<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CASH ACCOUNT TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CASH ACCOUNT TRUST
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPY --
IMPORTANT NEWS
FOR CASH ACCOUNT TRUST SHAREHOLDERS
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE'S A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.
Q & A ABOUT THE ENCLOSED PROXY MATERIALS
<TABLE>
<S> <C>
Q. WHAT IS HAPPENING?
A. Kemper Corporation -- NOT YOUR FUND -- has agreed to be acquired
by an investor group led by Zurich Insurance Company through a
merger. Zurich is an internationally recognized market leader in
life and non-life insurance, financial services and reinsurance.
As part of the merger, your fund's investment manager, Kemper
Financial Services, Inc. (KFS), will be sold to a subsidiary of
Zurich. In order for KFS to serve as investment manager of your
fund after the merger, it is necessary for your fund to approve a
new investment management agreement.
The following pages elaborate on Zurich, the proposed new
investment management agreement and the fund board's evaluation
of Zurich's plans for KFS. A vote is also being sought on a Rule
12b-1 plan* (the provisions of which are the same as in the
current Rule 12b-1 plan) for your fund, the election of trustees
to the Board of Trustees and the selection of independent
auditors.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT
MANAGEMENT AGREEMENT?
A. The Investment Company Act of 1940 requires a vote whenever there
is a change in control of an investment manager. Kemper
Corporation's merger with Zurich is such a change of control and
requires fund shareholder approval of a new investment management
agreement with your fund. Approval of the Rule 12b-1 distribution
plan with your fund is also required.
Q. WHAT HAPPENED WITH KEMPER CORPORATION'S INTENTION LAST YEAR TO
MERGE WITH CONSECO, INC.?
A. The agreement was terminated by mutual consent of Kemper and
Conseco.
Q. HOW WILL THE KEMPER/ZURICH MERGER AFFECT ME AS A FUND
SHAREHOLDER?
A. Your fund and your fund investment will not change. You will
still own the same shares in the same fund.
The terms of the new management agreement are the same as the
current management agreement. If the new investment management
agreement and Rule 12b-1 plan are approved, your fund shares will
not change, the advisory fees charged to your fund will not
change, and the fee rate payable under your fund's 12b-1 plan
will not change.
Zurich has committed to provide all resources necessary to
provide your fund with top quality investment management and
shareholder services.
Q. WILL THE INVESTMENT ADVISORY AND RULE 12B-1 FEES BE THE SAME?
A. Yes, the investment advisory and Rule 12b-1 fees paid by your
fund will remain the same.
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Q. HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the board members of your fund,
including the independent members, recommend that you vote "For"
all the items on the enclosed ballot.
Q. WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
A. Kemper Corporation and Zurich Insurance Company -- not your fund
-- are paying all costs of the fund's shareholder meeting and
proxy solicitation.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Kemper Shareholder Services at 1-800-231-8568.
</TABLE>
- ---------------
* Rule 12b-1 of the Investment Company Act of 1940 specifies the terms that an
investment company (mutual fund) must comply with when using fund assets to
pay for the distribution of fund shares. Kemper Distributors, Inc., the
principal underwriter and distributor for the fund, distributes your fund's
shares according to a Rule 12b-1 plan.
ABOUT THE BALLOT
<TABLE>
<S><C>
For Withhold For All
1. To elect the following as trustees: All All Except
/ / / / / /
01) David W. Belin, 02) Lewis A. Burnham, 03) Donald L. Dunaway, 04) Robert B. Hoffman, 05) Donald H. Jones,
06) David B. Mathis, 07) Shirley D. Peterson, 08) Stephen B. Timbers, 09) William P. Sommers
---------------------------------------------------------------------------------------------------------
To withhold authority to vote on any individual nominee(s), print the number(s) on the line above.
2. Ratify or reject the selection of For Against Abstain
/ / / / / /
Ernst & Young LLP as the Fund's independent auditors for
the current fiscal year.
3. Approve or disapprove a new investment management agreement / / / / / /
with Kemper Financial Services, Inc. or its successor on
the same terms as the current agreement.
4. Approve or disapprove a new Rule 12b-1 distribution plan / / / / / /
on the same terms as the current plan.
Signature(s) (All registered owners of accounts shown to the left must sign. If signing for
a corporation, estate or trust, please indicate your capacity or title.)
X
- ----------------------------------------------------------------------------------------
Signature Date
X
- ----------------------------------------------------------------------------------------
Signature Date
PLEASE VOTE TODAY!
</TABLE>
Because each portfolio must vote separately, you are being sent a ballot for
each fund account that you have. Please vote all issues shown on each ballot
that you receive.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each ballot. On Item 1 (election of trustees) mark --
For All, Withhold All or For All Except. If you mark an X in the For All Except
box, you should print the number(s) relating to the individual(s) for whom you
wish to withhold authority. On all other Items mark -- For, Against or Abstain.
Then sign, date and return each of your ballots in the accompanying postage-paid
envelope. All registered owners of an account, as shown in the address on the
ballot, must sign the ballot. If you are signing for a corporation, trust or
estate, please indicate your title or position.
THANK YOU FOR MAILING YOUR BALLOT PROMPTLY!
<PAGE> 4
CASH ACCOUNT TRUST
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
TELEPHONE 1-800-231-8568
July 7, 1995
Dear Cash Account Trust Shareholder:
As you read in the Questions and Answers (Q & A) on page 1, Kemper Corporation
has agreed to be acquired by an investor group led by Zurich Insurance Company
through a merger. Zurich is an internationally recognized market leader in life
and non-life insurance, financial services and reinsurance. (More information
about Zurich can be found inside the proxy statement.)
We're sending this proxy statement to you because your vote is important to
the planned Kemper merger. Your fund's investment manager, Kemper Financial
Services, Inc. (KFS), is a subsidiary of Kemper Corporation. Because of the
Zurich/Kemper merger, it is necessary for your Fund to approve a new investment
management agreement and the adoption of a new Rule 12b-1 plan.
As you review these materials, please keep in mind that Kemper Corporation and
KFS -- NOT YOUR FUND -- are being acquired by Zurich. If the new investment
management agreement and Rule 12b-1 plan are approved, YOUR FUND SHARES WILL NOT
CHANGE, THE ADVISORY FEES CHARGED TO YOUR FUND WILL NOT CHANGE, AND THE FEE RATE
PAYABLE UNDER YOUR FUND'S RULE 12B-1 PLAN WILL NOT CHANGE. Further, you should
continue to receive the high quality investment management and shareholder
services that you have come to expect over the years.
Your Fund Board has approved the proposals and recommends them for your
approval. I encourage you to vote in favor of the proposals. PLEASE VOTE NOW TO
HELP SAVE THE COST OF ADDITIONAL SOLICITATIONS.
As always, we thank you for your confidence and support.
Sincerely,
Stephen B. Timbers
President
<PAGE> 5
CASH ACCOUNT TRUST
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
TELEPHONE 1-800-231-8568
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 19, 1995 AND PROXY STATEMENT
July 7, 1995
To the Shareholders:
You are invited to attend a special meeting of shareholders of Cash Account
Trust (the "Fund"). The meeting will be held in Room 17L on the 17th Floor at
the offices of the Fund, 120 South LaSalle Street, Chicago, Illinois on Tuesday,
September 19, 1995 at 2:30 p.m., Chicago time, for the following purposes and to
transact such other business as may properly come before the meeting or any
adjournment of the meeting:
1. To elect nine (9) Trustees to the Board of Trustees.
2. To ratify or reject the selection of Ernst & Young LLP as independent
auditors for the current fiscal year.
3. To approve or disapprove a new investment management agreement with
Kemper Financial Services, Inc. or its successor on the same terms as
the current agreement.
4. To approve or disapprove a new Rule 12b-1 distribution plan with Kemper
Distributors, Inc. or its successor ("KDI") on the same terms as the
current plan.
The Board of Trustees of the Fund has selected the close of business on June 23,
1995 as the record date for the determination of shareholders of the Fund
entitled to notice of and to vote at the meeting. Shareholders are entitled to
one vote for each share held.
- --------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE> 6
The accompanying proxy is solicited by the Board of Trustees (the "Board") of
the Fund for voting at the special meeting of shareholders of the Fund to be
held on Tuesday, September 19, 1995, and at any and all adjournments thereof
(the "Meeting"). This proxy statement was first mailed to shareholders on or
about July 7, 1995.
The Fund is a "series company" that issues various series of shares. (Each
series also is sometimes described herein as a Fund.) Each series has its own
investment objective and policies and operates independently for purposes of
investments, dividends and redemptions. The series of the Fund are: Money Market
Portfolio ("MMP"); Government Securities Portfolio ("GSP") and Tax-Exempt
Portfolio ("TEP").
The shareholders of the Fund are being asked to vote on four items. On Item 1
(election of trustees) and Item 2 (ratification of selection of auditors), the
Fund will vote in the aggregate and not by series. On Item 3 (approval of new
investment management agreement) and Item 4 (approval of new Rule 12b-1 Plan),
each series will vote separately. The Board of the Fund recommends an
affirmative vote on all items. The vote required to approve each item is
described under the section of this proxy statement entitled "Miscellaneous."
The Board of the Fund has fixed the close of business on June 23, 1995 as the
record date for the determination of shareholders of the Fund entitled to notice
of and to vote at the Meeting. As of May 31, 1995, shares of the Fund were
issued and outstanding as follows:
<TABLE>
<CAPTION>
SERIES SHARES
----------------------------------- -----------
<S> <C>
MMP................................ 397,340,996
GSP................................ 149,858,831
TEP................................ 69,546,108
</TABLE>
ITEM 1. ELECTION OF BOARD OF TRUSTEES
At the Meeting, nine (9) trustees are to be elected to constitute the Board of
the Fund. All the nominees (except Messrs. Mathis and Timbers and Ms. Peterson)
were elected to the Board at a special meeting of shareholders, held on
[December 19, 1991]. Mr. Timbers was appointed to the Board on January 23, 1992
to fill a vacancy created by an expansion of the size of the Board. Mr. Mathis
was appointed to the Board on March 11, 1995 to fill a vacancy and Ms. Peterson
was appointed to the Board on June 15, 1995 to fill a vacancy created by an
expansion of the size of the Board to nine from eight trustees. Messrs. Mathis
and Timbers and Ms. Peterson are standing for election by the Fund's
shareholders for the first time at the Meeting.
