<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1997
1933 ACT REGISTRATION NO. 33-32476
1940 ACT REGISTRATION NO. 811-5970
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 8 [X]
(Check appropriate box or boxes)
------------------
CASH ACCOUNT TRUST
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C>
222 South Riverside Plaza, Chicago, Illinois 60606
(Address of Principal Executive Office) (Zip Code)
</TABLE>
Registrant's Telephone Number, including Area Code: (312) 537-7000
<TABLE>
<C> <C>
Philip J. Collora, Vice President and Secretary With a copy to:
Cash Account Trust Cathy G. O'Kelly
222 South Riverside Plaza David A. Sturms
Chicago, Illinois 60606 Vedder, Price, Kaufman & Kammholz
(Name and Address of Agent for Service) 222 North LaSalle Street
Chicago, Illinois 60601
</TABLE>
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE RULE 24F-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED APRIL 30, 1997
WAS FILED ON OR ABOUT JUNE 24, 1997.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE
BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
[X] ON AUGUST 1, 1997 PURSUANT TO PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
================================================================================
<PAGE> 2
CASH ACCOUNT TRUST
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER
OF FORM N-1A LOCATION IN PROSPECTUS
<C> <S> <C>
1. Cover Page............................. Cover Page
2. Synopsis............................... Summary; Summary of Expenses
3. Condensed Financial Information........ Financial Highlights; Performance
4. General Description of Registrant...... Investment Objectives, Policies and Risk Factors;
Capital Structure
5. Management of the Fund................. Investment Manager and Shareholder Services
5A. Management's Discussion of Fund
Performance............................ Inapplicable
6. Capital Stock and Other Securities..... Purchase of Shares; Dividends and Taxes;
Capital Structure
7. Purchase of Securities Being Offered... Purchase of Shares; Net Asset Value; Investment
Manager and Shareholder Services; Special Features
8. Redemption or Repurchase............... Redemption of Shares; Special Features
9. Pending Legal Proceedings.............. Inapplicable
</TABLE>
<PAGE> 3
CASH ACCOUNT TRUST
222 South Riverside Plaza
Chicago, Illinois 60606
<TABLE>
<S> <C>
TABLE OF CONTENTS
- ------------------------------------------------
Summary 1
- ------------------------------------------------
Summary of Expenses 2
- ------------------------------------------------
Financial Highlights 2
- ------------------------------------------------
Investment Objectives, Policies and Risk
Factors 3
- ------------------------------------------------
Net Asset Value 9
- ------------------------------------------------
Purchase of Shares 9
- ------------------------------------------------
Redemption of Shares 11
- ------------------------------------------------
Special Features 13
- ------------------------------------------------
Dividends and Taxes 13
- ------------------------------------------------
Investment Manager and Shareholder Services 14
- ------------------------------------------------
Performance 16
- ------------------------------------------------
Capital Structure 17
- ------------------------------------------------
</TABLE>
This prospectus contains information about the Fund that a prospective investor
should know before investing and should be retained for future reference. A
Statement of Additional Information dated August 1, 1997, has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
It is available upon request without charge from the Fund at the address or
telephone number on this cover or the firm from which this prospectus was
received.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CASH
ACCOUNT
TRUST
PROSPECTUS August 1, 1997
CASH ACCOUNT TRUST
222 South Riverside Plaza, Chicago, Illinois 60606 1-800-231-8568. The Fund
offers a choice of investment portfolios and is designed for investors who seek
maximum current income to the extent consistent with stability of capital. The
Fund currently offers the Money Market Portfolio, the Government Securities
Portfolio and the Tax-Exempt Portfolio. Each Portfolio invests exclusively in
high quality money market instruments.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY, AND IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
<PAGE> 4
CASH ACCOUNT TRUST
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606, TELEPHONE 1-800-231-8568
SUMMARY
INVESTMENT OBJECTIVES. Cash Account Trust (the "Fund") is an open-end
diversified management investment company. The Fund currently offers a choice of
three investment portfolios ("Portfolios"). Each Portfolio invests in a
portfolio of high quality short-term money market instruments consistent with
its specific objective. The Money Market Portfolio seeks maximum current income
to the extent consistent with stability of capital from a portfolio primarily of
commercial paper and bank obligations. The Government Securities Portfolio seeks
maximum current income to the extent consistent with stability of capital from a
portfolio of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Tax-Exempt Portfolio seeks maximum current
income that is exempt from federal income taxes to the extent consistent with
stability of capital from a portfolio of municipal securities. Each Portfolio
may use a variety of investment techniques, including the purchase of repurchase
agreements and variable rate securities. Each Portfolio seeks to maintain a net
asset value of $1.00 per share. There is no assurance that the objective of any
Portfolio will be achieved or that any Portfolio will be able to maintain a net
asset value of $1.00 per share. See "Investment Objectives, Policies and Risk
Factors."
INVESTMENT MANAGER AND SHAREHOLDER SERVICES. Zurich Kemper Investments, Inc.
("ZKI") is the investment manager for the Fund and provides the Fund with
continuous professional investment supervision. ZKI is paid an annual investment
management fee, payable monthly, on a graduated basis ranging from .22% of the
first $500 million of combined average daily net assets of all Portfolios of the
Fund to .15% of the combined average daily net assets of all Portfolios of the
Fund over $3 billion. Zurich Kemper Distributors, Inc. ("ZKDI"), an affiliate of
ZKI, is the primary administrator, distributor and principal underwriter of the
Fund and, as such, provides information and services for existing and potential
shareholders and acts as agent of the Fund in the sale of its shares. ZKDI
receives a distribution services fee, payable monthly, at an annual rate of .60%
of average daily net assets of the Money Market and Government Securities
Portfolios and .50% of average daily net assets of the Tax-Exempt Portfolio. As
distributor, ZKDI normally pays financial services firms that provide cash
management and other services for their customers at an annual rate of .60% of
average daily net assets of those accounts in the Money Market and Government
Securities Portfolios that they service and .50% of average daily net assets of
those accounts in the Tax-Exempt Portfolio that they maintain and service. See
"Investment Manager and Shareholder Services."
PURCHASES AND REDEMPTIONS. Shares of each Portfolio are available at net asset
value through selected financial services firms. The minimum initial investment
for each Portfolio is $1,000 and the minimum subsequent investment is $100. See
"Purchase of Shares." Shares may be redeemed at the net asset value next
determined after receipt by the Fund's Shareholder Service Agent of a request to
redeem in proper form. Shares may be redeemed by written request or by using one
of the Fund's expedited redemption procedures. See "Redemption of Shares."
DIVIDENDS. Dividends are declared daily and paid monthly. Dividends are
automatically reinvested in additional shares of the same Portfolio, unless the
shareholder makes a different election. See "Dividends and Taxes."
GENERAL INFORMATION AND CAPITAL. The Fund is organized as a business trust
under the laws of Massachusetts and may issue an unlimited number of shares of
beneficial interest. Shares are fully paid and nonassessable when issued, are
transferable without restriction and have no preemptive or conversion rights.
The Fund is not required to hold annual shareholder meetings; but will hold
special meetings as required or deemed desirable for such purposes as electing
trustees, changing fundamental policies or approving an investment management
agreement. See "Capital Structure."
1
<PAGE> 5
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES(1) ........................................None
<TABLE>
<CAPTION>
Money Government
Market Securities Tax-Exempt
Annual Fund Operating Expenses Portfolio Portfolio Portfolio
(after fee waiver and expense absorption) (as a percentage of average net assets) --------- ---------- ----------
<S> <C> <C> <C>
Management Fees.................................................................. .17% .18% .18%
12b-1 Fees(2).................................................................... .60% .60% .50%
Other Expenses................................................................... .23% .22% .27%
----- ----- ----
Total Operating Expenses......................................................... 1.00% 1.00% .95%
===== ===== ====
</TABLE>
- ---------------
(1) Investment dealers and other firms may independently charge shareholders
additional fees; please see their materials for details.
(2) As a result of the accrual of 12b-1 fees, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers.
