and to have become a party thereto. The
death of a Shareholder during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere against the Trust
or the Trustees, but only to the rights of said decedent under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition or
division of the same or for an accounting, nor
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shall the ownership of Shares constitute the Shareholders partners. Neither
the Trust nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholder, nor except as
specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder
may at any time personally agree to pay.
SHAREHOLDER INSPECTION RIGHTS
SECTION 10. Any Shareholder or his agent may inspect and copy during
normal business hours any of the following documents of the Trust: By-Laws,
minutes of the proceedings of the Shareholders and annual financial statements
of the Trust, including a balance sheet and financial statements of operations.
The foregoing rights of inspection of Shareholders of the Trust are the
exclusive and sole rights of the Shareholders with respect thereto and no
Shareholder of the Trust shall have, as a Shareholder, the right to inspect or
copy any of the books, records or other documents of the Trust except as
specifically provided in this Section 10 of this Article III or except as
otherwise determined by the Trustees.
ARTICLE IV
THE TRUSTEES
NUMBER, DESIGNATION, ELECTION, TERM, ETC.
SECTION 1.
(a) INITIAL TRUSTEE. Robert J. Engling, the initial Trustee,
appointed other Trustees pursuant to subsection (c) of this Section 1 and then
resigned.
(b) NUMBER. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase or decrease the number of Trustees to
a number other than the number theretofore determined which number shall not be
less than three nor more than fifteen except during the period that the initial
Trustee named above is sole Trustee. No decrease in the number of Trustees
shall have the effect of removing any Trustee from office prior to the
expiration of his term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to
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subsection (e) of this Section 1.
(c) TERM AND ELECTION. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee until the next meeting of
Shareholders, if any, called for the purpose of considering the election or
reelection of such Trustee or of a successor to such Trustee, and until the
election and qualification of his successor, if any, elected at such meeting,
or until such Trustee sooner dies, resigns, retires or is removed. Upon the
election and qualification of a new Trustee, the Trust estate shall vest in the
new Trustee (together with the continuing or other new Trustees) without any
further act or conveyance. Prior to any sale of Shares pursuant to any public
offering, the initial Trustee named above shall have the right to appoint other
persons as Trustees each to serve as Trustees as aforesaid until the first
meeting of Shareholders called for the purpose of the election or re-election
of such Trustee or of a successor to such Trustee.
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to the Chairman of the Board, if any, the President or the
Secretary of the Trust, and such resignation or retirement shall take effect
upon such delivery or upon such later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed for cause at any time by
written instrument, signed by at least a majority of the number of Trustees
prior to such removal, specifying the date upon which such removal shall become
effective. Any Trustee may be removed with or without cause (i) by the vote of
the Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter voting together without regard to series or
class at any meeting called for such purpose, or (ii) by a written consent
filed with the custodian of the Trust's portfolio securities and executed by
the Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter voting together without regard to series or
class.
Whenever ten or more Shareholders of record who have been such for at
least six months preceding the date of application, and who hold in the
aggregate Shares constituting at least one percent of the outstanding Shares of
the Trust, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a meeting to consider removal of a Trustee and accompanied by a
form of communication and request that they wish to transmit, the
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Trustees shall within five business days after receipt of such application
inform such applicants as to the approximate cost of mailing to the
Shareholders of record the proposed communication and form of request. Upon
the written request of such applicants, accompanied by a tender of the material
to be mailed and of the reasonable expenses of mailing, the Trustees shall,
within reasonable promptness, mail such material to all Shareholders of record
at their addresses as recorded on the books of the Trust. Notwithstanding the
foregoing, the Trustees may refuse to mail such material on the basis and in
accordance with the procedures set forth in the last two paragraphs of Section
16(c) of the 1940 Act.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees by the other Trustees may (but so long as there are at
least three remaining Trustees, need not unless required by the 1940 Act) be
filled either by a majority of the remaining Trustees, even if less than a
quorum, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine or, whenever deemed
appropriate by the remaining Trustees, by the election by the Shareholders, at
a meeting called for such purpose, of a person to fill such vacancy. Upon the
appointment or election and qualification of a new Trustee as aforesaid, the
Trust estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance, except that any such
appointment or election in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to be effective at a
later date shall become effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees.
(g) MANDATORY ELECTION BY SHAREHOLDERS. Notwithstanding the foregoing
provisions of this Section 1, the Trustees shall call a meeting of the
Shareholders for the election of one or more Trustees at such time or times as
may be required in order that the provisions of the 1940 Act may be complied
with, and the authority hereinabove provided for the Trustees to appoint any
successor Trustee or Trustees shall be restricted if such appointment would
result in failure of the Trust to comply with any provision of the 1940 Act.
(h) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall
not operate to annul or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into pursuant to the
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terms of this Declaration of Trust.
(i) NO ACCOUNTING. Except under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a result of his death,
resignation, retirement, removal or incapacity (nor the estate of any such
person) shall be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
POWERS
SECTION 2. The Trustees, subject only to the specific limitations
contained in this Declaration of Trust or otherwise imposed by the 1940 Act or
other applicable law, shall have, without further or other authorization and
free from any power or control of the Shareholders, full, absolute and
exclusive power, control and authority over the Trust assets and the business
and affairs of the Trust to the same extent as if the Trustees were the sole
and absolute owners thereof in their own right and to do all such acts and
things as in their sole judgment and discretion are necessary and incidental
to, or desirable for the carrying out of any of the purposes of the Trust or
conducting the business of the Trust. Any determination made in good faith by
the Trustees of the purposes of the Trust or the existence of any power or
authority hereunder shall be conclusive. In construing the provisions of this
Declaration of Trust, there shall be a presumption in favor of the grant of
power and authority to the Trustees. Without limiting the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration of Trust
containing provisions relating to the business of the Trust, the conduct of
its affairs, its rights or powers and the rights or powers of its Shareholders,
Trustees, officers, employees and other agents and may amend and repeal them to
the extent that such By-Laws do not reserve that right to the Shareholders;
fill vacancies in their number, including vacancies resulting from increases in
their number, unless a vote of the Trust's Shareholders is required to fill
such vacancies pursuant to the 1940 Act; elect and remove such officers and
appoint and terminate such agents as they consider appropriate; appoint from
their own number, and terminate, any one or more committees consisting of two
or more Trustees, including an executive committee which may, when the Trustees
are not in session, exercise some or all of the powers and authority of the
Trustees as the Trustees may determine; appoint an advisory board, the members
of which shall not be Trustees and need not be Shareholders; employ one or more
investment advisers or managers as provided in Section 6 of this Article IV;
employ one or more custodians of the assets of the Trust and authorize such
custodians to employ subcustodians and to deposit all or any part of such
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assets in a system or systems for the central handling of securities; retain a
transfer agent or a Shareholder services agent, or both; provide for the
distribution of Shares by the Trust, through one or more principal underwriters
or otherwise; set record dates for the determination of Shareholders with
respect to various matters; and in general delegate such authority as they
consider desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such custodian
or underwriter.
In furtherance of and not in limitation of the foregoing, the Trustees
shall have power and authority:
(a) To invest and reinvest in, to buy or otherwise acquire, to hold,
for investment or otherwise, to sell or otherwise dispose of, to lend or to
pledge, to trade in or deal in securities or interests of all kinds, however
evidenced, or obligations of all kinds, however evidenced, or rights, warrants,
or contracts to acquire such securities, interests, or obligations, of any
private or public company, corporation, association, general or limited
partnership, trust or other enterprise or organization, foreign or domestic,
or issued or guaranteed by any national or state government, foreign or
domestic, or their agencies, instrumentalities or subdivisions (including but
not limited to, bonds, debentures, bills, time notes and all other evidences of
indebtedness); negotiable or non-negotiable instruments; any and all futures
contracts; government securities and money market instruments (including but
not limited to, bank certificates of deposit, finance paper, commercial paper,
bankers acceptances, and all kinds of repurchase agreements);
(b) To invest and reinvest in, to buy or otherwise acquire, to hold,
for investment or otherwise, to sell or otherwise dispose of foreign
currencies, and funds and exchanges, and make deposits in banks, savings banks,
trust companies, and savings and loan associations, foreign or domestic;
(c) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop, and dispose of (by sale or otherwise) any property, real or
personal, and any interest therein;
(d) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;
(e) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or
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property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person
or persons such power and discretion with relation to securities or property
as the Trustees shall deem proper;
(f) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(g) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a custodian, subcustodian or
other depositary or a nominee or nominees or otherwise;
(h) Subject to the provisions of Article III, to allocate assets,
liabilities, income and expenses of the Trust to a particular series of Shares
or to apportion the same among two or more series, provided that any
liabilities or expenses incurred by a particular series shall be payable solely
out of the assets of that series; and to the extent necessary or appropriate to
give effect to the preferences and special or relative rights or privileges of
any classes of Shares, to allocate assets, liabilities, income and expenses of
a series to a particular class of Shares of that series or to apportion the
same among two or more classes of Shares of that series;
(i) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or property
of which is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer, and to
pay calls or subscriptions with respect to any security held in the Trust;
(j) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall
deem proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall
deem proper;
(k) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
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(l) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust property or any part thereof to secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distribution and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or manager, principal underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability; and
(p) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such retirement and
other benefits, for any or all of the Trustees, officers, employees and agents
of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees of common law trusts.
Except as otherwise provided herein or from time to time in the By-Laws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (if a quorum by present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can communicate with each other simultaneously and participation by
such means shall
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constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office.
PAYMENT OF EXPENSES, ALLOCATION OF LIABILITIES
SECTION 3. The Trustees are authorized to pay or to cause to be paid
out of the principal or income of the Trust, or partly out of principal and
partly out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, principal underwriter,
auditor, counsel, custodian, transfer agent, shareholder servicing agent, and
such other agents or independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur.
The assets of a particular series of Shares shall be charged with the
liabilities (including, in the discretion of the Trustees or their delegate,
accrued expenses and reserves) incurred in respect of such series (but not with
liabilities incurred in respect of any other series) and such series shall also
be charged with its share of any other liabilities. Any allocation of the
liabilities of a series among classes of Shares of that series shall be done in
a manner consistent with the preferences and special or relative rights or
privileges of such classes. The determination of the Trustees shall be final
and conclusive as to the amount of liabilities to be charged to one or more
particular series or class. The Trustees may delegate from time to time the
power to make such allocation to one or more Trustees or to an agent of the
Trust appointed for such purpose. The liabilities with which a series is so
charged are herein referred to as the "liabilities of" such series.
SECTION 4. The Trustees shall have the power, as frequently as they
may determine, to cause each Shareholder to pay directly, in advance or
arrears, for charges for the Trust's custodian or transfer or shareholder
service or similar agent, an amount fixed from time to time by the Trustees, by
setting off such charges due from such Shareholder from declared but unpaid
dividends owed such Shareholder and/or by reducing the number of Shares in the
account of such Shareholder by that number of full and/or fractional shares
which represents the outstanding amount of such charges due from such
Shareholder.
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OWNERSHIP OF ASSETS OF THE TRUST
SECTION 5. Title to all of the assets of each series of the Trust and
of the Trust shall at all times be considered as vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
SECTION 6. Subject to a favorable vote of a majority of the
outstanding voting securities of a series of the Trust, the Trustees may on
behalf of such series, at any time and from time to time, contract for
exclusive or nonexclusive advisory and/or management services for such series
with a corporation, trust, association or other organization, every such
contract to comply with such requirements and restrictions as may be set forth
in the By-Laws; and any such contract may contain such other terms interpretive
of or in addition to said requirements and restrictions as the Trustees may
determine, including, without limitation, authority to determine from time to
time what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of such series shall be held uninvested and to
make changes in such series' investments. The Trustees may also, at any time
and from time to time, contract with a corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine.
The fact that:
(a) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
advisor, principal underwriter, or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for any
parent or affiliate of any organization, with which an advisory or
management or principal underwriter's or distributor's contract, or
transfer, shareholder services or other agency contract may have been or
may hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the Trust, or
that
(b) any corporation, trust, association or other organization with
which an advisory or management or
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principal underwriter's or distributor's contract, or transfer,
shareholder services or other agency contract may have been or may
hereafter be made also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, shareholder services
or other agency contract with one or more other corporations, trusts,
associations, or other organizations, or has other businesses or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing
the same or create any liability or accountability to the Trust or its
Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. Subject to the voting provisions of one or more classes of
Shares, the Shareholders shall have power to vote only: (a) for the election or
removal of Trustees as provided in Article IV, Section 1; (b) with respect to
any investment advisor or manager as provided in Article IV, Section 6; (c)
with respect to any termination or reorganization of the Trust or any series or
class thereof to the extent and as provided in Article IX, Section 1; (d) with
respect to any amendment of this Declaration of Trust to the extent and as
provided in Article IX, Section 4; (e) to the same extent as the stockholders
of a Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders; and (f) with
respect to such additional matters relating to the Trust as may be required by
law, the 1940 Act, this Declaration of Trust, the By-Laws or any registration
of the Trust with the Securities and Exchange Commission (or any successor
agency) or any state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. Notwithstanding any other provision of the
Declaration of Trust, on any matter submitted to a vote of Shareholders all
Shares of the Trust then entitled to vote shall, except to the extent otherwise
required or permitted by the preferences and special or relative rights or
privileges of any class of
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Shares, be voted by individual series and not in the aggregate or by class,
except (a) when required by the 1940 Act, Shares shall be voted in the
aggregate and not by individual series; and (b) when the Trustees have
determined that the matter affects only the interests of one or more series or
classes, then only Shareholders of such series or class shall be entitled to
vote thereon. There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares of any series or class are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law,
this Declaration of Trust or the By-Laws to be taken by Shareholders of such
series or class.
SHAREHOLDER MEETINGS
SECTION 2. Meetings of Shareholders (including meetings involving only
one or more but less than all series or classes) may be called and held from
time to time for the purpose of taking action upon any matter requiring the
vote or authority of the Shareholders as herein provided or upon any other
matter deemed by the Trustees to be necessary or desirable. Such meetings
shall be held at the principal office of the Trust as set forth in the By-Laws
of the Trust or at any such other place within the United States as may be
designated in the call thereof, which call shall be made by the Trustees or the
President of the Trust. Meetings of Shareholders may be called by the Trustees
or such other person or persons as may be specified in the By-Laws upon written
application by Shareholders holding at least twenty-five percent (25%) (or ten
percent (10%)) if the purpose of the meeting is to determine if a Trustee is to
be removed from office) of the Shares then outstanding of all series and
classes entitled to vote at such meeting requesting a meeting be called for a
purpose requiring action by the Shareholders as provided herein or in the
By-Laws which purpose shall be specified in any such written application.
Shareholders shall be entitled to at least seven days' written notice
of any meeting of the Shareholders.
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QUORUM AND REQUIRED VOTE
SECTION 3. The presence at a meeting of Shareholders in person or by
proxy of Shareholders entitled to vote at least thirty percent (30%) of all
votes entitled to be cast at the meeting of each series or class entitled to
vote as a series or class shall be a quorum for the transaction of business at
a Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that the holders of Shares shall vote
in the aggregate and not as a series or class, then the presence in person or
by proxy of Shareholders entitled to vote at least thirty percent (30%) of all
votes entitled to be cast at the meeting (without regard to series or class)
shall constitute a quorum. Any lesser number, however, shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a reasonable
time after the date set for the original meeting without the necessity of
further notice.
Except when a larger vote is required by any provisions of the 1940
Act, this Declaration of Trust or the By-Laws, a majority of the Shares of each
series or class voted on the matter shall decide that matter insofar as that
series or class is concerned, provided that where any provision of law, this
Declaration of Trust or the By-Laws permits or requires that the holders of
Shares vote in the aggregate and not as a series or class, then a majority of
the Shares voted on any matter (without regard to series or class) shall decide
such matter and a plurality shall elect a Trustee.
ACTION BY WRITTEN CONSENT
SECTION 4. Any action taken by Shareholders may be taken without a
meeting if Shareholders entitled to vote more than fifty percent (50%) of the
votes entitled to be cast on the matter of each series or class or, where any
provision of law, this Declaration of Trust or the By-Laws permits or requires
that the holders of Shares vote in the aggregate and not as a series or class,
if Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast thereon (without regard to series or class) (or in either
case such larger vote as shall be required by any provision of this Declaration
of Trust or the By-Laws) consent to the action in writing and such written
consents are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
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ADDITIONAL PROVISIONS
SECTION 5. The By-Laws may include further provisions for
Shareholders' votes and meetings and related matters not inconsistent with the
provisions hereof.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
DISTRIBUTIONS
SECTION 1. The Trustees may in their sole discretion from time to time
distribute to the Shareholders of any series such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and accrued
expenses and liabilities of such series (including such reserves as the
Trustees may establish) determined in accordance with this Declaration of
Trust and good accounting practices. The Trustees shall have full discretion
to determine which items shall be treated as income and which items as
capital and their determination shall be binding upon the Shareholders.
Distributions to any series, if any be made, shall be in Shares of such series,
in cash or otherwise and on a date or dates determined by the Trustees. At any
time and from time to time in their discretion, the Trustees may distribute to
the Shareholders of any series as of a record date or dates determined by the
Trustees, in Shares of such series, in cash or otherwise, all or part of any
gains realized on the sale or disposition of property of the series or
otherwise, or all or part of any other principal of the Trust attributable to
the series. Except to the extent otherwise required or permitted by the
preferences and special or relative rights or privileges of any classes of
Shares of that series, each distribution pursuant to this Section 1 shall be
made ratably according to the number of Shares of the series held by the
several Shareholders on the applicable record date thereof, provided that
distributions from assets of a series may only be made to the holders of the
Shares of such series and provided that no distributions need be made on Shares
purchased pursuant to orders received, or for which payment is made, after such
time or times as the Trustees may determine. Any distribution to the
Shareholders of a particular class of Shares shall be made to such Shareholders
pro rata in proportion to the number of Shares of such class held by each of
them. Any distribution paid in Shares will be paid at the net asset
value thereof as determined in accor-
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dance with this Declaration of Trust. The Trustees have the power, in their
discretion, to distribute for any year amounts sufficient to enable the Trust
to qualify as a "regulated investment company" under the Internal Revenue Code
as amended (or any successor thereto) to avoid any liability for federal income
tax in respect of that year.
REDEMPTIONS AND REPURCHASES
SECTION 2. Any holder of Shares of the Trust may, by presentation of a
request in proper form, together with his certificates, if any, for such
Shares, in proper form for transfer to the Trust or duly authorized agent of
the Trust, request redemption of his shares for the net asset value thereof
determined and computed in accordance with the provisions of this Section 2 and
the provisions of Section 6 of this Article VI.
Upon receipt by the Trust or its duly authorized agent, as the case may
be, of such a request for redemption of Shares in proper form, such Shares
shall be redeemed at the net asset value per share of the particular series or
class next determined after such request is received or determined as of such
other time fixed by the Trustees as may be permitted or required by the 1940
Act. The criteria for determining what constitutes a request for redemption in
proper form and the time of receipt of such request shall be fixed by the
Trustees.
The obligation of the Trust to redeem its Shares as set forth above in
this Section 2 shall be subject to the condition that such obligation may be
suspended by the Trust by or under authority of the Trustees during any period
or periods when and to the extent permissible under the 1940 Act. If there is
such a suspension, any Shareholder may withdraw any request for redemption
which has been received by the Trust during any such period and the applicable
net asset value with respect to which would but for such suspension be
calculated as of a time during such period. Upon such withdrawal, the Trust
shall return to the Shareholder the certificates therefor, if any.
The Trust may also purchase, repurchase or redeem Shares in accordance
with such other methods, upon such other terms and subject to such other
conditions as the Trustee may from time to time authorize at a price not
exceeding the net asset value of such Shares in effect when the purchase or
repurchase or any contract to purchase or repurchase is made. Shares redeemed
or repurchased by the Trust hereunder shall be canceled upon such redemption or
repurchase without further action by the Trust or the Trustees and the number
of
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issued and outstanding Shares of the relevant series and class shall thereupon
by reduced by such amount.
PAYMENT FOR SHARES REDEEMED
SECTION 3. Payment of the redemption price for Shares redeemed
pursuant to this Article VI shall be made by the Trust or its duly authorized
agent after receipt by the Trust or its duly authorized agent of a request for
redemption in proper form (together with any certificates for such Shares as
provided in Section 2 above) in accordance with procedures and subject to
conditions prescribed by the Trustees; provided, however, that payment may be
postponed during the period in which the redemption of Shares is suspended
under Section 2 above. Subject to any generally applicable limitation imposed
by the Trustees, any payment on redemption, purchase or repurchase by the Trust
of Shares may, if authorized by the Trustees, be made wholly or partly in kind,
instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property then
held by the series of Shares being redeemed, purchased or repurchased (but not
necessarily involving a portion of each of the series' holdings) and taken at
their value used in determining the net asset value of the Shares in respect of
which payment is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
SECTION 4. The Trust shall have the right at its option and at any
time and from time to time to redeem Shares of any Shareholder at the net asset
value thereof as determined in accordance with Section 6 of this Article VI, if
at such time such Shareholder owns fewer shares of a series or class than, or
Shares of a series or class having an aggregate net asset value of less than,
an amount determined from time to time by the Trustees. Any such redemption at
the option of the Trust shall be made in accordance with such other criteria
and procedures for determining the Shares to be redeemed, the redemption date
and the means of effecting such redemption as the Trustees may from time to
time authorize.
ADDITIONAL PROVISIONS RELATING TO DIVIDENDS, REDEMPTIONS AND REPURCHASES
SECTION 5. The completion of redemption, purchase or repurchase of
Shares shall constitute a full discharge of the Trust and the Trustees with
respect to such Shares. No dividend or distribution (including, without
limitation, any
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distribution paid upon termination of the Trust or of any series or class) with
respect to, nor any redemption or repurchase of, the Shares of any series or
class shall be effected by the Trust other than from the assets of such series.
DETERMINATION OF NET ASSET VALUE
SECTION 6. The term "net asset value" of each Share of a series or
class as of any particular time shall be the quotient obtained by dividing the
value, as at such time, of the net assets of such series or class (i.e., the
value of the assets of such series or class less the liabilities of such series
or class, exclusive of liabilities represented by the Shares of such series or
class) by the total number of Shares of such series or class outstanding at
such time, all determined and computed in accordance with the Trust's current
prospectus.
The Trustees, or any officer, or officers or agent of the Trust
designated for the purpose by the Trustees shall determine the net asset value
of the Shares of each series or class, and the Trustees shall fix the time or
times as of which the net asset value of the Shares of each series or class
shall be determined and shall fix the periods during which any such net asset
value shall be effective as to sales, redemptions and repurchases of, and other
transactions in, the Shares of such series or class, except as such times and
periods for any such transaction may be fixed by other provisions of this
Declaration of Trust or by the By-Laws.
Determinations in accordance with this Section 6 made in good faith
shall be binding on all parties concerned.
HOW LONG SHARES ARE OUTSTANDING
SECTION 7. Shares of the Trust surrendered to the Trust for redemption
by it pursuant to the provisions of Section 2 of this Article VI shall be
deemed to be outstanding until the redemption price thereof is determined
pursuant to this Article VI and, thereupon and until paid, the redemption price
thereof shall be deemed to be a liability of the Trust. Shares of the Trust
purchased by the Trust in the open market shall be deemed to be outstanding
until confirmation of purchase thereof by the Trust and, thereupon and until
paid, the purchase price thereof shall be deemed to be a liability of the
Trust. Shares of the Trust redeemed by the Trust pursuant to Section 4 of this
Article VI shall be deemed to be outstanding until said Shares are deemed to be
redeemed in accordance with procedures adopted by the Trustees pursuant
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to said Section 4.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF
TRUSTEES AND SHAREHOLDERS
SECTION 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust if the rate thereof is prescribed by such Trustees.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust, it being recognized that such employment
may result in such Trustee being considered an Affiliated Person or an
Interested Person.
LIMITATION OF LIABILITY
SECTION 2. The Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, investment
advisor or manager, principal underwriter or custodian, nor shall any Trustee
be responsible for the act or omission of any other Trustee. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate, Share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustee or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or with
respect to their or his capacity as Trustees or Trustee and neither such
Trustees or Trustee nor the Shareholders shall be personally liable thereon.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust by them as Trustees or Trustee or as officers
or officer and not individually and
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that the obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust or a particular series of Shares, and may contain such further
recital as he or they may deem appropriate, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer or Shareholders
or Shareholder individually.
All persons extending credit to, contracting with or having any claim
against the Trust or a particular series of Shares shall look only to the
assets of the Trust or the assets of that particular series of Shares, as the
case may be, for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 3. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested. A Trustee
shall be liable only for his own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of counsel
or other experts with respect to the meaning and operation of this Declaration
of Trust and their duties as Trustees hereunder, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice. In discharging their duties, the Trustees, when acting
in good faith, shall be entitled to rely upon the books of account of the Trust
and upon written reports made to the Trustees by any officer appointed by them,
any independent public accountant and (with respect to the subject matter of
the contract involved) any officer, partner or responsible employee of any
other party to any contract entered into pursuant to Section 2 of Article IV.
The Trustees shall not be required to give any bond as such, nor any surety if
a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
SECTION 4. No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made or to be made by
the Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
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ARTICLE VIII
INDEMNIFICATION
Subject to the exceptions and limitations contained in this Article,
every person who is, or has been, a Trustee or officer of the Trust (including
persons who serve at the request of the Trust as directors, officers or
trustees of another organization in which the Trust has an interest as a
shareholder, creditor or otherwise) hereinafter referred to as a "Covered
Person", shall be indemnified by the Trust to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having been
such a Trustee, director or officer and against amounts paid or incurred by him
in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason
of a final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that
his action was in the best interest of the Trust; or
(c) in the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b)) and resulting in a
payment by a Covered Person, unless there has been either a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other body approving the settlement
or other disposition or a reasonable determination, based on a review of
readily available facts (as opposed to a full trial-type inquiry) that he
did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the Disinterested
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Trustees then in office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such a Covered Person and
shall inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Covered Persons may be entitled by contract or
otherwise under law.