It is intended that the proxies will be voted for the election of the nominees
described below. Each trustee so elected will serve as a trustee of the Fund
until the next meeting of shareholders, if any, called for the purpose of
electing trustees and until the election and qualification of a successor or
until such trustee sooner dies, resigns or is removed as provided in the
Agreement and
2
<PAGE> 7
Declaration of Trust of the Fund ("Declaration of Trust"). Since the Fund does
not hold annual meetings, trustees will hold office for an indeterminate period.
All the nominees listed below have consented to serve as trustees of the Fund,
if elected. In case any nominee shall be unable or shall fail to act as a
trustee by virtue of an unexpected occurrence, the proxies may be voted for such
other person(s) as shall be determined by the persons acting under the proxies
in their discretion.
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
- ----------------------------------------------------- -----------------
<S> <C>
David W. Belin (6/20/28)............................. 1989
Member, Belin Harris Lamson McCormick, P.C.,
Attorneys
Lewis A. Burnham (1/8/33)............................ 1989
Partner, Business Resources Group; formerly,
Executive Vice President, Anchor Glass Container
Corporation
Donald L. Dunaway (3/8/37)........................... 1989
Retired; formerly, Executive Vice President, A. O.
Smith Corporation
Robert B. Hoffman (12/11/36)......................... 1989
Senior Vice President and Chief Financial Officer,
Monsanto Company; formerly Vice President, FMC
Corporation; prior thereto, Director, Executive
Vice President and Chief Financial Officer, Staley
Continental, Inc.
Donald R. Jones (1/17/30)............................ 1989
Retired; Director, Motorola, Inc.; formerly,
Executive Vice President and Chief Financial
Officer, Motorola, Inc.
David B. Mathis* (4/13/38)........................... 1995
Chairman, Chief Executive Officer and Director,
Kemper Corporation; Director, Kemper Financial
Services, Inc. ("KFS"), Kemper Financial Companies,
Inc. ("KFC"), several other Kemper Corporation
subsidiaries and IMC Global Inc.
Shirley D. Peterson (9/3/41)......................... 1995
President, Hood College; formerly, partner, Steptoe
& Johnson (attorneys), January, 1993-December,
1994; prior thereto, Commissioner, Internal Revenue
Service, February, 1992-January, 1993; prior
thereto, Assistant Attorney General, U.S.
Department of Justice.
William P. Sommers (7/22/33)......................... 1989
President and Chief Executive Officer, SRI
International; formerly, Executive Vice President,
Iameter; prior thereto, Senior Vice President and
Director, Booz, Allen & Hamilton, Inc. (Retired);
Director, Rohr, Inc.; Director, Therapeutic
Discovery Corp.; Director, Litton Industries.
</TABLE>
3
<PAGE> 8
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
- ----------------------------------------------------- -----------------
<S> <C>
Stephen B. Timbers* (8/8/44)......................... 1992
President, Chief Operating Officer and Director,
Kemper Corporation; Chairman, Chief Executive
Officer, Chief Investment Officer and Director,
KFS; Director, KFC, several other Kemper
Corporation subsidiaries, Gillett Holdings, Inc.
and LTV Corporation.
</TABLE>
- ---------------
* Interested persons of the Fund as defined in the Investment Company Act of
1940 ("1940 Act") because of their positions with KFS, the investment manager
of the Fund.
All the nominees, except Messrs. Mathis and Timbers and Ms. Peterson, serve as
board members of 21 Kemper Funds. Mr. Mathis serves as a board member of 28
Kemper Funds, Mr. Timbers serves as a board member and president of 31 Kemper
Funds and Ms. Peterson serves as a board member of 18 Kemper Funds. Mr. Mathis
has been nominated to serve as a board member of 31 Kemper Funds and Ms.
Peterson has been nominated to serve as a board member of 21 Kemper Funds. A
"Kemper Fund" is an investment company for which KFS serves as investment
manager.
The Board of Trustees of the Fund has a nominating committee, the members of
which are Messrs. Burnham, Jones and Sommers. It proposed the nominees for
election by the shareholders; and the Board of Trustees, including the non-
interested trustees, concurred. The nominating committee met times during the
Fund's fiscal year ended April 30, 1995. Shareholders wishing to submit the name
of a candidate for consideration by the nominating committee should submit their
recommendations to the secretary of the Fund.
The Fund's audit committee is composed of Messrs. Dunaway, Hoffman and Jones.
The audit committee met four times during the Fund's fiscal year ended April 30,
1995. The audit committee of the Fund makes recommendations regarding the
selection of independent auditors for the Fund, confers with the independent
auditors regarding the Fund's financial statements, the results of audits and
related matters and performs such other tasks as the Board of Trustees of that
Fund assigns.
The Board of the Fund met nine times during the Fund's fiscal year ended April
30, 1995. Each then current trustee attended 75% or more of the respective
meetings of the Board and the committees held during that period.
The Fund pays trustees who are not interested persons of the Fund a monthly
retainer and an attendance fee for each Board meeting and committee meeting
attended, plus expense reimbursement. As reflected above, the trustees currently
serve as trustees of various investment companies for which KFS serves as
investment manager. Trustees or officers who are "interested persons" receive no
compensation from the Fund.
The table below shows, for each trustee entitled to receive compensation from
the Fund, the aggregate compensation paid or accrued by the Fund for its fiscal
4
<PAGE> 9
year ended April 30, 1995 and the total compensation that Kemper Funds paid to
each trustee during the calendar year 1994.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION KEMPER FUNDS PAID
NAME OF TRUSTEE PAID BY THE FUND TO TRUSTEES(2)
- ------------------------------- ---------------------- ------------------
<S> <C> <C>
David W. Belin(1).............. $112,200
Lewis A. Burham................ $ 90,110
Donald L. Dunaway(1)........... $115,400
Robert B. Hoffman.............. $ 87,400
Donald R. Jones................ $ 94,300
William P. Sommers............. $ 84,100
</TABLE>
- ---------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Fund. Deferred amounts accrue interest
monthly at a rate equal to the yield of Kemper Money Market Fund - Money
Market Portfolio.
(2) Includes compensation for service on the boards of 23 Kemper Funds with
fund portfolios (including two Kemper Funds no longer in existence).
Also includes amounts for new portfolios estimated as if they had existed at
the beginning of the year. Ms. Peterson was appointed to the Board on June
15, 1995 and, therefore, is not included in the above table.
FUND OFFICERS. Information about the executive officers of the Fund, with their
respective dates of birth and terms as Fund officers indicated, is set forth
below (other than information about Mr. Timbers, president of the Fund since
3/2/95, which is reflected above).
J. Patrick Beimford, Jr. (5/25/50), vice president of the Fund since 1/21/93, is
executive vice president and director of fixed income investments of KFS.
Philip J. Collora (11/15/45), vice president of the Fund since 11/28/89 and
secretary of the Fund since 3/2/95, is senior vice president and assistant
secretary of KFS.
Jerome L. Duffy (6/29/36), treasurer of the Fund since 9/7/89, is senior vice
president of KFS.
John E. Peters (11/4/47), vice president of the Fund since 1/14/94, is senior
executive vice president of KFS and president of KDI.
Frank J. Rachwalski, Jr. (3/26/45), vice president of the Fund since 11/28/89,
is senior vice president of KFS.
John W. Stuebe (1/7/49), vice president of the Fund since 1/23/92, is vice
president of KFS.
Elizabeth C. Werth (10/1/47), assistant secretary of the Fund since 3/17/90,
vice president and director of state registrations of KFS.
SHAREHOLDINGS
Listed below is the number of shares of the Fund owned beneficially by each
trustee as of May 31, 1995. Also shown is the number of shares owned
5
<PAGE> 10
beneficially by the trustees and officers as a group. In each case, the amounts
shown are less than 1% of the outstanding shares of such series of the Fund.
<TABLE>
<CAPTION>
TRUSTEES AND
OFFICERS
SERIES BELIN BURNHAM DUNAWAY HOFFMAN JONES MATHIS PETERSON SOMMERS TIMBERS AS A GROUP
- -------- ----- ------- ------- ------- ----- ------ -------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MMP..... 0 0 1,009 0 0 0 0 1,125 0
GSP..... 0 0 0 0 0 0 0 0 0
TEP..... 1,090 0 0 0 0 0 0 0 0
</TABLE>
As of May 31, 1995, no person is known to the Fund to own beneficially more than
five percent of the shares of any series of the Fund, except as indicated below:
<TABLE>
<CAPTION>
NUMBER
OF % OF
SERIES NAME AND ADDRESS SHARES SERIES
- ------------------------ ------------------------------ ----------- ------
<S> <C> <C> <C>
MMP..................... Stifel Nicolaus & Company Inc. 255,539,770 64.33
for the Exclusive Benefit of
Customers
500 N. Broadway
St. Louis, MO 63102
MMP..................... Sterling Trust 60,052,839 15.12
P. O. Box 21596
Waco, TX 76702
GSP..................... Stifel Nicolaus & Company 110,842,824 73.96
for the Exclusive Benefit of
Customers
500 N. Broadway
St. Louis, MO 63102
TEP..................... Stifel Nicolaus & Company 59,891,434 86.12
Inc. for the Exclusive Benefit
of Customers
500 N. Broadway
St. Louis, MO 63102
</TABLE>
ITEM 2. SELECTION OF INDEPENDENT AUDITORS
A majority of the members of the Board who are not "interested" persons of the
Fund has selected Ernst & Young LLP, independent auditors, to audit the books
and records of the Fund for the current fiscal year. This firm has served in
this capacity for the Fund since it was organized and has no direct or indirect
financial interest in the Fund except as independent auditors. The selection of
Ernst & Young LLP as independent auditors of the Fund is being submitted to the
shareholders for ratification. A representative of Ernst & Young LLP is expected
to be present at the Meeting and will be available to respond to any appropriate
questions raised at the Meeting and may make a statement.
BOARD OF TRUSTEES RECOMMENDATION
The Board recommends that shareholders vote FOR the ratification of the
selection of independent auditors.
6
<PAGE> 11
ITEM 3. NEW INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Kemper Financial Services, Inc. ("KFS") is the investment adviser and manager
for the Fund. The indirect parent of KFS, which is Kemper Corporation
("Kemper"), has entered into an Agreement and Plan of Merger dated as of May 15,
1995 (the "Merger Agreement"), with Zurich Insurance Company ("Zurich"),
Insurance Partners, L.P. ("IP"), Insurance Partners Offshore (Bermuda), L.P.