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE --------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 Money Market $10 $32 $55 $122
investment, assuming (1) 5% annual return and Government Securities $10 $32 $55 $122
(2) redemption at the end of each time period: Tax-Exempt $10 $30 $53 $117
</TABLE>
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. As discussed more fully under "Investment Manager and Shareholder
Services," the Fund's investment manager has agreed to temporarily waive its
management fee and reimburse or pay operating expenses of a Portfolio to the
extent, if any, that such expenses as defined, exceed the following percentages
of average daily net assets of the Portfolios: Money Market Portfolio (1.00%),
Government Securities Portfolio (1.00%) and Tax-Exempt Portfolio (.95%). Without
such waiver and reimbursement during the fiscal year ended April 30, 1997,
"Management Fees" for the Money Market Portfolio, Government Securities
Portfolio and Tax-Exempt Portfolio would have been .22%, .22% and .22%,
respectively, and "Total Operating Expenses" would have been 1.03%, .99% and
.96%, respectively. In addition, from time to time, ZKI may voluntarily waive
fees or absorb certain additional operating expenses of the Portfolios. "Other
Expenses" does not reflect the effect of this additional expense absorption. The
Example assumes a 5% annual rate of return pursuant to requirements of the
Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of past or future performance of any Portfolio of
the Fund. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
The tables below show financial information expressed in terms of one share
outstanding throughout the period. The information in the tables is covered by
the report of the Fund's independent auditors. The report is contained in the
Fund's Registration Statement and is available from the Fund. The financial
statements contained in the Fund's 1997 Annual Report to Shareholders are
incorporated herein by reference and may be obtained by writing or calling the
Fund.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, DECEMBER 3, 1990
------------------------------------------------------------- TO
MONEY MARKET PORTFOLIO 1997 1996 1995 1994 1993 1992 APRIL 30, 1991
---------------------- ---- ---- ---- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .04 .02 .02 .04 .03
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 4.60% 4.96 4.38 2.42 2.65 4.44 2.63
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense waiver 1.00% 1.00 .99 .93 .84 .93 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.51% 4.83 4.54 2.48 2.59 4.03 6.24
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses 1.03% 1.05 1.05 1.20 1.36 1.57 1.58
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.48% 4.78 4.48 2.21 2.07 3.39 5.66
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $584,947 455,025 378,551 156,153 34,267 27,905 6,105
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, DECEMBER 3, 1990
---------------------------------------------------------- TO
GOVERNMENT SECURITIES PORTFOLIO 1997 1996 1995 1994 1993 1992 APRIL 30, 1991
------------------------------- ---- ---- ---- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .04 .02 .02 .04 .03
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 4.69% 5.01 4.37 2.49 2.65 4.54 2.47
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense waiver .92% .90 .90 .84 .79 .79 .87
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.59% 4.88 4.66 2.47 2.63 4.41 5.95
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses .99% 1.06 1.05 1.22 1.18 1.20 1.44
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income 4.52% 4.72 4.51 2.09 2.24 4.00 5.38
- ---------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $544,501 189,919 138,020 30,829 28,963 34,119 30,080
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, DECEMBER 3, 1990
-------------------------------------------------------- TO
TAX-EXEMPT PORTFOLIO 1997 1996 1995 1994 1993 1992 APRIL 30, 1991
-------------------- ---- ---- ---- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .03 .03 .03 .02 .02 .03 .02
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN: 2.82% 3.16 2.80 1.84 2.13 3.46 1.76
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense waiver .81% .78 .76 .74 .71 .67 .75
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 2.78% 3.10 3.00 1.82 2.09 3.34 4.30
- ------------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses .96% .98 .93 1.20 1.39 1.38 .97
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income 2.63% 2.90 2.83 1.36 1.41 2.63 4.08
- ------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $220,791 66,981 67,748 16,991 10,014 7,097 3,904
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
a. The Money Market Portfolio's total returns for the years ended April 30, 1996
and 1995 include the effect of a capital contribution from the investment
manager. Without the capital contribution, the total returns would have been
4.80% and 4.16%, respectively.
b. ZKI has agreed to temporarily waive its management fee and reimburse or pay
certain operating expenses to the extent necessary to limit expenses to
specific levels. The Other Ratios to Average Net Assets are computed without
this waiver and expense absorption. Ratios have been determined on an
annualized basis. Total return is not annualized.
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
The Fund is a money market mutual fund designed to provide its shareholders with
professional management of short-term investment dollars. It is designed for
investors who seek maximum current income consistent with stability of capital.
The Fund pools individual and institutional investors' money that it uses to buy
high quality money market instruments. The Fund is a series investment company
that is able to provide investors with a choice of separate investment
portfolios ("Portfolios"). It currently offers three investment Portfolios: the
Money Market Portfolio, the Government Securities Portfolio and the Tax-Exempt
Portfolio. Because each Portfolio combines its shareholders' money, it can buy
and sell large blocks of securities, which reduces transaction costs and
maximizes
3
<PAGE> 7
yields. The Fund is managed by investment professionals who analyze market
trends to take advantage of changing conditions and who seek to minimize risk by
diversifying each Portfolio's investments. A Portfolio's investments are subject
to price fluctuations resulting from rising or declining interest rates and are
subject to the ability of the issuers of such investments to make payment at
maturity. However, because of their short maturities, liquidity and high quality
ratings, high quality money market instruments, such as those in which the Fund
invests, are generally considered to be among the safest available. Thus, the
Fund is designed for investors who want to avoid the fluctuations of principal
commonly associated with equity or long-term bond investments. There can be no
guarantee that a Portfolio will achieve its objective or that it will maintain a
net asset value of $1.00 per share.
MONEY MARKET PORTFOLIO. The Money Market Portfolio seeks maximum current income
consistent with stability of capital. The Portfolio pursues its objective by
investing exclusively in the following types of U.S. Dollar-denominated money
market instruments that mature in 12 months or less:
1. Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2. Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
banks (including their foreign branches) and Canadian chartered banks having
total assets in excess of $1 billion.
3. Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets in
excess of $10 billion.
4. Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) are rated high quality by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
Phelps, Inc. ("Duff"); or (ii) if unrated, are determined to be at least equal
in quality to one or more of the above ratings in the discretion of the Fund's
investment manager. Currently, only obligations in the top two categories are
considered to be rated high quality. The two highest rating categories of
Moody's, S&P and Duff for commercial paper are Prime-1 and Prime-2, A-1 and A-2
and Duff 1 and Duff 2, respectively. For other debt obligations, the two highest
rating categories for such services are Aaa and Aa, AAA and AA and AAA and AA,
respectively. For a description of these ratings, see "Appendix--Ratings of
Investments" in the Statement of Additional Information.
5. Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. Repurchase agreements are discussed below.
In addition, the Portfolio limits its investments to securities that meet the
quality and diversification requirements of Rule 2a-7 under the Investment
Company Act of 1940. See "Net Asset Value."
The Money Market Portfolio will normally invest at least 25% of its assets in
obligations issued by banks; provided, however, the Portfolio may in the
discretion of the Fund's investment manager temporarily invest less than 25% of
its assets in such obligations whenever the Portfolio assumes a defensive
posture. Investments by the Money Market Portfolio in Eurodollar certificates of
deposit issued by London branches of U.S. banks, or obligations issued by
foreign entities, including foreign banks, involve risks that are different from
investments in securities of domestic branches of U.S. banks. These risks may
include future unfavorable political and economic developments, possible
withholding taxes on interest payments, seizure of foreign deposits, currency
controls, interest limitations or other governmental restrictions that might
affect payment of principal or interest. The market for such obligations may be
less liquid and, at times, more volatile than for securities of domestic
branches of U.S. banks. Additionally, there may be less public information
available about foreign banks and their branches. The profitability of the
banking industry is dependent largely upon the availability and cost of funds
for the purpose of financing lending operations under prevailing money market
conditions. General economic conditions as well as exposure to credit losses
arising from possible financial difficulties of borrowers play an important part
in banking operations. As a result of Federal and state laws and regulations,
domestic banks are, among other things, required to maintain specified levels of
reserves, limited in the amounts they can loan to a single borrower and subject
to other regulations designed to promote financial soundness. However, not all
such laws and regulations apply to the foreign branches of domestic banks.