Expenses of preparation and presentation of a defense to any claim,
action, suit or proceeding subject to a claim for indemnification under this
Article shall be advanced by the Trust prior to final disposition thereof upon
receipt of an undertaking by or on behalf of the recipient to repay such amount
if it is ultimately determined that he is not entitled to indemnification under
this Article, provided that either:
(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or independent legal counsel in a written opinion shall
determine, based upon a review of the readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (a) who is
not an "interested person" of the Trust, as defined in the 1940 Act (including
anyone who has been exempted from being an "interested person" by any rule,
regulation or order of the Commission), and (b) against whom none of such
actions, suits or other proceedings or another action, suit or other proceeding
on the same or similar grounds is then or has been pending.
As used in this Article, the words "claim", "action", "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorneys' fees,
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cost, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified against all loss and expense arising from
such liability but only out of the assets of the particular series of Shares of
which he or she is or was a Shareholder; provided, however, there shall be no
liability or obligation of the Trust arising hereunder to reimburse any
Shareholder for taxes paid by reason of such Shareholder's ownership of Shares
or for losses suffered by reason of any changes in value of any Trust assets.
ARTICLE IX
MISCELLANEOUS
DURATION, TERMINATION AND REORGANIZATION OF TRUST
SECTION 1. Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time
by the Trustees by written notice to the Shareholders without a vote of the
Shareholders of the Trust or by the vote of the Shareholders entitled to vote
more than fifty percent (50%) of the votes of each series or class entitled to
be cast on the matter. Any series or class of Shares may be terminated at any
time by the Trustees by written notice to the Shareholders of such series or
class without a vote of the Shareholders of such series or class or by the vote
of the Shareholders of such series or class entitled to vote more than fifty
percent (50%) of the votes entitled to be cast on the matter.
Upon termination of the Trust or of any one or more series or classes
of Shares, after paying or otherwise providing for all charges, taxes, expenses
and liabilities, whether due or accrued or anticipated, of the particular
series or class as may be determined by the Trustees, the Trust shall in
accordance with such procedures as the Trustees consider appropriate reduce to
the extent necessary the remaining assets of the particular series to
distributable form in cash or other securities, or any
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combination thereof, and distribute the proceeds to the Shareholders of the
series or class involved, ratably according the number of Shares of such series
or class held by the several Shareholders of such series or class on the date
of termination. Any such distributions with respect to any series which has
one or more classes of Shares outstanding shall be made ratably to such classes
in the same proportion as the number of Shares of each class bears to the total
number of Shares of the series, except to the extent otherwise required or
permitted by the preferences and special or relative rights or privileges of
any classes of Shares of any such series.
At any time by the affirmative vote of the Shareholders of the affected
series entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter, the Trustees may sell, convey and transfer the assets of
the Trust, or the assets belonging to any one or more series, to another trust,
partnership, association or corporation organized under the laws of any state
of the United States, or to the Trust to be held as assets belonging to another
series of the Trust, in exchange for cash, shares or other securities
(including, in the case of a transfer to another series of the Trust, Shares of
such other series) with such transfer being made subject to or with the
assumption by the transferee of, the liabilities belonging to each series the
assets of which are so distributed. Following such transfer, the Trustees
shall distribute such cash, shares or other securities (giving due effect to
the assets and liabilities belonging to and any other differences among the
various series the assets belonging to which have so been transferred) among
the Shareholders of the series the assets belonging to which have been so
transferred; and if all the assets of the Trust have been so distributed, the
Trust shall be terminated.
FILING OF COPIES, REFERENCES, HEADINGS
SECTION 2. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each amendment
hereto shall be filed by the Trust with the Secretary of State of The
Commonwealth of Massachusetts and with the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by any officer of the
Trust as to whether or not any such amendments have been made and as to any
matters in connection with the Trust hereunder; and, with the same effect as if
it were the original, may rely on a copy certified by an officer of the Trust
to be a
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copy of this instrument or of any such amendments. In this instrument and in
any such amendment, references to this instrument, and all expressions like
"herein", "hereof", and "hereunder", shall be deemed to refer to this
instrument as amended from time to time. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument.
This instrument may be executed in any number of counterparts each of which
shall be deemed an original.
APPLICABLE LAW
SECTION 3. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall
be of the type commonly called a Massachusetts business trust, and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust.
AMENDMENTS
SECTION 4. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
so to do by vote of Shareholders holding more than fifty percent (50%) of the
Shares of each series entitled to vote, except that an amendment which in the
determination of the Trustees shall affect the holders of one or more series or
classes of Shares but not the holders of all outstanding series and classes
shall be authorized by vote of the Shareholders holding more than fifty percent
(50%) of the Shares entitled to vote of each series or class affected and no
vote of Shareholders of a series or class not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
provision which is defective or inconsistent with the 1940 Act or with the
requirements of the Internal Revenue Code and the regulations thereunder for
the Trust's obtaining the most favorable treatment thereunder available to
regulated investment companies shall not require authorization by Shareholder
vote.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals for themselves and their assigns, as of this 15th day of September, 1994.
(SEAL) (signatures attached)
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/s/ Arthur R. Gottschalk
-------------------------------
Arthur R. Gottschalk, Trustee
2512 Braeburn Road
Flossmoor, Illinois 60422
/s/ Frederick T. Kelsey
-------------------------------
Frederick T. Kelsey, Trustee
3133 Laughing Gull Court
Johns Island, South Carolina 29455
/s/ Charles M. Kierscht
-------------------------------
Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
/s/ Stephen B. Timbers
-------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, Illinois 60045
/s/ John B. Tingleff
-------------------------------
John B. Tingleff, Trustee
2015 South Lake Shore Drive
Harbor Springs, Michigan 49740
/s/ John G. Weithers
-------------------------------
John G. Weithers, Trustee
311 Springlake
Hinsdale, Illinois 60521
30
<PAGE> 31
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
Then personally appeared the afore-named Arthur R. Gottschalk,
Frederick T. Kelsey, Charles M. Kierscht, Stephen B. Timbers, John B. Tingleff
and John G. Weithers who acknowledged the foregoing instrument to be their free
act and deed, before me this 15th day of September, 1994.
/s/ Sandra K. Pelletier
-----------------------------
NOTARY PUBLIC
<PAGE> 1
EXHIBIT 99.B1.(b)
WRIT. INST. ESTABLISHING TRUST
KEMPER TARGET EQUITY FUND
WRITTEN INSTRUMENT ESTABLISHING AND DESIGNATING
KEMPER RETIREMENT FUND SERIES VI
The undersigned, being a majority of the trustees of Kemper Target Equity
Fund (the "Trust"), a business trust organized pursuant to an amended and
restated Agreement and Declaration of Trust dated September 15, 1994, as
amended (the "Declaration of Trust"), pursuant to Section 1 of Article III of
the Declaration of Trust, do hereby establish and designate a seventh series of
Shares of the Trust to be known as "Kemper Retirement Fund Series VI." The
relative rights and preferences of such series shall be as set forth in the
Declaration of Trust.
IN WITNESS WHEREOF, the undersigned have this 7th day of April, 1995
signed these presents.
/s/ Stephen B. Timbers
------------------------------
Stephen B. Timbers, Trustee
210 South Green Bay Road
Lake Forest, IL 60045
(Signatures continue)
<PAGE> 2
/s/ Arthur R. Gottschalk
------------------------------
Arthur R. Gottschalk, Trustee
1070 Marblehead Drive
Naples, FL 33942-8718
/s/ Frederick T. Kelsey
------------------------------
Frederick T. Kelsey, Trustee
3133 Laughing Gull Court
Johns Island, SC 29455
/s/ David B. Mathis
------------------------------
David B. Mathis, Trustee
529 Buena Road
Lake Forest, IL 60045
/s/ John B. Tingleff
------------------------------
John B. Tingleff, Trustee
2015 South Lake Shore Drive
Harbor Springs, MI 49740
/s/ John G. Weithers
------------------------------
John G. Weithers, Trustee
311 Springlake
Hinsdale, IL 60521
<PAGE> 1
EXHIBIT 99.B2.
BY-LAWS
BY-LAWS OF
KEMPER RETIREMENT FUND
SECTION 1. AGREEMENT AND DECLARATION OF
TRUST AND PRINCIPAL OFFICE
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Kemper Retirement Fund, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust; Resident Agent. The principal office of
the Trust shall be located in Chicago, Illinois. Its resident agent in
Massachusetts shall be CT Corporation System, 2 Oliver Street, Boston,
Massachusetts or such other person as the Trustees may from time to time select.
SECTION 2. SHAREHOLDERS
2.1 Shareholder Meetings. Meetings of the shareholders may be called at any
time by the Trustees, by the President or, if the Trustees and the President
shall fail to call any meeting of shareholders for a period of 30 days after
written application of one or more shareholders who hold at least 25% of all
shares issued and outstanding and entitled to vote at the meeting (or 10% if
the purpose of the meeting is to determine if a Trustee shall be removed from
office), then such shareholders may call such meeting. Each call of a meeting
shall state the place, date, hour and purposes of the meeting.
2.2 Place of Meetings. All meetings of the shareholders shall be held at the
principal office of the Trust, or, to the extent permitted by the Declaration
of Trust, at such other place within the United States as shall be designated
by the Trustees or the President of the Trust.
2.3 Notice of Meetings. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be
given at least seven days before the meeting to each shareholder entitled to
vote thereat by leaving such notice with him or at his residence or usual
place of business or by mailing it, postage prepaid, and addressed to such
shareholder at his address as it appears in the records of the Trust. Such
notice shall be given by the Secretary or an
<PAGE> 2
Assistant Secretary or by an officer designated by the Trustees. No notice of
any meeting of shareholders need be given to a shareholder if a written waiver
of notice, executed before or after the meeting by such shareholder or his
attorney thereunto duly authorized, is filed with the records of the meeting.
2.4 Ballots. No ballot shall be required for any election unless requested
by a shareholder present or represented at the meeting and entitled to vote in
the election.
2.5 Proxies and Voting. Shareholders entitled to vote may vote either in
person or by proxy in writing dated not more than six months before the
meeting named therein, which proxies shall be filed with the Secretary or
other person responsible to record the proceedings of the meeting before being
voted. Unless otherwise specifically limited by their terms, such proxies shall
entitle the holders thereof to vote at any adjournment of such meeting but
shall not be valid after the final adjournment of such meeting. At all
meetings of shareholders, unless the voting is conducted by inspectors, all
questions relating to the qualification of voters, the validity of proxies and
the acceptance or rejection of votes shall be decided by the chairman of the
meeting.
SECTION 3. TRUSTEES
3.1 Committees and Advisory Board. The Trustees may appoint from their
number an executive committee and other committees. Any such committee may be
abolished and reconstituted at any time and from time to time by the Trustees.
Except as the Trustees may otherwise determine, any such committee may make
rules for the conduct of its business. The Trustees may appoint an advisory
board to consist of not less than two nor more than five members. The members
of the advisory board shall be compensated in such manner as the Trustees may
determine and shall confer with and advise the Trustees regarding the
investments and other affairs of the Trust. Each member of the advisory board
shall hold office until the first meeting of the Trustees following the
meeting of the shareholders, if any, next following his appointment and until
his successor is appointed and qualified, or until he sooner dies, resigns, is
removed, or becomes disqualified, or until the advisory board is sooner
abolished by the Trustees.
3.2 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time
to time determine, provided that notice of the first regular meeting following
any such
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<PAGE> 3
determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as any meeting of the shareholders.
3.3 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting, when called by the
Chairman of the Board or by two or more Trustees, sufficient notice thereof
being given to each Trustee by the Secretary or an Assistant Secretary or by the
officer or one of the Trustees calling the meeting.
3.4 Notice. It shall be sufficient notice to a Trustee to send notice by
mail at least three days or by telegram at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to
any Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.
3.5 Quorum. At any meeting of the Trustees, one-third of the Trustees then
in office shall constitute a quorum; provided, however, a quorum (unless the
Board of Trustees consists of two or fewer persons) shall not be less than two.
Any meeting may be adjourned from time to time by a majority of the votes cast
upon the question, whether or not a quorum is present, and the meeting may be
held as adjourned without further notice.
SECTION 4. OFFICERS AND AGENTS
4.1 Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary and such other officers, if any, as the
Trustees from time to time may in their discretion elect or appoint. The
Trust may also have such agents, if any, as the Trustees from time to time may
in their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
4.2 Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the
-3-
<PAGE> 4
Trust were organized as a Massachusetts business corporation and such other
duties and powers as the Trustees may from time to time designate.
4.3 Election. The President, the Treasurer and the Secretary shall be
elected annually by the Trustees at their first meeting in each calendar year
or at such later meeting in such year as the Trustees shall determine. Other
officers or agents, if any, may be elected or appointed by the Trustees at said
meeting or at any other time.
4.4 Tenure. The President, Treasurer and Secretary shall hold office until
the first meeting of Trustees in each calendar year and until their
respective successors are chosen and qualified, or in each case until he or
she sooner dies, resigns, is removed or becomes disqualified. Each other
officer shall hold office and each agent shall retain his or her authority at
the pleasure of the Trustees.
4.5 Chairman of the Board. The Chairman of the Board of Trustees, if one is
so appointed, shall be chosen from among the Trustees and may hold office only
so long as he continues to be a Trustee. The Chairman of the Board, if any is
so appointed, shall preside at all meetings of the shareholders and of the
Trustees at which he is present; and shall have such other duties and powers
as specified herein and as may be assigned to him by the Trustee.
4.6 President and Vice Presidents. The President shall be the chief
executive officer of the Trust. The President shall, subject to the control of
the Trustees, have general charge and supervision of the Trust and shall
perform such other duties and have such other powers as the Trustees shall
prescribe from time to time. Any Vice President shall at the request or in the
absence or disability of the President exercise the powers of the President
and perform such other duties and have such other powers as shall be
designated from time to time by the Trustees.
4.7 Treasurer and Controller. The Treasurer shall be the chief financial
officer of the Trust and, subject to any arrangement made by the Trustees with
a bank or trust company or other organization as custodian or transfer or
shareholder services agent, shall be in charge of its valuable papers and
shall have such other duties and powers as may be designated from time to
time by the Trustees or by the President. If at any time there shall be no
Controller, the Treasurer shall also be the chief accounting officer of the
Trust and shall have the duties and power prescribed herein for the Controller.
Any Assistant Treasurer shall have such duties and powers as shall be
designated from time to time by the Trustees.
-4-
<PAGE> 5
The Controller, if any be elected, shall be the chief accounting officer of
the Trust and shall be in charge of its books of account and accounting
records. The Controller shall be responsible for preparation of financial
statements of the Trust and shall have such other duties and powers as may be
designated from time to time by the Trustees or the President.
4.8 Secretary and Assistant Secretaries. The Secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the
absence of the Secretary from any meeting of shareholders or Trustees, an
Assistant Secretary, or if there be none or if he or she is absent, a
temporary clerk chosen at the meeting shall record the proceedings thereof in
the aforesaid books.
SECTION 5. RESIGNATIONS AND REMOVALS
Any Trustee may resign his trust or retire as a Trustee in accordance with
procedures set forth in the Declaration of Trust. Any officer or advisory
board member may resign at any time by delivering his or her resignation in
writing to the Chairman of the Board, the President or the Secretary or to a
meeting of the Trustees. The Trustees may remove any officer or advisory board
member elected or appointed by them with or without cause by the vote of a
majority of the Trustees then in office. Except to the extent expressly
provided in a written agreement with the Trust, no Trustee, officer, or
advisory board member resigning, and no officer or advisory board member
removed, shall have any right to any compensation for any period following his
or her resignation or removal, or any right to damages on account of such
removal.
SECTION 6. VACANCIES
A vacancy in the office of Trustee shall be filed in accordance with the
Declaration of Trust. Vacancies resulting from the death, resignation,
incapacity or removal of any officer may be filled by the Trustees. Each
successor of any such officer shall hold office for the unexpired term, and in
the case of the President, the Treasurer and the Secretary, until his or her
successor is chosen and qualified, or in each case until he or she sooner dies,
resigns, is removed or becomes disqualified.
SECTION 7. SHARES OF BENEFICIAL INTEREST
7.1 Share Certificates. No certificates certifying the ownership of shares
shall be issued except as the Trustees may otherwise authorize. In the event
that the Trustees authorize
-5-
<PAGE> 6
the issuance of share certificates, subject to the provisions of Section 7.3,
each shareholder shall be entitled to a certificate stating the number of
shares owned by him or her, in such form as shall be prescribed from time to
time by the Trustees. Such certificate shall be signed by the President or a
Vice President and by the Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary. Such signatures may be facsimiles if the certificate is signed by
a transfer or shareholder services agent or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued
by the Trust with the same effect as if he or she were such officer at the
time of its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares,
who shall in either case be deemed, for all purposes hereunder, to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
7.2 Loss of Certificates. In the case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued
in place thereof, upon such terms as the Trustees may prescribe.
7.3 Discontinuance of Issuance of Certificates. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
SECTION 8. RECORD DATE
The Trustees may fix in advance a time, which shall not be more than 90 days
before the date of any meeting of shareholders or the date for the payment
of any dividend or making of any other distribution to shareholders, as the
record date for determining the shareholders having the right to notice and to
vote at such meeting and any adjournment thereof or the right to receive such
dividend or distribution, and in such case only shareholders of record on such
record date shall have such right, notwithstanding any transfer of shares on
the books of the Trust after the record date.
-6-
<PAGE> 7
SECTION 9. SEAL
The seal of the Trust shall, subject to alteration by the Trustees, consist of
a flat-faced circular die with the word "Massachusetts" together with the name
of the Trust, cut or engraved thereon; but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence
shall not impair the validity of, any document, instrument, or other paper
executed and delivered by or on behalf of the Trust.
SECTION 10. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers,
contracts, bonds, notes, checks, drafts and other obligations made, accepted or
endorsed by the Trust shall be signed, and any transfers of securities standing
in the name of the Trust shall be executed, by the President or by one of the
Vice Presidents or by the Treasurer or by whomsoever else shall be designated
for that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
SECTION 11. FISCAL YEAR
The fiscal year of the Trust shall end on such date in each year as the
Trustees shall from time to time determine.
SECTION 12. AMENDMENTS
These By-Laws may be amended or repealed, in whole or in part, by a majority
of the Trustees then in office at any meeting of the Trustees, or by one or
more writings signed by such majority.
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<PAGE> 1
EXHIBIT 99.B4.
TEXT OF SHARE CERTIFICATE
[Name]
is the owner of [number] shares of beneficial
interest in the above noted Fund (the "FUND"), of the series and class, if
any, specified, fully paid and nonassessable, the said shares being issued
and held subject to the provisions of the Agreement and Declaration of
Trust of the Fund, and all amendments thereto, copies of which are on file
with the Secretary of The Commonwealth of Massachusetts. The said owner by
accepting this certificate agrees to and is bound by all of the said
provisions. The shares represented hereby are transferable in writing by the
owner thereof in person or by attorney upon surrender of this certificate to
the Fund properly endorsed for transfer. This certificate is executed on
behalf of the Trustees of the Fund as Trustees and not individually and the
obligations hereof are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the Fund or, if applicable, the specified series of the Fund. The shares may
be subject to a contingent deferred sales charge. This certificate is not
valid unless countersigned by the Transfer Agent.
<PAGE> 1
EXHIBIT 99.B5.(a)
INVESTMENT MANAGEMENT AGREEMENT
[Kemper Retirement Fund Series]
AGREEMENT made this 14th day of June, 1994, by and between KEMPER
TARGET EQUITY FUND, a Massachusetts business trust (the "Fund"), and KEMPER
FINANCIAL SERVICES, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, the shares of beneficial
interest ("Shares") of which are registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate series or
portfolios with each representing the interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund wants to retain the Adviser under this Agreement to
render investment advisory and management services to the portfolios of the
Fund known as Kemper Retirement Fund Series I, Kemper Retirement Fund Series
II, Kemper Retirement Fund Series III, Kemper Retirement Fund Series IV and
Kemper Retirement Fund Series V (the "Initial Portfolios"), together with any
other Fund portfolios which may be established later and served by the Adviser
hereunder, being herein referred to collectively as the "Portfolios" and
individually referred to as a "Portfolio"; and
WHEREAS, the Adviser is willing to render such investment advisory and
management services for the Initial Portfolios;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment
adviser for the Initial Portfolios and other Portfolios hereunder and to manage
the investment and reinvestment of the assets of each such Portfolio in
accordance with the applicable investment objectives and policies and
limitations, and to administer the affairs of each such Portfolio to the extent
requested by and subject to the supervision of the Board of Trustees of the
Fund for the period and upon the terms herein set forth, and to place orders
for the purchase or sale of portfolio securities for the Fund's account with
brokers or dealers selected by it; and, in connection therewith, the Adviser is
authorized as
<PAGE> 2
the agent of the Fund to give instructions to the Custodian of the Fund as
to the deliveries of securities and payments of cash for the account of the
Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser is directed to seek for the Fund best
execution of orders. Subject to such policies as the Board of Trustees of the
Fund determines, the Adviser shall not be deemed to have acted unlawfully or to
have breached any duty, created by this Agreement or otherwise, solely by
reason of its having caused the Fund to pay a broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Adviser determined in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer viewed in terms of either
that particular transaction or the Adviser's overall responsibilities with
respect to the clients of the Adviser as to which the Adviser exercises
investment discretion. The Fund recognizes that all research services and
research that the Adviser receives or generates are available for all clients,
and that the Fund and other clients may benefit thereby. The investment of
funds shall be subject to all applicable restrictions of the Agreement and
Declaration of Trust and By-Laws of the Fund as may from time to time be in
force.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as trustees or officers of
the Fund if elected to such positions and to assume the obligations herein set
forth for the compensation herein provided. The Adviser shall for all purposes
herein provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. It
is understood and agreed that the Adviser, by separate agreements with the
Fund, may also serve the Fund in other capacities.
2. In the event that the Fund establishes one or more portfolios
other than the Initial Portfolios with respect to which it desires to retain
the Adviser to render investment advisory and management services hereunder, it
shall notify the Adviser in writing. If the Adviser is willing to render such
services, it shall notify the Fund in writing whereupon such portfolio or
portfolios shall become a Portfolio or Portfolios hereunder.
2
<PAGE> 3
3. For the services and facilities described in Section 1, the Fund will
pay to the Adviser at the end of each calendar month, an investment management
fee computed at an annual rate of .50 of 1% of the combined average daily net
assets of the Portfolios. The fee as computed above shall be computed
separately for, and charged as an expense of, each Portfolio based upon the
average daily net assets of such Portfolio. For the month and year in which
this Agreement becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement is in effect
during the month and year, respectively.
4. The services of the Adviser to the Fund under this Agreement are not to
be deemed exclusive, and the Adviser shall be free to render similar services
or other services to others so long as its services hereunder are not impaired
thereby.
5. In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for any other
charges of the custodian, and for calculating the net asset value of the Fund
as provided in the prospectus of the Fund. The Adviser shall not be required
to pay and the Fund shall assume and pay the charges and expenses of its
operations, including compensation of the trustees (other than those affiliated
with the Adviser), charges and expenses of independent auditors, of legal
counsel, of any transfer or dividend disbursing agent, and of any registrar of
the Fund, costs of acquiring and disposing of portfolio securities, interest,
if any, on obligations incurred by the Fund, costs of share certificates and of
reports, membership dues in the Investment Company Institute or any similar
organization, costs of reports and notices to shareholders, other like
miscellaneous expenses and all taxes and fees payable to federal, state or
other governmental agencies on account of the registration of securities issued
by the Fund, filing of trust documents or otherwise. The Fund shall not pay or
incur any obligation for any expenses for which the Fund intends to seek
reimbursement from the Adviser as herein provided without first obtaining the
written approval of the Adviser. The Adviser shall arrange, if desired by the
Fund, for officers or employees of the Adviser to serve, without compensation
from the Fund, as trustees, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law.
If expenses borne by the Fund for those Portfolios which the Adviser
manages in any fiscal year (including the
3
<PAGE> 4
Adviser's fee, but excluding interest, taxes, fees incurred in acquiring
and disposing of portfolio securities, distribution services fees,
extraordinary expenses and any other expenses excludable under state securities
law limitations) exceed any applicable limitation arising under state
securities laws, the Adviser will reduce its fee or reimburse the Fund for any
excess to the extent required by such state securities laws. If for any month
the expenses of the Fund properly chargeable to the income account shall exceed
1/12 of the percentage of average net assets allowable as expenses, the payment
to the Adviser for that month shall be reduced and if necessary the Adviser
shall make a refund payment to the Fund so that the total net expense will not
exceed such percentage. As of the end of the Fund's fiscal year, however, the
foregoing computations and payments shall be readjusted so that the aggregate
compensation payable to the Adviser for the year is equal to the percentage
calculated in accordance with Section 3 hereof of the average net asset value
as determined as described herein throughout the fiscal year, diminished to the
extent necessary so that the total of the aforementioned expense items of the
Fund shall not exceed the expense limitation. The aggregate of repayments, if
any, by the Adviser to the Fund for the year shall be the amount necessary to
limit the said net expense to said percentage in accordance with the foregoing.
The net asset value for each Portfolio shall be calculated in
accordance with the provisions of the Fund's prospectus or as the trustees may
determine in accordance with the provisions of the Investment Company Act of
1940. On each day when net asset value is not calculated, the net asset value
of a Portfolio shall be deemed to be the net asset value of such Portfolio as
of the close of business on the last day on which such calculation was made for
the purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is understood
that trustees, officers or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested
in the Fund otherwise than as a trustee, officer or agent.