("IP Bermuda" and, together with IP, "Insurance Partners") and ZIP Acquisition
Corp. ("ZIP"), whereby ZIP will be merged with and into Kemper and Kemper will
continue as the surviving corporation (the "Kemper merger"). In connection with
the Kemper merger, Kemper has agreed to sell KFS to KFS Acquisition Corp. ("New
KFS"), a wholly-owned, indirect subsidiary of Zurich, by merging KFS into New
KFS, and with New KFS continuing as the surviving corporation (the "KFS Sale").
Upon consummation of the KFS Sale, it is anticipated that New KFS will change
its name to "Kemper Financial Services, Inc." The terms of the KFS Sale are set
forth in a separate Agreement and Plan of Merger among Kemper, KFS, KFC and New
KFS dated May 15, 1995 (the "KFS Merger Agreement"). It is currently
contemplated that the KFS Sale will occur immediately before or immediately
after the Kemper merger, although it is possible that the KFS Sale could be
deferred until a later date. (The Kemper merger and related KFS Sale are
hereinafter referred to together as the "Merger").
Consummation of the Merger would constitute an "assignment," as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"), of the Fund's
current investment management agreement with KFS. As required by the 1940 Act,
the current investment management agreement provides for its automatic
termination in the event of its assignment. In anticipation of the Merger, a new
investment management agreement between the Fund and KFS or its successor
("management agreement") is being proposed for approval by shareholders of the
Fund. A copy of the form of the new management agreement is attached hereto as
Exhibit A. THE NEW MANAGEMENT AGREEMENT IS ON THE SAME TERMS AS THE CURRENT
MANAGEMENT AGREEMENT.
BOARD OF TRUSTEES RECOMMENDATION
The Board met on May 5, 1995, May 31, 1995 and June 15, 1995 to consider the
Merger and its anticipated effects upon KFS and the investment management and
other services provided to the Fund by KFS and its affiliates. On June 15, 1995
the Board, including a majority of the trustees who are not parties to such
agreement or interested persons of any such party, voted to approve the new
management agreement and to recommend it to shareholders for their approval.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees Evaluation" near the end of this
Item 3.
The Board recommends that shareholders vote FOR approval of the new management
agreement.
7
<PAGE> 12
INVESTMENT MANAGEMENT AGREEMENT
The current and new management agreement (sometimes collectively referred to as
the "management agreement") each provides that the Fund's investment manager
will act as investment adviser, manage the Fund's investments, administer its
business affairs, furnish offices, necessary facilities and equipment, provide
clerical, bookkeeping and administrative services and permit any of its officers
or employees to serve without compensation as trustees or officers of the Fund
if duly elected to such positions. Under the management agreement, the Fund
agrees to assume and pay the charges and expenses of its operations including,
by way of example, the compensation of the trustees other than those affiliated
with the investment manager, charges and expenses of independent auditors, of
legal counsel, of any transfer or dividend disbursing agent, of any registrar of
the Fund and of the custodian (including fees for safekeeping of securities),
costs of calculating net asset value, all costs of acquiring and disposing of
portfolio securities, interest, if any, on obligations incurred by the Fund,
costs of share certificates, membership dues in the Investment Company Institute
or any similar organization, reports and notices to shareholders, other like
miscellaneous expenses and all taxes and fees to federal, state or other
governmental agencies.
For the services and facilities furnished, the Fund pays KFS an investment
management fee, payable monthly, at the annual rate shown below. The investment
management fee and the expense limitation is computed based on average daily net
assets of all series of the Fund in the aggregate and allocated among the series
based upon the relative net assets of each series. Exhibit D reflects the
management fees paid by the Fund to KFS for the fiscal year ended April 30,
1995.
<TABLE>
<CAPTION>
APPLICABLE ASSETS MANAGEMENT FEE
---------------------------------- --------------
<S> <C>
$0 - $500 million................. .22 of 1%
$500 million - $1 billion......... .20 of 1%
$1 billion - $2 billion........... .175 of 1%
$2 billion - $3 billion........... .16 of 1%
$3 billion and over............... .15 of 1%
</TABLE>
The management agreement provides that the Fund's investment manager will
reimburse the Fund should the operating expenses of the Fund, including the
investment management fee, but excluding taxes, interest, distribution fees,
extraordinary expenses and brokerage commissions or transaction costs, and any
other properly excludable expenses, exceed on an annual basis 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. KFS has agreed to temporarily waive fees and absorb expenses in
addition to the limitation described above. The amounts of waived fees and
absorbed expenses for the fiscal year ended April 30, 1995 are included in
Exhibit D.
8
<PAGE> 13
The management agreement provides that the Fund's investment manager shall not
be liable for any error of judgment or of law, or for any loss suffered by the
Fund in connection with the matters to which the management agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Fund's investment manager in the performance of its
obligations and duties or by reason of its reckless disregard of its obligations
and duties under the management agreement.
The management agreement may be terminated for the Fund or series thereof
without penalty upon sixty (60) days written notice by either party, or by a
majority vote of the outstanding shares of the Fund or series thereof, and
automatically terminates in the event of its assignment.
The new management agreement for the Fund will be dated as of the date of the
consummation of the Kemper merger. The Kemper merger is expected to occur in the
fourth quarter of 1995, but in no event later than February 28, 1996. The new
management agreement will continue in effect for an initial term ending on the
date to which the current management agreement had previously been continued
prior to the Kemper merger, and may continue thereafter from year to year if
specifically approved at least annually by vote of "a majority of the
outstanding voting securities" of the Fund, as defined under the 1940 Act, or by
the Board, and, in either event, the vote of a majority of the trustees who are
not parties to the agreement or interested persons of any such party, cast in
person at a meeting called for such purpose.
KFS has acted as investment adviser and manager for the Fund since it commenced
public offering of its shares as shown below. Also shown is the date of the
current management agreement, the date when the current management agreement was
last approved by the trustees and the shareholders of the Fund and the date to
which the current management agreement continues. The purpose of the last
submission to shareholders was to continue the current management agreement.
<TABLE>
<CAPTION>
COMMENCEMENT APPROVAL OF CURRENT CURRENT
OF DATE OF AGREEMENT BY AGREEMENT
INVESTMENT CURRENT -------------------------- CONTINUED BY
SERIES OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS(A) TRUSTEES TO
- ---------- ------------ --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
MMP....... 12/03/90 09/06/90 09/09/94 12/19/91 12/01/95
GSP....... 12/03/90 09/06/90 09/09/94 12/19/91 12/01/95
TEP....... 12/03/90 09/06/90 09/09/94 12/19/91 12/01/95
</TABLE>
- ---------------
(a) On September 9, 1994, the Board approved a new investment management
agreement with KFS in anticipation of the termination of the current
agreement because of a proposed merger involving Kemper and Conseco, Inc.
(the "Conseco/Kemper Merger"). As with the Merger, consummation of the
Conseco/Kemper Merger would have constituted an "assignment" and, therefore,
a termination of the management agreement. In anticipation of the
Conseco/Kemper Merger and in order to assure that KFS could continue to
serve as investment manager to the Fund, a new agreement was approved by the
Board and submitted to shareholders for approval. By agreement of Kemper and
Conseco, Inc., the Conseco/Kemper Merger did not occur and, therefore, the
new agreement was not voted upon by shareholders.
9
<PAGE> 14
INFORMATION CONCERNING ZURICH AND THE MERGER
The following information concerning Zurich and the Merger has been provided to
the Fund by Zurich.
Founded in 1872, Zurich is a multinational, public corporation organized under
the laws of Switzerland. Its home office is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of the Zurich Insurance
Group. Zurich and the Zurich Insurance Group provide an extensive range of
insurance products and services, while having branch offices and subsidiaries in
more than 40 countries throughout the world. Zurich Insurance Group is
particularly strong in the insurance of international companies and
organizations. Over the past few years, Zurich's global presence, particularly
in the United States, has been strengthened by means of selective acquisitions.
IP and IP Bermuda are parallel investment partnerships established to
participate jointly in acquisitions, recapitalizations, demutualizations and
other structured transactions in the insurance industry. (IP and IP Bermuda are
together referred to as "Insurance Partners"). Insurance Partners was formed by
Centre Reinsurance Holdings Limited (a subsidiary of Zurich), Keystone, Inc.
(formerly the Robert M. Bass Group, Inc.) and The Chase Manhattan Corporation.
IP is located at 201 Main Street, Fort Worth, TX 76102 and IP Bermuda is located
at 41 Cedar Avenue, Hamilton HM-EX, Bermuda. ZIP is a newly-formed
majority-owned subsidiary of Zurich. ZIP is approximately 80% owned by Zurich
Holding Company of America, Inc. (which, in turn, is a wholly-owned subsidiary
of Zurich) and 13.274% and 6.726% owned by IP and IP Bermuda, respectively. ZIP
is located at 1400 American Lane, Schaumburg, IL 60196. New KFS is a
newly-formed wholly-owned subsidiary of Zurich Holding Company of America, Inc.
Prior to consummation of the Merger, New KFS will be registered as an investment
adviser under the Investment Advisers Act of 1940. New KFS, a Delaware
corporation, and Zurich Holding Company of America, Inc., a Delaware
corporation, are both located at 1400 American Lane, Schaumburg, IL 60196.
Under the Merger Agreement, ZIP will merge with and into Kemper, with Kemper as
the surviving corporation. Each share of Kemper common stock will be converted
in the Kemper merger into the right to receive $49.50 cash, for an aggregate
acquisition price of approximately $2.1 billion. The closing of the Kemper
merger will take place on the third business day after all the closing
conditions are satisfied. It is expected that the Kemper merger will close in
the fourth quarter of 1995. However, ZIP may elect to delay the closing of the
Kemper merger to a later date (not later than January 4, 1996). It is currently
contemplated that contemporaneously with the Kemper merger closing (either
immediately before or immediately after) Kemper will sell KFS to Zurich by
merging KFS with and into New KFS. It is possible, however, that the Kemper
merger could be consummated, but the KFS Sale could be deferred until a later
date (not later than January 4, 1996). Immediately prior to the KFS Sale, KFS
will cause those of its wholly owned subsidiaries designated by Zurich to be
merged with and into, direct or indirect, wholly-owned subsidiaries of New KFS.