Foreign branches of foreign banks are not
4
<PAGE> 8
regulated by U.S. banking authorities, and generally are not bound by
accounting, auditing and financial reporting standards comparable to U.S. banks.
Bank obligations held by the Portfolio do not benefit materially from insurance
from the Federal Deposit Insurance Corporation.
The Money Market Portfolio may invest in commercial paper issued by major
corporations under the Securities Act of 1933 in reliance on the exemption from
registration afforded by Section 3(a)(3) thereof. Such commercial paper may be
issued only to finance current transactions and must mature in nine months or
less. Trading of such commercial paper is conducted primarily by institutional
investors through investment dealers and individual investor participation in
the commercial paper market is very limited. The Portfolio also may invest in
commercial paper issued in reliance on the so-called "private placement"
exemption from registration that is afforded by Section 4(2) of the Securities
Act of 1933 ("Section 4(2) paper"). Section 4(2) paper is restricted as to
disposition under the federal securities laws, and generally is sold to
institutional investors such as the Portfolio who agree that they are purchasing
the paper for investment and not with a view to public distribution. Any resale
by the purchaser must be in an exempt transaction. Section 4(2) paper normally
is resold to other institutional investors like the Portfolio through or with
the assistance of the issuer or investment dealers who make a market in the
Section 4(2) paper, thus providing liquidity. The Fund's investment manager
considers the legally restricted but readily saleable Section 4(2) paper to be
liquid; however, pursuant to procedures approved by the Board of Trustees of the
Fund, if a particular investment in Section 4(2) paper is not determined to be
liquid, that investment will be included within the 10% limitation on illiquid
securities discussed under "The Fund" below. The Fund's investment manager
monitors the liquidity of the Portfolio's investments in Section 4(2) paper on a
continuous basis.
The Money Market Portfolio may invest in high quality participation certificates
("certificates") representing undivided interests in trusts that hold a
portfolio of receivables from consumer and commercial credit transactions, such
as transactions involving consumer revolving credit card accounts or commercial
revolving credit loan facilities. The receivables would include amounts charged
for goods and services, finance charges, late charges and other related fees and
charges. Interest payable on the certificates may be fixed or may be adjusted
periodically or "float" continuously according to a formula based upon an
objective standard such as the 30-day commercial paper rate. See "The Fund"
below for a discussion of "Variable Rate Securities." A trust may have the
benefit of a letter of credit from a bank at a level established to satisfy
rating agencies as to the credit quality of the assets supporting the payment of
principal and interest on the certificates. Payments of principal and interest
on the certificates would be dependent upon the underlying receivables in the
trust and may be guaranteed under a letter of credit to the extent of such
credit. The quality rating by a rating service of an issue of certificates is
based primarily upon the value of the receivables held by the trust and the
credit rating of the issuer of any letter of credit and of any other guarantor
providing credit support to the trust. The Fund's investment manager considers
these factors as well as others, such as any quality ratings issued by the
rating services identified above, in reviewing the credit risk presented by a
certificate and in determining whether the certificate is appropriate for
investment by the Portfolio. Collection of receivables in the trust may be
affected by various social, legal and economic factors affecting the use of
credit and repayment patterns, such as changes in consumer protection laws, the
rate of inflation, unemployment levels and relative interest rates. It is
anticipated that for most publicly offered certificates there will be a liquid
secondary market or there may be demand features enabling the Fund to readily
sell its certificates prior to maturity to the issuer or a third party. While
the Portfolio may invest without limit in certificates, it is currently
anticipated that such investments will not exceed 25% of the Portfolio's assets.
GOVERNMENT SECURITIES PORTFOLIO. The Government Securities Portfolio seeks
maximum current income consistent with stability of capital. The Portfolio
pursues its objective by investing exclusively in U.S. Treasury bills, notes,
bonds and other obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities and repurchase agreements of such obligations. All
securities purchased mature in 12 months or less. Some securities issued by U.S.
Government agencies or instrumentalities are supported only by the credit of the
agency or instrumentality, such as those issued by the Federal Home Loan Bank,
and others have an additional line of credit with the U.S. Treasury, such as
those issued by the Federal National Mortgage Association, Farm Credit System
5
<PAGE> 9
and Student Loan Marketing Association. Short-term U.S. Government obligations
generally are considered to be the safest short-term investment. The U.S.
Government guarantee of the securities owned by the Portfolio, however, does not
guarantee the net asset value of its shares, which the Fund seeks to maintain at
$1.00 per share. Also, with respect to securities supported only by the credit
of the issuing agency or instrumentality or by an additional line of credit with
the U.S. Treasury, there is no guarantee that the U.S. Government will provide
support to such agencies or instrumentalities and such securities may involve
risk of loss of principal and interest. Repurchase agreements are discussed
below.
TAX-EXEMPT PORTFOLIO. The Tax-Exempt Portfolio seeks maximum current income that
is exempt from Federal income taxes to the extent consistent with stability of
capital. The Portfolio pursues its objective primarily through a professionally
managed, diversified portfolio of short-term high quality tax-exempt municipal
obligations. Under normal market conditions at least 80% of the Portfolio's
total assets will, as a fundamental policy, be invested in obligations issued by
or on behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, the income from which is exempt from Federal income tax
("Municipal Securities"). In compliance with the position of the staff of the
Securities and Exchange Commission, the Fund does not consider "private
activity" bonds as described in "Dividends and Taxes--Tax-Exempt Portfolio" to
be Municipal Securities for purposes of the 80% limitation. This is a
fundamental policy so long as the staff maintains its position, after which it
would become non-fundamental.
Dividends representing net interest income received by the Tax-Exempt Portfolio
on Municipal Securities will be exempt from federal income tax when distributed
to the Portfolio's shareholders. Such dividend income may be subject to state
and local taxes. See "Dividends and Taxes--Tax-Exempt Portfolio." The
Portfolio's assets will consist of Municipal Securities, taxable temporary
investments as described below and cash. The Portfolio considers short-term
Municipal Securities to be those that mature in one year or less.
The Tax-Exempt Portfolio will invest only in Municipal Securities that at the
time of purchase: (a) are rated within the two highest-ratings for Municipal
Securities (Aaa or Aa) assigned by Moody's or (AAA or AA) assigned by S&P; (b)
are guaranteed or insured by the U.S. Government as to the payment of principal
and interest; (c) are fully collateralized by an escrow of U.S. Government
securities acceptable to the Fund's investment manager; (d) have at the time of
purchase Moody's short-term Municipal Securities rating of MIG-2 or higher or a
municipal commercial paper rating of P-2 or higher, or S&P's municipal
commercial paper rating of A-2 or higher; (e) are unrated, if longer term
Municipal Securities of that issuer are rated within the two highest rating
categories by Moody's or S&P; or (f) are determined to be at least equal in
quality to one or more of the above ratings in the discretion of the Fund's
investment manager. In addition, the Portfolio limits its investments to
securities that meet the quality requirements of Rule 2a-7 under the Investment
Company Act of 1940. See "Net Asset Value."
Municipal Securities generally are classified as "general obligation" or
"revenue" issues. General obligation bonds are secured by the issuer's pledge of
its full credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Industrial development bonds held by the Fund are in
most cases revenue bonds and are not payable from the unrestricted revenues of
the issuer. Among other types of instruments, the Portfolio may purchase
tax-exempt commercial paper, warrants and short-term municipal notes such as tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
construction loan notes and other forms of short-term loans. Such notes are
issued with a short-term maturity in anticipation of the receipt of tax
payments, the proceeds of bond placements or other revenues. A more detailed
discussion of Municipal Securities and the Moody's and S&P ratings outlined
above is contained in the Statement of Additional Information. As indicated
under "Dividends and Taxes--Tax-Exempt Portfolio," the Portfolio may invest in
short-term "private activity" bonds.