7. The Adviser 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 this
Agreement relates, except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance of its
obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
4
<PAGE> 5
8. This Agreement shall become effective with respect to the Initial
Portfolios on the date hereof and shall remain in full force until April 1,
1995, unless sooner terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter with respect to each Portfolio,
but only as long as such continuance is specifically approved for each
Portfolio at least annually in the manner required by the Investment Company
Act of 1940 and the rules and regulations thereunder; provided, however, that
if the continuation of this Agreement is not approved for a Portfolio, the
Adviser may continue to serve in such capacity for such Portfolio in the manner
and to the extent permitted by the Investment Company Act of 1940 and the rules
and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by the Adviser on sixty (60) days written notice to the other
party. The Fund may effect termination with respect to any Portfolio by action
of the Board of Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may be terminated with respect to any Portfolio at any
time without the payment of any penalty by the Board of Trustees or by vote of
a majority of the outstanding voting securities of such Portfolio in the event
that it shall have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken any action
which results in a breach of the covenants of the Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment Company
Act of 1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Adviser
to receive payments on any unpaid balance of the compensation described in
Section 3 earned prior to such termination.
9. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
10. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
11. All parties hereto are expressly put on notice of the
5
<PAGE> 6
Fund's Agreement and Declaration of Trust and all amendments thereto, all of
which are on file with the Secretary of The Commonwealth of Massachusetts, and
the limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the trustees, officers, or shareholders
of the Fund individually but are binding upon only the assets and property of
the Fund. With respect to any claim by the Adviser for recovery of that
portion of the investment management fee (or any other liability of the Fund
arising hereunder) allocated to a particular Portfolio, whether in accordance
with the express terms hereof or otherwise, the Adviser shall have recourse
solely against the assets of that Portfolio to satisfy such claim and shall
have no recourse against the assets of any other Portfolio for such purpose.
12. This Agreement shall be construed in accordance with applicable
federal law and (except as to Section 11 hereof which shall be construed in
accordance with the laws of The Commonwealth of Massachusetts) the laws of the
State of Illinois.
13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
6
<PAGE> 7
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement
to be executed as of the day and year first above written.
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
-----------------------------
Title: Vice President
ATTEST:
/s/ Philip J. Collora
- --------------------------------
Title: Assistant Secretary
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-----------------------------
Title: Senior Vice President
ATTEST:
/s/ David F. Dierenfeldt
- --------------------------------
Title: Assistant Secretary
7
<PAGE> 1
EXHIBIT 99.B5.(b)
NOTIFICATION OF ADDITIONAL PORTFOLIO
Kemper Target Equity Fund, a Massachusetts business trust (the "Fund"),
pursuant to Paragraph 2 of the Investment Management Agreement ("Management
Agreement") dated June 14, 1994 between the Fund and Kemper Financial Services,
Inc. (the "Adviser") for the Fund's Kemper Retirement Fund series hereby
notifies the Adviser that it desires to retain the Adviser to render investment
advisory and management services under the Management Agreement for the series
of the Fund known as Kemper Retirement Fund Series VI ("Series VI").
Dated: April 17, 1995
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
--------------------------
Title: Vice President
--------------------------
Attest: /s/ Philip J. Collora
----------------------------
Title: Secretary
----------------------------
Adviser, pursuant to said Paragraph 2 of the Management Agreement,
hereby notifies the Fund that it is willing to render the aforesaid services
for Series VI and acknowledges that such Series VI shall hereby become a
"Portfolio" under the Management Agreement.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
--------------------------
Title: Senior Vice President
--------------------------
Attest: /s/ David F. Dierenfeldt
----------------------------
Title: Assistant Secretary
----------------------------
<PAGE> 1
EXHIBIT 99.B5.(c)
INVESTMENT MANAGEMENT AGREEMENT
(Worldwide)
AGREEMENT made this 3rd day of May, 1994, by and between KEMPER TARGET
EQUITY FUND, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940, the shares of beneficial
interest ("Shares") of which are registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate series or
portfolios with each representing the interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund wants to retain the Adviser under this Agreement to
render investment advisory and management services to the portfolio of the Fund
known as Kemper Worldwide 2004 Fund (the "Initial Portfolio"), together with
any other Fund portfolios that hereafter become subject to this Agreement
pursuant to Section 2 hereof, being herein referred to collectively as the
"Portfolios" and individually referred to as a "Portfolio"; and
WHEREAS, the Adviser is willing to render such investment advisory and
management services for the Initial Portfolio;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for
the Initial Portfolio and other Portfolios hereunder and to manage the
investment and reinvestment of the assets of each such Portfolio in accordance
with the applicable investment objectives and policies and limitations,
and to administer the affairs of each such Portfolio to the extent requested by
and subject to the supervision of the Board of Trustees of the Fund for the
period and upon the terms herein set forth, and to place orders for the
purchase or sale of portfolio securities for the Fund's account with brokers or
dealers selected by it; and, in connection therewith, the Adviser is authorized
as the agent of the Fund to give instructions to the Custodian
<PAGE> 2
of the Fund as to the deliveries of securities and payments of cash for the
account of the Fund. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed to seek for the
Fund best execution of orders. Subject to such policies as the Board of
Trustees of the Fund determines, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty, created by this Agreement or
otherwise, solely by reason of its having caused the Fund to pay a broker or
dealer an amount of commission for effecting a securities transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determined in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer viewed in terms of
either that particular transaction or the Adviser's overall responsibilities
with respect to the clients of the Adviser as to which the Adviser exercises
investment discretion. The Fund recognizes that all research services and
research that the Adviser receives or generates are available for all clients,
and that the Fund and other clients may benefit thereby. The investment of
funds shall be subject to all applicable restrictions of the Agreement and
Declaration of Trust and By-Laws of the Fund as may from time to time be in
force.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as trustees or officers of
the Fund if elected to such positions and to assume the obligations herein set
forth for the compensation herein provided. The Adviser shall for all purposes
herein provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. It
is understood and agreed that the Adviser, by separate agreements with the
Fund, may also serve the Fund in other capacities.
2. In the event that the Fund establishes one or more portfolios other than
the Initial Portfolio with respect to which it desires to retain the Adviser
to render investment advisory and management services hereunder, it shall
notify the Adviser in writing. If the Adviser is willing to render such
services, it shall notify the Fund in writing whereupon such portfolio or
portfolios shall become a Portfolio or Portfolios hereunder.
3. For the services and facilities described in Section 1,
2
<PAGE> 3
the Fund will pay to the Adviser at the end of each calendar month, an
investment management fee computed at an annual rate of .60 of 1% of the
combined average daily net assets of the Portfolios. The fee as computed above
shall be allocated as an expense of each Portfolio based upon the relative
daily net assets of such Portfolios. For the month and year in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement is in effect
during the month and year, respectively.
4. The services of the Adviser to the Fund under this Agreement are not to be
deemed exclusive, and the Adviser shall be free to render similar services or
other services to others so long as its services hereunder are not impaired
thereby.
5. In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for any other
charges of the custodian, and for calculating the net asset value of the Fund
as provided in the prospectus of the Fund. The Adviser shall not be
required to pay and the Fund shall assume and pay the charges and expenses of
its operations, including compensation of the trustees (other than those
affiliated with the Adviser), charges and expenses of independent auditors, of
legal counsel, of any transfer or dividend disbursing agent, and of any
registrar of the Fund, costs of acquiring and disposing of portfolio
securities, interest, if any, on obligations incurred by the Fund, costs of
share certificates and of reports, membership dues in the Investment Company
Institute or any similar organization, costs of reports and notices to
shareholders, other like miscellaneous expenses and all taxes and fees payable
to federal, state or other governmental agencies on account of the registration
of securities issued by the Fund, filing of trust documents or otherwise. The
Fund shall not pay or incur any obligation for any expenses for which the Fund
intends to seek reimbursement from the Adviser as herein provided without first
obtaining the written approval of the Adviser. The Adviser shall arrange, if
desired by the Fund, for officers or employees of the Adviser to serve, without
compensation from the Fund, as trustees, officers or agents of the Fund if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law.
If expenses borne by the Fund for those Portfolios which the Adviser
manages in any fiscal year (including the Adviser's fee, but excluding
interest, taxes, fees incurred in acquiring and disposing of portfolio
securities,
3
<PAGE> 4
distribution services fees, extraordinary expenses and any other expenses
excludable under state securities law limitations) exceed any applicable
limitation arising under state securities laws, the Adviser will reduce its fee
or reimburse the Fund for any excess to the extent required by such state
securities laws. The expense limitation guarantee shall be allocated to each
such Portfolio upon a fee reduction or reimbursement based upon the relative
average daily net assets of each such Portfolio. If for any month the expenses
of the Fund properly chargeable to the income account shall exceed 1/12 of the
percentage of average net assets allowable as expenses, the payment to the
Adviser for that month shall be reduced and if necessary the Adviser shall make
a refund payment to the Fund so that the total net expense will not exceed such
percentage. As of the end of the Fund's fiscal year, however, the foregoing
computations and payments shall be readjusted so that the aggregate
compensation payable to the Adviser for the year is equal to the percentage set
forth in Section 3 hereof of the average net asset value as determined as
described herein throughout the fiscal year, diminished to the extent necessary
so that the total of the aforementioned expense items of the Fund shall not
exceed the expense limitation. The aggregate of repayments, if any, by the
Adviser to the Fund for the year shall be the amount necessary to limit the
said net expense to said percentage in accordance with the foregoing.
The net asset value for each Portfolio shall be calculated in
accordance with the provisions of the Fund's prospectus or as the trustees may
determine in accordance with the provisions of the Investment Company Act of
1940. On each day when net asset value is not calculated, the net asset value
of a share of a Portfolio shall be deemed to be the net asset value of such a
share as of the close of business on the last day on which such calculation was
made for the purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is understood that
trustees, officers or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested
in the Fund otherwise than as a trustee, officer or agent.
7. The Adviser 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 this
Agreement relates, except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance of its
obligations and duties or by reason of its reckless disregard of its
obligations and duties under this
4
<PAGE> 5
Agreement.
8. This Agreement shall become effective with respect to the Initial
Portfolio on the date hereof and shall remain in full force until April 1,
1995, unless sooner terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter with respect to each Portfolio,
but only as long as such continuance is specifically approved for each
Portfolio at least annually in the manner required by the Investment Company
Act of 1940 and the rules and regulations thereunder; provided, however, that
if the continuation of this Agreement is not approved for a Portfolio, the
Adviser may continue to serve in such capacity for such Portfolio in the manner
and to the extent permitted by the Investment Company Act of 1940 and the rules
and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by the Adviser on sixty (60) days written notice to the other
party. The Fund may effect termination with respect to any Portfolio by action
of the Board of Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may be terminated with respect to any Portfolio at any
time without the payment of any penalty by the Board of Trustees or by vote of
a majority of the outstanding voting securities of such Portfolio in the event
that it shall have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken any action
which results in a breach of the covenants of the Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment Company
Act of 1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Adviser
to receive payments on any unpaid balance of the compensation described in
Section 3 earned prior to such termination.
9. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
10. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
5
<PAGE> 6
11. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers, or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by the Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund arising
hereunder) allocated to a particular Portfolio, whether in accordance with the
express terms hereof or otherwise, the Adviser shall have recourse solely
against the assets of that Portfolio to satisfy such claim and shall have no
recourse against the assets of any other Portfolio for such purpose.
12. This Agreement shall be construed in accordance with applicable federal
law and (except as to Section 11 hereof which shall be construed in accordance
with the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
6
<PAGE> 7
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement
to be executed as of the day and year first above written.
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
----------------------------
Title: Vice President
ATTEST:
/s/ Philip J. Collora
- ------------------------------
Title: Assist. Secretary
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
----------------------------
Title: Senior Vice President
ATTEST:
/s/ David F. Dierenfeldt
- ------------------------------
Title: Assist. Secretary
7
<PAGE> 1
EXHIBIT 99.B6.(a)
UNDERWRITING AGREEMENT
AGREEMENT made as of this 11th day of January, 1990 between
KEMPER RETIREMENT FUND, a Massachusetts business trust
(hereinafter called the "Fund"), and KEMPER FINANCIAL SERVICES,
INC., a Delaware corporation (hereinafter called the
"Underwriter");
W I T N E S S E T H:
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto
as follows:
1. The Fund hereby appoints the Underwriter its agent
for the distribution of shares of beneficial interest
(hereinafter called "shares") of the Fund in jurisdictions
wherein shares of the Fund may legally be offered for sale;
provided, however, that the Fund in its absolute discretion may
(a) issue or sell shares directly to holders of shares of the
Fund upon such terms and conditions and for such consideration,
if any, as it may determine, whether in connection with the
distribution of subscription or purchase rights, the payment or
reinvestment of dividends or distributions, or otherwise; or (b)
issue or sell shares at net asset value to the shareholders of
any other investment company, for which the Underwriter shall act
as exclusive distributor, who wish to exchange all or a portion
of their investment in shares of such other investment company
for shares of the Fund.
2. The Underwriter hereby accepts appointment as agent
for the distribution of the shares of the Fund and agrees that it
will use its best efforts with reasonable promptness to sell such
part of the authorized shares of the Fund remaining unissued as
from time to time shall be effectively registered under the
Securities Act of 1933 ("Securities Act"), at prices determined
as hereinafter provided and on terms hereinafter set forth, all
subject to applicable Federal and state laws and regulations and
to the Agreement and Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to
keep effectively registered under the Securities Act for sale as
herein contemplated such shares as the Underwriter shall
reasonably request and as the Securities and Exchange Commission
shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund
1
<PAGE> 2
may terminate, suspend or withdraw the offering of shares
whenever, in its sole discretion, it deems such action to be
desirable.
5. The Underwriter shall sell shares of the Fund to or
through qualified dealers or others in such manner, not
inconsistent with the provisions hereof and the then effective
registration statement of the Fund under the Securities Act (and
related prospectus), as the Underwriter may determine from time
to time, provided that no dealer or other person shall be
appointed or authorized to act as agent of the Fund without the
prior consent of the Fund. It is mutually agreed that, in
addition to sales made by it as agent of the Fund, the
Underwriter may, in its discretion, also sell shares of the Fund
as principal to persons with whom it does not have dealer selling
group agreements.
6. Shares of the Fund offered for sale or sold by the
Underwriter shall be so offered or sold at a price per share
determined in accordance with the then current prospectus
relating to the sale of such shares except as departure from such
prices shall be permitted by the rules and regulations of the
Securities and Exchange Commission; provided, however, that any
public offering price for shares of the Fund shall be the net
asset value per share plus a distribution charge in the amount
set forth in the then current prospectus of the Fund relating to
such shares. The net asset value per share shall be determined
in the manner and at the times set forth in the then current
prospectus of the Fund relating to such shares.
7. The price the Fund shall receive for all shares
purchased from the Fund shall be the net asset value used in
determining the public offering price applicable to the sale of
such shares. The excess, if any, of the sales price over the net
asset value of the shares of the Fund sold by the Underwriter as
agent shall be retained by the Underwriter as a commission for
its services hereunder. Out of such commission the Underwriter
may allow commissions or concessions to dealers and may allow
them to others in its discretion in such amounts as the
Underwriter shall determine from time to time. Except as may be
otherwise determined by the Underwriter and the Fund from time to
time, such commissions or concessions shall be uniform to all
dealers.
8. The Underwriter shall issue and deliver on behalf of
the Fund such confirmations of sales made by it as agent pursuant
to this agreement as may be required. At or prior to the time of
issuance of shares, the Underwriter will pay or cause to be paid
to the Fund the amount due the Fund for the sale of such shares.
Certificates shall be issued or shares registered on the transfer
books of the Fund in such names and denominations as the
Underwriter may specify.
2
<PAGE> 3
9. The Fund will execute any and all documents and
furnish any and all information which may be reasonably necessary
in connection with the qualification of its shares for sale
(including the qualification of the Fund as a dealer where
necessary or advisable) in such states as the Underwriter may
reasonably request (it being understood that the Fund shall not
be required without its consent to comply with any requirement
which in its opinion is unduly burdensome).
10. The Fund will furnish to the Underwriter from time
to time such information with respect to the Fund and its shares
as the Underwriter may reasonably request for use in connection
with the sale of shares of the Fund. The Underwriter agrees that
it will not use or distribute or authorize the use, distribution
or dissemination by its dealers or others in connection with the
sale of such shares any statements, other than those contained in
the Fund's current prospectus, except such supplemental
literature or advertising as shall be lawful under Federal and
state securities laws and regulations, and that it will furnish
the Fund with copies of all such material.
11. The Underwriter shall order shares of the Fund from
the Fund only to the extent that it shall have received purchase
orders therefor. The Underwriter will not make, or authorize any
dealers or others to make: (a) any short sales of shares of the
Fund; or (b) any sales of such shares to any trustee or officer
of the Fund or to any officer or director of the Underwriter or
of any corporation or association furnishing investment advisory,
managerial or supervisory services to the Fund, or to any such
corporation or association, unless such sales are made in
accordance with the then current prospectus relating to the sale
of such shares.
12. The Underwriter, as agent of and for the account of
the Fund, may repurchase the shares of the Fund at such prices
and upon such terms and conditions as shall be specified in the
current prospectus of the Fund.
13. In selling or reacquiring shares of the Fund for the
account of the Fund, the Underwriter will in all respects conform
to the requirements of all state and Federal laws and the Rules
of Fair Practice of the National Association of Securities
Dealers, Inc., relating to such sale or reacquisition, as the
case may be, and will indemnify and save harmless the Fund from
any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the
Underwriter. The Underwriter will observe and be bound by all
the provisions of the Agreement and Declaration of Trust of the
Fund (and of any fundamental policies adopted by the Fund
pursuant to the Investment Company Act of 1940, notice of which
shall have been given to the Underwriter) which at the time in
any way require, limit, restrict or prohibit or otherwise
3
<PAGE> 4
regulate any action on the part of the Underwriter.
14. The Underwriter will require each dealer to conform
to the provisions hereof and the Registration Statement (and
related prospectus) at the time in effect under the Securities
Act with respect to the public offering price of the Fund's
shares, and neither the Underwriter nor any such dealers shall
withhold the placing of purchase orders so as to make a profit
thereby.
15. The Fund shall assume and pay all charges and
expenses of its operations not specifically assumed or otherwise
to be provided by the Underwriter under this Agreement. The Fund
will pay or cause to be paid expenses (including the fees and
disbursements of its own counsel) of any registration of the Fund
and its shares under the United States securities laws and
expenses incident to the issuance of shares of beneficial
interest, such as the cost of share certificates, issue taxes,
and fees of the transfer agent. The Underwriter will pay all
expenses (other than expenses which one or more Firms may bear
pursuant to any agreement with the Underwriter) incident to the
sale and distribution of the shares issued or sold hereunder,
including, without limiting the generality of the foregoing, all
(a) expenses of printing and distributing any prospectus and of
preparing, printing and distributing or disseminating any other
literature, advertising and selling aids in connection with the
offering of the shares for sale (except that such expenses need
not include expenses incurred by the Fund in connection with the
preparation, typesetting, printing and distribution of any
registration statement, prospectus or report or other
communication to shareholders in their capacity as such), (b)
expenses of advertising in connection with such offering and (c)
expenses (other than the Fund's auditing expenses) of qualifying
or continuing the qualification of the shares for sale and, in
connection therewith, of qualifying or continuing the
qualification of the Fund as a dealer or broker under the laws of
such states as may be designated by the Underwriter under the
conditions herein specified. No transfer taxes, if any, which
may be payable in connection with the issue or delivery of shares
sold as herein contemplated or of the certificates for such
shares shall be borne by the Fund, and the Underwriter will
indemnify and hold harmless the Fund against liability for all
such transfer taxes.
16. This agreement shall become effective on the date
hereof and shall continue in effect until April 1, 1991 and from
year to year thereafter, but only so long as such continuance is
approved in the manner required by the Investment Company Act of
1940. Either party hereto may terminate this agreement on any
date by giving the other party at least six months prior written
notice of such termination specifying the date fixed therefor.
Without prejudice to any other remedies of the Fund in any such
4
<PAGE> 5
event the Fund may terminate this agreement at any time
immediately upon any failure of fulfillment of any of the
obligations of the Underwriter hereunder.
17. This agreement shall automatically terminate in the
event of its assignment.
18. Any notice under this agreement shall be in writing,
addressed and delivered or mailed, postage postpaid, to the other
party at such address as such other party may designate for the
receipt of such notice.
19. All parties hereto are expressly put on notice of
the Fund's Agreement and Declaration of Trust and all amendments
thereto, all of which are on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder
and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as
such representatives and not individually, and the obligations of
the Fund hereunder are not binding upon any of the Trustees,
officers or shareholders of the Fund individually but are binding
upon only the assets and the property of the Fund. With respect
to any claim by the Underwriter for recovery of any liability of
the Fund arising hereunder allocated to a particular series of
the Fund, if there be more than one, whether in accordance with
the express terms hereof or otherwise, the Underwriter shall have
recourse solely against the assets of that series to satisfy such
claim and shall have no recourse against the assets of any other
Portfolio for such purpose.
5
<PAGE> 6
IN WITNESS WHEREOF, the Fund and the Underwriter have each
caused this agreement to be executed on the day and year first
above written.
KEMPER RETIREMENT FUND
By: /s/ Charles M. Kierscht
----------------------
Title: President
------------------
Attest: /s/ Robert J. Engling
----------------------
Title: V.P. & Secy.
-----------------------
KEMPER FINANCIAL SERVICES, INC.
By: /s/ John E. Peters
-------------------------
Title: Senior Vice President
----------------------
Attest: /s/ Philip J. Collora
----------------------
Title: Vice President & Assistant Sec.
-------------------------------
6
<PAGE> 1
EXHIBIT 99.B6.(b)
SELLING GROUP AGREEMENT KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street, Chicago, Illinois 60603
Dear Financial Services Firm:
As principal underwriter and distributor, we invite you to join a
Selling Group for the distribution of shares of the Kemper Mutual Funds (herein
called "Funds"), but only in those states in which the shares of the respective
Funds may legally be offered for sale. As exclusive agent of each of the Funds,
we offer to sell to you shares of the Funds on the following terms:
1. In all sales of these shares to the public you shall act as dealer
for your own account, and in no transaction shall you have any authority to
act as agent for the issuer, for us, or for any other member of the Selling
Group.
2. Orders received from you will be accepted by us only at the public
offering price applicable to each order, as established by the Prospectus of
each Fund, subject to the discount, commission or other concession, if any, as
provided in such Prospectus. Upon receipt from you of any order to purchase
shares of a Fund, we shall confirm to you in writing or by wire to be followed
by a confirmation in writing. Additional instructions may be forwarded to you
from time to time. All orders are subject to acceptance or rejection by us in
our sole discretion.
3. You may offer and sell shares to your customers only at the public
offering price determined in the manner described in the applicable Prospectus.
The public offering price is the net asset value per share as provided in the
applicable Prospectus plus, with respect to certain Funds, a sales charge from
which you shall receive a discount equal to a percentage of the applicable
offering price as provided in the applicable Prospectus. You shall receive a
sales commission, with respect to certain Funds, equal to a percentage of the
amount invested as provided in the applicable Prospectus. You shall receive a
distribution service fee, for certain Funds for which such fees are available,
as provided in the applicable Prospectus which fee shall be payable with
respect to such assets, for such periods and at such intervals as are from time
to tome specified by us. The discounts or other concessions to which you may be
entitled in connection with sales to your customers pursuant to any special
features of a Fund (such as cumulative discounts, letters of intent, etc., the
terms of which shall be as described in the applicable Prospectus and related
forms) shall be in accordance with the terms of such features. You may receive
an administrative service fee, with respect to certain Funds for which such
fees are available, as provided in the applicable Prospectus, which fee shall
be payable with respect to such
1
<PAGE> 2
assets, for such periods and at such intervals as are from time
to time specified by us.
4. By accepting this agreement, you agree:
(a) To purchase shares only from us or from your
customers.
(b) That you will purchase shares from us only to cover
purchase orders already received from your customers, or for your
own bona fide investments.
(c) That you will not purchase shares from your
customers at a price lower than the bid price then quoted by or
for the Fund involved. You may, however, sell shares for the
account of your customer to the Fund, or to us as agent for the
Fund, at the bid price currently quoted by or for the Fund and
charge your customer a fair commission for handling the
transaction.
(d) That you will not withhold placing with us orders
received from your customers so as to profit yourself as a result
of such withholding.
5. We will not accept from you any conditional orders for shares.
6. If any shares confirmed to you under the terms of this agreement
are repurchased by the issuing Fund or by us as agent for the Fund, or are
tendered for repurchase, within seven business days after the date of our
confirmation of the original purchase order, you shall forthwith refund to us
the full discount, commission, finder's fee or other concession, if any,
allowed or paid to you on such shares.
7. Payment for shares ordered from us shall be in New York clearing
house funds and must be received by the appropriate Fund's shareholder service
agent within seven days after our acceptance of your order (or such shorter
time period as may be required by applicable regulations). If such payment is
not received, we reserve the right, without notice, forthwith to cancel the
sale or, at our option, to sell the shares ordered back to the Fund, in which
case we may hold you responsible for any loss, including loss of profit
suffered by us as a result of your failure to make such payment.
8. Shares sold to you hereunder shall be available in negotiable form
for delivery at the appropriate Fund's shareholder services agent, against
payment, unless other instructions have been given.
9. All sales will be made subject to our receipt of shares from the
Fund. We reserve the right, in our discretion, without notice, to suspend sales
or withdraw the offering of shares entirely. We reserve the right to modify,
cancel or change the terms of this agreement, upon 15 days prior written notice
to you. Also, the sales charges, discounts, commissions or other concessions,
service fees of any kind provided for hereunder are subject to change at any
time by the Funds and us.
10. All communications to us should be sent to the address in the
heading above. Any notice to you shall be duly given if
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mailed or telegraphed to you at the address specified by you
below.
11. This agreement shall be construed in accordance with the laws of
Illinois. This agreement is subject to the Prospectuses of the Funds from time
to time in effect, and, in the event of a conflict, the terms of the
Prospectuses shall control. References herein to the "Prospectus" of a Fund
shall mean the prospectus and statement of additional information of such Fund
as from time to time in effect. Any changes, modifications or additions
reflected in any such Prospectus shall be effective on the date of such
Prospectus (or supplement thereto) unless specified otherwise.