Upon consummation of the KFS Sale, it is anticipated that New KFS will change
its name to "Kemper Financial Services, Inc." The consideration for the KFS
10
<PAGE> 15
Sale is $900 million although, at the election of Zurich, it may be increased to
$1 billion.
It is further contemplated that prior to the Merger: (1) an employee stock
ownership plan will acquire from KFC approximately 55% of the voting common
stock of a new corporation ("Newco") formed to acquire Kemper's securities
brokerage segment, principally Kemper Securities, Inc. ("KSI"); (2) non-voting
common stock representing an approximately 1% equity interest in Newco will be
distributed to the management of KSI; and (3) the balance of Newco's voting
common stock will be distributed to the holders of Kemper common stock (the "KSI
ESOP Sale").
It is further contemplated that prior to the Merger: (1) KFS will attempt to
sell State Street Boston Corporation stock owned by KFS (estimated value of $97
million as of , 1995) and that the net cash proceeds from such
sale will be transferred from KFS to Kemper (if, upon consummation of the
Merger, KFS has not sold all such State Street Boston Corporation stock, KFS
will transfer any remaining such stock to Kemper); (2) KFS will transfer $50
million in cash to Kemper; (3) KFS will transfer to Kemper the proceeds of its
sale of Supervised Services Company (approximately $23 million); and (4) at the
written request of ZIP, KFS or any of its subsidiaries will dividend or
otherwise transfer cash to Kemper in such amounts as ZIP may reasonably request.
To confirm and clarify certain contractual relationships between Kemper and
Lumbermens Mutual Casualty Company ("Lumbermens") prior to, as a result of and
following the Merger, Lumbermens, Zurich, Insurance Partners, ZIP, Kemper and
KFS entered into a letter agreement dated May 15, 1995 (the "Lumbermens
Agreement"). The Lumbermens Agreement, among other things, (1) permits the
continued use of the "Kemper" name by Kemper and KFS (or its successor) and (2)
obligates New KFS to reimburse Lumbermens for certain amounts that may be due to
Lumbermens by Kemper, if Kemper has not paid such amounts. As of March 31, 1995,
the total potential liability was $35.2 million.
The Lumbermens Agreement provides, to the extent permitted by law, that
Lumbermens intends to continue to engage KFS (or its successor), or its
subsidiaries, for at least three years to provide investment management services
for not less than 80% of the investment assets of Lumbermens (excluding benefit
plan assets held in trust) managed by KFS or its subsidiaries as of May 15,
1995. In connection therewith, the Lumbermens Agreement permits Lumbermens, and
Lumbermens intends, contemporaneously with the KFS Sale to invest in New KFS an
aggregate amount of up to $100 million or such lesser amount as is necessary to
purchase (1) either 9.9% of the shares of common stock of New KFS or an amount
of convertible preferred stock of New KFS that is convertible into 9.9% of the
shares of New KFS and (2) pro rata with Zurich, all other equity and debt
securities purchased from New KFS by Zurich. In the event of such investment,
Lumbermens will receive representation on the Board of Directors of New KFS that
is proportionate to Lumbermens' equity interest in New KFS; but in any event, at
least one individual designated by Lumbermens will be elected to the Board of
Directors of New KFS. It is currently contemplated that Lumbermens would
designate Mr. David B. Mathis for election to the Board of Directors
11
<PAGE> 16
of New KFS (see "Other Information -- KFS"). The address of Lumbermens is: One
Kemper Drive, Long Grove, Illinois 60049. If the percentage of Lumbermens'
investment assets managed by New KFS drops below 50% of Lumbermens' investment
assets (excluding benefit plan assets held in trust), then Zurich or New KFS may
purchase Lumbermens investment in New KFS at fair market value. On the seventh
anniversary of the closing of the KFS Sale, Lumbermens will have the right to
demand that all its shares of New KFS be registered under the Securities Act of
1933.
Zurich has informed the Fund that as of May 31, 1995, no stockholder of Zurich,
either individually or as a "group" (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended), is known to beneficially own more
than 10% of the outstanding shares of Zurich's voting securities. KFS informed
the Fund that, as of May 31, 1995, KFS shared power to vote and dispose of
shares of Zurich (approximately % of the shares outstanding), which
were held by various non-investment company clients of KFS.
The common stockholders of Kemper will be voting on the Kemper merger. The
Merger is subject to various conditions such as governmental and insurance
regulatory approvals and filings and consummation of the KSI ESOP Sale. Neither
the Kemper merger nor the KFS Sale is subject to financing, although each may
involve financing. Zurich has guaranteed the obligations of ZIP and Insurance
Partners to consummate the Kemper merger and has guaranteed the obligations of
New KFS to consummate the KFS Sale.
It is a condition to the closing of the Merger that all directors and officers
of Kemper and its subsidiaries (including KFS), whose resignations have been
requested by ZIP, not less than ten days prior to the closing, shall have
resigned or been removed from office, effective as of the closing. No such
resignations have been requested nor are currently contemplated for KFS and its
subsidiaries.
The Merger Agreement also provides as a condition to the closing of the Merger
that the shareholders of registered investment companies for which Kemper or any
subsidiary acts as investment adviser or sub-adviser (the "KFS Advised Funds")
representing at least 90% of the total net assets of the KFS Advised Funds as of
April 30, 1995 shall have approved the new management agreements (the "90%
condition"). At that date, net assets of the KFS Advised Funds totalled
approximately $ billion. If, for example, a "majority" (as defined under
"Miscellaneous") of the shares of each of enough KFS Advised Funds to total at
least $ billion (90% of $ billion) were voted to approve new management
agreements, then the 90% condition would be satisfied. If the shareholders of
the Fund do not approve the new management agreement, Kemper, Zurich and
Insurance Partners nevertheless intend to proceed with the Merger (assuming all
conditions precedent have been satisfied or waived, including the 90%
condition). In that event, the Board would take such action as it deemed to be
in the best interests of the shareholders, including, if necessary, seeking
exemptive relief from the SEC so that KFS (or its successor) could provide
investment management services to the Fund on an interim basis. If the Merger is
not consummated for any reason, then the current management agreement with the
Fund will continue.
12
<PAGE> 17
BOARD OF TRUSTEES EVALUATION
On April 10, 1995, the Board was informed that Kemper had entered into an
agreement in principle with an investor group led by Zurich pursuant to which
Kemper would be acquired by the investor group in a merger transaction and KFS
would be sold. Thereafter, the Board was given Zurich financial reports and
other information regarding Zurich. In addition, counsel to the Fund and the
independent trustees prepared and distributed an analysis of the Board's
fiduciary obligations. At a special meeting on May 5, 1995, the trustees
discussed the initial information provided about Zurich and reviewed their
fiduciary obligations. Zurich senior management personnel, who were present by
invitation, presented a review of matters including Zurich's history, strategy
and general plans. There was extended discussion of, and questioning about,
Zurich's plans for KFS and the Fund, some of which were to be addressed in
definitive merger documents (which had not yet been executed). The Board agreed
at that time to hold another special meeting for further consideration of the
Merger and its effect on the Fund. Prior to that meeting, and from time to time
thereafter, the Board received a variety of materials concerning Zurich and the
Merger. The definitive merger documents were signed on May 15, 1995 and the
special Board meeting was held on May 31, 1995. There was further discussion of,
and questioning about, the terms of the Merger and Zurich's plans for New KFS
and the Fund, including the financial aspects of the Merger and proforma
financial statements of New KFS. As a result of its investigation and
consideration of the Merger and the new management agreement, at its meeting on
June 15, 1995, the Board voted to approve the new management agreement and to
recommend it to the shareholders of the Fund for their approval.
During its deliberations, the Board used outside assistance in its analysis of
financial and other aspects of the Merger to help evaluate the potential effects
upon KFS and the Fund. Throughout the review process the independent trustees of
the Board had the assistance of legal counsel.
The Board obtained from KFS and Zurich information regarding the respective
organizations, the Merger, and the future plans of the parties. Included in the
information furnished to and discussed with the Board were financial statements
and other representations of financial condition of Zurich and certain of its
subsidiaries, independent reports and analyses regarding Zurich and pro forma
financial statements of New KFS giving effect to the Merger. The New KFS pro
forma financial statements reflected anticipated borrowings by New KFS of $650
million, the sale of State Street Boston Corporation stock holdings and transfer
of the proceeds thereof, the $50 million dividend to Kemper and the sale of
Supervised Services Company and transfer of the proceeds thereof.
In connection with their deliberations, the Board obtained certain assurances
from Zurich, including the following:
- - Zurich looks upon New KFS as a core business in a core strategic market and
expects it to be an important part of Zurich's global asset management
strategy. With that focus, Zurich will devote to New KFS and its affairs all
attention and
13
<PAGE> 18
resources that are necessary to provide for the Fund top quality investment
management, shareholder, administrative and product distribution services.
- - The Merger will not result in any change in the Fund's investment objectives
or policies.
- - The Merger is not expected to result in any adverse change in the investment
management or operations of the Fund, or the investment personnel managing the
Fund; Zurich neither plans nor proposes to make any material change in the
composition of senior management or personnel of KFS, except to fill certain
open positions; and Zurich neither plans nor proposes to make any adverse
change in the manner in which investment advisory services are rendered to the
Fund.
- - Zurich is committed to the continuance, without interruption, of services of
the type and quality currently provided by KFS and its subsidiaries, or
superior thereto.
- - Zurich plans to maintain or enhance the KFS facilities and organization.
- - The KFS senior management and the Board will be involved in decisions
materially affecting the KFS organization as it relates to the Fund.
- - In order to retain and attract key personnel, Zurich intends for New KFS to
maintain overall compensation and performance incentive policies and practices
at market levels or better.
Zurich, Kemper and KFS assured the Board that they intend to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of its affiliated persons to
receive any amount or benefit in connection with a change in control of the
investment adviser so long as two conditions are met. First, for a period of
three years after the transaction, at least 75% of the board members of the
investment company must not be interested persons of such investment adviser.
The Board of the Fund presently consists of nine trustees, two of whom, Messrs.
David B. Mathis and Stephen B. Timbers, are interested persons of KFS.
Accordingly, the current composition of the Board of the Fund would be in
compliance with this provision of Section 15(f)*. Second, an "unfair burden"
must not be imposed upon the investment company as a result of such transaction
or any express or implied terms, conditions or understandings applicable
thereto. The term "unfair burden" is defined in Section 15(f) to include any
arrangement during the two-year period after the transaction whereby the
investment adviser, or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the purchase
or sale of securities or other property to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal
- ---------------
* After consummation of the Merger and subject to compliance with Section 15(f),
it is expected that a senior executive of Zurich will be proposed to be
nominated to the Board.