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<PAGE> 10
The Tax-Exempt Portfolio may purchase securities that provide for the right to
resell them to an issuer, bank or dealer at an agreed upon price or yield within
a specified period prior to the maturity date of such securities. Such a right
to resell is referred to as a "Standby Commitment." Securities may cost more
with Standby Commitments than without them. Standby Commitments will be entered
into solely to facilitate portfolio liquidity. A Standby Commitment may be
exercised before the maturity date of the related Municipal Security if the
Fund's investment adviser revises its evaluation of the creditworthiness of the
underlying security or of the entity issuing the Standby Commitment. The
Portfolio's policy is to enter into Standby Commitments only with issuers, banks
or dealers that are determined by the Fund's investment manager to present
minimal credit risks. If an issuer, bank or dealer should default on its
obligation to repurchase an underlying security, the Portfolio might be unable
to recover all or a portion of any loss sustained from having to sell the
security elsewhere.
The Tax-Exempt Portfolio may purchase high quality Certificates of Participation
in trusts that hold Municipal Securities. A Certificate of Participation gives
the Portfolio an undivided interest in the Municipal Security in the proportion
that the Portfolio's interest bears to the total principal amount of the
Municipal Security. These Certificates of Participation may be variable rate or
fixed rate with remaining maturities of one year or less. A Certificate of
Participation may be backed by an irrevocable letter of credit or guarantee of a
financial institution that satisfies rating agencies as to the credit quality of
the Municipal Security supporting the payment of principal and interest on the
Certificate of Participation. Payments of principal and interest would be
dependent upon the underlying Municipal Security and may be guaranteed under a
letter of credit to the extent of such credit. The quality rating by a rating
service of an issue of Certificates of Participation is based primarily upon the
rating of the Municipal Security held by the trust and the credit rating of the
issuer of any letter of credit and of any other guarantor providing credit
support to the issue. The Fund's investment manager considers these factors as
well as others, such as any quality ratings issued by the rating services
identified above, in reviewing the credit risk presented by a Certificate of
Participation and in determining whether the Certificate of Participation is
appropriate for investment by the Portfolio. It is anticipated by the Fund's
investment manager that, for most publicly offered Certificates of
Participation, there will be a liquid secondary market or there may be demand
features enabling the Portfolio to readily sell its Certificates of
Participation prior to maturity to the issuer or a third party. As to those
instruments with demand features, the Portfolio intends to exercise its right to
demand payment from the issuer of the demand feature only upon a default under
the terms of the Municipal Security, as needed to provide liquidity to meet
redemptions, or to maintain a high quality investment portfolio.
The Tax-Exempt Portfolio may purchase and sell Municipal Securities on a
when-issued or delayed delivery basis. A when-issued or delayed delivery
transaction arises when securities are bought or sold for future payment and
delivery to secure what is considered to be an advantageous price and yield to
the Portfolio at the time it enters into the transaction. In determining the
maturity of portfolio securities purchased on a when-issued or delayed delivery
basis, the Portfolio will consider them to have been purchased on the date when
it committed itself to the purchase.
A security purchased on a when-issued basis, like all securities held by the
Tax-Exempt Portfolio, is subject to changes in market value based upon changes
in the level of interest rates and investors' perceptions of the
creditworthiness of the issuer. Generally such securities will appreciate in
value when interest rates decline and decrease in value when interest rates
rise. Therefore if, in order to achieve higher interest income, the Portfolio
remains substantially fully invested at the same time that it has purchased
securities on a when-issued basis, there will be a greater possibility that the
market value of the Portfolio's assets will vary from $1.00 per share because
the value of a when-issued security is subject to market fluctuation and no
interest accrues to the purchaser prior to settlement of the transaction. See
"Net Asset Value."
The Portfolio will only make commitments to purchase Municipal Securities on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but the Portfolio reserves the right to sell these securities
before the settlement date if deemed advisable. The sale of these securities may
result in the realization of gains that are not exempt from federal income tax.
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<PAGE> 11
In seeking to achieve its investment objective, the Tax-Exempt Portfolio may
invest all or any part of its assets in Municipal Securities that are industrial
development bonds. Moreover, although the Portfolio does not currently intend to
do so on a regular basis, it may invest more than 25% of its assets in Municipal
Securities that are repayable out of revenue streams generated from economically
related projects or facilities, if such investment is deemed necessary or
appropriate by the Portfolio's investment manager. To the extent that the
Portfolio's assets are concentrated in Municipal Securities payable from
revenues on economically related projects and facilities, the Portfolio will be
subject to the risks presented by such projects to a greater extent than it
would be if the Portfolio's assets were not so concentrated.
From time to time, as a defensive measure or when acceptable short-term
Municipal Securities are not available, the Tax-Exempt Portfolio may invest in
taxable "temporary investments" that include: obligations of the U.S.
Government, its agencies or instrumentalities; debt securities rated within the
two highest grades by Moody's or S&P; commercial paper rated in the two highest
grades by either of such rating services; certificates of deposit of domestic
banks with assets of $1 billion or more; and any of the foregoing temporary
investments subject to repurchase agreements. Repurchase agreements are
discussed below. Interest income from temporary investments is taxable to
shareholders as ordinary income. Although the Portfolio is permitted to invest
in taxable securities (limited under normal market conditions to 20% of the
Portfolio's total assets), it is the Portfolio's primary intention to generate
income dividends that are not subject to federal income taxes. See "Dividends
and Taxes." For a description of the ratings, see "Appendix--Ratings of
Investments" in the Statement of Additional Information.
THE FUND. Each Portfolio may invest in repurchase agreements, which are
instruments under which a Portfolio acquires ownership of a security from a
broker-dealer or bank that agrees to repurchase the security at a mutually
agreed upon time and price (which price is higher than the purchase price),
thereby determining the yield during the Portfolio's holding period. Maturity of
the securities subject to repurchase may exceed one year. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, a Portfolio
might have expenses in enforcing its rights, and could experience losses,
including a decline in the value of the underlying securities and loss of
income. A Portfolio will not purchase illiquid securities, including time
deposits and repurchase agreements maturing in more than seven days if, as a
result thereof, more than 10% of such Portfolio's net assets valued at the time
of the transaction would be invested in such securities.
Each Portfolio may invest in instruments having rates of interest that are
adjusted periodically or that "float" continuously according to formulae
intended to minimize fluctuation in values of the instruments ("Variable Rate
Securities"). The interest rate of Variable Rate Securities ordinarily is
determined by reference to or is a percentage of an objective standard such as a
bank's prime rate, the 90-day U.S. Treasury Bill rate, or the rate of return on
commercial paper or bank certificates of deposit. Generally, the changes in the
interest rate on Variable Rate Securities reduce the fluctuation in the market
value of such securities. Accordingly, as interest rates decrease or increase,
the potential for capital appreciation or depreciation is less than for
fixed-rate obligations. Some Variable Rate Securities ("Variable Rate Demand
Securities") have a demand feature entitling the purchaser to resell the
securities at an amount approximately equal to amortized cost or the principal
amount thereof plus accrued interest. As is the case for other Variable Rate
Securities, the interest rate on Variable Rate Demand Securities varies
according to some objective standard intended to minimize fluctuation in the
values of the instruments. Each Portfolio determines the maturity of Variable
Rate Securities in accordance with Rule 2a-7, which allows the Portfolio to
consider certain of such instruments as having maturities shorter than the
maturity date on the face of the instrument.
A Portfolio may not borrow money except as a temporary measure for extraordinary
or emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without immediately
selling any portfolio securities. Any such borrowings under this provision will
not be collateralized. No Portfolio will borrow for leverage purposes.