12. This agreement is subject to the Additional Stipulations and
Conditions on the reverse side hereof, all of which are a part of this
agreement.
Kemper Distributors, Inc.
By
----------------------------
Authorized Signature
Title
-------------------------
We have read the foregoing agreement and accept and agree to the terms and
conditions thereof.
Firm
--------------------------
Witness
------------------------ By
----------------------------
Authorized Representative
Dated Title
-------------------------- -------------------------
3
<PAGE> 4
ADDITIONAL STIPULATIONS AND CONDITIONS
13. No person is authorized to make any representations concerning
shares of any Fund except those contained in the Prospectus of such Fund and in
printed information subsequently issued by the Fund or by us as information
supplemental to such Prospectus. If you wish to use your own advertising with
respect to a Fund, all such advertising must be approved by us or by the Fund
prior to use. You shall be responsible for any required filing of such
advertising.
14. Your acceptance of this agreement constitutes a representation (i)
that you are a registered security dealer and a member in good standing of the
National Association of Securities Dealers, Inc. and that you agree to comply
with all state and federal laws, rules and regulations applicable to
transactions hereunder and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., including specifically Section 26,
Article III thereof, or (ii) if you are offering and selling shares of the
Funds only in jurisdictions outside of the several states, territories and
possessions of the United States and are not otherwise required to be a member
of the National Association of Securities Dealers, Inc., that you nevertheless
agree to conduct your business in accordance with the spirit of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., and to
observe the laws and regulations of the applicable jurisdiction. You likewise
agree that you will not offer to sell shares of any Fund in any state or other
jurisdiction in which they may not lawfully be offered for sale.
15. You shall make available an investment management account for your
customers through the Funds and shall provide such office space and equipment,
telephone facilities, personnel and literature distribution as is necessary or
appropriate for providing information and services to your customer. Such
services and assistance may include, but not be limited to, establishment and
maintenance of shareholder accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Funds, and
such other services as may be agreed upon from time to time and as may be
permitted by applicable statute, rule, or regulation. You agree to release,
indemnify and hold harmless the Funds, us and our respective representatives
and agents from any and all direct or indirect liabilities or losses resulting
from requests, directions, actions or inactions of or by you, your officers,
employees or agents regarding the purchase, redemption or transfer of
registration of shares of the Funds for accounts of you, your customers and
other shareholders or from any unauthorized or improper use of any on-line
computer facilities. You shall prepare such periodic reports for us as shall
reasonably be requested by us. You shall immediately inform the Funds or us of
all written complaints received by you from Fund
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<PAGE> 5
shareholders relating to the maintenance of their accounts and shall promptly
answer all such complaints and other similar correspondence. You shall provide
the Funds and us on a timely basis with such information as may be required to
complete various regulatory forms.
16. As a result of the necessity to compute the amount of any
contingent deferred sales charge due with respect to the redemption of shares,
you may not hold shares of a Fund imposing such a charge in an account
registered in your name or in the name of your nominee for the benefit of
certain of your customers except with our prior written consent. Except as
otherwise permitted by us, shares of such a Fund owned by a shareholder must be
in a separate identifiable account for such shareholder.
17. Shares of certain Funds have been divided into separate classes:
Class A Shares, Class B Shares and Class C Shares. Class A shares are offered
at net asset value plus an initial sales charge. Class B Shares are offered at
net asset value without an initial sales charge but are subject to a contingent
deferred sales charge and a Rule 12b-1 fee and have a conversion feature. Class
C Shares are offered at net asset value without an initial sales charge or
contingent deferred sales charge but are subject to a Rule 12b-1 fee and have
no conversion feature. Please see the appropriate Prospectuses for a more
complete description of the distinctions between the classes of shares.
It is important to investors not only to choose Funds appropriate for
their investment objectives, but also to choose the appropriate distribution
arrangement, based on the amount invested and the expected duration of the
investment. To assist investors in these decisions, we have instituted the
following policies with respect to orders for shares of the Funds. The
following policies and procedures with respect to sales of classes of shares of
the Funds apply to each broker/dealer that distributes shares of the Funds.
1. All purchase orders for $500,000 or more (not including street name
or omnibus accounts) should be for class A Shares.
2. Any purchase order of less than $500,000 may be for either Class A,
Class B or Class C Shares in light of the relevant facts and circumstances,
including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold the shares; and
c. any other relevant circumstances such as the
availability of purchases under a Letter of Intent, Combined Purchases or
Cumulative Discount Privilege.
There are instances when one pricing structure may be more appropriate
than another. For example, investors who would qualify for a reduced sales
charge on Class A Shares may determine that payment of a reduced front-end
sales charge is preferable to payment of an ongoing Rule 12b-1 fee. On the
other hand, investors whose orders would not qualify for such a discount and
who plan to hold their investment for more than six years may wish to defer the
sales charge and would consider Class
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<PAGE> 6
B Shares. Investors who prefer not to pay an initial sales charge and who
plan to redeem their shares within six years might consider Class C Shares.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of shares of
the Funds advise the investor of the available pricing structures offered by
the Funds and the impact of choosing one method over another, including
breakpoints and the availability of Letters of Intent, Combined Purchases and
Cumulative Discounts. In some instances it may be appropriate for a
supervisory person to discuss a purchase with the investor.
18. This agreement shall be in substitution of any prior selling group
agreement between you and us regarding these shares. This agreement shall not
be applicable to the provision of services for Cash Equivalent Fund, Tax-Exempt
California Money Market Fund, Tax Exempt New York Money Market Fund, Investors
Cash Trust and similar wholesale money market funds. The payment of related
distribution and services fees, shall be subject to separate services
agreements.
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<PAGE> 1
EXHIBIT 99.B6.(c)
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION ("Assignment and Assumption") made and
entered into as of February 1, 1995 by and between Kemper Financial Services,
Inc., a Delaware corporation ("Assignor"), and Kemper Distributors, Inc., a
Delaware corporation ("Assignee").
WHEREAS, Assignor serves as principal underwriter for Kemper Target
Equity Fund, a Massachusetts business trust (the "Fund"), pursuant to that
certain Underwriting Agreement dated January 11, 1990 by and between Assignor
and the Fund (the "Agreement");
WHEREAS, Assignee is a wholly-owned subsidiary of Assignor;
WHEREAS, It has been proposed that the rights, duties and
responsibilities of Assignor under the Agreement be transferred to and assumed
by Assignee;
WHEREAS, The Fund has determined that such transfer of rights, duties
and responsibilities is reasonable and in the best interests of the Fund and
the Fund's shareholders; and
NOW, THEREFORE, in consideration of the covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Assignment and Assumption. Assignor assigns and transfers to
Assignee all of Assignor's rights, interests, liabilities, duties and
obligations under the Agreement ("Assigned Rights and Obligations"). Assignee
accepts the foregoing assignment and transfer of the Assigned Rights and
Obligations and agrees to assume, pay, perform and otherwise be fully
responsible for the same.
2. Further Assurances. From time to time, at the request of either
party, the other party will execute and deliver such further instruments of
assignment, transfer and assumption and take such further action as may be
required to assign, transfer and assume the Assigned Rights and Obligations.
3. Applicable Law. This Assignment and Assumption shall be governed
by the laws of the State of Illinois.
4. Amendments. This Assignment and Assumption may only be amended by
the written agreement of the parties.
<PAGE> 2
IN WITNESS WHEREOF, the parties have each caused this Assignment and
Assumption to be executed on its behalf by a duly authorized officer as of the
date first written above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
------------------------
Its: Senior Vice President
KEMPER DISTRIBUTORS, INC.
By: /s/ James L. Greenawalt
-------------------------
Its: Executive Vice President
The undersigned hereby acknowledges and consents to the foregoing
Assignment and Assumption as of February 1, 1995.
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
-------------------
Its: Vice President
2
<PAGE> 1
EXHIBIT 99.B8.(a)
CUSTODY AGREEMENT
AGREEMENT, made the 1st day of March, 1995 by and between Kemper Target
Equity Fund, a Massachusetts business trust having its principal place of
business at 120 South LaSalle Street, Chicago, Illinois 60603 ("Fund") and
Investors Fiduciary Trust Company, a trust company organized and existing under
the laws of Missouri, having its principal place of business at Kansas City,
Missouri ("Custodian").
WHEREAS, Fund wants to appoint Investors Fiduciary Trust Company as
Custodian to have custody of a portion of Fund's portfolio securities and
monies pursuant to this Agreement; and, for purposes related to its foreign
investments held outside the United States, Fund wants another custodian to
have custody of the remainder of Fund's portfolio securities and monies
pursuant to a separate agreement; and
WHEREAS, Investors Fiduciary Trust Company wants to accept such
appointment;
NOW, THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Fund hereby constitutes and appoints Investors Fiduciary Trust Company
as Custodian of Fund which is to include:
A. Custody of the securities and monies at any time owned by
Fund and received by Custodian; and
B. Performing certain accounting and record keeping functions
relating to its function as Custodian for Fund and each of its
Portfolios.
2. DELIVERY OF CORPORATE DOCUMENTS.
Fund has delivered or will deliver to Custodian prior to the effective
date of this Agreement, copies of the following documents and all
amendments or supplements thereto, properly certified or authenticated:
A. Resolutions of the Board of Trustees of Fund appointing
Investors Fiduciary Trust Company as Custodian hereunder and approving
the form of this Agreement; and
<PAGE> 2
B. Resolutions of the Board of Trustees of Fund authorizing
certain persons to give instructions on behalf of Fund to Custodian
and authorizing Custodian to rely upon written instructions over their
signatures.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
All Fund's securities and monies, except as permitted by the
Investment Company Act of 1940 ("1940 Act"), will be delivered either
to Custodian or to The Chase Manhattan Bank, N.A., pursuant to a
separate custody agreement. Fund will deliver or cause to be delivered
to Custodian on the effective date of this Agreement, or as soon
thereafter as practicable, and from time to time thereafter, portfolio
securities acquired by it and monies then owned by it except as
permitted by the 1940 Act or from time to time coming into its
possession during the time this Agreement shall continue in effect.
Custodian shall have no responsibility or liability whatsoever for or
on account of securities or monies not so delivered. All securities so
delivered to Custodian (other than bearer securities) shall be
registered in the name of Fund or its nominee, or of a nominee of
Custodian, or shall be properly endorsed and in form for transfer
satisfactory to Custodian.
B. Safekeeping
Custodian will receive delivery of and keep safely the assets
of Fund delivered to it from time to time. Custodian will not deliver
any such assets to any person except as permitted by the provisions of
this Agreement or any agreement executed by it according to the terms
of this Agreement. Custodian shall be responsible only for the monies
and securities of Fund held directly by it or its nominees or
sub-custodian under this Agreement; provided that Custodian's
responsibility for any sub-custodian appointed at the Fund's direction
for purposes of (i) effecting third-party repurchase transactions with
banks, brokers, dealers, or other entities through the use of a common
custodian or sub-custodian; or (ii) providing depository and clearing
agency services with respect to certain variable rate demand note
securities ("special sub-custodian") shall be further limited as set
forth in this Agreement. Custodian may participate directly or
indirectly through a sub-custodian in the Depository Trust Company, the
Treasury/Federal Reserve Book Entry System, the Participants Trust
Company and any other securities depository approved by the Board of
Trustees of the Fund, subject to compliance with the provisions of Rule
17f-4 under the 1940 Act including, without limitation, the
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<PAGE> 3
specific provisions of subsections (a) (1) through (d) (4)
thereof.
C. Registration of Securities
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or in the name of any
nominee of Custodian for whose fidelity and liabilities Custodian shall
be fully responsible, or in street certificate form, so-called, with or
without any indication of fiduciary capacity. Unless otherwise
instructed, Custodian will register all such portfolio securities in
the name of its authorized nominee.
D. Exchange of Securities
Upon receipt of instructions, Custodian will exchange, or cause
to be exchanged, portfolio securities held by it for the account of
Fund for other securities or cash issued or paid in connection with any
reorganization, recapitalization, merger, consolidation, split-up of
shares, change of par value, conversion or otherwise, and will deposit
any such securities in accordance with the terms of any reorganization
or protective plan. Without instructions, Custodian is authorized to
exchange securities held by it in temporary form for securities in
definitive form, to effect an exchange of shares when the par value of
the stock is changed, and, upon receiving payment therefore, to
surrender bonds or other securities held by it at maturity or when
advised of earlier call for redemption, except that Custodian shall
receive instructions prior to surrendering any convertible security.
E. Purchases or Sales of Investments of Fund
Fund shall, on each business day on which a purchase or sale of
a portfolio security shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such transaction:
(1) The name of the issuer and description of the security;
(2) The number of shares or the principal amount purchased or
sold, and accrued interest, if any;
(3) The trade date;
(4) The settlement date;
(5) The date when the securities sold were purchased by Fund or other
information identifying the securities sold and to be delivered;
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<PAGE> 4
(6) The price per unit and the brokerage commission, taxes and other
expenses in connection with the transaction;
(7) The total amount payable or receivable upon such transaction;
and
(8) The name of the person from whom or the broker or dealer through
whom the transaction was made.
In accordance with such purchase instructions, Custodian shall pay for
out of monies held for the account of Fund, but only insofar as monies
are available therein for such purpose, and receive the portfolio
securities so purchased by or for the account of Fund. Such payment
shall be made only upon receipt by Custodian of the securities so
purchased in form for transfer satisfactory to Custodian.
In accordance with such sales instructions, Custodian will deliver or
cause to be delivered the securities thus designated as sold for the
account of Fund to the broker or other person specified in the
instructions relating to such sale, such delivery to be made only
upon receipt of payment therefor in such form as shall be satisfactory
to Custodian, with the understanding that Custodian may deliver or
cause to be delivered securities for payment in accordance with the
customs prevailing among dealers in securities.
F. Purchases or Sales of Options and Futures Transactions
Fund will, on each business day on which a purchase or sale of
the following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:
(1) Securities Options
(a) The underlying security;
(b) The price at which purchased or sold;
(c) The expiration date;
(d) The number of contracts;
(e) The exercise price;
(f) Whether opening, exercising, expiring or closing the
transaction;
(g) Whether the transaction involves a put or call;
(h) Whether the option is written or purchased;
(i) Market on which option traded; and
(j) Name and address of the broker or dealer through whom the
sale or purchase was made.
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<PAGE> 5
(2) Options on Indices
(a) The index;
(b) The price at which purchased or sold;
(c) The exercise price;
(d) The premium;
(e) The multiple;
(f) The expiration date;
(g) Whether the transaction is an opening, exercising,
expiring or closing transaction;
(h) Whether the transaction involves a put or call;
(i) Whether the option is written or purchased; and
(j) Name and address of the broker or dealer through
whom the sale or purchase was made.
(3) Securities Index Futures Transactions
(a) The last trading date specified in the contract
and, when available, the closing level, thereof;
(b) The index level on the date the contract is entered into;
(c) The multiple;
(d) Any margin requirements;
(e) The need for a segregated margin account (in addition to
instructions; and, if not already in the possession of
Custodian, Fund shall deliver a substantially complete and
executed custodial safekeeping account and procedural
agreement which shall be incorporated into this Custody
Agreement); and
(f) The name and address of the futures commission merchant
through whom the sale or purchase was made.
(4) Options on Index Futures Contracts
(a) The underlying index futures contract;
(b) The premium;
(c) The expiration date;
(d) The number of options;
(e) The exercise price;
(f) Whether the transaction involves an opening, exercising,
expiring or closing transaction;
(g) Whether the transaction involves a put or call;
(h) Whether the option is written or purchased; and
(i) The market on which the option is traded.
G. Securities Pledged to Secure Loans
(1) Upon receipt of instructions, Custodian will release or
cause to be released securities held in custody to the pledgee
designated in such instructions by way of
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<PAGE> 6
pledge or hypothecation to cure any loan incurred by Fund; provided,
however, that the securities shall be released only upon payment to
Custodian of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, further
securities may be released or caused to be released for that purpose
upon receipt of instructions. Upon receipt of instructions, Custodian
will pay, but only from funds available for such purpose, any such loan
upon redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing such
loan.
(2) Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated in such
instructions; provided, however, that the securities shall be released
only upon deposit with Custodian of full cash collateral as specified
in such instructions, and that Fund will retain the right to any
dividends, interest or distribution on such loaned securities. Upon
receipt of instructions and the loaned securities, Custodian will
release the cash collateral to the borrower.
H. Routine Matters
Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange, substitution,
purchase, transfer, or other dealings with securities or other property
of Fund except as may be otherwise provided in this Agreement or
directed from time to time by the Board of Trustees of Fund.
I. Demand Deposit Account
Custodian will open and maintain a demand deposit account or
accounts in the name of Custodian, subject only to draft or order by
Custodian upon receipt of instructions. All monies received by
Custodian from or for the account of Fund shall be deposited in said
account or accounts.
When properly authorized by a resolution of the Board of
Trustees of Fund, Custodian may open and maintain an additional demand
deposit account or accounts in such other banks or trust companies as
may be designated in such resolution, such accounts, however, to be in
the name of Custodian and subject only to its draft or order.
J. Income and Other Payments to Fund
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<PAGE> 7
Custodian will:
(1) collect, claim and receive and deposit for the account of
Fund all income and other payments which become due and payable on or
after the effective date of this Agreement with respect to the
securities deposited under this Agreement, and credit the account of
Fund with such income on the payable date;
(2) execute ownership and other certificates and affidavits
for all federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
(3) take such other action as may be necessary or proper in
connection with:
(a) the collection, receipt and deposit of such income and
other payments, including but not limited to the
presentation for payment of:
(1) all coupons and other income items requiring presentation;
(2) all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge, or
notice of which is contained in publications of the type
to which it normally subscribes for such purpose; and
(b) the endorsement for collection, in the name of Fund,
of all checks, drafts or other negotiable instruments.
Custodian, however, shall not be required to institute suit or
take other extraordinary action to enforce collection except upon
receipt of instructions and upon being indemnified to its satisfaction
against the costs and expenses of such suit or other actions.
Custodian will receive, claim and collect all stock dividends, rights
and other similar items and deal with the same pursuant to
instructions. Unless prior instructions have been received to the
contrary, Custodian will, without further instructions, sell any rights
held for the account of Fund on the last trade date prior to the date
of expiration of such rights.
K. Payment of Dividends and Other Distributions
On the declaration of any dividend or other distribution on the
shares of beneficial interest of any Portfolio ("Portfolio Shares") by
the Board of Trustees of
7
<PAGE> 8
Fund, Fund shall deliver to Custodian instructions with respect
thereto, including a copy of the Resolution of said Board of Trustees
certified by the Secretary or an Assistant Secretary of Fund wherein
there shall be set forth the record date as of which shareholders
are entitled to receive such dividend or distribution, and the amount
payable per share on such dividend or distribution.
On the date specified in such Resolution for the payment of
such dividend or other distribution, Custodian shall pay out of the
monies held for the account of Fund, insofar as the same shall be
available for such purposes, and credit to the account of the Dividend
Disbursing Agent for Fund, such amount as may be necessary to pay the
amount per share payable in cash on Portfolio Shares issued and
outstanding on the record date established by such Resolution.
L. Portfolio Shares Purchased by Fund
Whenever any Portfolio Shares are purchased by Fund, Fund or
its agent shall advise Custodian of the aggregate dollar amount to be
paid for such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate dollar
amount to the custody account of Fund and either deposit the same in
the account maintained for the purpose of paying for the purchase of
Portfolio Shares or deliver the same in accordance with such advice.
M. Portfolio Shares Purchased from Fund
Whenever Portfolio Shares are purchased from Fund, Fund will
deposit or cause to be deposited with Custodian the amount received for
such shares. Custodian shall not have any duty or responsibility to
determine that Fund Shares purchased from Fund have been added to the
proper shareholder account or accounts or that the proper number of
such shares have been added to the shareholder records.
N. Proxies and Notices
Custodian will promptly deliver or mail to Fund all proxies
properly signed, all notices of meetings, all proxy statements and
other notices, requests or announcements affecting or relating to
securities held by Custodian for Fund and will, upon receipt of
instructions, execute and deliver or cause its nominee to execute and
deliver such proxies or other authorizations as may be required.
Except as provided by this Agreement or pursuant to instructions
hereafter received by Custodian, neither it nor its nominee shall
exercise any power inherent in any such securities,
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<PAGE> 9
including any power to vote the same, or execute any proxy, power of
attorney, or other similar instrument voting any of such securities, or
give any consent, approval or waiver with respect thereto, or take
any other similar action.
O. Disbursements
Custodian will pay or cause to be paid insofar as funds are
available for the purpose, bills, statements and other obligations of
Fund (including but not limited to obligations in connection with the
conversion, exchange or surrender of securities owned by Fund, interest
charges, variation margin, dividend disbursements, taxes, management
fees, administration-distribution fees, custodian fees, legal fees,
auditors' fees, transfer agents' fees, brokerage commissions,
compensation to personnel, and other operating expenses of Fund)
pursuant to instructions of Fund setting forth the name of the person
to whom payment is to be made, the amount of the payment, and the
purpose of the payment.
P. Books, Records and Accounts
Custodian acknowledges that all the records it shall prepare
and maintain pursuant to this Agreement shall be the property of Fund
and that upon request of Fund it shall make Fund's records available to
it, along with such other information and data as are reasonably
requested by Fund, for inspection, audit or copying, or turn said
records over to Fund.
Custodian shall, within a reasonable time, render to Fund as of
the close of business on each day, a detailed statement of the amounts
received or paid and of securities received or delivered for the
account of Fund during said day. Custodian shall, from time to time,
upon request by Fund, render a detailed statement of the securities and
monies held for Fund under this Agreement, and Custodian shall maintain
such books and records as are necessary to enable it do so and shall
permit such persons as are authorized by Fund, including Fund's
independent public accountants, to examine such records or to confirm
the contents of such records; and, if demanded, shall permit federal
and state regulatory agencies to examine said securities, books and
records. Upon the written instructions of Fund or as demanded by
federal or state regulatory agencies, Custodian shall instruct any sub-
custodian to permit such persons as are authorized by Fund to examine
the books, records and securities held by such sub-custodian which
relate to Fund.
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Q. Appointment of Sub-Custodian
Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of Fund may be held in Custodian's own
custody or in the custody of one or more other banks or trust companies
acting as sub-custodians as may be approved by resolutions of Fund's
Board of Trustees, evidenced by a copy thereof certified by the
Secretary or Assistant Secretary of Fund. Any sub-custodian must have
the qualifications required for custodians under the 1940 Act unless
exempted therefrom. Any sub-custodian may participate directly or
indirectly in the Depository Trust Company, the Treasury/Reserve Book
Entry System, the Participants Trust Company and any other securities
depository approved by the Board of Trustees of the Fund to the same
extent and subject to the same conditions as provided hereunder.
Neither Custodian nor sub-custodian shall be entitled to reimbursement
by Fund for any fees or expenses of any sub-custodian; provided that
Custodian shall not be liable for, and Fund shall hold Custodian
harmless from, the expenses of any special sub-custodian. The
appointment of a sub-custodian shall not relieve Custodian of any of
its obligations hereunder; provided that Custodian shall be responsible
to Fund for any loss, damage, or expense suffered or incurred by Fund
resulting from the actions or omissions of a special sub-custodian only
to the extent the special sub-custodian is liable to Custodian.
R. Multiple Portfolios
If Fund shall issue shares of more than one Portfolio during
the term hereof, Custodian agrees that all securities and other assets
of Fund shall be segregated by Portfolio and all books and records,
account values or actions shall be maintained, held, made or taken, as
the case may be, separately for each Portfolio.
S. Other Custodian
Pursuant to instructions, Custodian will transmit securities
and moneys of Fund to The Chase Manhattan Bank, N.A., as custodian for
Fund.
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written or
oral instructions to Custodian from an authorized person of Fund.
Certified copies of resolutions of the Board of Trustees of Fund naming
one or more persons authorized to give instructions in the name and on
behalf of Fund may be received and accepted by Custodian as conclusive
evidence of the authority of any person so to act and may be
10
<PAGE> 11
considered to be in full force and effect (and Custodian shall be fully
protected in acting in reliance thereon) until receipt by Custodian of
notice to the contrary. Unless the resolution authorizing any person to
give instructions specifically requires that the approval of anyone
else shall first have been obtained, Custodian shall be under no
obligation to inquire into the right of the person giving such
instructions to do so. Notwithstanding any of the foregoing provisions
of this Section 4, no authorizations or instructions received by
Custodian from Fund shall be deemed to authorize or permit any trustee,
officer, employee, or agent of Fund to withdraw any of the securities
or monies of Fund upon the mere receipt of instructions from such
trustee, officer, employee or agent.
B. No later than the next business day immediately following
each oral instruction referred to herein, Fund shall give Custodian
written confirmation of each such oral instruction. Either party may
electronically record any oral instruction whether given in person or
via telephone.
5. LIMITATION OF LIABILITY OF CUSTODIAN
A. Custodian shall hold harmless and indemnify Fund from and
against any loss or liability arising out of Custodian's failure to
comply with the terms of this Agreement or arising out of Custodian's
negligence, willful misconduct, or bad faith. Custodian may request
and obtain the advice and opinion of counsel for Fund or of its own
counsel with respect to questions or matters of law, and it shall be
without liability to Fund for any action taken or omitted by it in good
faith, in conformity with such advice or opinion.
B. If Fund requires Custodian in any capacity to take, with
respect to any securities, any action which involves the payment of
money by it, or which in Custodian's opinion might make it or its
nominee liable for payment of monies or in any other way, Custodian
shall be and be kept indemnified by Fund in an amount and form
satisfactory to Custodian against any liability on account of such
action.
C. Custodian shall be entitled to receive, and Fund agrees to
pay to Custodian, on demand, reimbursement for such cash disbursements,
costs and expenses as may be agreed upon from time to time by Custodian
and Fund.