14
<PAGE> 19
underwriter for such investment company). Zurich, Kemper and KFS are not aware
of any express or implied term, condition, arrangement or understanding that
would impose an "unfair burden" on the Fund as a result of the Merger. Zurich,
Kemper and KFS have agreed that they, and their affiliates, will take no action
that would have the effect of imposing an "unfair burden" on the Fund as a
result of the Merger. Zurich and Kemper have undertaken to pay the costs of
preparing and distributing proxy materials to and of holding the meetings of the
Fund's shareholders as well as other fees and expenses in connection with the
Merger, including the fees and expenses of legal counsel to the Fund and the
independent trustees and for other outside assistance to help analyze the Merger
from a financial perspective.
In connection with the Board's approval of the new management agreement, the
Board considered that the terms of the Merger Agreement and the KFS Merger
Agreement do not require any change in the Fund's investment objective or
policies, the investment management or operation of the Fund, or the investment
personnel managing the Fund. If, after the Merger, changes in New KFS are
proposed that might materially affect its services to the Fund, the Board will
consider the effect of those changes and take such action as it deems advisable
under the circumstances.
In evaluating the new management agreement, the Board took into account that the
new management agreement for the Fund, including the terms relating to the
services to be provided and the fees and expenses payable by the Fund, is on the
same terms as the current management agreement. The Board noted that, in
previously approving the continuation of the current management agreements, the
Board had considered a number of factors, including the nature and quality of
services provided by KFS; investment performance, both of the Fund itself and
relative to that of competitive investment companies; investment management fees
and expense ratios of the Fund and competitive investment companies; KFS
profitability from managing the Fund; fall-out benefits to KFS from its
relationship to the Fund, including revenues derived from services provided to
the Fund by affiliates of KFS; and the potential benefits to KFS and to the Fund
and their shareholders of receiving research services from broker/dealer firms
in connection with the allocation of portfolio transactions to such firms.
The Board discussed the Merger, the financial condition of Zurich and the pro
forma financial statements of New KFS with the senior management of KFS and
Zurich and among themselves. Zurich senior management personnel and
representatives advised the Board that Zurich expects the operating cash flows
from New KFS to be more than sufficient to service debt and pay for operating
and other expenses. The Board also considered that Zurich is a large,
well-established company with substantial resources and, as noted above, has
undertaken to devote such resources as are necessary to provide the Fund with
top quality services.
As a result of its investigation and consideration of the Merger and the new
management agreement, at its meeting on June 15, 1995, the Board voted to
approve the new management agreement and to recommend it to the shareholders of
the Fund for their approval.
15
<PAGE> 20
The Board recommends that shareholders vote FOR approval of the new management
agreement.
ITEM 4. NEW RULE 12B-1 DISTRIBUTION PLAN
INTRODUCTION
Rule 12b-1 under the 1940 Act provides, among other things, that an investment
company (mutual fund) may bear expenses of distributing its shares only pursuant
to a plan (a "Rule 12b-1 Plan") adopted in accordance with Rule 12b-1. Pursuant
to an administration, shareholder services and distribution agreement
("distribution agreement"), KDI serves as distributor, administrator and
principal underwriter to the Fund to provide information and services for
existing and potential shareholders. Since the distribution agreement provides
for fees that are used by KDI to pay for distribution and administration
services, the agreement and the plan contained therein are approved and reviewed
in accordance with Rule 12b-1.
Consummation of the Merger may constitute an "assignment," as that term is
defined in the 1940 Act, of the Fund's Rule 12b-1 Plan. As required by the 1940
Act, the Fund's Rule 12b-1 Plan provides for its automatic termination in the
event of its assignment. In anticipation of the Merger, a new Rule 12b-1 Plan is
being submitted for approval of the Fund's shareholders. THE NEW RULE 12B-1 PLAN
IS ON THE SAME TERMS AS THE FUND'S CURRENT RULE 12B-1 PLAN. A form of the new
Rule 12b-1 Plan for the Fund is attached hereto as Exhibit B. NO CHANGE IN FEES
IS BEING PROPOSED.
On June 15, 1995, the Board, including a majority of the "non-interested"
trustees, voted to approve the new Rule 12b-1 Plan for the Fund, and directed
that it be submitted to shareholders of the Fund at the Meeting, along with a
recommendation that shareholders approve the Rule 12b-1 Plan.
If the new Rule 12b-1 Plan is approved by a series of the Fund, it will become
effective for that series and will replace the current Rule 12b-1 Plan upon
consummation of the Merger. If the shareholders of a series do not approve the
new Rule 12b-1 Plan, the Board of the Fund would consider appropriate action.
DESCRIPTION OF THE NEW RULE 12B-1 PLAN
As noted above, a form of the new Rule 12b-1 Plan is attached as Exhibit B and
this summary is qualified in its entirety by reference to Exhibit B. THE TERMS
OF THE NEW RULE 12B-1 PLAN DESCRIBED BELOW ARE THE SAME AS IN THE CURRENT RULE
12B-1 PLAN FOR THE FUND.
Under the Fund's new Rule 12b-1 Plan, KDI shall appoint various financial
services firms, such as broker-dealers or banks, to provide cash management
services for their customers or clients through the Fund. The firms are to
provide such office space and equipment, telephone facilities, personnel and
literature distribution as is necessary or appropriate for providing information
and services to the firms' clients. For its services under the distribution
agreement, KDI receives a fee, payable monthly, at the annual rate of .60 of 1%
average daily net
16
<PAGE> 21
assets of MMP and GSP and .50 of 1% of average daily net assets of TEP. The fees
are accrued daily as an expense of the Fund.
Before February 1, 1995, KFS served as the Fund's principal underwriter. On
February 1, 1995, KFS assigned and transferred to KDI, and KDI assumed, all of
the rights, interests, liabilities, duties and obligations of KFS under the
distribution agreement with the Fund (which agreement also constitutes the
Fund's Rule 12b-1 Plan). Such assignment and assumption did not constitute an
"assignment" under the 1940 Act, since there was no change of control because
KDI is a wholly-owned subsidiary of KFS.
As principal underwriter for the Fund, KDI acts as agent of the Fund in the sale
of its shares. KDI pays all its expenses under the distribution agreement
including, without limitation, services fees to firms. The Fund pays the cost
for the prospectus and shareholder reports to be set in type and printed for
existing shareholders, and KDI pays for the printing and distribution of copies
thereof used in connection with the offering of shares to prospective investors.
KDI also pays for supplementary sales literature and advertising costs.
KDI has related services agreements with various broker-dealer firms to provide
cash management and other services for Fund shareholders. KDI also has services
agreements with banking firms to provide such services, except for certain
underwriting or distribution services which the banks may be prohibited from
providing under the Glass-Steagall Act, for their clients who wish to invest in
the Fund. If the Glass-Steagall Act should prevent banking firms from acting in
any capacity or providing any of the described services, management will
consider what action, if any, is appropriate. Management does not believe that
termination of a relationship with a bank would result in any material adverse
consequences to the Fund. 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. KDI normally pays such firms at a
maximum annual rate of .60 of 1% of average daily net assets of those accounts
in MMP and GSP that they maintain and service and .50 of 1% of average daily net
assets of those accounts of TEP that they maintain and service. KDI may in its
discretion pay certain firms additional amounts. KDI may elect to keep a portion
of the total distribution fee to compensate itself for functions performed for
the Fund or to pay for sales materials or other promotional activities.
The table below shows, for each series, the date the 12b-1 Plan was adopted, the
date of last amendment (if any), the date last approved by the trustees and the
date to which it continues.
<TABLE>
<CAPTION>
SERIES DATE ADOPTED APPROVAL BY TRUSTEES DATE CONTINUED TO
- -------------------- -------------- -------------------- -----------------
<S> <C> <C> <C>
MMP................. 9/9/94(a)(b)
GSP................. 9/9/94(a)(b)
TEP................. 9/9/94(a)(b)
</TABLE>
- ---------------
(a) Trustee approval of continuation of Rule 12b-1 Plan with KFS. Assignment of
Rule 12b-1 Plan from KFS to KDI was approved by trustees on December 8,
1994.
17
<PAGE> 22
(b) On September 9, 1994, the Board approved a new Rule 12b-1 Plan with KFS in
anticipation of the termination of the current Rule 12b-1 Plan because of a
proposed merger involving Kemper and Conseco, Inc. (the "Conseco/Kemper
Merger"). As with the Merger, consummation of the Conseco/Kemper Merger
would have constituted an "assignment" and, therefore, a termination of the
Rule 12b-1 Plan. In anticipation of the Conseco/Kemper Merger a new 12b-1
Plan was approved by the Board and submitted to shareholders for approval.
By agreement of Kemper and Conseco, Inc., the Conseco/Kemper Merger did not
occur and, therefore, the new 12b-1 Plan was not voted upon by the
shareholders.
Since the fees payable to KDI under the distribution agreement are based upon
percentages of the average daily net assets as provided above and not upon the
actual expenditures of KDI, the expenses of KDI, which may include overhead
expense, may be more or less than the fees received by it under the distribution
agreement. If the distribution agreement is terminated in accordance with its
terms, the obligation of the Fund to make payments to KDI pursuant to the
distribution agreement will cease and the Fund will not be required to make any
payments past the termination date. Thus, there is no legal obligation for the
Fund to pay any expenses incurred by KDI in excess of its fees under the
distribution agreement, if for any reason the distribution agreement is
terminated in accordance with its terms. Future fees under the distribution
agreement may or may not be sufficient to reimburse KDI for its cumulative
expenses incurred. Shown below are the amounts paid by each series to KFS (and
KDI as its successor) under the distribution agreement.
<TABLE>
<CAPTION>
SERIES FISCAL YEAR END 12B-1 FEES PAID BY FUND
- ---------------------------------- --------------- -----------------------
<S> <C> <C>
MMP............................... 04/30/95 $
GSP............................... 04/30/95 $
TEP............................... 04/30/95 $
</TABLE>
The new Rule 12b-1 Plan will continue in effect for an initial term ending on
the date to which the current Rule 12b-1 Plan had previously been continued
prior to the Kemper merger and may continue thereafter from year to year for a
series if specifically approved at least annually by vote of "a majority of the
outstanding voting securities" of that series, as defined under the 1940 Act, or
by the Board, including, in either event, the vote of a majority of the
"non-interested" trustees, cast in person at a meeting called for such purpose.