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<PAGE> 12
The Fund has adopted for each Portfolio certain investment restrictions that are
presented in the Statement of Additional Information and that, together with the
investment objective and policies of such Portfolio (except for policies
designated as non-fundamental and limited in regard to the Tax-Exempt Portfolio
to the policies in the first and third paragraphs under "Tax-Exempt Portfolio"
above), cannot be changed without approval by holders of a majority of its
outstanding voting shares. As defined in the Investment Company Act of 1940,
this means with respect to a Portfolio the lesser of the vote of (a) 67% of the
shares of such Portfolio present at a meeting where more than 50% of the
outstanding shares of the Portfolio are present in person or by proxy or (b)
more than 50% of the outstanding shares of the Portfolio.
NET ASSET VALUE
The net asset value per share of each Portfolio is calculated by dividing the
total assets of such Portfolio less its liabilities by the total number of its
shares outstanding. The net asset value per share of each Portfolio is
determined on each day the New York Stock Exchange ("Exchange") is open for
trading, at 11:00 a.m., 1:00 p.m. and 3:00 p.m. Chicago time for the Money
Market Portfolio; at 11:00 a.m., 1:00 p.m., 3:00 p.m. and 8:00 p.m. Chicago time
for Government Securities Portfolio and at 11:00 a.m. and 3:00 p.m. Chicago time
for the Tax-Exempt Portfolio. Fund shares are sold at the net asset value next
determined after an order and payment are received in the form described under
"Purchase of Shares." Orders received by dealers or other financial services
firms prior to the 8:00 p.m. determination of net asset value for the Government
Securities Portfolio and received by Zurich Kemper Distributors, Inc. ("ZKDI"),
the primary administrator, distributor and principal underwriter for the Funds,
prior to the close of its business day can be confirmed at the 8:00 p.m.
determination of net asset value for that day. Such transactions are settled by
payment of Federal funds in accordance with procedures established by ZKDI. Each
Portfolio seeks to maintain its net asset value at $1.00 per share.
Each Portfolio values its portfolio instruments at amortized cost in accordance
with Rule 2a-7 under the Investment Company Act of 1940, which means that they
are valued at their acquisition cost (as adjusted for amortization of premium or
accretion of discount) rather than at current market value. Calculations are
made to compare the value of each Portfolio's investments valued at amortized
cost with market-based values. Market-based valuations are obtained by using
actual quotations provided by market makers, estimates of market value, or
values obtained from yield data relating to classes of money market instruments
published by reputable sources at the mean between the bid and asked prices for
the instruments. If a deviation of 1/2 of 1% or more were to occur between a
Portfolio's net asset value per share calculated by reference to market-based
values and the Portfolio's $1.00 per share net asset value, or if there were any
other deviation that the Board of Trustees believed would result in a material
dilution to shareholders or purchasers, the Board of Trustees would promptly
consider what action, if any, should be initiated. In order to value its
investments at amortized cost, the Portfolios purchase only securities with a
maturity of one year or less and maintain a dollar-weighted average portfolio
maturity of 90 days or less. In addition, the Portfolios limit their portfolio
investments to securities that meet the quality and diversification requirements
of Rule 2a-7.
PURCHASE OF SHARES
Shares of each Portfolio of the Fund are sold at net asset value through
selected financial services firms, such as broker-dealers and banks ("firms").
Investors must indicate the Portfolio in which they wish to invest. The Fund has
established a minimum initial investment for each Portfolio of $1,000 and $100
for subsequent investments, but these minimums may be changed at any time in
management's discretion. Firms offering Fund shares may set higher minimums for
accounts they service and may change such minimums at their discretion.
The Fund seeks to have its Portfolios as fully invested as possible at all times
in order to achieve maximum income. Since each Portfolio will be investing in
instruments that normally require immediate payment in Federal Funds (monies
credited to a bank's account with its regional Federal Reserve Bank), the Fund
has adopted procedures for the convenience of its shareholders and to ensure
that each Portfolio receives investable funds.
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<PAGE> 13
Orders for purchase of shares of a Portfolio received by wire transfer in the
form of Federal Funds will be effected at the next determined net asset value.
Shares purchased by wire will receive (i) that day's dividend if effected at or
prior to the 1:00 p.m. Chicago time net asset value determination for the Money
Market and the Government Securities Portfolio and at or prior to the 11:00 a.m.
Chicago time net asset value determination for the Tax-Exempt Portfolio; (ii)
the dividend for the next calendar day if effected at the 3:00 p.m. or 8:00 p.m.
Chicago time net asset value determination provided such payment is received by
3:00 p.m. Chicago time; or (iii) the dividend for the next business day if
effected at the 8:00 p.m. Chicago time net asset value calculation and payment
is received after 3:00 p.m. Chicago time on such date for the Government
Securities Portfolio. Confirmed share purchases that are effective at the 8:00
p.m. Chicago net asset value determination for the Government Securities
Portfolio will receive dividends upon receipt of payment for such transactions
in the form of Federal Funds in accordance with the time provisions immediately
above. Orders for purchase accompanied by a check or other negotiable bank draft
will be accepted and effected as of 3:00 p.m. Chicago time on the next business
day following receipt and such shares will receive the dividend for the next
calendar day following the day the purchase is effected. If an order is
accompanied by a check drawn on a foreign bank, funds must normally be collected
on such check before shares will be purchased. See "Purchase and Redemption of
Shares" in the Statement of Additional Information.
If payment is wired in Federal Funds, the payment should be directed to United
Missouri Bank of Kansas City, N.A. (ABA #101-000-695), 10th and Grand Avenue,
Kansas City, MO 64106 for credit to appropriate Fund bank account (CAT Money
Market Fund 46: 98-0119-980-3; CAT Government Securities Fund 47: 98-0119-983-8;
CAT Tax-Exempt Fund 48: 98-0119-985-4).
CLIENTS OF FIRMS. Firms provide varying arrangements for their clients with
respect to the purchase and redemption of Fund shares and the confirmation
thereof and may arrange with their clients for other investment or
administrative services. Such firms are responsible for the prompt transmission
of purchase and redemption orders. Some firms may establish higher minimum
investment requirements than set forth above. Such firms may independently
establish and charge additional amounts to their clients for their services,
which charges would reduce their clients' yield or return. Firms may also hold
Fund shares in nominee or street name as agent for and on behalf of their
clients. In such instances, the Fund's transfer agent will have no information
with respect to or control over the accounts of specific shareholders. Such
shareholders may obtain access to their accounts and information about their
accounts only from their firm. Certain of these firms may receive compensation
through the Fund's Shareholder Service Agent for record-keeping and other
expenses relating to these nominee accounts. In addition, certain privileges
with respect to the purchase and redemption of shares (such as check writing
redemptions) or the reinvestment of dividends may not be available through such
firms or may only be available subject to certain conditions or limitations.
Some firms may participate in a program allowing them access to their clients'
accounts for servicing including, without limitation, transfers of registration
and dividend payee changes; and may perform functions such as generation of
confirmation statements and disbursement of cash dividends. The prospectus
should be read in connection with such firm's material regarding its fees and
services.
OTHER INFORMATION. The Fund reserves the right to withdraw all or any part of
the offering made by this prospectus or to reject purchase orders, without prior
notice. The Fund also reserves the right at any time to waive or increase the
minimum investment requirements. All orders to purchase shares of a Portfolio
are subject to acceptance by the Fund and are not binding until confirmed or
accepted in writing. Any purchase that would result in total account balances
for a single shareholder in excess of $3 million is subject to prior approval by
the Fund. Share certificates are issued only on request. A $10 service fee will
be charged when a check for the purchase of shares is returned because of
insufficient or uncollected funds or a stop payment order.
Shareholders should direct their inquiries to the firm from which they received
this prospectus or to Zurich Kemper Service Company, the Fund's "Shareholder
Service Agent," 811 Main Street, Kansas City, Missouri 64105-2005.
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<PAGE> 14
REDEMPTION OF SHARES
GENERAL. Upon receipt by the Shareholder Service Agent of a request in the form
described below, shares of a Portfolio will be redeemed by the Fund at the next
determined net asset value. If processed at 3:00 p.m. or 8:00 p.m. (for the
Government Securities Portfolio) Chicago time, the shareholder will receive that
day's dividend. A shareholder may use either the regular or expedited redemption
procedures. Shareholders who redeem all their shares of a Portfolio will receive
the net asset value of such shares and all declared but unpaid dividends on such
shares.