D. Custodian shall be protected in acting as custodian
hereunder upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing to it to
be genuine and to have been properly executed and shall, unless
otherwise specifically
11
<PAGE> 12
provided herein, be entitled to receive as conclusive proof of any fact
or matter required to be ascertained from Fund hereunder, a
certificate signed by Fund's President, or other officer specifically
authorized for such purpose.
E. Without limiting the generality of the foregoing,
Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
(1) The validity of the issue of any securities
purchased by or for Fund, the legality of the purchase thereof
or evidence of ownership required by Fund to be received by
Custodian, or the propriety of the decision to purchase or
amount paid therefor;
(2) The legality of the sales of any securities by or
for Fund, or the propriety of the amount paid therefor;
(3) The legality of the issue or sale of any shares of
Fund, or the sufficiency of the amount to be received
therefor;
(4) The legality of the purchase of any shares of
Fund, or the propriety of the amount to be paid therefor; or
(5) The legality of the declaration of any dividend by
Fund, or the legality of the issue of any shares of Fund in
payment of any share dividend.
F. Custodian shall not be liable for, or considered to be the
custodian of, any money represented by any check, draft, wire transfer,
clearing house funds, uncollected funds, or instrument for the payment
of money received by it on behalf of Fund, until Custodian actually
receives such money, provided only that it shall advise Fund promptly
if it fails to receive any such money in the ordinary course of
business, and use its best efforts and cooperate with Fund toward the
end that such money shall be received.
G. Subject to the obligations of Custodian under Section 3.B.
hereof, Custodian shall not be responsible for loss occasioned by the
acts, neglects, defaults or insolvency of any broker, bank, trust
company, or any other person with whom Custodian may deal in the
absence of negligence, misconduct or bad faith on the part of
Custodian.
H. Custodian or any sub-custodian shall provide Fund for its
approval by its Board of Trustees agreements with banks or trust
companies which will act as sub-custodian for Fund pursuant to this
Agreement; and, as set forth in
12
<PAGE> 13
Section 3.B hereof, Custodian shall be responsible for the monies and
securities of the Fund held by it or its nominees or sub-custodians
under this Agreement, but not for monies and securities of the Fund
held by any special sub-custodian except to the extent the special
sub-custodian is liable to Custodian.
6. COMPENSATION.
Fund shall pay to Custodian such compensation at such times as may from
time to time be agreed upon in writing by Custodian and Fund. Custodian may
charge such compensation against monies held by it for the account of Fund.
Custodian shall also be entitled, notwithstanding the provisions of Sections 5B
or 5C hereof, to charge against any monies held by it for the account of Fund
the amount of any loss, damage, liability or expense for which it shall be
entitled to reimbursement under the provisions of this Agreement. Custodian
shall not be entitled to reimbursement by Fund for any loss or expenses of any
sub-custodian; provided that Custodian shall not be liable for, and Fund shall
hold Custodian harmless from, the expenses of any special sub-custodian.
7. TERMINATION.
Either party to this Agreement may terminate the same by notice in
writing, delivered or mailed, postage prepaid, to the other party hereto and
received not less than sixty (60) days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, Fund shall
pay to Custodian such compensation for its reimbursable disbursements, costs
and expenses paid or incurred to such date and Fund shall use its best efforts
to obtain a successor custodian. Unless the holders of a majority of the
outstanding shares of Fund vote to have the securities, funds and other
properties held under this Agreement delivered and paid over to some other
person, firm or corporation specified in the vote, having not less than Two
Million Dollars ($2,000,000) aggregate capital, surplus and undivided profits,
as shown by its last published report, and meeting such other qualifications
for custodian as set forth in the Bylaws of Fund, the Board of Trustees of Fund
shall, forthwith upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian a bank or trust company having such
qualifications. Custodian shall, upon termination of this Agreement, deliver
to the successor custodian so specified or appointed, at custodian's office,
all securities then held by Custodian hereunder, duly endorsed and in form for
transfer, and all funds and other properties of Fund deposited with or held by
Custodian hereunder, and shall cooperate in effecting changes in book-entries
at the Depository Trust Company, the Treasury/Federal Reserve Book-Entry
System, the Participants Trust Company and any other securities depository
holding assets
13
<PAGE> 14
of the Fund. In the event no such vote has been adopted by the shareholders of
Fund and no written order designating a successor custodian shall have been
delivered to Custodian on or before the date when such termination shall become
effective, then Custodian shall deliver the securities, funds and properties of
Fund to a bank or trust company at the selection of Custodian and meeting the
qualifications for custodian, if any, set forth in the Bylaws of Fund and
having not less than Two Million Dollars ($2,000,000) aggregate capital,
surplus and undivided profits, as shown by its last published report. Upon
either such delivery to a successor custodian, Custodian shall have no further
obligations or liabilities under this Agreement. Thereafter such bank or trust
company shall be the successor custodian under this Agreement and shall be
entitled to reasonable compensation for its services. In the event that no such
successor custodian can be found, Fund will submit to its shareholders, before
permitting delivery of the cash and securities owned by Fund to anyone other
than a successor custodian, the question of whether Fund shall be liquidated or
shall function without a custodian. Not-withstanding the foregoing
requirement as to delivery upon termination of this Agreement, Custodian may
make any other delivery of the securities, funds and property of Fund which
shall be permitted by the 1940 Act and Fund's Agreement and Declaration of
Trust and Bylaws then in effect. Except as otherwise provided herein, neither
this Agreement nor any portion thereof may be assigned by Custodian without the
consent of Fund, authorized or approved by a resolution of its Board of
Trustees.
8. NOTICES.
Notices, requests, instructions and other writings received by Fund at
120 South LaSalle Street, Chicago, Illinois 60603 or at such other address as
Fund may have designated by certified resolution of the Board of Trustees to
Custodian and notices, requests, instructions and other writings received by
Custodian at its offices at 21 West 10th Street, Kansas City, Missouri 64105,
or to such other address as it may have designated to Fund in writing, shall be
deemed to have been properly given hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of
Missouri and shall be governed by the laws of the State of Missouri
(except as to Section 9.H. hereof which shall be governed in accordance
with the laws of The Commonwealth of Massachusetts).
B. All the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties hereto.
14
<PAGE> 15
C. No provisions of the Agreement may be amended or modified
in any manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in this Agreement are included for
convenience of reference only, and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
E. This Agreement shall become effective at the close of
business on the date hereof.
F. 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.
G. If any part, term or provision of this Agreement is by the
courts held to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be considered
severable and not be affected, and the rights and obligations of the
parties shall be construed and enforced as if the Agreement did not
contain the particular part, term or provision held to be illegal or
invalid.
H. All parties hereto are expressly put on notice of Fund's
Agreement and Declaration of Trust, which is on file with the Secretary
of The Commonwealth of Massachusetts, and the limitation of shareholder
and trustee liability contained therein. This Agreement has been
executed by and on behalf of Fund by its representatives as such
representatives and not individually, and the obligations of Fund
hereunder are not binding upon any of the Trustees, officers or
shareholders of Fund individually but are binding upon only the assets
and property of Fund. With respect to any claim by Custodian for
recovery of that portion of the compensation (or any other liability of
Fund arising hereunder) allocated to a particular Portfolio, whether in
accordance with the express terms hereof or otherwise, Custodian shall
have recourse solely against the assets of that Portfolio to satisfy
such claim and shall have no recourse against the assets of any other
Portfolio for such purpose.
I. This Agreement, together with the Fee Schedule, is the
entire contract between the parties relating to the subject matter
hereof and supersedes all prior agreements.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective authorized officers.
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
-----------------------------
Title: Vice President
---------------------------
Attest: /s/ Philip J. Collora
----------------------
Title: Assistant Secretary
-----------------------
INVESTORS FIDUCIARY TRUST COMPANY
By:
------------------------------
Title:
---------------------------
Attest:
----------------------
Title:
-----------------------
16
<PAGE> 1
EXHIBIT 99.B8.(b)
FOREIGN CUSTODY AGREEMENT
AGREEMENT dated January 2, 1990 between THE CHASE MANHATTAN BANK, N.A.
(the "Bank") and KEMPER RETIREMENT FUND.
1. Custody Account. The Bank agrees to establish and maintain (a) a
custody account in the name of the Fund ("Custody Account") for any and all
stocks, shares, bonds, debentures, notes, mortgages or other obligations for
the payment of money and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the same
or evidencing or representing any other rights or interests therein and other
similar property (hereinafter called "Securities") and from time to time
received by the Bank or its subcustodian (as defined in the last sentence of
Section 3) for the account of the Fund, and (b) a deposit account in the name
of the Fund ("Deposit Account") for any and all cash in any currency received
by the Bank or its subcustodian for the account of the Fund, which cash shall
not be subject to withdrawal by draft or check.
2. Maintenance of Securities Abroad. Securities in the Custody
Account shall be held in the country or other jurisdiction as shall be
specified from time to time in Instructions, provided that such country or
other jurisdiction shall be one in which the principal trading market for such
Securities is located or the country or other jurisdiction in which such
Securities are to be presented for payment or are acquired for the Custody
Account and cash in the Deposit Account shall be credited to an account in such
amounts and in the country or other jurisdiction as shall be specified from
time to time in Instructions, provided that such country or other jurisdiction
shall be one in which such cash is the legal currency for the payment of public
or private debts.
3. Eligible Foreign Custodians and Securities Depositories. The
Fund's Board of Trustees authorizes the Bank to hold the Securities in the
Custody Account and the cash in the Deposit Account in custody and deposit
accounts, respectively, which have been established by the Bank with one of its
branches, a branch of a qualified U.S. bank, an eligible foreign custodian or
an eligible foreign securities depository; provided, however, that the Bank has
recommended and the Board has approved the use of, and the Bank's contract
with, such eligible foreign custodian or eligible foreign securities depository
by resolution, and a certified copy of such resolution has been provided to the
Bank.
<PAGE> 2
Furthermore, if one of its branches, a branch of a qualified U.S. bank
or an eligible foreign custodian is selected to act as the Bank's subcustodian
to hold any of the Securities or cash, such entity is authorized to hold such
Securities or cash in its account with any eligible foreign securities
depository in which it participates. For purposes of this Agreement (a)
"qualified U.S. bank" shall mean a qualified U.S. bank as defined in Rule 17f-5
under the Investment Company Act of 1940 ("Investment Company Act"); (b)
"eligible foreign custodian" shall mean (i) a banking institution or trust
company incorporated or organized under the laws of a country other than the
United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank holding company
that is incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100 million in
U.S. currency (or a foreign currency equivalent thereof) or (iii) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United
States which has such other qualifications as shall be authorized or permitted
by a rule, regulation, interpretation or exemptive order promulgated by or
under the authority of the Securities and Exchange Commission, specified in
Instructions and approved by the Bank; and (c) "eligible foreign securities
depository" shall mean a securities depository or clearing agency, incorporated
or organized under the laws of a country other than the United States, which
operates (i) the central system for handling of securities or equivalent book-
entries in that country or (ii) a transnational system for the central handling
of securities or equivalent book entries.
Hereinafter the term "subcustodian" will refer to any branch of a
qualified U.S. bank, any eligible foreign custodian or any eligible foreign
securities depository with which the Bank has entered an agreement of the type
contemplated hereunder regarding Securities and/or cash held in or to be
acquired for the Custody Account or the Deposit Account.
4. Use of Subcustodian. With respect to Securities and other assets
which are maintained by the Bank in the physical custody of a subcustodian
pursuant to Section 3 (as used in this Section 4, the term "Securities" means
such Securities and other assets),
(a) The Bank will identify on its books as belonging
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<PAGE> 3
to the Fund any Securities held by such subcustodian.
(b) In the event that a subcustodian permits any of the
Securities placed in its care to be held in an eligible foreign
securities depository, such subcustodian will be required by its
agreement with the Bank to identify on its books such Securities as being
held for the account of the Bank as a custodian for its customers.
(c) Any Securities in the Custody Account held by a
subcustodian of the Bank will be subject only to the instructions of the
Bank or its agents; and any Securities held in an eligible foreign
securities depository for the account of a subcustodian will be subject
only to the instructions of such subcustodian.
(d) The Bank will only deposit Securities in an account with a
subcustodian which includes exclusively the assets held by the Bank for
its customers, and the Bank will cause such account to be designated by
such subcustodian as a special custody account for the exclusive benefit
of customers of the Bank.
(e) Any agreement the Bank shall enter into with a
subcustodian with respect to the holding of Securities shall require that
(i) the Securities are not subject to any right, charge, security
interest, lien or claim of any kind in favor of such subcustodian except
for their safe custody or administration and (ii) beneficial ownership of
such Securities is freely transferable without the payment of money or
value other than for safe custody or administration; provided, however,
that the foregoing shall not apply to the extent that any of the
above-mentioned rights, charges, etc. result from any compensation or
other expenses arising with respect to the safekeeping of Securities
pursuant to such agreement or from any arrangements made by the Fund with
any such subcustodian.
(f) The Bank shall allow independent public
accountants of the Fund such reasonable access to the records of the Bank
relating to the Securities held in the Custody Account as is required by
such accountants in connection with their examination of the books and
records pertaining to the affairs of the Fund. The Bank shall, subject
to restrictions under applicable law, also obtain from any subcustodian
with which the Bank maintains the physical possession of any Securities
in the Custody Account an undertaking to permit independent public
accountants of the Fund such reasonable access to the records of such
subcustodian as may be required in connection with their
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<PAGE> 4
examination of the books and records pertaining to the affairs of the
Fund. The Bank shall furnish to the Fund such reports (or portions
thereof) of the Bank's external auditors as relate directly to the Bank's
system of internal accounting controls applicable to the Bank's duties
under this Agreement. The Bank shall use its best efforts to obtain and
furnish the Fund with similar reports with respect to each eligible
foreign custodian and eligible foreign securities depository holding
Securities of the Fund.
(g) The Bank will supply to the Fund from time to time as
mutually agreed upon a statement in respect to any Securities in the
Custody Account held by a subcustodian, including an identification of
the entity having possession of the Securities, and the Bank will send to
the Fund an advice or notification of any transfers of Securities to or
from the Custody Account, indicating, as to Securities acquired for the
Fund, the identity of the entity having physical possession of such
Securities. In the absence of the filing in writing with the Bank by the
Fund of exceptions or objections to any such statement within sixty (60)
days following receipt of the statement, the Fund shall be deemed to have
approved such statement; and in such case or upon written approval of the
Fund of any such statement the Bank shall, to the extent permitted by
law, be released, relieved and discharged with respect to all matters and
things set forth in such statement as though such statement had been
settled by the decree of a court of competent jurisdiction in an action
in which the Fund and all persons having any equity interest in the Fund
were parties.
(h) The Bank hereby warrants to the Fund that in its opinion,
after due inquiry, the established procedures to be followed by each of
its branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding the
Fund's Securities pursuant to this Agreement afford protection for such
Securities at least equal to that afforded by the Bank's established
procedures with respect to similar securities held by the Bank (and its
securities depositories) in New York.
5. Deposit Account Payments. Subject to the provisions of Section 7,
the Bank shall make, or cause its subcustodians to make, payments of cash
credited to the Deposit Account only
(a) in connection with the purchase of Securities for
the Fund and the delivery of such Securities to, or the crediting of such
Securities to the account of, the Bank or
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<PAGE> 5
its subcustodian, each such payment to be made at prices as its
subcustodian, each such payment to be made at prices as confirmed by
Instructions (as defined in Section 9 hereof) from Authorized Persons (as
defined in Section 10 hereof);
(b) for the purchase or redemption of shares of the capital
stock of the Fund and the delivery to, or crediting to the account of,
the Bank or its subcustodian of such shares to be so purchased or
redeemed;
(c) for the payment for the account of the Fund of dividends,
interest, taxes, management or supervisory fees, capital distributions or
operating expenses;
(d) for the payments to be made in connection with the
conversion, exchange or surrender of Securities held in the Custody
Account;
(e) for transmittal either to United Missouri Bank of Kansas
City, National Association, or to Investors Fiduciary Trust Company,
Custodian for the Fund;
(f) for other proper corporate purposes of the Fund; or
(g) upon the termination of this Custody Agreement as
hereinafter set forth.
All payments of cash for a purpose permitted by subsection (a), (b),
(c), (d) or (e) of this Section 5 will be made only upon receipt by the Bank of
Instructions from Authorized Persons which shall specify the purpose for which
the payment is to be made and the applicable subsection of this Section 5. In
the case of any payment to be made for the purpose permitted by subsection (f)
of this Section 5, the Bank must first receive a certified copy of a resolution
of the Board adequately describing such payment, declaring such purpose to be a
proper purpose, and naming the person or persons to whom such payment is to be
made. Any payment pursuant to subsection (g) of this Section 5 will be made in
accordance with Section 17.
In the event that any payment made under this Section 5 exceeds the
funds available in the Deposit Account, the Bank may, in its discretion,
advance the Fund an amount equal to such excess and such advance shall be
deemed a loan from the Bank to the Fund, payable on demand, bearing interest at
the rate of interest customarily charged by the Bank on similar loans.
If the Bank causes the Deposit Account to be credited on the payable
date for interest, dividends or redemptions, the Fund
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<PAGE> 6
will promptly return to the Bank any such amount or property so
credited upon oral or written notification that neither the Bank nor its
subcustodian can collect such amount or property in the ordinary course of
business. The Bank or its subcustodian, as the case may be, shall have no duty
or obligation to institute legal proceedings, file a claim or proof of claim in
any insolvency proceeding or take any other action with respect to the
collection of such amount or property beyond its ordinary collection
procedures.
6. Custody Account Transactions. Subject to the provisions of
Section 7, Securities in the Custody Account will be transferred, exchanged or
delivered by the Bank or its subcustodians only
(a) upon sale of such Securities for the Fund and receipt by
the Bank or its subcustodian only of payment therefor, each such payment
to be in the amount confirmed by Instructions from Authorized persons;
(b) when such Securities are called, redeemed or
retired, or otherwise become payable;
(c) in exchange for or upon conversion into other
Securities along or other Securities and cash pursuant to any plan or
merger, consolidation, reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to their terms
into other Securities;
(e) upon exercise of subscription, purchase or other similar
rights represented by such Securities;
(f) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(g) for the purpose of delivery either to United Missouri
Bank of Kansas City, National Association, or to Investors Fiduciary
Trust Company, as Custodian for the Fund;
(h) for the purpose of redeeming in kind shares of the Fund
against delivery to the Bank or its subcustodian of such shares to be so
redeemed;
(i) for other proper trust purposes of the Fund;
(j) upon the termination of this Custody Agreement as
hereinafter set forth.
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<PAGE> 7
All transfers, exchanges or deliveries of Securities in the Custody
Account for a purpose permitted by either subsection (a), (b), (c), (d), (e),
(f) or (g) of this Section 6 will be made, except as provided in Section 8,
only upon receipt by the Bank of Instructions from Authorized Persons which
shall specify the purpose of the transfer, exchange or delivery to be made and
the applicable subsection of this Section 6. In the case of any transfer or
delivery to be made for the purpose permitted by subsection (h) of this Section
6, the Bank must first receive Instructions from Authorized Persons specifying
the shares held by the Bank or its subcustodian to be so transferred or
delivered and naming the person or persons to whom transfers or delivery of
such shares shall be made. In the case of any transfer, exchange or delivery
to be made for the purpose permitted by subsection (i) of this Section 6, the
Bank must first receive a certified copy of a resolution of the Board
adequately describing such transfer, exchange or delivery, declaring such
purpose to be a proper trust purpose, and naming the person or persons to whom
delivery of such Securities shall be made. Any transfer or delivery pursuant
to subsection (j) of this Section 6 will be made in accordance with Section 17.
7. Custody Account Procedures. With respect to any transaction
involving Securities held in or to be acquired for the Custody Account, the
Bank in its discretion may cause the Deposit Account to be credited on the
contractual settlement date with the proceeds of any sale or exchange of
Securities from the Custody Account and to be debited on the contractual
settlement date for the cost of Securities purchased or acquired for the
Custody Account. The Bank may reverse any such credit or debit if the
transaction with respect to which such credit or debit were made fails to
settle within a reasonable period, determined by the Bank in its discretion,
after the contractual settlement date, except that if any Securities delivered
pursuant to this Section 7 are returned by the recipient thereof, the Bank may
cause any such credits and debits to be reversed at any time. With respect to
any transactions as to which the Bank does not determine so to credit or debit
the Deposit Account, the proceeds from the sale or exchange of Securities will
be credited and the cost of such Securities purchased or acquired will be
debited to the Deposit Account on the date such proceeds or Securities are
received by the Bank.
Notwithstanding the preceding paragraph, settlement and payment for
Securities received for, and delivery of Securities out of, the Custody Account
may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the jurisdiction
or market in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer
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<PAGE> 8
therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such Securities from such
purchaser or dealer.
8. Actions of the Bank. Until the Bank receives instructions from
Authorized Persons to the contrary, the Bank will, or will instruct its
subcustodian to,
(a) present for payment any Securities in the Custody Account
which are called, redeemed or retired or otherwise become payable and all
coupons and other income items which call for payment upon presentation
to the extent that the Bank or subcustodian is aware of such
opportunities for payment, and hold cash received upon presentation of
such Securities in accordance with the provisions of Sections 2, 3 and 4
of this Agreement;
(b) in respect of Securities in the Custody Account, execute
in the name of the Fund such ownership and other certificates as may be
required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in the
Custody Account for definitive Securities;
(d) convert moneys received with respect to Securities of
foreign issue into United States dollars or any other currency necessary
to effect any transaction involving the Securities whenever it is
practicable to do so through customary banking channels, using any method
or agency available, including, but not limited to, the facilities of the
Bank, its subsidiaries, affiliates or subcustodians; and
(e) in the event of any loss of Securities or cash, use its
best efforts to ascertain the circumstances relating to such loss and
promptly report the same to the Fund.
9. Instructions. As used in this Agreement, the term "Instructions"
means instructions of the Fund received by the Bank, via telephone, telex, TWX,
facsimile transmission, bank wire or other teleprocess or electronic
instruction system acceptable to the Bank which the Bank reasonably believes in
good faith to have been given by Authorized Persons or which are transmitted
with proper testing or authentication pursuant to terms and conditions which
the Bank may specify.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Fund will hold the
Bank harmless for its
-8-
<PAGE> 9
failure to send such confirmation in writing, the failure of such
confirmation to conform to the telephone instructions received or the Bank's
failure to produce such confirmation at any subsequent time provided that the
Bank has timely advised the Fund of its failure to send such confirmation in
writing or the failure of such confirmation to conform to the telephone
instructions received. Unless otherwise expressly provided, all Instructions
shall continue in full force and effect until cancelled or superceded. If the
Bank requires test arrangements, authentication methods or other security
devices to be used with respect to instructions, any Instructions given by the
Fund thereafter shall be given and processed in accordance with such terms and
conditions for the use of such arrangements, methods or devices as the Bank may
put into effect and modify from time to time. The Fund shall safeguard any
testkeys, identification codes or other security devices which the Bank shall
make available to it. The Bank may electronically record any Instructions
given by telephone, and any other telephone discussions, with respect to the
Custody Account.
10. Authorized Persons. As used in this Agreement, the term
"Authorized Persons" means such officers or such agents of the Fund as have
been designated by a resolution of the Board, a certified copy of which has
been provided to the Bank, to act on behalf of the Fund in the performance of
any acts which Authorized Persons may do under this Agreement. Such persons
shall continue to be Authorized Persons until such time as the Bank receives
instructions from Authorized Persons that any such officer or agent is no
longer an Authorized Person.
11. Nominees. Securities in the Custody Account which are ordinarily
held in registered form may be registered in the name of the Bank's nominee or,
as to any Securities in the possession of an entity other than the Bank, in the
name of such entity's nominee. The Fund agrees to hold any such nominee
harmless from any liability as a holder of record of such Securities. The Bank
may without notice to the Fund cause any such Securities to cease to be
registered in the name of any such nominee and to be registered in the name of
the Fund. In the event that any Securities registered in the name of the
Bank's nominee or held by one of its subcustodians and registered in the name
of such subcustodian's nominee are called for partial redemption by the issuer
of such Security, the Bank may allot, or cause to be allotted, the called
portion to the respective beneficial holders of such class of security in any
manner the Bank deems to be fair and equitable.
12. Standard of Care. The Bank shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Bank by Authorized Persons
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<PAGE> 10
which are not contrary to the provisions of this Agreement. The Bank
will use reasonable care with respect to the safekeeping of Securities in the
Custody Account. The Bank shall be liable to the Fund for any loss which shall
occur as the result of the failure of a subcustodian or an eligible foreign
securities depository engaged by such subcustodian to exercise reasonable care
with respect to the safekeeping of such Securities and other assets to the same
extent that the Bank would be liable to the Fund if the Bank were holding such
Securities and other assets in New York. In the event of any loss to the Fund
by reason of the failure of the Bank or its subcustodian or an eligible foreign
securities depository engaged by such subcustodian to utilize reasonable care,
the Bank shall be liable to the Fund to the extent of the Fund's damages, to be
determined based on the market value of the property which is the subject of
the loss at the date of discovery of such loss and without reference to any
special conditions or circumstances. The Bank shall be held to the exercise of
reasonable care in carrying out this Agreement but shall be indemnified by, and
shall be without liability to, the Fund for any action taken or omitted by the
Bank in good faith without negligence. The Bank shall be entitled to rely, and
may act, on advice of counsel (who may be counsel for the Fund) on all matters
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
The Bank need not maintain any insurance for the benefit of the Fund.
However, the Bank represents and warrants that it presently maintains a
bankers' blanket bond ("Bond") which provides standard fidelity and
non-negligent loss coverage with respect to securities which may be held by the
Bank and securities which may be held in the offices of foreign banks and
foreign securities depositories which may be utilized by the Bank pursuant to
this Agreement. The Bank agrees that if at any time the Bank for any reason
discontinues such coverage, it shall immediately notify the Fund in writing.