Pursuant to the new Rule 12b-1 Plan, KDI will prepare reports to the Board of
the Fund on a quarterly basis showing the amounts paid to the various firms and
such other information as from time to time the Board may reasonably request.
In approving the new Rule 12b-1 Plan, the Board determined, as with the current
Rule 12b-1 Plan, that there is a reasonable likelihood that the new Rule 12b-1
Plan would benefit the Fund and its shareholders. In doing so, the Board
considered several factors, including that the new Rule 12b-1 Plan would (i)
enable investors to continue to receive cash management and other services from
the financial services firm through which the investor purchased shares of the
Fund and to attract new investors and assets to the Fund to the benefit of the
Fund and its shareholders; (ii) facilitate distribution of the Fund's shares;
18
<PAGE> 23
(iii) help maintain the competitive position of the Fund; and (iv) permit
possible economies of scale through increased Fund size.
BOARD OF TRUSTEES RECOMMENDATION
As a result of its consideration of the foregoing factors, the Board voted to
approve the new Rule 12b-1 Plan and to submit it to the shareholders for their
approval.
The Board recommends that shareholders vote FOR approval of the new Rule 12b-1
Plan.
OTHER INFORMATION
KFS
KFS is a wholly owned subsidiary of Kemper Financial Companies, Inc., ("KFC"), a
financial services holding company. Kemper, an insurance and financial services
holding company, owns more than 99% of the voting securities of KFC. The address
of KFS is 120 South LaSalle Street, Chicago, Illinois 60603. The address of KFC
and Kemper is One Kemper Drive, Long Grove, Illinois 60049.
Since March 31, 1994, no trustee or nominee for election as a trustee of the
Fund purchased or sold securities, or as of May 31, 1995, beneficially owned in
the aggregate, more than 1% of the outstanding securities of KFC, Kemper or
Zurich. As of May 31, 1995, none of the non-interested trustees, or
non-interested nominees, beneficially owned any securities of KFC, Kemper or
Zurich.
The investment companies to which KFS renders investment management services,
and the related management fees, are identified in Exhibit C.
The names, addresses and principal occupations of the principal executive
officer and the directors of KFS are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ------------------------------ ------------------------------------
<S> <C>
James R. Boris, Director Chairman and Chief Executive
77 West Wacker Drive Officer, Kemper Securities, Inc. and
Chicago, Illinois 60601 Executive Vice President, Kemper
David B. Mathis, Director Chairman and Chief Executive
One Kemper Drive Officer, Kemper
Long Grove, Illinois 60049
John E. Neal, Director President and Chief Operating
120 South LaSalle Street Officer, KFS
Chicago, Illinois 60603
John E. Peters, Director Senior Executive Vice President, KFS
120 South LaSalle Street
Chicago, Illinois 60603
</TABLE>
19
<PAGE> 24
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ------------------------------ ------------------------------------
<S> <C>
Stephen B. Timbers, Chairman, President and Chief Operating
Chief Executive Officer and Officer, Kemper; Chairman, Chief
Director Executive Officer and Chief
120 South LaSalle Street Investment Officer, KFS
Chicago, Illinois 60603
</TABLE>
Upon consummation of the Merger, it is expected that Messrs. Mathis, Neal,
Peters and Timbers and one or more senior executive officers of Zurich will
become directors of New KFS.
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, as custodian, and
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02210, as sub-custodian, have custody of all securities and cash of the Fund.
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 Fund's transfer agent and dividend-paying agent. Prior to February 1, 1995,
IFTC was owned equally by KFS and DST Systems, Inc., a company that is not
affiliated with KFS. On February 1, 1995, KFS and DST Systems, Inc. sold IFTC to
State Street Boston Corporation. Pursuant to a services agreement with IFTC,
Kemper Service Company ("KSVC"), an affiliate of KFS, serves as "Shareholder
Service Agent."
IFTC receives an annual fee as custodian for the Fund, payable monthly, on a
graduated basis ranging from $.40 to $.05 per $1,000 of average monthly net
assets of the Fund plus certain transaction charges and out-of-pocket expense
reimbursement. (The effective custodian fee rate is based upon the average net
assets of all Kemper Mutual Funds of the money market type for which IFTC serves
as custodian.) IFTC receives as transfer agent, and pays to KSVC annual account
fees of a maximum of $13 plus out-of-pocket expense reimbursement.
For the fiscal year ended April 30, 1995, the Fund incurred custodian and
transfer agent fees to IFTC and IFTC remitted shareholder service fees to KSVC
as set forth in Exhibit D. It is anticipated that KSVC (or its successor) will
continue to provide transfer agent services after consummation of the Merger.
ALLOCATION OF PORTFOLIO TRANSACTIONS. KFS is the investment manager for the Fund
and KFS and its affiliates also furnish investment management services to other
clients including the KFS Advised Funds, Kemper 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.
20
<PAGE> 25
The above mentioned factors may have a detrimental effect on the quantities or
prices of securities available to the Fund. On the other hand, the ability of
the Fund to participate in volume transactions may produce better execution for
the Fund in some cases. The Board of the Fund believes that the benefits of KFS'
organization outweigh any limitations that may arise from simultaneous
transactions.
KFS, in effecting purchases and sales of portfolio securities for the account of
the Fund, implements the Fund's policy of seeking best execution of orders,
which includes best net prices. Consistent with this policy, orders for
portfolio transactions are placed with broker-dealer firms giving consideration
to the quality, quantity and nature of each firm's professional services which
include execution, 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 statistical and other research information is only
supplementary to research efforts of KFS and still must be analyzed and reviewed
by its staff, the receipt of research information is not expected to materially
reduce its expenses. In selecting among firms believed to meet the criteria for
handling a particular transaction, KFS may give consideration to those firms
that provide market, statistical and other research information to the Fund and
KFS. KFS is not authorized to pay higher commissions or in the case of principal
trades, higher prices, to firms that provide such services. The Fund may
purchase instruments issued by banks that are receiving service payments or
commissions; however, no preferences will be given in making such portfolio
purchases. Money market instruments are normally purchased in principal
transactions directly from the issuer or from an underwriter or market maker.
There are normally no brokerage commissions paid for such purchases. Purchases
from underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and ask prices.
The Fund did not pay any brokerage commissions during its fiscal year ended
April 30, 1995.
MISCELLANEOUS
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by Kemper and Zurich, including any additional
solicitation made by letter, telephone or telegraph. In addition to solicitation
by mail, certain officers and representatives of the Fund, officers and
employees of KFS and certain financial services firms and their representatives,
who will receive no extra compensation for their services, may solicit proxies
by telephone, telegram or personally. In addition, Kemper and Zurich may retain
a firm to solicit proxies on behalf of the Board and the boards of the other KFS
Advised Funds, the fee for which will be borne by Kemper and Zurich. A COPY OF
YOUR FUND'S ANNUAL REPORT IS AVAILABLE WITHOUT CHARGE UPON REQUEST BY WRITING TO
THE FUND, 120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603 OR BY CALLING
1-800-231-8568.
21
<PAGE> 26
PROPOSALS OF SHAREHOLDERS
As a Massachusetts business trust, the Fund is not required to hold annual
shareholder meetings, but it will hold special meetings as required or deemed
desirable. Since the Fund does not hold regular meetings of shareholders, the
anticipated date of the next special shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy solicitation
material for a special shareholder meeting must be received by the Fund no later
than four months prior to the date when proxy statements are mailed to
shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any matters that will be presented for action at the
Meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote the shares as to any such other
matters in accordance with their best judgment in the interest of the Fund.
VOTING, QUORUM
Each share of the Fund is entitled to one vote on each matter submitted to a
vote of the shareholders at the Meeting; no shares have cumulative voting
rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR the election of the persons who have been nominated as trustees for the Fund
and FOR Items 2, 3 and 4. Shareholders who execute proxies may revoke them at
any time before they are voted, either by writing to the Fund or in person at
the time of the Meeting. Proxies given by telephone or electronically
transmitted instruments may be counted if obtained pursuant to procedures
designed to verify that such instructions have been authorized.
Item 1 (election of trustees) requires a plurality vote of the shares of the
Fund. This means that the nine nominees receiving the largest number of votes
will be elected. Item 2 (ratification of selection of independent auditors)
requires the affirmative vote of a majority of the shares voting on the matter.
Item 3 (approval of new investment management agreement) and Item 4 (approval of
new Rule 12b-1 Plan) require the affirmative vote of a "majority of the
outstanding voting securities" of the Fund. The term "majority of the
outstanding voting securities" as defined in the 1940 Act means: the affirmative
vote of the lesser of (1) 67% of the voting securities of the Fund present at
the meeting if more than 50% of the outstanding shares of the Fund are present
in person or by proxy or (2) more than 50% of the outstanding shares of the
Fund.
On Items 1 and 2, the Fund will vote in the aggregate and not by series. On
Items 3 and 4, each series will vote separately.
22
<PAGE> 27
The Declaration of Trust of the Fund provides that the presence at a shareholder
meeting in person or by proxy of at least 30% of the shares of the Fund
constitutes a quorum for the Fund. Thus, the meeting for the Fund could not take
place on its scheduled date if less than 30% of the shares of the Fund were
represented. If, by the time scheduled for the meeting, a quorum of shareholders
of the Fund is not present or if a quorum is present but sufficient votes in
favor of any of the items are not received, the persons named as proxies may
propose one or more adjournments of the meeting for the Fund to permit further
soliciting of proxies from its shareholders. Any such adjournment will require
the affirmative vote of a majority of the shares of the Fund as to which the
meeting is being adjourned present (in person or by proxy) at the session of the
meeting to be adjourned. The persons named as proxies will vote in favor of any
such adjournment if they determine that such adjournment and additional
solicitation are reasonable and in the interest of the Fund's shareholders.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1, abstentions and broker non-votes will have no
effect; the nine nominees receiving the largest number of votes will be elected.
On Item 2, abstentions and broker non-votes will not be counted as "votes cast"
and will have no effect on the result of the vote. On Items 3 and 4 abstentions
and broker non-votes will be considered to be both present at the Meeting and
issued and outstanding and, as a result, will have the effect of being counted
as voted against the Items.