If shares of a Portfolio to be redeemed were purchased by check or through
certain Automated Clearing House ("ACH") transactions, the Fund may delay
transmittal of redemption proceeds until it has determined that collected funds
have been received for the purchase of such shares, which will be up to 10 days
from receipt by the Fund of the purchase amount. Shareholders may not use
expedited redemption procedures (wire transfer or Redemption Check) until the
shares being redeemed have been owned for at least 10 days, and shareholders may
not use such procedures to redeem shares held in certificated form. There is no
delay when shares being redeemed were purchased by wiring Federal Funds.
If shares being redeemed were acquired from an exchange of shares of a mutual
fund that were offered subject to a contingent deferred sales charge as
described in the prospectus for that other fund, the redemption of such shares
by the Fund may be subject to a contingent deferred sales charge as explained in
such prospectus.
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individual
and institutional accounts and pre-authorized telephone redemption transactions
for certain institutional accounts. Shareholders may choose these privileges on
the account application or by contacting the Shareholder Service Agent for
appropriate instructions. Please note that the telephone exchange privilege is
automatic unless the shareholder refuses it on the account application. The Fund
or its agents may be liable for any losses, expenses or costs arising out of
fraudulent or unauthorized telephone requests pursuant to these privileges,
unless the Fund or its agents reasonably believe, based upon reasonable
verification procedures, that the telephone instructions are genuine. THE
SHAREHOLDER WILL BEAR THE RISK OF LOSS, including loss resulting from fraudulent
or unauthorized transactions, as long as the reasonable verification procedures
are followed. The verification procedures include recording instructions,
requiring certain identifying information before acting upon instructions and
sending written confirmations.
Because of the high cost of maintaining small accounts, the Fund reserves the
right to redeem an account that falls below the minimum investment level,
currently $1,000. A shareholder will be notified in writing and will be allowed
60 days to make additional purchases to bring the account value up to the
minimum investment level before the Fund redeems the shareholder account.
Firms provide varying arrangements for their clients to redeem Fund shares. Such
firms may independently establish and charge additional amounts to their clients
for such services.
REGULAR REDEMPTIONS. When shares are held for the account of a shareholder by
the Fund's transfer agent, the shareholder may redeem them by sending a written
request with signatures guaranteed to Zurich Kemper Service Company, P.O. Box
419153, Kansas City, Missouri 64141-6153. When certificates for shares have been
issued, they must be mailed to or deposited with the Shareholder Service Agent,
along with a duly endorsed stock power and accompanied by a written request for
redemption. Redemption requests and a stock power must be endorsed by the
account holder with signatures guaranteed by a commercial bank, trust company,
savings and loan association, federal savings bank, member firm of a national
securities exchange or other eligible financial institution. The redemption
request and stock power must be signed exactly as the account is registered
including any special capacity of the registered owner. Additional documentation
may be requested, and a signature guarantee is normally required, from
institutional and fiduciary account holders, such as corporations, custodians
(e.g., under the Uniform Transfers to Minors Act), executors, administrators,
trustees, or guardians.
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<PAGE> 15
TELEPHONE REDEMPTIONS. If the proceeds of the redemption are $50,000 or less and
the proceeds are payable to the shareholder of record at the address of record,
normally a telephone request or a written request by any one account holder
without a signature guarantee is sufficient for redemptions by individual or
joint account holders, and trust, executor and guardian account holders
(excluding custodial accounts for gifts and transfers to minors) provided the
trustee, executor or guardian is named in the account registration. Other
institutional account holders and guardian account holders of custodial accounts
for gifts and transfers to minors may exercise this special privilege of
redeeming shares by telephone request or written request without signature
guarantee subject to the same conditions as individual account holders and
subject to the limitations on liability described under "General" above,
provided that this privilege has been pre-authorized by the institutional
account holder or guardian account holder by written instruction to the
Shareholder Service Agent with signatures guaranteed. Telephone requests may be
made by calling 1-800-231-8568. Shares purchased by check or through certain ACH
transactions may not be redeemed under this privilege of redeeming shares by
telephone request until such shares have been owned for at least 10 days. This
privilege of redeeming shares by telephone request or by written request without
a signature guarantee may not be used to redeem shares held in certificated form
and may not be used if the shareholder's account has had an address change
within 30 days of the redemption request. During periods when it is difficult to
contact the Shareholder Service Agent by telephone, it may be difficult to use
the telephone redemption privilege, although investors can still redeem by mail.
The Fund reserves the right to terminate or modify this privilege at any time.
EXPEDITED WIRE TRANSFER REDEMPTIONS. If the account holder has given
authorization for expedited wire redemption to the account holder's brokerage or
bank account, shares can be redeemed and proceeds sent by a federal wire
transfer to a single previously designated account. Requests received by the
Shareholder Service Agent prior to 11:00 a.m. Chicago time will result in shares
being redeemed that day and normally the proceeds will be sent to the designated
account that day. Once authorization is on file, the Shareholder Service Agent
will honor requests by telephone at 1-800-231-8568 or in writing, subject to the
limitations on liability described under "General" above. The Fund is not
responsible for the efficiency of the federal wire system or the account
holder's financial services firm or bank. The Fund currently does not charge the
account holder for wire transfers. The account holder is responsible for any
charges imposed by the account holder's firm or bank. There is a $1,000 wire
redemption minimum. To change the designated account to receive wire redemption
proceeds, send a written request to the Shareholder Service Agent with
signatures guaranteed as described above or contact the firm through which
shares of the Fund were purchased. Shares purchased by check or through certain
ACH transactions may not be redeemed by wire transfer until the shares have been
owned for at least 10 days. Account holders may not use this procedure to redeem
shares held in certificated form. During periods when it is difficult to contact
the Shareholder Service Agent by telephone, it may be difficult to use the
expedited wire transfer redemption privilege. The Fund reserves the right to
terminate or modify this privilege at any time.
EXPEDITED REDEMPTIONS BY DRAFT. Upon request, shareholders will be provided with
drafts to be drawn on the Fund ("Redemption Checks"). These Redemption Checks
may be made payable to the order of any person for not more than $5 million.
Shareholders should not write Redemption Checks in an amount less than $250
since a $10 service fee will be charged as described below. When a Redemption
Check is presented for payment, a sufficient number of full and fractional
shares in the shareholder's account will be redeemed as of the next determined
net asset value to cover the amount of the Redemption Check. This will enable
the shareholder to continue earning dividends until the Fund receives the
Redemption Check. A shareholder wishing to use this method of redemption must
complete and file an Account Information Form which is available from the Fund
or firms through which shares were purchased. Redemption Checks should not be
used to close an account since the account normally includes accrued but unpaid
dividends. The Fund reserves the right to terminate or modify this privilege at
any time. This privilege may not be available through some firms that distribute
shares of the Fund. In addition, firms may impose minimum balance requirements
in order to obtain this feature. Firms may also impose fees to investors for
this privilege or establish variations of minimum check amounts if approved by
the Fund.
Unless one signer is authorized on the Account Information Form, Redemption
Checks must be signed by all account holders. Any change in the signature
authorization must be made by written notice to the Shareholder
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<PAGE> 16
Service Agent. Shares purchased by check or through certain ACH transactions may
not be redeemed by Redemption Check until the shares have been on the Fund's
books for at least 10 days. Shareholders may not use this procedure to redeem
shares held in certificated form. The Fund reserves the right to terminate or
modify this privilege at any time.
The Fund may refuse to honor Redemption Checks whenever the right of redemption
has been suspended or postponed, or whenever the account is otherwise impaired.
A $10 service fee will be charged when a Redemption Check is presented to redeem
Fund shares in excess of the value of a Fund account or in an amount less than
$250; when a Redemption Check is presented that would require redemption of
shares that were purchased by check or certain ACH transactions within 10 days;
or when "stop payment" of a Redemption Check is requested.
SPECIAL FEATURES
Certain firms that offer shares of the Fund also provide special redemption
features through charge or debit cards and checks that redeem Fund shares.