The Bank represents that only the named insured on the Bond, which includes the
Bank but not any of the Bank's customers, is directly protected against loss.
The Bank represents that while it might resist a claim of one of its customers
to recover for a loss not covered by the Bond, as a practical matter, where a
claim is brought and loss is possibly covered by the Bond, the Bank would give
notice of the claim to its insurer, and the insurer would normally determine
whether to defend the claim against the Bank or to pay the claim on behalf of
the Bank.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Fund. The Bank shall have no liability for any loss occasioned by delay in the
actual receipt of notice by the Bank or by its subcustodian of any payment,
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<PAGE> 11
redemption or other transaction regarding Securities in the Custody Account
in respect of which the Bank has agreed to take action as provided in Section 8
hereof. The Bank shall not be liable for any action taken in good faith upon
Instructions or upon any certified copy of any resolution of the Board and may
rely on the genuineness of any such documents which it may in good faith
believe to be validly executed. The Bank shall not be liable for any loss
resulting from, or caused by, the direction of the Fund to maintain custody of
any Securities or cash in a foreign country including, but not limited to,
losses resulting from nationalization, expropriation, currency restrictions,
acts of war or terrorism, insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God.
13. Compliance with Securities and Exchange Commission Rules and
Orders. To the extent that a condition of a rule, regulation, interpretation
or exemptive order promulgated by or under the authority of the Securities and
Exchange Commission applies to the Bank or the Fund each shall be solely
responsible to assure that this Agreement and the maintenance of Securities and
cash under this Agreement complies with any such rule, regulation,
interpretation or exemptive order.
14. Corporate Action. The Bank or its subcustodian is to forward
promptly to the Fund all communications relative to the Securities in the
Custody Account. Such communications as call for voting or the exercise of
rights or other specific action (including material relative to legal
proceedings intended to be transmitted to security holders) shall be
transmitted to the Fund by means which will permit the Fund to take timely
action. The Bank or its subcustodian will cause its nominee to execute and
deliver to the Fund proxies relating to Securities in the Custody Account
registered in the name of such nominee but without indicating the manner in
which such proxies are to be voted. Proxies relating to bearer Securities will
be delivered in accordance with written instructions from Authorized Persons.
Bank hereby agrees that Bank shall create, maintain, and retain all
records relating to its activities and obligations under this Agreement in such
manner as will meet the obligations of the Fund under the Investment Company
Act, particularly Section 31 thereof and Rules 31a-1, 31a-2 and 31a-3
thereunder, and applicable Federal, state and foreign tax laws and other laws
or administrative rules or procedures, in each case as currently in effect,
which may be applicable to the Fund. All records so maintained in connection
with the performance of its duties under this Agreement shall be preserved and
maintained as required by regulation and, in the event of termination of the
Agreement, shall be available to the Fund or its agent upon request.
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<PAGE> 12
15. Fees and Expenses. The Fund agrees to pay to the Bank from time
to time such compensation for its services pursuant to this Agreement as may be
mutually agreed upon in writing from time to time including reimbursement of
the Bank's reasonable out-of-pocket or incidental expenses, including legal
fees. The Fund hereby agrees to hold the Bank harmless from any liability or
loss resulting from any taxes or other governmental charges, and any expenses
related thereto, which may be imposed, or assessed with respect to the Custody
Account or any Securities in the Custody Account and also agrees to hold the
Bank, its subcustodians, and their respective nominees harmless from any
liability as a record holder of Securities in the Custody Account. The Bank is
authorized to charge any account of the Fund for such items and the Bank shall
have a lien on Securities in the Custody Account and on cash in the Deposit
Account for any amount owing to the Bank from time to time under this
Agreement.
16. Effectiveness. This Agreement shall be effective on the date
first noted above; provided, however, that the Board has provided the Bank a
certified copy of a resolution that (i) approves each of the subcustodians
listed in Appendix A hereto and the terms of the custody agreement between the
Bank and each such subcustodian attached as Exhibits I through hereof, and
(ii) states that the Board has determined that the use of each such
subcustodian and the terms of each such subcustody agreement are consistent
with the best interests of the Fund and its shareholders.
17. Termination. This Agreement may be terminated by the Fund or the
Bank by 60 days written notice to the other, sent by registered mail, provided
that any termination by the Fund shall be authorized by a resolution of its
Board, a certified copy of which shall accompany such notice of termination,
and provided further, that such resolution shall specify the names of the
persons to whom the Bank shall deliver the Securities in the Custody Account
and to whom the cash in the Deposit Account shall be paid. If notice of
termination is given by the Bank, the Fund shall, within 60 days following the
giving of such notice, deliver to the Bank a certified copy of a resolution of
its Board specifying the names of the persons to whom the Bank shall deliver
the Securities in the Custody Account and to whom the cash in the Deposit
Account shall be paid. In either case the Bank will deliver such Securities
and cash to the persons so specified, after deducting therefrom any amounts
which the Bank determines to be owed to it under Section 15. If within 60 days
following the giving of a notice of termination by the Bank, the Bank does not
receive from the Fund a certified copy of a resolution of the Board specifying
the names of the persons to whom the Bank shall deliver the Securities in the
Custody Account and to whom the cash in the Deposit Account shall be paid, the
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<PAGE> 13
Bank, at its election, may deliver such Securities and pay such cash to a bank
or trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions of this Agreement, or to Authorized
Persons, or may continue to hold such Securities and cash until a certified
copy of one or more resolutions as aforesaid is delivered to the Bank.
Concurrently with the delivery of such Securities, the Bank shall deliver to
the Company, or such other person as the Company shall instruct, the records
referred to in Section 14 hereof which are in the possession or control of the
Bank. The obligations of the parties hereto regarding the use of reasonable
care, indemnities and payment of fees and expenses shall survive the
termination of this Agreement.
18. Notices. Any notice or other communication from the Fund to the
Bank is to be sent to the office of the Bank at 1211 Avenue of the Americas
(33rd floor), New York, New York, 10036, Attention Global Custody Division, or
such other address as may hereafter be given to the Company in accordance with
the notice provisions hereunder, and any notice from the Bank to the Fund is to
be mailed postage prepaid, addressed to the Fund at the address appearing
below, or as it may hereafter be changed on the Bank's records in accordance
with notice hereunder from the Fund.
19. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors and assigns of the Fund and the
Bank.
20. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
21. Additional Portfolios. If the Fund shall issue shares of more
than one portfolio during the term hereof, the Bank agrees that all securities
and other assets of the Fund shall be segregated by portfolio and all books and
records, account values or actions shall be maintained, held, made or taken, as
the case may be, separately for each portfolio. Other than as encompassed by
the preceding sentence, references in this Agreement to "the Fund" are
applicable either to the entire trust or to a particular portfolio or
portfolios, as the context may make reasonable and appropriate. If the Fund
has more than one portfolio, instructions shall designate the portfolio or
portfolios to which they apply.
22. Disclaimer. All parties hereto are expressly put on notice of the
Fund's Agreement and Declaration of Trust and all amendments thereto, all of
which are on file with the Secretary of The Commonwealth of Massachusetts, and
the limitation of
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<PAGE> 14
shareholder and trustee liability contained therein. This Agreement has
been executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by Bank for recovery of that portion of the
compensation (or any other liability of the Fund arising hereunder) allocated
to a particular portfolio, whether in accordance with the express terms hereof
or otherwise, the Bank shall have recourse solely against the assets of that
portfolio to satisfy such claim and shall have no recourse against the assets
of any other portfolio for such purpose.
KEMPER RETIREMENT FUND
By: /s/ Charles M. Kierscht
----------------------------
Title(s)
Address for Record: 120 South LaSalle Street
------------------------
Chicago, Illinois 60603
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Mary Kay Orr
--------------------------
Title Vice President
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<PAGE> 1
EXHIBIT 99.B9.(a)
AGENCY AGREEMENT
AGREEMENT dated the 11th day of January, 1990, by and between KEMPER RETIREMENT
FUND, a Massachusetts business trust having its principal place of business at
120 South LaSalle Street, Chicago, IL 60603 ("Fund"), and INVESTORS FIDUCIARY
TRUST COMPANY, a state chartered trust company organized and existing under the
laws of the State of Missouri having its principal place of business at 127
West 10th Street, Kansas City, Missouri 64105 ("IFTC").
WHEREAS, Fund wants to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent, and IFTC wants to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of IFTC as Transfer Agent and
Dividend Disbursing Agent for Fund, there will be filed with IFTC
the following documents:
A. A certified copy of the resolutions of the Board of Trustees
of Fund appointing IFTC as Transfer Agent and
Dividend Disbursing Agent, approving the form of this
Agreement, and designating certain persons to give written
instructions and requests on behalf of Fund.
B. A certified copy of the Agreement and Declaration
of Trust of Fund and any amendments thereto.
C. A certified copy of the Bylaws of Fund.
D. Copies of Registration Statements filed with the
Securities and Exchange Commission.
E. Specimens of all forms of outstanding share
certificates as approved by the Board of Trustees
of Fund, with a certificate of the Secretary of
Fund as to such approval.
F. Specimens of the signatures of the officers of the
Fund authorized to sign share certificates and
<PAGE> 2
individuals authorized to sign written
instructions and requests on behalf of the Fund.
G. An opinion of counsel for Fund:
(1) With respect to Fund's organization and
existence under the laws of The Commonwealth
of Massachusetts.
(2) With respect to the status of all shares of
Fund covered by this appointment under the
Securities Act of 1933, and any other
applicable federal or state statute.
(3) To the effect that all issued shares are, and
all unissued shares will be when issued,
validly issued, fully paid and non-
assessable.
2. Certain Representations and Warranties of IFTC. IFTC
represents and warrants to Fund that:
A. It is a trust company duly organized and existing
and in good standing under the laws of the State
of Missouri.
B. It is duly qualified to carry on its business in
the State of Missouri.
C. It is empowered under applicable laws and by its
Articles of Incorporation and Bylaws to enter into
and perform the services contemplated in this
Agreement.
D. All requisite corporate proceedings have been
taken to authorize it to enter into and perform
this Agreement.
E. It has and will continue to have and maintain the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement.
F. It is, and will continue to be, registered as a
transfer agent under the Securities Exchange Act
of 1934.
3. Certain Representations and Warranties of Fund. Fund
represents and warrants to IFTC that:
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<PAGE> 3
A. It is a business trust duly organized and existing
and in good standing under the laws of The
Commonwealth of Massachusetts.
B. It is an investment company registered under the
Investment Company Act of 1940.
C. A registration statement under the Securities Act
of 1933 has been filed and will be effective with
respect to all shares of Fund being offered for
sale at any time and from time to time.
D. All requisite steps have been or will be taken to
register Fund's shares for sale in all applicable
states, including the District of Columbia.
E. Fund and its Trustees are empowered under
applicable laws and by the Fund's Agreement and
Declaration of Trust and Bylaws to enter into and
perform this Agreement.
4. Scope of Appointment.
A. Subject to the conditions set forth in this
Agreement, Fund hereby employs and appoints IFTC
as Transfer Agent and Dividend Disbursing Agent
effective the date hereof.
B. IFTC hereby accepts such employment and
appointment and agrees that it will act as Fund's
Transfer Agent and Dividend Disbursing Agent.
IFTC agrees that it will also act as agent in
connection with Fund's periodic withdrawal payment
accounts and other open-account or similar plans
for shareholders, if any.
C. IFTC agrees to provide the necessary facilities,
equipment and personnel to perform its duties and
obligations hereunder in accordance with industry
practice.
D. Fund agrees to use all reasonable efforts to
deliver to IFTC in Kansas City, Missouri, as soon
as they are available, all its shareholder account
records.
E. Subject to the provisions of Sections 20 and 21
hereof, IFTC agrees that it will perform all the
usual and ordinary services of Transfer Agent and
Dividend Disbursing Agent and as agent for the
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<PAGE> 4
various shareholder accounts, including, without
limitation, the following: issuing, transferring
and cancelling share certificates, maintaining all
shareholder accounts, preparing shareholder
meeting lists, mailing proxies, receiving and
tabulating proxies, mailing shareholder reports
and prospectuses, withholding federal income
taxes, preparing and mailing checks for
disbursement of income and capital gains
dividends, preparing and filing all required U.S.
Treasury Department information returns for all
shareholders, preparing and mailing confirmation
forms to shareholders and dealers with respect to
all purchases and liquidations of Fund shares and
other transactions in shareholder accounts for
which confirmations are required, recording
reinvestments of dividends and distributions in
Fund shares, recording redemptions of Fund shares
and preparing and mailing checks for payments upon
redemption and for disbursements to systematic
withdrawal plan shareholders.
5. Compensation and Expenses.
A. In consideration for the services provided
hereunder by IFTC as Transfer Agent and Dividend
Disbursing Agent, Fund will pay to IFTC from time
to time compensation as agreed upon for all
services rendered as Agent, and also, all its
reasonable out-of-pocket expenses and other
disbursements incurred in connection with the
agency. Such compensation will be set forth in a
separate schedule to be agreed to by Fund and
IFTC. The initial agreement regarding
compensation is attached as Exhibit A.
B. Fund agrees to promptly reimburse IFTC for all
reasonable out-of-pocket expenses or advances
incurred by IFTC in connection with the
performance of services under this Agreement
including, but not limited to, postage (and first
class mail insurance in connection with mailing
share certificates), envelopes, check forms,
continuous forms, forms for reports and
statements, stationery, and other similar items,
telephone and telegraph charges incurred in
answering inquiries from dealers or shareholders,
microfilm used each year to record the previous
year's transactions in shareholder accounts and
computer tapes used for permanent storage of
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<PAGE> 5
records and cost of insertion of materials in
mailing envelopes by outside firms. IFTC may, at
its option, arrange to have various service
providers submit invoices directly to the Fund for
payment of out-of-pocket expenses reimbursable
hereunder.
6. Efficient Operation of IFTC System.
A. In connection with the performance of its services
under this Agreement, IFTC is responsible for the
accurate and efficient functioning of its system
at all times, including:
(1) The accuracy of the entries in IFTC's records
reflecting purchase and redemption orders and
other instructions received by IFTC from
dealers, shareholders, Fund or its principal
underwriter.
(2) The timely availability and the accuracy of
shareholder lists, shareholder account
verifications, confirmations and other
shareholder account information to be
produced from IFTC's records or data.
(3) The accurate and timely issuance of dividend
and distribution checks in accordance with
instructions received from Fund.
(4) The accuracy of redemption transactions and
payments in accordance with redemption
instructions received from dealers,
shareholders or Fund or other authorized
persons.
(5) The deposit daily in Fund's appropriate
special bank account of all checks and
payments received from dealers or
shareholders for investment in shares.
(6) The requiring of proper forms of
instructions, signatures and signature
guarantees and any necessary documents
supporting the rightfulness of transfers,
redemptions and other shareholder account
transactions, all in conformance with IFTC's
present procedures with such changes as may
be deemed reasonably appropriate by IFTC or
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<PAGE> 6
as may be reasonably approved by or on behalf
of Fund.
(7) The maintenance of a current duplicate set of
Fund's essential or required records, as
agreed upon from time to time by Fund and
IFTC, at a secure distant location, in form
available and usable forthwith in the event
of any breakdown or disaster disrupting its
main operation.
7. Indemnification.
A. Fund shall indemnify and hold IFTC harmless from
and against any and all claims, actions, suits,
losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of
or attributable to any action or omission by IFTC
pursuant to this Agreement or in connection with
the agency relationship created by this Agreement,
provided that IFTC has acted in good faith,
without negligence and without willful misconduct.
B. IFTC shall indemnify and hold Fund harmless from
and against any and all claims, actions, suits,
losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of
or attributable to any action or omission by IFTC
pursuant to this Agreement or in connection with
the agency relationship created by this Agreement,
provided that IFTC has not acted in good faith,
without negligence and without willful misconduct.
C. In order that the indemnification provisions
maintained in this Section 7 shall apply, upon the
assertion of a claim for which either party (the
"Indemnifying Party") may be required to provide
indemnification hereunder, the party seeking
indemnification (the "Indemnitee") shall promptly
notify the Indemnifying Party of such assertion,
and shall keep such party advised with respect to
all developments concerning such claim. The
Indemnifying Party shall be entitled to assume
control of the defense and the negotiations, if
any, regarding settlement of the claim. If the
Indemnifying Party assumes control, the Indemnitee
shall have the option to participate in the
defense and negotiations of such claim at its own
expense. The Indemnitee shall in no event
confess, admit to, compromise, or settle any claim
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<PAGE> 7
for which the Indemnifying Party may be required
to indemnify it except with the prior written
consent of the Indemnifying Party, which shall not
be unreasonably withheld.
8. Certain Covenants of IFTC and Fund.
A. All requisite steps will be taken by Fund from
time to time when and as necessary to register the
Fund's shares for sale in all states in which
Fund's shares shall at the time be offered for
sale and require registration. If at any time
Fund receives notice of any stop order or other
proceeding in any such state affecting such
registration or the sale of Fund's shares, or of
any stop order or other proceeding under the
Federal securities laws affecting the sale of
Fund's shares, Fund will give prompt notice
thereof to IFTC.
B. IFTC hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to
Fund for safekeeping of share certificates, check
forms, and facsimile signature imprinting devices,
if any; and for the preparation or use, and for
keeping account of, such certificates, forms and
devices. Further, IFTC agrees to carry insurance,
as specified in Exhibit B hereto, with insurers
reasonably acceptable to Fund and in minimum
amounts that are reasonably acceptable to Fund,
which will not be changed without the consent of
Fund, which consent shall not be unreasonably
withheld, and which will be expanded in coverage
or increased in amounts from time to time if and
when reasonably requested by Fund. If IFTC
determines that it is unable to obtain any such
insurance upon commercially reasonable terms, it
shall promptly so advise Fund in writing. In such
event, Fund shall have the right to terminate this
Agreement upon 30 days notice.
C. To the extent required by Section 31 of the
Investment Company Act of 1940 and Rules
hereunder, IFTC agrees that all records maintained
by IFTC relating to the services to be performed
by IFTC under this Agreement are the property of
Fund and will be preserved and will be surrendered
promptly to Fund on request.
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<PAGE> 8
D. IFTC agrees to furnish Fund semi-annual reports of
its financial condition, consisting of a balance
sheet, earnings statement and any other reasonably
available financial information reasonably
requested by Fund. The annual financial
statements will be certified by IFTC's certified
public accountants.
E. IFTC represents and agrees that it will use all
reasonable efforts to keep current on the trends
of the investment company industry relating to
shareholder services and will use all reasonable
efforts to continue to modernize and improve its
system without additional cost to Fund.
F. IFTC will permit Fund and its authorized
representatives to make periodic inspections of
its operations at reasonable times during business
hours.
G. If IFTC is prevented from complying, either
totally or in part, with any of the terms or
provisions of this Agreement, by reason of fire,
flood, storm, strike, lockout or other labor
trouble, riot, war, rebellion, accidents, acts of
God, equipment, utility or transmission failure or
damage, and/or any other cause or casualty beyond
the reasonable control of IFTC, whether similar to
the foregoing matters or not, then upon written
notice to Fund, the requirements of this Agreement
that are affected by such disability, to the
extent so affected, shall be suspended during the
period of such disability; provided, however, that
IFTC shall make reasonable effort to remove such
disability as soon as possible. During such
period, Fund may seek alternate sources of service
without liability hereunder; and IFTC will use all
reasonable efforts to assist Fund to obtain
alternate sources of service. IFTC shall have no
liability to Fund for nonperformance because of
the reasons set forth in this Section 8.G; but if
a disability that, in Fund's reasonable belief,
materially affects IFTC's ability to perform its
obligations under this Agreement continues for a
period of 30 days, then Fund shall have the right
to terminate this Agreement upon 10 days written
notice to IFTC.
9. Adjustment.
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<PAGE> 9
In case of any recapitalization, readjustment or other
change in the structure of Fund requiring a change in
the form of share certificates, IFTC will issue or
register certificates in the new form in exchange for,
or in transfer of, the outstanding certificates in the
old form, upon receiving the following:
A. Written instructions from an officer of Fund.
B. Certified copy of any amendment to the Agreement
and Declaration of Trust or other document
effecting the change.
C. Certified copy of any order or consent of each
governmental or regulatory authority required by
law for the issuance of the shares in the new
form, and an opinion of counsel that no order or
consent of any other government or regulatory
authority is required.
D. Specimens of the new certificates in the form
approved by the Board of Trustees of Fund, with a
certificate of the Secretary of Fund as to such
approval.
E. Opinion of counsel for Fund:
(1) With respect to the status of the shares of
Fund in the new form under the Securities Act
of 1933, and any other applicable federal or
state laws.
(2) To the effect that the issued shares in the
new form are, and all unissued shares will be
when issued, validly issued, fully paid and
non-assessable.
10. Share Certificates.
Fund will furnish IFTC with a sufficient supply of
blank share certificates and from time to time will
renew such supply upon the request of IFTC. Such
certificates will be signed manually or by facsimile
signatures of the officers of Fund authorized by law
and Fund's Bylaws to sign share certificates and, if
required, will bear the trust seal or facsimile
thereof.
11. Death, Resignation or Removal of Signing Officer.
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<PAGE> 10
Fund will file promptly with IFTC written notice of any
change in the officers authorized to sign share
certificates, written instructions or requests,
together with two signature cards bearing the specimen
signature of each newly authorized officer, all as
certified by an appropriate officer of the Fund. In
case any officer of Fund who will have signed manually
or whose facsimile signature will have been affixed to
blank share certificates will die, resign, or be
removed prior to the issuance of such certificates,
IFTC may issue or register such share certificates as
the share certificates of Fund notwithstanding such
death, resignation, or removal, until specifically
directed to the contrary by Fund in writing. In the
absence of such direction, Fund will file promptly with
IFTC such approval, adoption, or ratification as may be
required by law.
12. Future Amendments of Agreement and Declaration of Trust
and Bylaws.
Fund will promptly file with IFTC copies of all
material amendments to its Agreement and Declaration of
Trust and Bylaws and Registration Statement made after
the date of this Agreement.
13. Instructions, Opinion of Counsel and Signatures.
At any time IFTC may apply to any officer of Fund for
instructions, and may consult with legal counsel for
Fund at the expense of Fund, or with its own legal
counsel at its own expense, with respect to any matter
arising in connection with the agency; and it will not
be liable for any action taken or omitted by it in good
faith in reliance upon such instructions or upon the
opinion of such counsel. IFTC is authorized to act on
the orders, directions or instructions of such persons
as the Board of Trustees of Fund shall from time to
time designate by resolution. IFTC will be protected
in acting upon any paper or document, including any
orders, directions or instructions, reasonably believed
by it to be genuine and to have been signed by the
proper person or persons; and IFTC will not be held to
have notice of any change of authority of any person so
authorized by Fund until receipt of written notice
thereof from Fund. IFTC will also be protected in
recognizing share certificates that it reasonably
believes to bear the proper manual or facsimile
signatures of the officers of Fund, and the proper
-10-
<PAGE> 11
countersignature of any former Transfer Agent or
Registrar, or of a Co-Transfer Agent or Co-Registrar.
14. Papers Subject to Approval of Counsel.
The acceptance by IFTC of its appointment as Transfer
Agent and Dividend Disbursing Agent, and all documents
filed in connection with such appointment and
thereafter in connection with the agencies, will be
subject to the approval of legal counsel for IFTC,
which approval will not be unreasonably withheld.
15. Certification of Documents.
The required copy of the Agreement and Declaration of
Trust of Fund and copies of all amendments thereto will
be certified by the appropriate official of The
Commonwealth of Massachusetts; and if such Agreement
and Declaration of Trust and amendments are required by
law to be also filed with a county, city or other
officer or official body, a certificate of such filing
will appear on the certified copy submitted to IFTC. A
copy of the order or consent of each governmental or
regulatory authority required by law for the issuance
of Fund shares will be certified by the Secretary or
Clerk of such governmental or regulatory authority,
under proper seal of such authority. The copy of the
Bylaws and copies of all amendments thereto and copies
of resolutions of the Board of Trustees of Fund will be
certified by the Secretary or an Assistant Secretary of
Fund.
16. Records.
IFTC will maintain customary records in connection with
its agency, and particularly will maintain those
records required to be maintained pursuant to sub-
paragraph (2)(iv) of paragraph (b) of Rule 31a-1 under
the Investment Company Act of 1940, if any.
17. Disposition of Books, Records and Cancelled
Certificates.
IFTC will send periodically to Fund, or to where
designated by the Secretary or an Assistant Secretary
of Fund, all books, documents, and all records no
longer deemed needed for current purposes and share
certificates which have been cancelled in transfer or
in exchange, upon the understanding that such books,
-11-
<PAGE> 12
documents, records, and share certificates will not be
destroyed by Fund without the consent of IFTC (which
consent will not be unreasonably withheld), but will be
safely stored for possible future reference.
18. Provisions Relating to IFTC as Transfer Agent.
A. IFTC will make original issues of share
certificates upon written request of an officer of
Fund and upon being furnished with a certified
copy of a resolution of the Board of Trustees
authorizing such original issue, an opinion of
counsel as outlined in Section 1.G or 9.E of this
Agreement, the certificates required by Section 10
of this Agreement and any other documents required
by Section 1 or 9 of this Agreement.
B. Before making any original issue of certificates,
Fund will furnish IFTC with sufficient funds to
pay any taxes required on the original issue of
the shares. Fund will furnish IFTC such evidence
as may be required by IFTC to show the actual
value of the shares. If no taxes are payable,
IFTC will upon request be furnished with an
opinion of outside counsel to that effect.