The Board of Trustees of the Fund recommends an affirmative vote on all items.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
Philip J. Collora
Secretary
23
<PAGE> 28
EXHIBIT A
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this day of , 199 , by and between CASH ACCOUNT
TRUST, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end, diversified 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 the Money Market Portfolio, Government Securities Portfolio and Tax-Exempt
Portfolio (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 such Portfolios in accordance with the
applicable investment objectives and policies and limitations, and to administer
the affairs of such Portfolios 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. 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
A-1
<PAGE> 29
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.
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 .22 of 1% of the first $500,000,000 of average
daily net assets of all Portfolios subject to this Agreement, .20 of 1% of the
next $500,000,000, .175 of 1% of the next $1 billion, .16 of 1% of the next $1
billion and .15 of 1% of average daily net assets of all Portfolios subject to
this Agreement over $3 billion. 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,
cost 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.
A-2
<PAGE> 30
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, 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. 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 (1L") 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 at such other time or times 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 Agreement.
8. This Agreement shall become effective with respect to the Initial Portfolios
on the date hereof and shall remain in full force until , 199 ,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in force from year to year thereafter with respect to each 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
A-3
<PAGE> 31
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 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 share
holder 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.
A-4
<PAGE> 32
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.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed as of the day and year first above written.
CASH ACCOUNT TRUST
By:
---------------------------
Title:
------------------------
ATTEST:
- -------------------------------
Title:
------------------------- KEMPER FINANCIAL SERVICES, INC.
By:
---------------------------
Title:
------------------------
ATTEST:
- -------------------------------
Title:
-------------------------
A-5
<PAGE> 33
EXHIBIT B
FORM OF
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
AGREEMENT made this day of , 199 , by and between CASH
ACCOUNT TRUST, a Massachusetts business trust (the "Fund"), and KEMPER
DISTRIBUTORS, INC., a Delaware corporation ("KDI").
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KDI to act as administrator, distributor and
principal underwriter 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 KDI shall act as exclusive
distributor, who wish to exchange all or a portion of their investment in shares
of such other investment company for shares of the Fund.
KDI shall appoint various broker-dealers and other financial services firms
("Firms") to provide a cash management service for their clients through the
Fund. The Firms shall provide such office space and equipment, telephone
facilities, personnel, literature distribution, advertising and promotion as is
necessary or beneficial for providing information and services to potential and
existing shareholders of the Fund and to assist the Fund's shareholder service
agent in servicing accounts of the Firm's clients who own Fund shares
("clients"). Such services and assistance may include, but are not limited to,
establishment and maintenance of shareholder accounts and records, processing
purchase and redemption transactions, automatic investment in Fund shares of
client account cash balances, answering routine client inquiries regarding the
Fund, assistance to clients in changing dividend options, account designations
and addresses, and such other services as the Fund or KDI may reasonably
request. KDI may also provide some of the above services for the Fund directly.
This Agreement applies to the three currently authorized series of shares of the
Fund ("Portfolios"). These Portfolios are the "Money Market Portfolio," the
"Government Securities Portfolio" and the "Tax-Exempt Portfolio."
KDI accepts such appointment and agrees during the term hereof to render such
services and to assume the obligations herein set forth for the compensation
herein provided. KDI shall for all purposes herein provided be deemed to be an
independent contractor and, unless 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 KDI, by
B-1
<PAGE> 34
separate agreement with the Fund, may also serve the Fund in other capacities.
The services of KDI to the Fund under this Agreement are not to be deemed
exclusive, and KDI shall be free to render similar services or other services to
others.
In carrying out its duties and responsibilities hereunder, KDI will, pursuant to
separate administration services and selling group agreements ("services
agreements"), appoint various Firms to provide administrative, distribution and
other services contemplated hereunder directly to or for the benefit of existing
and potential shareholders who may be clients of such Firms. Such Firms shall at
all times be deemed to be independent contractors retained by KDI and not the
Fund. KDI and not the Fund will be responsible for the payment of compensation
to such Firms for such services.
KDI 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. 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.
2. KDI shall sell shares of the Fund to or through qualified Firms in such
manner, not inconsistent with the provisions hereof and the then effective
registration statement of the Fund under the Securities Act (and related
prospectus), as KDI may determine from time to time, provided that no Firm or
other person shall be appointed or authorized to act as agent of the Fund
without the prior consent of the Fund. In addition to sales made by it as agent
of the Fund, KDI may, in its discretion, also sell shares of the Fund as
principal to persons with whom it does not have services agreements.
Shares of the Fund offered for sale or sold by KDI shall be so offered or sold
at a price per share determined in accordance with the then current prospectus
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. The net asset value per share of
each Portfolio of the Fund shall be determined in the manner and at the times
set forth in the then current prospectus of the Fund relating to such shares.
KDI will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the public offering price of the Fund's shares,
and neither KDI nor any such Firms shall withhold the placing of purchase orders
so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered under the
Securities Act for sale as herein contemplated such shares as KDI shall
reasonably request and as the Securities and Exchange Commission shall permit to
be so
B-2
<PAGE> 35
registered. Notwithstanding any other provision hereof, the Fund may terminate,
suspend or withdraw the offering of shares whenever, in its sole discretion, it
deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any and all
information 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 KDI may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to KDI from time to time such information
with respect to the Fund and its shares as KDI may reasonably request for use in
connection with the sale of shares of the Fund.
5. KDI shall issue and deliver or shall arrange for various Firms to issue and
deliver on behalf of the Fund such confirmations of sales made by it as agent
pursuant to this Agreement as may be required. At or prior to the time of
issuance of shares, KDI will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
KDI may specify.
6. KDI shall order shares of the Fund from the Fund only to the extent that it
shall have received purchase orders therefor. KDI will not make, or authorize
any Firms or others to make, any short sales of shares of the Fund. KDI, as
agent of and for the account of the Fund, may repurchase the shares of the Fund
at such prices and upon such terms and conditions as shall be specified in the
current prospectus of the Fund. In selling or reacquiring shares of the Fund for
the account of the Fund, KDI will in all respects conform to the requirements of
all state and Federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., relating to such sale or reacquisition,
as the case may be, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by KDI or any employee,
representative or agent of KDI. KDI will observe and be bound by all the
provisions of the 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 KDI) which at the time in any
way require, limit, restrict or prohibit or otherwise regulate any action on the
part of KDI.
7. The Fund shall assume and pay all charges and expenses of its operations not
specifically assumed or otherwise to be provided by KDI under this Agreement.
The Fund will pay or cause to be paid expenses (including the fees and
disbursements of its own counsel) and all taxes and fees payable to the Federal,
state or other governmental agencies on account of the registration or
qualification of securities issued by the Fund or otherwise. The Fund will also
pay or cause to be paid expenses incident to the issuance of shares of
beneficial interest, such as the cost of share certificates, issue taxes, and
fees of the transfer agent. KDI will pay all expenses (other than expenses which
one or more Firms may bear pursuant to any agreement with KDI) incident to the
sale and distribution of the shares issued or sold hereunder including, without
limiting the generality of
B-3
<PAGE> 36
the foregoing, all 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) and expenses of advertising in
connection with such offering.
8. For the services and facilities described herein, the Fund will pay to KDI at
the end of each calendar month an administration services fee computed at an
annual rate of 0.60 of 1% of the average daily net assets of the Money Market
Portfolio and the Government Securities Portfolio and at an annual rate of 0.50
of 1% of the average daily net assets of the Tax-Exempt Portfolio. The fees
shall be charged to each Portfolio of the Fund subject to this Agreement based
upon the average daily net assets of such Portfolio and at the annual rate
applicable to such Portfolio as provided above. 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.
The net asset value of each Portfolio 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 any
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.
9. KDI shall prepare reports for the Board of Trustees of the Fund on a
quarterly basis showing amounts paid to the various Firms, the basis for any
discretionary payments made to such Firms and such other information as from
time to time shall be reasonably requested by the Board of Trustees.
This Agreement shall become effective on the date hereof and shall continue
until , 199 and shall continue from year to year thereafter with
respect to each Portfolio, but only so long as such continuance is specifically
approved for each Portfolio at least annually by a vote of the Board of Trustees
of the Fund including the trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in this Agreement or in
any agreement related to this Agreement.
This Agreement may not be amended to increase the amount to be paid to KDI for
services hereunder without the vote of a majority of the outstanding voting
securities of each Portfolio of the Fund. All material amendments to this
Agreement must in any event be approved by a vote of the Board of Trustees of
the Fund including the trustees who are not interested persons of the Fund and
who have no direct or indirect financial interest in this Agreement or in any
agreement related to this Agreement, cast in person at a meeting called for such
purpose.
B-4
<PAGE> 37
10. This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the Fund
or by KDI on sixty (60) days written notice to the other party. The Fund may
effect termination with respect to any Portfolio by a vote of (i) a majority of
the Board of Trustees, (ii) a majority of the trustees who are not interested
persons of the Fund and who have no direct or indirect financial interest in
this Agreement or in any agreement related to this Agreement, or (iii) a
majority of the outstanding voting securities of a Portfolio.
The terms "assignment", "interested" 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 KDI to receive
payments on any unpaid balance of the compensation described in Section 8 earned
prior to such termination.
11. KDI will not use or distribute or authorize the use, distribution or
dissemination by Firms or others in connection with the sale of the 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 will furnish the Fund with copies of
all such material.
12. 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.
13. 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.
14. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund. With
respect to any claim by KDI for recovery of that portion of the administration
services fees (or any other liability of the Fund arising hereunder) allocated
to a particular Portfolio, whether in accordance with the express terms hereof
or otherwise, KDI 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.
15. This Agreement shall be construed in accordance with applicable federal law
and (except as to Section 14 hereof which shall be construed in accordance with
the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
B-5
<PAGE> 38
16. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supercedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and KDI have caused this Agreement to be executed
as of the day and year first above written.
CASH ACCOUNT TRUST
By:
---------------------------
Title:
------------------------
ATTEST:
- -------------------------------
Title:
------------------------- KEMPER DISTRIBUTORS, INC.