Various firms have different charges for their services. Shareholders should
obtain information from their firm with respect to any special redemption
features, applicable charges, minimum balance requirements and special rules of
the cash management program being offered.
Information about the following special features is contained in the Statement
of Additional Information; and further information may be obtained without
charge from ZKDI: Tax Sheltered Retirement Programs; Systematic Withdrawal
Program; Exchange Privilege and Automated Clearing House Programs.
DIVIDENDS AND TAXES
Dividends are declared daily and paid monthly. Shareholders may select one of
the following ways to receive dividends.
1. REINVEST DIVIDENDS at net asset value into additional shares of the same
Portfolio. Dividends are normally reinvested on the 21st of each month if a
business day, otherwise on the next business day. Dividends will be reinvested
unless the shareholder elects to receive them in cash.
2. RECEIVE DIVIDENDS IN CASH, if so requested. Checks will be mailed monthly to
the shareholder or any person designated by the shareholder.
The Fund reinvests dividend checks (and future dividends) in shares of the Fund
if checks are returned as undeliverable. Dividends and other distributions in
the aggregate amount of $10 or less are automatically reinvested in shares of
the Fund unless the shareholder requests that such policy not be applied to the
shareholder's account.
TAXABLE PORTFOLIOS. The Money Market Portfolio and the Government Securities
Portfolio each intend to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code (the "Code") and, if so
qualified, will not be subject to Federal income taxes to the extent its
earnings are distributed. Dividends derived from interest and short-term capital
gains are taxable as ordinary income whether received in cash or reinvested in
additional shares. Dividends from these Portfolios do not qualify for the
dividends received deduction available to corporate shareholders.
TAX-EXEMPT PORTFOLIO. The Tax-Exempt Portfolio intends to continue to qualify
under the Code as a regulated investment company and, if so qualified, will not
be liable for Federal income taxes to the extent its earnings are distributed.
This Portfolio also intends to meet the requirements of the Code applicable to
regulated investment companies distributing tax-exempt interest dividends and,
accordingly, dividends representing net interest received on Municipal
Securities will not be includable by shareholders in their gross income for
Federal income tax purposes, except to the extent such interest is subject to
the alternative minimum tax as discussed below. Dividends representing taxable
net investment income (such as net interest income from temporary investments in
obligations of the U.S. Government) and net short-term capital gains, if any,
are taxable to shareholders as ordinary income.
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<PAGE> 17
Net interest on certain "private activity bonds" issued on or after August 8,
1986 is treated as an item of tax preference and may, therefore, be subject to
both the individual and corporate alternative minimum tax. To the extent
provided by regulations to be issued by the Secretary of the Treasury,
exempt-interest dividends from the Tax-Exempt Portfolio are to be treated as
interest on private activity bonds in proportion to the interest income the
Portfolio receives from private activity bonds, reduced by allowable deductions.
For the 1996 calendar year 19% of the net interest income was derived from
"private activity bonds."
Exempt-interest dividends, except to the extent of interest from "private
activity bonds," are not treated as a tax-preference item. For a corporate
shareholder, however, such dividends will be included in determining such
corporate shareholder's "adjusted current earnings." Seventy-five percent of the
excess, if any, of "adjusted current earnings" over the corporate shareholder's
other alternative minimum taxable income with certain adjustments will be a
tax-preference item. Corporate shareholders are advised to consult their tax
advisers with respect to alternative minimum tax consequences.
Shareholders will be required to disclose on their Federal income tax returns
the amount of tax-exempt interest earned during the year, including
exempt-interest dividends received from the Tax-Exempt Portfolio.
Individuals whose modified income exceeds a base amount will be subject to
Federal income tax on up to 85% of their Social Security benefits. Modified
income includes adjusted gross income, tax-exempt interest, including
exempt-interest dividends from the Tax-Exempt Portfolio, and 50% of Social
Security benefits.
The tax exemption of dividends from the Tax-Exempt Portfolio for Federal income
tax purposes does not necessarily result in exemption under the income or other
tax laws of any state or local taxing authority. The laws of the several states
and local taxing authorities vary with respect to the taxation of such income
and shareholders of the Portfolios are advised to consult their own tax advisers
as to the status of their accounts under state and local tax laws.
THE FUND. Dividends declared in October, November or December to shareholders of
record as of a date in one of those months and paid during the following January
are treated as paid on December 31 of the calendar year in which declared for
Federal income tax purposes. The Fund may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in the Code.
Each Portfolio is required by law to withhold 31% of taxable dividends paid to
certain shareholders who do not furnish a correct taxpayer identification number
(in the case of individuals a social security number) and in certain other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts are
required by law to withhold 20% of the taxable portion of any distribution that
is eligible to be "rolled over." The 20% withholding requirement does not apply
to distributions from IRAs or any part of a distribution that is transferred
directly to another qualified retirement plan, 403(b)(7) account, or IRA.
Shareholders should consult their tax advisers regarding the 20% withholding
requirement.
Shareholders normally will receive monthly confirmations of dividends and of
purchase and redemption transactions except that confirmations of dividend
reinvestment for IRAs and other fiduciary accounts for which Investors Fiduciary
Trust Company serves as trustee will be sent quarterly. Firms may provide
varying arrangements with their clients with respect to confirmations. Tax
information will be provided annually. Shareholders are encouraged to retain
copies of their account confirmation statements or year-end statements for tax
reporting purposes. However, those who have incomplete records may obtain
historical account transaction information at a reasonable fee.
INVESTMENT MANAGER AND SHAREHOLDER SERVICES
INVESTMENT MANAGER. Zurich Kemper Investments, Inc. ("ZKI"), 222 South Riverside
Plaza, Chicago, Illinois 60606, is the investment manager of the Fund and
provides the Fund with continuous professional investment supervision. ZKI is
one of the largest investment managers in the country and has been engaged in
the
14
<PAGE> 18
management of investment funds for more than forty-nine years. ZKI and its
affiliates provide investment advice and manage investment portfolios for the
Kemper Funds, Zurich Money Funds, affiliated insurance companies and other
corporate, pension, profit-sharing and individual accounts representing
approximately $80 billion under management including $10 billion in money market
fund assets. ZKI and its affiliates act as investment adviser for 32 open-end
and seven closed-end investment companies, with 90 separate investment
portfolios, representing more than 2.5 million shareholder accounts. The ZKI is
an indirect subsidiary of Zurich Insurance Company, a leading internationally
recognized provider of insurance and financial services in property/casualty and
life insurance, reinsurance and structured financial solutions as well as asset
management.
The Zurich Insurance Company ("Zurich") had entered into a definitive agreement
with Scudder, Stevens & Clark, Inc. ("Scudder") pursuant to which Zurich will
acquire approximately 70% of Scudder. Upon completion of the transaction,
Scudder will change its name to Scudder Kemper Investments, Inc. ("SKI"), and
Zurich Kemper Investments, Inc. ("ZKI") will be operated either as a subsidiary
of SKI or as part of SKI. Consummation of the transaction is subject to a number
of contingencies. Because the transaction would constitute an assignment of the
Funds' investment management agreements with ZKI and, where applicable, Rule
12b-1 agreements under the Investment Company Act of 1940 it is anticipated that
ZKI would seek approval of new agreements by the Funds' boards and shareholders.
If the contingencies are timely met, the transaction is expected to close in the
fourth quarter of 1997. Zurich will own 69.5% of SKI and senior employees of SKI
will hold the remaining 30.5%. SKI will be headquartered in New York City and
the chief executive officer of SKI will be Edmond D. Villani, Scudder's
president and chief executive officer. Mr. Villani will also join Zurich's
Corporate Executive Board. A transition team comprised of representatives from
ZKI, Zurich, and Scudder has been formed to make recommendations regarding
combining the operations of Scudder and ZKI.
Responsibility for overall management of the Fund rests with its Board of
Trustees and officers. Professional investment supervision is provided by ZKI.