C. Shares will be transferred and new certificates
issued in transfer, or shares accepted for
redemption and funds remitted therefor, upon
surrender of the old certificates in form deemed
by IFTC properly endorsed for transfer or
redemption accompanied by such documents as IFTC
may deem necessary to evidence the authority of
the person making the transfer or redemption, and
bearing satisfactory evidence of the payment of
any applicable share transfer taxes. IFTC
reserves the right to refuse to transfer or redeem
shares until it is satisfied that the endorsement
or signature on the certificate or any other
document is valid and genuine, and for that
purpose it may require a guarantee of signature by
such persons as may from time to time be specified
in the prospectus related to such shares or
otherwise authorized by Fund. IFTC also reserves
the right to refuse to transfer or redeem shares
until it is satisfied that the requested transfer
or redemption is legally authorized, and it will
incur no liability for the refusal in good faith
to make transfers or redemptions which, in its
judgment, are improper, unauthorized, or otherwise
-12-
<PAGE> 13
not rightful. IFTC may, in effecting transfers or
redemptions, rely upon Simplification Acts or
other statutes which protect it and Fund in not
requiring complete fiduciary documentation.
D. When mail is used for delivery of share
certificates, IFTC will forward share certificates
in "nonnegotiable" form as provided by Fund by
first class mail, all such mail deliveries to be
covered while in transit to the addressee by
insurance arranged for by IFTC.
E. IFTC will issue and mail subscription warrants and
certificates provided by Fund and representing
share dividends, exchanges or split-ups, or act as
Conversion Agent upon receiving written instruc-
tions from any officer of Fund and such other
documents as IFTC deems necessary.
F. IFTC will issue, transfer, and split-up
certificates upon receiving written instructions
from an officer of Fund and such other documents
as IFTC may deem necessary.
G. IFTC may issue new certificates in place of
certificates represented to have been lost,
destroyed, stolen or otherwise wrongfully taken,
upon receiving indemnity satisfactory to IFTC, and
may issue new certificates in exchange for, and
upon surrender of, mutilated certificates. Any
such issuance shall be in accordance with the
provisions of law governing such matter and any
procedures adopted by the Board of Trustees of the
Fund of which IFTC has notice.
H. IFTC will supply a shareholder's list to Fund
properly certified by an officer of IFTC for any
shareholder meeting upon receiving a request from
an officer of Fund. It will also supply lists at
such other times as may be reasonably requested by
an officer of Fund.
I. Upon receipt of written instructions of an officer
of Fund, IFTC will address and mail notices to
shareholders.
J. In case of any request or demand for the
inspection of the share books of Fund or any other
books of Fund in the possession of IFTC, IFTC will
endeavor to notify Fund and to secure instructions
-13-
<PAGE> 14
as to permitting or refusing such inspection.
IFTC reserves the right, however, to exhibit the
share books or other books to any person in case
it is advised by its counsel that it may be held
responsible for the failure to exhibit the share
books or other books to such person.
19. Provisions Relating to Dividend Disbursing Agency.
A. IFTC will, at the expense of Fund, provide a
special form of check containing the imprint of
any device or other matter desired by Fund. Said
checks must, however, be of a form and size
convenient for use by IFTC.
B. If Fund wants to include additional printed
matter, financial statements, etc., with the
dividend checks, the same will be furnished to
IFTC within a reasonable time prior to the date of
mailing of the dividend checks, at the expense of
Fund.
C. If Fund wants its distributions mailed in any
special form of envelopes, sufficient supply of
the same will be furnished to IFTC but the size
and form of said envelopes will be subject to the
approval of IFTC. If stamped envelopes are used,
they must be furnished by Fund; or, if postage
stamps are to be affixed to the envelopes, the
stamps or the cash necessary for such stamps must
be furnished by Fund.
D. IFTC will maintain one or more deposit accounts as
Agent for Fund, into which the funds for payment
of dividends, distributions, distributions,
redemptions or other disbursements provided for
hereunder will be deposited, and against which
checks will be drawn.
20. Termination of Agreement.
A. This Agreement may be terminated by either party
upon sixty (60) days prior written notice to the
other party.
B. Fund, in addition to any other rights and
remedies, shall have the right to terminate this
Agreement forthwith upon the occurrence at any
time of any of the following events:
-14-
<PAGE> 15
(1) Any interruption or cessation of operations
by IFTC or its assigns which materially
interferes with the business operation of
Fund.
(2) The bankruptcy of IFTC or its assigns or the
appointment of a receiver for IFTC or its
assigns.
(3) Any merger, consolidation or sale of
substantially all the assets of IFTC or its
assigns.
(4) The acquisition of a controlling interest in
IFTC or its assigns, by any broker, dealer,
investment adviser or investment company
except as may presently exist.
(5) Failure by IFTC or its assigns to perform its
duties in accordance with this Agreement,
which failure materially adversely affects
the business operations of Fund and which
failure continues for thirty (30) days after
written notice from Fund.
(6) The registration of IFTC or its assigns as a
transfer agent under the Securities Exchange
Act of 1934 is revoked, terminated or
suspended for any reason.
C. In the event of termination, Fund will promptly
pay IFTC all amounts due to IFTC hereunder. Upon
termination of this Agreement, IFTC shall deliver
all shareholder and account records pertaining to
Fund either to Fund or as directed in writing by
Fund.
21. Assignment.
A. Except for the assignment of responsibilities
pursuant to the Services Agreement ("Services
Agreement") between IFTC and Kemper Service
Company ("KSVC"), which Fund has approved, neither
this Agreement nor any rights or obligations
hereunder may be assigned by IFTC without the
written consent of Fund; provided, however, no
assignment will relieve IFTC of any of its
obligations hereunder.
-15-
<PAGE> 16
B. This Agreement including, without limitation, the
provisions of Section 7 will inure to the benefit
of and be binding upon the parties and their
respective successors and assigns including KSVC
pursuant to the aforesaid Services Agreement.
C. KSVC is authorized by Fund to use the system
services of DST Systems, Inc.
22. Confidentiality.
A. Except as provided in the last sentence of Section
18.J hereof, or as otherwise required by law, IFTC
will keep confidential all records of and
information in its possession relating to Fund or
its shareholders or shareholder accounts and will
not disclose the same to any person except at the
request or with the consent of Fund.
B. Except as otherwise required by law, Fund will
keep confidential all financial statements and
other financial records (other than statements and
records relating solely to Fund's business
dealings with IFTC) and all manuals, systems and
other technical information and data, not publicly
disclosed, relating to IFTC's operations and
programs furnished to it by IFTC pursuant to this
Agreement and will not disclose the same to any
person except at the request or with the consent
of IFTC. Notwithstanding anything to the contrary
in this Section 22.B, if an attempt is made
pursuant to subpoena or other legal process to
require Fund to disclose or produce any of the
aforementioned manuals, systems or other technical
information and data, Fund shall give IFTC prompt
notice thereof prior to disclosure or production
so that IFTC may, at its expense, resist such
attempt.
23. Survival of Representations and Warranties.
All representations and warranties by either party
herein contained will survive the execution and
delivery of this Agreement.
24. Miscellaneous.
A. This Agreement is executed and delivered in the
State of Illinois and shall be governed by the
laws of said state (except as to Section 24.G
-16-
<PAGE> 17
hereof which shall be governed by the laws of The
Commonwealth of Massachusetts).
B. No provisions of this Agreement may be amended or
modified in any manner except by a written
agreement properly authorized and executed by both
parties hereto.
C. 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.
D. This Agreement shall become effective as of the
date hereof.
E. 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.
F. If any part, term or provision of this Agreement
is held by the courts to be illegal, in conflict
with any law or otherwise invalid, the remaining
portion or portions shall be considered severable
and not be affected, and the rights and
obligations of the parties shall be construed and
enforced as if the Agreement did not contain the
particular part, term or provision held to be
illegal or invalid.
G. All parties hereto are expressly put on notice of
Fund's Agreement and Declaration of Trust which is
on file with the Secretary of The Commonwealth of
Massachusetts, and the limitation of shareholder
and trustee liability contained therein. This
Agreement has been executed by and on behalf of
Fund by its representatives as such
representatives and not individually, and the
obligations of Fund hereunder are not binding upon
any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only
the assets and property of Fund. With respect to
any claim by IFTC for recovery of that portion of
the compensation and expenses (or any other
liability of Fund arising hereunder) allocated to
a particular Portfolio, whether in accordance with
the express terms hereof or otherwise, IFTC shall
have recourse solely against the assets of that
Portfolio to satisfy such claim and shall have no
-17-
<PAGE> 18
recourse against the assets of any other Portfolio
for such purpose.
H. This Agreement, together with the Fee Schedule, is
the entire contract between the parties relating
to the subject matter hereof and supersedes all
prior agreements between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day and year
first set forth above.
KEMPER RETIREMENT FUND
By /s/ Charles M. Kierscht
-----------------------
Title: Pres.
-------------------
ATTEST:
/s/ Robert J. Engling
- ---------------------
Title: VP & Secy.
-------------
INVESTORS FIDUCIARY TRUST COMPANY
By /s/ Gerard P. Dipoto, Jr.
-------------------------
Title: S.V.P.
----------------------
ATTEST:
/s/ Cheryl Naegler
- ------------------
Title: Asst. Sec.
----------
-18-
<PAGE> 19
EXHIBIT A
FEE SCHEDULE
<TABLE>
<CAPTION>
Transfer Agency Function by Fund Fee Payable
-------------------------------- -----------
<S> <C>
1. Maintenance of open shareholder $6.00 per year
account. account
2. Maintenance of closed shareholder $6.00 per year
account. account
3. Establishment of new shareholder $4.00 per new
account. account
4. Payment of dividend. $.25 per
dividend payment
per account
5. Dividend reinvestment from Kemper $.50 per
Unit Investment Trusts. transaction
6. Process purchase or redemption of $1.00 per
shares transaction. transaction
7. All other shareholder account $1.00 per
transactions. transaction
</TABLE>
The out-of-pocket expenses of IFTC will be reimbursed by Fund in
accordance with the provisions of paragraph 5 of the Agency Agreement. All
fees will be subject to offset by earnings allowances under the Custody
Agreement between Fund and IFTC.
<PAGE> 20
EXHIBIT B
IFTC INSURANCE COVERAGE
DESCRIPTION OF POLICY:
BROKERS BLANKET BOND, STANDARD FORM 14
Covering losses caused by dishonesty of employees, physical loss
of securities on or outside of premises while in possession of
authorized person, loss caused by forgery or alteration of checks or
similar instruments.
ERRORS AND OMISSIONS INSURANCE
Covering replacement of destroyed records and computer errors and
omissions.
SPECIAL FORGERY BOND
Covering losses through forgery or alteration of checks or drafts
of customers processed by insured but drawn on or against them.
MAIL INSURANCE (APPLIES TO ALL FULL SERVICE OPERATIONS)
Provides indemnity for the following types of securities lost in
the mails:
Non-negotiable securities mailed to domestic locations via
registered mail.
Non-negotiable securities mailed to domestic locations
via first-class or certified mail.
Non-negotiable securities mailed to foreign locations via
registered mail.
Negotiable securities mailed to all locations via registered
mail.
<PAGE> 1
EXHIBIT 99.B9.(b)
Supplement to Agency Agreement
Supplement to Agency Agreement ("Supplement") made as of June 1, 1993
by and between the registered investment company executing this document (the
"Fund") and Investors Fiduciary Trust Company ("Agent").
WHEREAS, the Fund and Agent are parties to an Agency Agreement ("Agency
Agreement") dated January 11, 1990, as supplemented from time to time;
WHEREAS, Section 5.A. of the Agency Agreement provides that the fees
payable by the Fund to Agent thereunder shall be as set forth in a separate
schedule to be agreed to by the Fund and Agent; and
WHEREAS, the parties desire to reflect in this Supplement the revised
fee schedule for the Agency Agreement as in effect as of the date hereof;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein provided, the parties agree as follows:
1. The revised fee schedule for services provided by Agent to the Fund
under the Agency Agreement as in effect as of the date hereof is set forth in
Exhibit A attached hereto.
2. This Supplement shall become a part of the Agency Agreement and
subject to its terms and shall supersede all previous fee schedules under such
agreement as of the date hereof.
<PAGE> 2
IN WITNESS WHEREOF, the Fund and Agent have duly executed this
Supplement as of the day and year first set forth above.
KEMPER RETIREMENT FUND
By: /s/ John E. Peters
-----------------------------
Title: Vice President
--------------------------
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ R. A. Winegar
-----------------------------
Title: Executive Vice President
--------------------------
-2-
<PAGE> 3
EXHIBIT A
FEE SCHEDULE
<TABLE>
<CAPTION>
Transfer Agency Function Fee Payable by Fund
------------------------ -------------------
<S> <C>
1. Annual open shareholder $6.00 per year per account.
account fee.
2. Annual closed shareholder $6.00 per year per account.
account fee.
3. Establishment of new $4.00 per new account.
shareholder account.
4. Payment of dividend. $.40 per dividend payment
per account.
5. Automated ACH/UIT $.50 per transaction.
transaction.
6. Process purchase or $1.25 per transaction.
redemption of shares transaction.
7. Non-monetary transactions $2.00 per year per open
fee. account.
8. All other shareholder $1.25 per transaction.
inquiry, correspondence and
research transactions.
9. Disaster recovery fee. $.40 per year per open and
closed account.
</TABLE>
The out-of-pocket expenses of IFTC will be reimbursed by Fund in accordance
with the provisions of Section 5 of the Agency Agreement. All fees will be
subject to offset by earnings allowances under the Custody Agreement between
Fund and IFTC.
-3-
<PAGE> 1
EXHIBIT 99.B9.(c)
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT dated this 1st day of August, 1990, by and between KEMPER RETIREMENT
FUND, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation ("KFS").
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KFS to provide information and administrative
services for the benefit of the Fund and its shareholders. In this regard, KFS
shall appoint various broker-dealer firms and other financial services firms
("Firms") to provide related services and facilities for their clients who are
shareholders of the Fund ("clients"). The Firms shall provide such office
space and equipment, telephone facilities and personnel as is necessary or
beneficial for providing information and services to shareholders of the Fund.
Such services and assistance may include, but are not limited to, establishing
and maintaining shareholder accounts and records, processing purchase and
redemption transactions, answering routine client inquiries regarding the Fund
and its special features, assistance to clients in changing dividend and
investment options, account designations and addresses, and such other services
as the Fund or KFS may reasonably request. KFS may also provide some of the
above services for the Fund directly.
KFS accepts such appointment and agrees during such period to render such
services and to assume the obligations herein set forth for the compensation
herein provided. KFS shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund. KFS, by separate agreement with the
Fund, may also serve the Fund in other capacities. In carrying out its duties
and responsibilities hereunder, KFS will appoint various Firms to provide
administrative and other services described herein directly to or for the
benefit of shareholders of the Fund who may be clients of such Firms. Such
Firms shall at all times be deemed to be independent contractors retained by
KFS and not the Fund. KFS and not the Fund will be responsible for the payment
of compensation to such Firms for such services.
2. For the services and facilities described in Section 1, the Fund will
pay to KFS at the end of each calendar month an administrative service fee
computed at an annual rate of up to 0.25 of 1% of the average daily net assets
of the Fund. The
<PAGE> 2
current fee schedule is set forth as Appendix I hereto. For the month and year
in which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during such month and year, respectively. The services of KFS to the
Fund under this Agreement are not to be deemed exclusive, and KFS shall be
free to render similar services or other services to others.
The net asset value for each share of the Fund shall be calculated in
accordance with the provisions of the Fund's current prospectus. On each day
when net asset value is not calculated, the net asset value of a share of
the Fund shall be deemed to be the net asset value of such a share as of the
close of business on the last day on which such calculation was made for the
purpose of the foregoing computations.
3. The Fund shall assume and pay all charges and expenses of its operations
not specifically assumed or otherwise to be provided by KFS under this
Agreement.
4. This Agreement may be terminated at any time without the payment of any
penalty by the Fund or by KFS on sixty (60) days written notice to the other
party. Termination of this Agreement shall not affect the right of KFS to
receive payments on any unpaid balance of the compensation described in Section
2 hereof earned prior to such termination. This Agreement may not be amended
to increase the amount to be paid to KFS for services hereunder above .25 of 1%
of the average daily net assets of the Fund without the vote of a majority of
the outstanding voting securities of the Fund. All material amendments to this
Agreement must in any event be approved by vote of the Board of Trustees of the
Fund. This Agreement supersedes all prior agreements between the parties
regarding the subject matter hereof.
5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
6. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
7. All parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust and all amendments thereto, all of which are on file
with the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of
-2-
<PAGE> 3
the Fund hereunder are not binding upon any of the trustees, officers or
shareholders of the Fund individually but are binding upon only the assets and
property of the Fund.
8. This Agreement shall be construed in accordance with applicable federal
law and (except as to Section 7 hereof which shall be construed in accordance
with the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
IN WITNESS WHEREOF, the Fund and KFS have caused this Agreement to be executed
as of the day and year first above written.
KEMPER RETIREMENT FUND KEMPER FINANCIAL SERVICES, INC.
By: /s/ Charles M. Kierscht By: /s/ John E. Peters
------------------------- ---------------------------
Title: President Title: Executive Vice President
---------------------- ------------------------
-3-
<PAGE> 4
APPENDIX I
KEMPER RETIREMENT FUND
FEE SCHEDULE FOR ADMINISTRATIVE
SERVICES AGREEMENT
Pursuant to Section 2 of the Administrative Services Agreement to which
this Appendix is attached, the Fund and KFS agree that the initial
administrative service fee will be computed at an annual rate of .25 of 1% (the
"Fee Rate"). For purposes of computing the fee due KFS, the Fee Rate shall be
applied against the amount of assets of the Fund for which a broker-dealer or
other financial services firm is listed on the records of the Fund as "dealer
of record," which shall not include KFS.
Dated: August 1, 1990
KEMPER RETIREMENT FUND KEMPER FINANCIAL SERVICES, INC.
By: /s/ Charles M. Kierscht By: /s/ John E. Peters
----------------------- ---------------------------
Title: President Title: Executive Vice President
--------- ------------------------
-4-
<PAGE> 1
EXHIBIT 99.B9.(d)
GUARANTY AGREEMENT
Agreement dated the 11th day of January, 1990 by and between Kemper
Financial Services, Inc., a Delaware corporation ("KFS") and Kemper Retirement
Fund, a Massachusetts business trust (the "Trust").
WHEREAS, the Trust is an open-end, diversified, management investment
company that may issue shares in one or more series, the initial series of the
Trust being designated as "Series I" (the "Fund");
WHEREAS, KFS is the investment manager and principal underwriter for
the Fund;
WHEREAS, the investment objectives of the Fund are to provide a
guarantee of return of principal, including any sales charge, for shares
redeemed on November 15, 1999 (the "Maturity Date") and to provide long-term
growth of capital;
WHEREAS, the Fund will pursue its objectives by investing a portion of
its assets in "zero coupon" U.S. Treasury obligations and the balance of its
assets primarily in common stocks;
WHEREAS, the Fund is designed to provide a guarantee of return of
principal only to those investors who reinvest dividends and hold their shares
until the Maturity Date ("Eligible Investors"); and
WHEREAS, the Fund and KFS want to provide further assurance pursuant to
this Agreement that Eligible Investors will receive a return of principal upon
redemption of their shares on the Maturity Date;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. KFS agrees that it will make payments to Eligible Investors on
the Maturity Date in such amounts as may be necessary to enable all Eligible
Investors to receive, upon redemption of their investment in the Fund on the
Maturity Date at the then current net asset value thereof, an aggregate amount
of redemption proceeds and payments hereunder equal to the principal amount of
their original investment, including any sales charge.
2. The Trust hereby accepts the undertaking by KFS set
<PAGE> 2
forth in this Agreement.
3. This Agreement shall be governed by the laws of the State of
Illinois, except that Paragraph 4 hereof shall be governed by the laws of The
Commonwealth of Massachusetts.
4. All parties hereto are expressly put on notice of Trust's
Agreement and Declaration of Trust, which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Trust by its representatives as such representatives and not individually,
and the obligations, if any, of Trust hereunder are not binding upon any of the
Trustees, officers or shareholders of the Trust individually but are binding
upon only the assets and property of Trust.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day and year
first set forth above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Charles M. Kierscht
------------------------------
Title: Pres.
---------------------------
KEMPER RETIREMENT FUND
By: /s/ Robert J. Engling
------------------------------
Title: VP & Secy
---------------------------
-2-
<PAGE> 1
EXHIBIT 99.B9.(e)
GUARANTY AGREEMENT
Agreement dated the 1st day of September, 1990 by and between Kemper
Financial Services, Inc., a Delaware corporation ("KFS") and Kemper Retirement
Fund, a Massachusetts business trust (the "Trust").
WHEREAS, the Trust is an open-end, diversified, management investment
company that may issue shares in one or more series, the second series of the
Trust being designated as "Series II" (the "Fund");
WHEREAS, KFS is the investment manager and principal underwriter for
the Fund;
WHEREAS, the investment objectives of the Fund are to provide a
guarantee of return of principal, including any sales charge, for shares
redeemed on August 15, 2000 (the "Maturity Date") and to provide long-term
growth of capital;
WHEREAS, the Fund will pursue its objectives by investing a portion of
its assets in "zero coupon" U.S. Treasury obligations and the balance of its
assets primarily in common stocks;
WHEREAS, the Fund is designed to provide a guarantee of return of
principal only to those investors who reinvest dividends and hold their shares
until the Maturity Date ("Eligible Investors"); and
WHEREAS, the Fund and KFS want to provide further assurance pursuant to
this Agreement that Eligible Investors will receive a return of principal upon
redemption of their shares on the Maturity Date;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. KFS agrees that it will make payments to Eligible Investors on the
Maturity Date in such amounts as may be necessary to enable all Eligible
Investors to receive, upon redemption of their investment in the Fund on the
Maturity Date at the then current net asset value thereof, an aggregate amount
of redemption proceeds and payments hereunder equal to the principal amount of
their original investment, including any sales charge.
2. The Trust hereby accepts the undertaking by KFS set
<PAGE> 2
forth in this Agreement.
3. This Agreement shall be governed by the laws of the State of
Illinois, except that Paragraph 4 hereof shall be governed by the laws of The
Commonwealth of Massachusetts.
4. All parties hereto are expressly put on notice of Trust's
Agreement and Declaration of Trust, which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Trust by its representatives as such representatives and not individually,
and the obligations, if any, of Trust hereunder are not binding upon any of the
Trustees, officers or shareholders of the Trust individually but are binding
upon only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day and year
first set forth above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ John E. Peters
-----------------------------
Title: Executive Vice President
--------------------------
KEMPER RETIREMENT FUND
By: /s/ Charles M. Kierscht
----------------------------
Title: President
--------------------------
-2-
<PAGE> 1
EXHIBIT 99.B9.(f)
GUARANTY AGREEMENT
Agreement dated the 10th day of March, 1992 by and between Kemper
Financial Services, Inc., a Delaware corporation ("KFS") and Kemper Retirement
Fund, a Massachusetts business trust (the "Trust").
WHEREAS, the Trust is an open-end, diversified, management investment
company that may issue shares in one or more series, the third series of the
Trust being designated as "Series III" (the "Fund");
WHEREAS, KFS is the investment manager and principal underwriter for
the Fund;
WHEREAS, the investment objectives of the Fund are to provide a
guarantee of return of principal, including any sales charge, for shares
redeemed on February 15, 2002 (the "Maturity Date") and to provide long-term
growth of capital;
WHEREAS, the Fund will pursue its objectives by investing a portion of
its assets in "zero coupon" U.S. Treasury obligations and the balance of its
assets primarily in common stocks;
WHEREAS, the Fund is designed to provide a guarantee of return of
principal only to those investors who reinvest dividends and hold their shares
until the Maturity Date ("Eligible Investors"); and
WHEREAS, the Fund and KFS want to provide further assurance pursuant to
this Agreement that Eligible Investors will receive a return of principal upon
redemption of their shares on the Maturity Date;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. KFS agrees that it will make payments to Eligible Investors on the
Maturity Date in such amounts as may be necessary to enable all Eligible
Investors to receive, upon redemption of their investment in the Fund on the
Maturity Date at the then current net asset value thereof, an aggregate amount
of redemption proceeds and payments hereunder equal to the principal amount of
their original investment, including any sales charge.
2. The Trust hereby accepts the undertaking by KFS set
<PAGE> 2
forth in this Agreement.
3. This Agreement shall be governed by the laws of the State of
Illinois, except that Paragraph 4 hereof shall be governed by the laws of The
Commonwealth of Massachusetts.
4. All parties hereto are expressly put on notice of Trust's
Agreement and Declaration of Trust, which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Trust by its representatives as such representatives and not individually,
and the obligations, if any, of Trust hereunder are not binding upon any of the
Trustees, officers or shareholders of the Trust individually but are binding
upon only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day and year
first set forth above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Robert T. Jackson
----------------------------
Title: CFO
--------------------------
KEMPER RETIREMENT FUND
By: /s/ John E. Peters
----------------------------
Title: Sr. E V.P.
--------------------------
-2-
<PAGE> 1
EXHIBIT 99.B9.(g)
GUARANTY AGREEMENT
Agreement dated the 15th day of January, 1993 by and between Kemper
Financial Services, Inc., a Delaware corporation ("KFS") and Kemper Retirement
Fund, a Massachusetts business trust (the "Trust").
WHEREAS, the Trust is an open-end, diversified, management investment
company that may issue shares in one or more series, the fourth series of the
Trust being designated as "Series IV" (the "Fund");
WHEREAS, KFS is the investment manager and principal underwriter for
the Fund;
WHEREAS, the investment objectives of the Fund are to provide a
guarantee of return of principal, including any sales charge, for shares
redeemed on February 15, 2003 (the "Maturity Date") and to provide long-term
growth of capital;
WHEREAS, the Fund will pursue its objectives by investing a portion of
its assets in "zero coupon" U.S. Treasury obligations and the balance of its
assets primarily in common stocks;
WHEREAS, the Fund is designed to provide a guarantee of return of
principal only to those investors who reinvest dividends and hold their shares
until the Maturity Date ("Eligible Investors"); and
WHEREAS, the Fund and KFS want to provide further assurance pursuant to
this Agreement that Eligible Investors will receive a return of principal upon
redemption of their shares on the Maturity Date;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. KFS agrees that it will make payments to Eligible Investors on the
Maturity Date in such amounts as may be necessary to enable all Eligible
Investors to receive, upon redemption of their investment in the Fund on the
Maturity Date at the then current net asset value thereof, an aggregate amount
of redemption proceeds and payments hereunder equal to the principal amount of
their original investment, including any sales charge.