By:
---------------------------
Title:
------------------------
ATTEST:
- -------------------------------
Title:
-------------------------
B-6
<PAGE> 39
EXHIBIT C
FUNDS AND MANAGEMENT FEES
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Technology Fund............................ $ 786 A
Kemper Total Return Fund.......................... 2,842 A
Kemper Growth Fund................................ 2,269 A
Kemper Small Capitalization Equity Fund........... 655 F
Kemper Income and Capital Preservation Fund....... 548 B
Kemper National Tax-Free Income Series
1. Kemper Municipal Bond Fund................... 3,634 C
2. Kemper Intermediate Municipal Bond Fund...... 13 B
Kemper Diversified Income Fund.................... 768 A
Kemper High Yield Fund............................ 3,517 A
Kemper U.S. Government Securities Fund............ 4,889 C
Kemper International Fund......................... 369 D
Kemper International Bond Fund.................... 7 D
Kemper State Tax-Free Income Series
1. Kemper California Tax-Free Income Fund....... 1,139 B
2. Kemper New York Tax-Free Income Fund......... 329 B
3. Kemper Florida Tax-Free Income Fund.......... 123 B
4. Kemper Texas Tax-Free Income Fund............ 16 B
5. Kemper Ohio Tax-Free Income Fund............. 31 B
6. Kemper Michigan Tax-Free Income Fund......... 2 B
7. Kemper New Jersey Tax-Free Income Fund....... 4 B
8. Kemper Pennsylvania Tax-Free Income Fund..... 2 B
Kemper Portfolios
1. Kemper Cash Reserves Fund.................... 214 E
2. Kemper U.S. Mortgage Fund.................... 3,652 B
3. Kemper Short-Intermediate Government Fund.... 250 B
Kemper Adjustable Rate U.S. Government Fund....... 150 B
Kemper Blue Chip Fund............................. 155 A
Kemper Global Income Fund......................... 172 D
Kemper Money Market Fund.......................... G
1. Money Market Portfolio....................... 3,998
2. Government Securities Portfolio.............. 586
3. Tax-Exempt Portfolio......................... 738
Cash Equivalent Fund
1. Money Market Portfolio....................... 3,451 H
2. Government Securities Portfolio.............. 1,687 H
Cash Equivalent Fund
1. Tax-Exempt Portfolio......................... 1,020 H
Tax-Exempt California Money Market Fund........... 94 H
Cash Account Trust................................ H
1. Money Market Portfolio....................... 397
2. Government Securities Portfolio.............. 150
3. Tax-Exempt Portfolio......................... 70
Investors Cash Trust
1. Government Securities Portfolio.............. 197 0.15%
</TABLE>
C-1
<PAGE> 40
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ------------------ -----------
<S> <C> <C>
2. Treasury Portfolio........................... 67 0.15%
Tax-Exempt New York Money Market Fund............. 15 H
Kemper High Income Trust.......................... 200 0.85%
Kemper Intermediate Government Trust.............. 278 0.80%
Kemper Municipal Income Trust..................... 672 0.55%
Kemper Multi-Market Income Trust.................. 215 0.85%
Kemper Strategic Municipal Income Trust........... 126 0.60%
The Growth Fund of Spain, Inc. ................... 221 1.00%
Kemper Strategic Income Fund...................... 45 0.85%
Kemper Investors Fund
1. Money Market Portfolio....................... 65 0.50%
2. Total Return Portfolio....................... 626 0.55%
3. High Yield Portfolio......................... 265 0.60%
4. Equity Portfolio............................. 336 0.60%
5. Government Securities Portfolio.............. 96 0.55%
6. International Portfolio...................... 125 0.75%
7. Small Capitalization Equity Portfolio........ 18 0.65%
Kemper Target Equity Fund
1. Kemper Retirement Fund Series I.............. 105 0.50%
2. Kemper Retirement Fund Series II ............ 172 0.50%
3. Kemper Retirement Fund Series III ........... 123 0.50%
4. Kemper Retirement Fund Series IV ............ 151 0.50%
5. Kemper Retirement Fund Series V.............. 134 0.50%
6. Kemper Retirement Fund Series VI............. 3 0.50%
7. Kemper Worldwide 2004 Fund................... 30 0.60%
Sterling Funds
1. Equity Fund.................................. 0 I
2. Total Return Fund............................ 0 I
3. U.S. Government Securities Fund.............. 0 J
4. Municipal Bond Fund.......................... 0 J
5. Government Money Market Fund................. 0 K
Amway Mutual Fund, Inc.***........................ 63 0.45%
</TABLE>
- ---------------
* Total Net Assets, in millions, as of May 31, 1995.
** Scheduled annual management fees payable to KFS as a percentage of average
daily net assets.
*** KFS serves as sub-adviser.
(A) .58 of 1% of the first $250 million, .55 of 1% of the next $750 million, .53
of 1% of the next $1.5 billion, .51 of 1% of the next $2.5 billion, .48 of
1% of the next $2.5 billion, .46 of 1% of the next $2.5 billion, .44 of 1%
of the next $2.5 billion and .42 of 1% thereafter.
(B) .55 of 1% of the first $250 million, .52 of 1% of the next $750 million, .50
of 1% of the next $1.5 billion, .48 of 1% of the next $2.5 billion, .45 of
1% of the next $2.5 billion, .43 of 1% of the next $2.5 billion, .41 of 1%
of the next $2.5 billion and .40 of 1% thereafter. KFS is currently waiving
its management fee for Kemper Intermediate Municipal Bond Fund, Kemper
C-2
<PAGE> 41
Michigan Tax-Free Income Fund, Kemper New Jersey Tax-Free Income Fund and
Kemper Pennsylvania Tax-Free Income Fund.
(C) .45 of 1% of the first $250 million, .43 of 1% of the next $750 million, .41
of 1% of the next $1.5 billion, .40 of 1% of the next $2.5 billion, .38 of
1% of the next $2.5 billion, .36 of 1% of the next $2.5 billion, .34 of 1%
of the next $2.5 billion and .32 of 1% thereafter.
(D) .75 of 1% of the first $250 million, .72 of 1% of the next $750 million, .70
of 1% of the next $1.5 billion, .68 of 1% of the next $2.5 billion, .65 of
1% of the next $2.5 billion, .64 of 1% of the next $2.5 billion, .63 of 1%
of the next $2.5 billion and .62 of 1% thereafter.
(E) .40 of 1% of the first $250 million, .38 of 1% of the next $750 million, .35
of 1% of the next $1.5 billion, .32 of 1% of the next $2.5 billion, .30 of
1% of the next $2.5 billion, .28 of 1% of the next $2.5 billion, .26 of 1%
of the next $2.5 billion and .25 of 1% thereafter.
(F) Base investment management fee of .65 of 1% of average daily net assets plus
or minus an incentive fee based upon the investment performance of the fund
as compared with the performance of the Standard & Poor's 500 Stock Index
which may result in a total fee ranging from .35 of 1% to .95 of 1%.
(G) .50% of the first $215 million; .375% of the next $335 million; .30% of the
next $250 million; .25% thereafter (on the identified series in the
aggregate).
(H) .22% of the first $500 million; .20% of the next $500 million; .175% of the
next $1 billion; .16% of the next $1 billion; .15% thereafter (on the
identified series in the aggregate).
(I) .80% of the first $250 million; .79% of the next $750 million; .77% of the
next $1.5 billion; .75% thereafter.
(J) .65% of the first $250 million; .64% of the next $750 million; .62% of the
next $1.5 billion; .60% thereafter.
(K) .50% of the first $250 million; .49% of the next $750 million; .47% of the
next $1.5 billion; .45% thereafter.
C-3
<PAGE> 42
EXHIBIT D
FEES AND EXPENSES
<TABLE>
<CAPTION>
MMP GSP TEP
--------- -------- -------
<S> <C> <C> <C>
Fiscal Year End...................... 4/30/95 4/30/95 4/30/95
Management Fees Paid to KFS.......... $ 621,000 188,000 107,000
Effective Management Fee Rate........ .22 .22 .22
Waived Management Fees and Expenses
Absorbed by KFS.................... $(173,000) (129,000) (82,000)
Custodian, Transfer Agent Fees Paid
by Fund to IFTC.................... $ 512,000 101,000 62,000
Shareholder Service Fees Paid by IFTC
to KSvC............................ $ 488,000 94,000 58,000
</TABLE>
D-1
<PAGE> 43
Thank you for mailing your ballot promptly!
We appreciate your continuing support and look
forward to serving your future investment needs.
<PAGE> 44
CASH ACCOUNT TRUST
MONEY MARKET PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
TAX-EXEMPT PORTFOLIO
PRINTED ON RECYCLED PAPER
<PAGE> 45
<TABLE>
<S><C>
For Withhold For All
1. To elect the following as trustees: All All Except
/ / / / / /
01) David W. Belin, 02) Lewis A. Burnham, 03) Donald L. Dunaway, 04) Robert B. Hoffman, 05) Donald H. Jones,
06) David B. Mathis, 07) Shirley D. Peterson, 08) Stephen B. Timbers, 09) William P. Sommers
---------------------------------------------------------------------------------------------------------
To withhold authority to vote on any individual nominee(s), print the number(s) on the line above.
2. Ratify or reject the selection of For Against Abstain
/ / / / / /
Ernst & Young LLP as the Fund's independent auditors for
the current fiscal year.
3. Approve or disapprove a new investment management agreement / / / / / /
with Kemper Financial Services, Inc. or its successor on
the same terms as the current agreement.
4. Approve or disapprove a new Rule 12b-1 distribution plan / / / / / /
on the same terms as the current plan.
Signature(s) (All registered owners of accounts shown to the left must sign. If signing for
a corporation, estate or trust, please indicate your capacity or title.)
X
- ----------------------------------------------------------------------------------------
Signature Date
X
- ----------------------------------------------------------------------------------------
Signature Date
PLEASE VOTE TODAY!
</TABLE>
<PAGE> 46
PLEASE VOTE PROMPTLY!
Your vote is needed! Please vote on the reverse side of this form and sign in
the space provided. Return your completed proxy in the enclosed envelope
today.
You may receive additional proxies for your other accounts with Kemper. These
are not duplicates: you should sign and return each proxy card in order for
your votes to be counted. Please return them as soon as possible to help save
the cost of additional mailings.
The signers of this proxy hereby appoint Stephen B. Timbers and Donald L.
Dunaway, and each of them, attorneys and proxies, with power of substitution in
each, to vote all shares for the signers at the special meeting of shareholders
to be held September 19, 1995, and at any adjournments thereof, as specified
herein, and in accordance with their best judgement, on any other business that
may properly come before this meeting. If no specification is made herein, all
shares will be voted "For" the proposals set forth on this proxy.
The proxy is solicited by the Board of the Fund which recommends a vote "FOR"
all matters.