2. The Trust hereby accepts the undertaking by KFS set
<PAGE> 2
forth in this Agreement.
3. This Agreement shall be governed by the laws of the State of
Illinois, except that Paragraph 4 hereof shall be governed by the laws of The
Commonwealth of Massachusetts.
4. All parties hereto are expressly put on notice of Trust's
Agreement and Declaration of Trust, which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Trust by its representatives as such representatives and not individually,
and the obligations, if any, of Trust hereunder are not binding upon any of the
Trustees, officers or shareholders of the Trust individually but are binding
upon only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day and year
first set forth above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Robert T. Jackson
---------------------------------------
Title: Senior Executive Vice President
-------------------------------------
KEMPER RETIREMENT FUND
By: /s/ John E. Peters
---------------------------------------
Title: Vice President
-------------------------------------
-2-
<PAGE> 1
EXHIBIT 99.B9.(h)
GUARANTY AGREEMENT
Agreement dated the 10th day of November, 1993 by and between Kemper
Financial Services, Inc., a Delaware corporation ("KFS") and Kemper Retirement
Fund, a Massachusetts business trust (the "Trust").
WHEREAS, the Trust is an open-end, diversified, management investment
company that may issue shares in one or more series, the fifth series of the
Trust being designated as "Series V" (the "Fund");
WHEREAS, KFS is the investment manager and principal underwriter for
the Fund;
WHEREAS, the investment objectives of the Fund are to provide a
guarantee of return of principal, including any sales charge, for shares
redeemed on November 15, 2004 (the "Maturity Date") and to provide long-term
growth of capital;
WHEREAS, the Fund will pursue its objectives by investing a portion of
its assets in "zero coupon" U.S. Treasury obligations and the balance of its
assets primarily in common stocks;
WHEREAS, the Fund is designed to provide a guarantee of return of
principal only to those investors who reinvest dividends and hold their shares
until the Maturity Date ("Eligible Investors"); and
WHEREAS, the Fund and KFS want to provide further assurance pursuant to
this Agreement that Eligible Investors will receive a return of principal upon
redemption of their shares on the Maturity Date;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. KFS agrees that it will make payments to Eligible Investors on
the Maturity Date in such amounts as may be necessary to enable all Eligible
Investors to receive, upon redemption of their investment in the Fund on the
Maturity Date at the then current net asset value thereof, an aggregate amount
of redemption proceeds and payments hereunder equal to the principal amount of
their original investment, including any sales charge.
2. The Trust hereby accepts the undertaking by KFS set forth in
this Agreement.
<PAGE> 2
3. This Agreement shall be governed by the laws of the State of
Illinois, except that Paragraph 4 hereof shall be governed by the laws of The
Commonwealth of Massachusetts.
4. All parties hereto are expressly put on notice of Trust's
Agreement and Declaration of Trust, which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Trust by its representatives as such representatives and not individually,
and the obligations, if any, of Trust hereunder are not binding upon any of the
Trustees, officers or shareholders of the Trust individually but are binding
upon only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day and year
first set forth above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Dale S. Siligmueller
------------------------------
Title: SVP
---------------------------
KEMPER RETIREMENT FUND
By: /s/ John E. Peters
------------------------------
Title: Vice President
---------------------------
-2-
<PAGE> 1
EXHIBIT 99.B9.(i)
GUARANTY AGREEMENT
Agreement dated the 17th day of April, 1995 by and between
Kemper Financial Services, Inc., a Delaware corporation ("KFS")
and Kemper Target Equity Fund, a Massachusetts business trust
(the "Trust").
WHEREAS, the Trust is an open-end, diversified, management
investment company that may issue shares in one or more series,
the seventh series of the Trust being designated as "Kemper
Retirement Fund Series VI" (the "Fund");
WHEREAS, KFS is the investment manager for the Fund;
WHEREAS, the investment objectives of the Fund are to
provide a guarantee of return of investment, including any sales
charge, for shares redeemed on May 15, 2006 (the "Maturity Date")
and to provide long-term growth of capital;
WHEREAS, the Fund will pursue its objectives by investing a
portion of its assets in "zero coupon" U.S. Treasury obligations
and the balance of its assets primarily in common stocks;
WHEREAS, the Fund is designed to provide a guarantee of
return of investment only to those investors who reinvest
dividends and hold their shares until the Maturity Date
("Eligible Investors"); and
WHEREAS, the Fund and KFS want to provide further assurance
pursuant to this Agreement that Eligible Investors will receive a
return of investment upon redemption of their shares on the
Maturity Date;
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. KFS agrees that it will make payments to Eligible
Investors on the Maturity Date in such amounts as may be
necessary to enable all Eligible Investors to receive, upon
redemption of their investment in the Fund on the Maturity Date
at the then current net asset value thereof, an aggregate amount
of redemption proceeds and payments hereunder equal to the amount
of their original investment, including any sales charge.
2. The Trust hereby accepts the undertaking by KFS set
forth in this Agreement.
<PAGE> 2
3. This Agreement shall be governed by the laws of the
State of Illinois, except that Paragraph 4 hereof shall be
governed by the laws of The Commonwealth of Massachusetts.
4. All parties hereto are expressly put on notice of
Trust's Amended and Restated Agreement and Declaration of Trust,
which is on file with the Secretary of The Commonwealth of
Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by
and on behalf of Trust by its representatives as such
representatives and not individually, and the obligations, if
any, of Trust hereunder are not binding upon any of the Trustees,
officers or shareholders of the Trust individually but are
binding upon only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective duly authorized officer as of
the day and year first set forth above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
----------------------------
Title: Senior Vice President
-------------------------
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
----------------------------
Title: Vice President
-------------------------
-2-
<PAGE> 1
EXHIBIT 99.B9.(j)
GUARANTY AGREEMENT
Agreement dated the 3rd day of May, 1994 by and between Kemper
Financial Services, Inc., a Delaware corporation ("KFS") and Kemper Target
Equity Fund, a Massachusetts business trust (the "Trust").
WHEREAS, the trust is an open-end, diversified, management investment
company that may issue shares in one or more series, the sixth series of the
Trust being designated as "Kemper Worldwide 2004 Fund" (the "Fund");
WHEREAS, KFS is the investment manager and principal underwriter for
the Fund;
WHEREAS, the investment objectives of the Fund are to provide a
guarantee of return of investment, including any sales charge, for shares
redeemed on November 15, 2004 (the "Maturity Date") and to provide a total
return;
WHEREAS, the Fund will pursue its objectives by investing a portion of
its assets in "zero coupon" U.S. Treasury obligations and the balance of its
assets primarily in common stocks;
WHEREAS, the Fund is designed to provide a guarantee of return of
investment only to those investors who reinvest dividends and hold their shares
until the Maturity Date ("Eligible Investors"); and
WHEREAS, the Fund and KFS want to provide further assurance pursuant to
this Agreement that Eligible Investors will receive a return of investment upon
redemption of their shares on the Maturity Date;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. KFS agrees that it will make payments to Eligible Investors on
the Maturity Date in such amounts as may be necessary to enable all Eligible
Investors to receive, upon redemption of their investment in the Fund on the
Maturity Date at the then current net asset value thereof, an aggregate amount
of redemption proceeds and payments hereunder equal to the amount of their
original investment, including any sales charge.
2. The Trust hereby accepts the undertaking by KFS set forth in
this Agreement.
<PAGE> 2
3. This Agreement shall be governed by the laws of the State of
Illinois, except that Paragraph 4 hereof shall be governed by the laws of The
Commonwealth of Massachusetts.
4. All parties hereto are expressly put on notice of Trust's
Agreement and Declaration of Trust, which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Trust by its representatives as such representatives and not individually,
and the obligations, if any, of Trust hereunder are not binding upon any of the
Trustees, officers or shareholders of the Trust individually but are binding
upon only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day and year
first set forth above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-------------------------------
Title: Senior Vice President
---------------------------
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
------------------------------
Title: Vice President
---------------------------
-2-
<PAGE> 1
EXHIBIT 99.B9.(k)
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION ("Assignment and Assumption") made and
entered into as of February 1, 1995 by and between Kemper Financial Services,
Inc., a Delaware corporation ("Assignor"), and Kemper Distributors, Inc., a
Delaware corporation ("Assignee").
WHEREAS, Assignor serves as administrator for Kemper Target Equity
Fund, a Massachusetts business trust (the "Fund"), pursuant to that certain
Administrative Services Agreement dated August 1, 1990 by and between Assignor
and the Fund, as may have been amended, (the "Agreement");
WHEREAS, Assignee is a wholly-owned subsidiary of Assignor;
WHEREAS, It has been proposed that the rights, duties and
responsibilities of Assignor under the Agreement be transferred to and assumed
by Assignee;
WHEREAS, The Fund has determined that such transfer of rights, duties
and responsibilities is reasonable and in the best interests of the Fund and
the Fund's shareholders; and
NOW, THEREFORE, in consideration of the covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. Assignment and Assumption. Assignor assigns and transfers to
Assignee all of Assignor's rights, interests, liabilities, duties and
obligations under the Agreement ("Assigned Rights and Obligations"). Assignee
accepts the foregoing assignment and transfer of the Assigned Rights and
Obligations and agrees to assume, pay, perform and otherwise be fully
responsible for the same.
2. Further Assurances. From time to time, at the request of either
party, the other party will execute and deliver such further instruments of
assignment, transfer and assumption and take such further action as may be
required to assign, transfer and assume the Assigned Rights and Obligations.
3. Applicable Law. This Assignment and Assumption shall be
governed by the laws of the State of Illinois.
4. Amendments. This Assignment and Assumption may only be amended
by the written agreement of the parties.
<PAGE> 2
IN WITNESS WHEREOF, the parties have each caused this Assignment and
Assumption to be executed on its behalf by a duly authorized officer as of the
date first written above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
--------------------------
Its: Senior Vice President
KEMPER DISTRIBUTORS, INC.
By: /s/ James L. Greenawalt
--------------------------
Its: Executive Vice President
The undersigned hereby acknowledges and consents to the foregoing Assignment
and Assumption as of February 1, 1995.
KEMPER TARGET EQUITY FUND
By: /s/ John E. Peters
------------------
Its: Vice President
-2-
<PAGE> 1
EXHIBIT 99.B10(a)
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
April 18, 1995
Kemper Target Equity Fund
120 South LaSalle Street
Chicago, Illinois 60603
Ladies and Gentlemen:
Reference is made to Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A under the Securities Act of 1933 being
filed by Kemper Target Equity Fund (the "Fund") in connection with the proposed
public offering of an indefinite amount of units of beneficial interest, no par
value ("Shares"), in the Kemper Retirement Fund Series VI (the "Portfolio").
We have acted as counsel to the Fund since its inception and in such
capacity are familiar with the Fund's organization and have counseled the Fund
regarding various legal matters. We have examined such Fund records and other
documents and certificates as we have considered necessary or appropriate for
the purposes of this opinion. In our examination of such materials, we have
assumed the genuineness of all signatures and the conformity to original
documents of all copies submitted to us.
Based upon the foregoing and upon the opinion dated April 18, 1995 by
Ropes & Gray of Boston, Massachusetts, we advise you and opine that (a) the
Fund is a duly authorized and validly existing voluntary association with
transferrable shares under the laws of the Commonwealth of Massachusetts and is
authorized to issue an unlimited number of Shares in the Portfolio; and (b)
upon the issuance of the Shares in accordance with the Fund's Agreement and
Declaration of Trust and the receipt by the Fund of a purchase price not less
than the net asset value per Share, the Shares will be legally issued and
outstanding, fully paid and non-assessable (although shareholders of the Fund
may be subject to liability under certain circumstances described in Part B of
the Registration Statement of the Fund under the caption "Shareholder Rights").
We hereby consent to the use of this opinion in connection with said
Post-Effective Amendment.
Very truly yours,
/s/Vedder, Price, Kaufman & Kammholz
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
<PAGE> 1
EXHIBIT 99.B10(b)
ROPES & GRAY
April 18, 1995
Kemper Target Equity Fund
120 South LaSalle Street
Chicago, Illinois 60603
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer and
sale from time to time of an indefinite number of shares of beneficial interest
(the "Shares") of Kemper Retirement Fund Series VI (the "Series"), a portfolio
series of Kemper Target Equity Fund (the "Fund"), being registered under the
Securities Act of 1933, as amended, by a Registration Statement on Form N-1A
(the "Registration Statement").
We have acted as Massachusetts counsel for the Fund in connection with
its organization and are familiar with the action taken by its Trustees to
authorize the issuance of the Shares of the Series. We have examined its
by-laws and its Agreement and Declaration of Trust on file at the Office of the
Secretary of State of The Commonwealth of Massachusetts and we have also
examined such other documents as we deem necessary for the purpose of this
opinion.
We assume that appropriate action has been or will be taken to
register or qualify the sale of the Shares under any applicable state and
federal laws regulating sales and offerings of securities and that upon sale of
the Shares, the Fund will receive the net asset value thereof.
Based upon the foregoing, we are of the opinion that:
1. The fund is a legally organized and validly existing
unincorporated voluntary association under the laws of The Commonwealth of
Massachusetts which, unless terminated
<PAGE> 2
Kemper Target Equity Fund
Vedder, Price, Kaufman & Kammholz -2- April 17, 1995
as provided in its Agreement and Declaration of Trust, shall continue in
existence without limitation of time.
2. The Fund is authorized to issue an unlimited number of Shares and
upon the issue of any thereof for cash at net asset value after the
effectiveness of the Registration Statement and receipt by the Fund of the
authorized consideration therefor, the Shares so issued will be validly issued,
fully paid, and nonassessable by the Fund.
The Fund is an entity of the type commonly known as a "Massachusetts
business trust". Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund or the
Series. However, the Agreement and Declaration of Trust disclaim shareholder
liability for acts and obligations of the Fund and the Series and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trustees or officers of the Fund. The
Agreement and Declaration of Trust provides for indemnification out of the
property of the Series for all loss and expense of any shareholder of the
Series held personally liable for the obligations of the Fund or the Series.
Thus, the risk of a liability is limited to circumstances in which the Series
would be unable to meet its obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
<PAGE> 1
EXHIBIT 99.B11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Independent
Auditors and Reports to Shareholders" and to the use of our report dated April
17, 1995 on the Statement of Net Assets of Kemper Target Equity Fund - Kemper
Retirement Fund - Series VI in the Registration Statement (Form N-1A) of the
Kemper Target Equity Fund, filed with the Securities and Exchange Commission in
this Post-Effective Amendment No. 20 to the Registration Statement under the
Securities Act of 1933 (File No. 33-30876) and in this Amendment No. 22 to the
Registration Statement under the Investment Company Act of 1940 (File No.
811-5896).
/s/ ERNST & YOUNG LLP
Chicago, Illinois
April 18, 1995
<PAGE> 1
EXHIBIT 99.B13.
SUBSCRIPTION AGREEMENT
KEMPER TARGET EQUITY FUND
KEMPER RETIREMENT FUND SERIES VI
Subscription Agreement
1. Share Subscription. The undersigned agrees to purchase from Kemper
Target Equity Fund (the "Fund") the number of shares (the "Shares") of the
series of the Fund known as Kemper Retirement Fund Series VI (the "Portfolio"),
without par value, set forth at the end of this Agreement on the terms and
conditions set forth herein and in the Preliminary Prospectus ("Preliminary
Prospectus") described below, and hereby tenders the amount of the price
required to purchase these Shares at the price set forth at the end of this
Agreement.
The undersigned understands that the Fund has prepared a registration
statement or an amendment thereto for filing with the Securities and Exchange
Commission on Form N-1A, which contains the Preliminary Prospectus which
describes the Fund, the Portfolio and the Shares. By its signature hereto, the
undersigned hereby acknowledges receipt of a copy of the Preliminary
Prospectus.
The undersigned recognizes that the Portfolio will not be fully
operational until such time as it commences the public offering of its shares.
Accordingly, a number of features of the Portfolio described in the Preliminary
Prospectus, including, without limitation, the declaration and payment of
dividends, and redemption of shares upon request of shareholders, are not, in
fact, in existence at the present time and will not be instituted until the
Portfolio's registration under the Securities Act of 1933 is made effective.
2. Registration and Warranties. The undersigned hereby represents and
warrants as follows:
(a) It is aware that no Federal or state agency has made any
findings or determination as to the fairness for investment, nor any
recommendation or endorsement, of the Shares;
(b) It has such knowledge and experience of financial and business
matters as will enable it to utilize the information made available to it
in connection with the offering of the Shares, to evaluate the merits and
risks of the prospective investment and to make an informed investment
decision;
<PAGE> 2
(c) It recognizes that the Portfolio has no financial or operating
history and, further, that investment in the Portfolio involves certain
risks, and it has taken full cognizance of and understands all of the
risks related to the purchase of the Shares, and it acknowledges that it
has suitable financial resources and anticipated income to bear the
economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for investment,
and not with any present intention of redemption, distribution, or resale
of the Shares, either in whole or in part;
(e) It will not sell the Shares purchased by it without
registration of the Shares under the Securities Act of 1933 or exemption
therefrom;
(f) This Agreement and the Preliminary Prospectus and such material
documents relating to the Fund as it has requested have been provided to
it by the Fund and have been reviewed carefully by it; and
(g) It has also had the opportunity to ask questions of, and
receive answers from, representatives of the Fund concerning the Fund and
the terms of the offering.
3. The undersigned recognizes that the Fund reserves the unrestricted
right to reject or limit any subscription and to close the offer at any time.
Number of Shares: 11,111.111 of Kemper Retirement Fund Series VI.
Subscription price $9.00 per share for an aggregate price of $100,000.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
17th day of April, 1995.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
--------------------------------
Title: Senior Vice President
-----------------------------
-2-
<PAGE> 1
EXHIBIT 99.B16.
PERFORMANCE CALCULATIONS
EXHIBIT OF PERFORMANCE CALCULATIONS
This exhibit reflects the calculation of certain performance figures that
appear under "Performance" in the Part B Statement of Additional Information
("Part B") of Kemper Retirement Fund--Series II (the "Fund").
A. TOTAL RETURN.
1. Formula. The total return performance of the Fund for a specified
period equals the change in the value of a hypothetical $10,000 investment
("Initial Investment") from the beginning of the period to the end of the
period. It is assumed that all dividends are reinvested. Total return may be
computed either with or without adjustment for sales charge. It may be
expressed either as a dollar value change or as a percentage change. Total
return information is set forth in the Total Return Table that appears under
"Performance" in the Part B.
2. Performance Reflected. The representative total return calculations
reflected in this Section A are for the Fund for the period from September 11,
1990 to June 30, 1991.
3. Unadjusted Total Return. The column labeled "Percentage Increase
(unadjusted)" in the Total Return Table shows the total return of the Fund as
a percentage change without adjustment for any sales charge. The percentage
change in value of the Initial Investment for the period (i.e., the unadjusted
total return) is calculated by determining the percentage increase in the net
asset value per share ("NAV") of the Fund over the period and adjusting that
for the dividends reinvested over the period. There was one dividend during
the period. The percentage change is then calculated as follows:
Shares X Ending NAV
Percentage Change = ------------------- - 1
Beginning NAV
Ending NAV = NAV on June 30, 1991 = $10.75/Share
Beginning NAV = NAV on September 11, 1990 = $9.00/Share
Shares = Number of shares at the end of the period assuming a one share
investment at the beginning of the period and reinvestment of
dividends. "Shares" is computed under the following formula.
<TABLE>
<S> <C> <C> <C>
DIV DIV DIV
1 2 n
--- --- ---
Shares = (1 + RNAV ) X (1 + RNAV )...X (1 + RNAV )
1 2 n
</TABLE>
<PAGE> 2
DIV = Dollar amount distributed for the nth dividend of the
n period. n equals 1 in the present example since there was
one dividend distributed.
RNAV = NAV on the date that the nth dividend in the period was
n reinvested. n equals 1 in the present example.
The following data is presented:
<TABLE>
<S> <C> <C>
n DIV. RNAV
n
--- ------------ -------------
1 $0.08/Share $9.53/Share
</TABLE>
$0.08
Shares = (1 + ------------) = 1.0083945
$9.53/Share
1.0083945 x $10.75/Share
Percentage Change = ------------------------ - 1 = 0.2045
$9.00/Share
The decimal return is converted to a percentage by multiplying by 100.
0.2045 x 100 = 20.45%
The column labeled "Ending Value (unadjusted)" in the Total Return
Table shows the total return of the Fund as a dollar value change without
adjustment for any sales charge. The Ending Value (unadjusted) is equal to the
Initial Investment ($10,000) plus the percentage change of such investment over
the period (calculated as described above).
$10,000 + (20.45% of $10,000) = $10,000 + (0.2045 x $10,000) = $12,045
4. Adjusted Total Return. The column labeled "Percentage Increase
(adjusted)" in the Total Return Table shows the total return of the Fund as a
percentage change with adjustment for the maximum sales charge.
The maximum sales charge for the Fund is 5.00% of the offering price.
On the $10,000 Initial Investment, the 5.00% sales charge would equal $500.
5.00% of $10,000 = 0.0500 x $10,000 = $500
The Initial Investment adjusted for the maximum sales charge ("adjusted
Initial Investment") is calculated by deducting the sales charge from the
Initial Investment.
$10,000 - $500 = $9,500
<PAGE> 3
The column labeled "Ending Value (adjusted)" in the Total Return Table shows
the total return of the Fund as a dollar value change with adjustment for the
maximum sales charge. The Ending Value (adjusted) is equal to the adjusted
Initial Investment plus the percentage change of such investment over the
period. The percentage change over the period is calculated in Sub-section 3
above.
$9,500 + (20.45% of $9,500) = $9,500 + (0.2045 x $9,500) = $11,443
Percentage Increase (adjusted) equals the percentage change of the Ending
Value (adjusted) from the Initial Investment.
$11,443
------- - 1 = 1.1443 - 1 = 0.1443
$10,000
The decimal return is converted to a percentage by multiplying by 100.
0.1443 x 100 = 14.43%
B. AVERAGE ANNUAL TOTAL RETURN.
1. Formula. The average annual total return of the Fund for a specific
period is found by taking a hypothetical $1,000 investment ("Initial
Investment") at the beginning of the period, adjusting for the maximum sales
charge, and computing the redeemable value at the end of the period
("Redeemable Value"). The Redeemable Value is then divided by the Initial
Investment, and this quotient is taken to the Nth root (N representing the
number of years in the period) and 1 is subtracted from the result, which is
then expressed as a percentage. Thus, the following formula applies:
Redeemable Value 1/N
Average Annual Total Return = (------------------) - 1
Initial Investment
2. Performance Reflected. The representative average annual total return
calculation reflected in this Section B is for the Fund for the period from
commencement of operations (September 11, 1990) to June 30, 1991.
3. Calculation. The maximum sales charge for the Fund is 5.00% of the
offering price. On the $1,000 Initial Investment, the 5.00% sales charge
would equal $57.50.
5.00% of $1,000 = 0.0500% x $1,000 = 50
The Initial Investment adjusted for the maximum sales charge ("adjusted
Initial Investment") is calculated by deducting the sales charge from the
Initial Investment.
$1,000 - $50 = $950
<PAGE> 4
The Redeemable Value is equal to the adjusted Initial Investment plus the
percentage change in the value of such investment over the period. The
percentage change over the period is calculated in Sub-section 3 of Section A
above.
Redeemable Value = $950 + (20.45% of $950) = $950 + (0.2045 x $950) =
$1,144.28
The period covered is from September 11, 1990 to June 30, 1991 or 10 months.
N = number of years in the period = 10/12 = 0.833
Using the formula provided above, average annual total return for the period
may then be calculated.
The Redeemable Value is divided by the Initial Investment.
($1,144.28 / $1,000) = 1.1443
This quotient is taken to the Nth root.
The 0.833rd root of 1.1443 = 1.1755
1 is subtracted from the result.
1.1755 - 1 = 0.1755
The decimal return is converted to a percentage by multiplying by 100.
0.1755 x 100 = 17.55%
<PAGE> 1
EXHIBIT 99.B17.
POWER OF ATTORNEY
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Stephen B. Timbers and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Target Equity Fund.
Signature Title Date
--------- ----- ----
/s/ Stephen B. Timbers Trustee March 2, 1995
----------------------
<PAGE> 2
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Stephen B. Timbers and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Target Equity Fund.
Signature Title Date
--------- ----- ----
/s/ Arthur R. Gottschalk Trustee March 2, 1995
------------------------
<PAGE> 3
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Stephen B. Timbers and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Target Equity Fund.
Signature Title Date
--------- ----- ----
/s/ Frederick T. Kelsey Trustee March 2, 1995
-----------------------
<PAGE> 4
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Stephen B. Timbers and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Target Equity Fund.
Signature Title Date
--------- ----- ----
/s/ David B. Mathis Trustee March 2, 1995
-------------------
<PAGE> 5
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Stephen B. Timbers and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Target Equity Fund.
Signature Title Date
--------- ----- ----
/s/ John B. Tingleff Trustee March 2, 1995
--------------------
<PAGE> 6
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Stephen B. Timbers and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Target Equity Fund.
Signature Title Date
--------- ----- ----
/s/ John G. Weithers Trustee March 2, 1995
--------------------
<PAGE> 1
EXHIBIT 99.485(b)
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
April 18, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kemper Target Equity Fund
To The Commission:
We are counsel to the above-referenced investment company (the "Fund")
and as such have participated in the preparation and review of Post-Effective
Amendment No. 20 to the Fund's registration statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485, we hereby represent that such amendment does not contain
disclosures which would render it ineligible to become effective pursuant to
paragraph (b) thereof.
Very truly yours,
/s/Vedder, Price, Kaufman & Kammholz
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
COK:dfd