The investment management agreement provides that ZKI shall act as the Fund's
investment adviser, manage its investments and provide it with various services
and facilities. For the services and facilities furnished to the Money Market,
Government Securities and Tax-Exempt Portfolios, the Fund pays ZKI an annual
investment management fee, payable monthly, on a graduated basis of .22% of the
first $500 million of combined average daily net assets of such Portfolios, .20%
of the next $500 million, .175% of the next $1 billion, .16% of the next $1
billion and .15% of combined average daily net assets of such Portfolios over $3
billion. ZKI has agreed to temporarily waive its management fee and absorb
operating expenses of each Portfolio to the extent, if any, that they exceed the
following percentages of average daily net assets of the Portfolios: Money
Market Portfolio (1.00%), Government Securities Portfolio (1.00%) and Tax-Exempt
Portfolio (.95%). For this purpose, Portfolio operating expenses do not include
taxes, interest, extraordinary expenses, brokerage commissions or transaction
costs. Upon notice to the Fund, ZKI may at any time terminate this waiver or
absorption of operating expenses. In addition, from time to time, ZKI may
voluntarily absorb certain additional operating expenses of the Portfolios. The
level of this voluntary expense absorption shall be in ZKI's discretion and is
in addition to ZKI's agreement to temporarily absorb certain operating expenses
of the Portfolios described above. For its services as investment adviser and
manager and for facilities furnished during the fiscal year ended April 30,
1997, ZKI received management fees aggregating .18%, .14% and .07% of the
average daily net assets of the Money Market Portfolio, the Government
Securities Portfolio and the Tax-Exempt Portfolio, respectively, which includes
the effect of the fee waiver.
DISTRIBUTOR AND ADMINISTRATOR. Pursuant to an administration, shareholder
services and distribution agreement ("distribution agreement"), ZKDI, 222 South
Riverside Plaza, Chicago, Illinois 60606, an affiliate of ZKI, serves as primary
administrator, distributor and principal underwriter for the Fund to provide
information and services for existing and potential shareholders. The
distribution agreement provides that ZKDI shall appoint various financial
services firms to provide a cash management service 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, ZKDI receives a
distribution services fee, payable monthly, at the annual rate of .60% of
average daily net assets from the Money Market and Government Securities
Portfolios and .50% of average daily
15
<PAGE> 19
net assets from the Tax-Exempt Portfolio. The fee is accrued daily as an expense
of the Portfolios. As principal underwriter for the Fund, ZKDI acts as agent of
the Fund in the sale of its shares.
ZKDI has related administration services and selling group agreements ("services
agreements") with various firms to provide cash management and other services
for Fund shareholders. ZKDI normally pays such firms for services at an annual
rate of .60% of average daily net assets of those accounts in the Money Market
and Government Securities Portfolios that they maintain and service and .50% of
average daily net assets of those accounts in the Tax-Exempt Portfolio that they
maintain and service. In addition, ZKDI may, from time to time, from its own
resources pay certain firms additional amounts for such services including,
without limitation, fixed dollar amounts and amounts based upon a percentage of
net assets or increased net assets in those Fund accounts that said firms
maintain and service. Since the distribution agreement provides for fees that
are used by ZKDI to pay for distribution and administration services, the
distribution agreement along with the related services agreements and the plan
contained therein are approved and reviewed in accordance with Rule 12b-1 under
the Investment Company Act of 1940, which regulates the manner in which an
investment company may, directly or indirectly, bear the expenses of
distributing its shares.
Since the fee payable to ZKDI under the distribution agreement is based upon
percentages of the average daily net assets of the Portfolios as provided above
and not upon the actual expenditures of ZKDI, the expenses of ZKDI, which may
include overhead expense, may be more or less than the fees received by it under
the distribution agreement. For example, during the fiscal year ended April 30,
1997, ZKDI incurred expenses under the distribution agreement of approximately
$6,369,000, while it received an aggregate fee under the distribution agreement
of $5,929,000. If the distribution agreement is terminated in accordance with
its terms, the obligation of the Fund to make payments to ZKDI 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 ZKDI 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 ZKDI for its cumulative
expenses incurred.
ZKDI also has agreements with banking firms to provide administrative and other
services, except for certain underwriting or distribution services that 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.
CUSTODIAN, TRANSFER AGENT 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 02110, 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
also is the Fund's transfer and dividend-paying agent. Pursuant to a services
agreement with IFTC, Zurich Kemper Service Company, 811 Main Street, Kansas
City, Missouri 64105, an affiliate of ZKI, serves as Shareholder Service Agent
of the Fund.
PERFORMANCE
The Fund may advertise several types of performance information including
"yield," "effective yield" and, for the Tax-Exempt Portfolio only, "tax
equivalent yield." Each of these figures is based upon historical earnings and
is not representative of the future performance of a Portfolio. The yield of a
Portfolio refers to the net investment income generated by a hypothetical
investment in the Portfolio over a specific seven-day period. This net
investment income is then annualized, which means that the net investment income
generated during the seven-day period is assumed to be generated each week over
an annual period and is shown as a percentage of the investment. The effective
yield is calculated similarly, but the net investment income earned by the
investment is assumed to be compounded weekly when annualized. The effective
yield will be slightly higher than the yield due
16
<PAGE> 20
to this compounding effect. Tax equivalent yield is the yield that a taxable
investment must generate in order to equal the Tax-Exempt Portfolio's yield for
an investor in a stated Federal income tax bracket (normally assumed to be the
maximum tax rate). Tax equivalent yield is based upon, and will be higher than,
the portion of the Tax-Exempt Portfolio's yield that is tax-exempt.
The performance of a Portfolio may be compared to that of other money market
mutual funds or mutual fund indexes as reported by independent mutual fund
reporting services such as Lipper Analytical Services, Inc. A Portfolio's
performance and its relative size may be compared to other money market mutual
funds as reported by IBC/Financial Data, Inc.(R) or Money Market Insight(R),
reporting services on money market funds. Investors may want to compare a
Portfolio's performance to that of various bank products as reported by BANK
RATE MONITORTM, a financial reporting service that weekly publishes average
rates of bank and thrift institution money market deposit accounts and interest
bearing checking accounts or various certificate of deposit indexes. The
performance of a Portfolio also may be compared to that of U.S. Treasury bills
and notes. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured. In addition, investors may
want to compare a Portfolio's performance to the Consumer Price Index either
directly or by calculating its "real rate of return," which is adjusted for the
effects of inflation.
Information may be quoted from publications such as MORNINGSTAR, INC., THE WALL
STREET JOURNAL, MONEY MAGAZINE, FORBES, BARRON'S, FORTUNE, THE CHICAGO TRIBUNE,
USA TODAY, INSTITUTIONAL INVESTOR AND REGISTERED REPRESENTATIVE. The Fund may
depict the historical performance of the securities in which a Portfolio may
invest over periods reflecting a variety of market or economic conditions either
alone or in comparison with alternative investments, performance indexes of
those investments or economic indicators. The Fund may also describe its
portfolio holdings and depict its size or relative size compared to other mutual
funds, the number and make-up of its shareholder base and other descriptive
factors concerning the Fund.
Each Portfolio's yield will fluctuate. Shares of the Fund are not insured.
Additional information concerning a Portfolio's performance appears in the
Statement of Additional Information.
CAPITAL STRUCTURE
The Fund is an open-end, diversified, management investment company, organized
as a business trust under the laws of Massachusetts on September 7, 1989. The
Fund may issue an unlimited number of shares of beneficial interest in one or
more series ("Portfolios"), all having no par value, which may be divided by the
Board of Trustees into classes of shares, subject to compliance with the
Securities and Exchange Commission regulations permitting the creation of
separate classes of shares. The Fund's shares are not currently divided into
classes. While only shares of the three previously described Portfolios are
presently being offered, the Board of Trustees may authorize the issuance of
additional Portfolios if deemed desirable. Since the Fund offers multiple
Portfolios, it is known as a "series company." Shares of each Portfolio have
equal noncumulative voting rights and equal rights with respect to dividends,
assets and liquidation of such Portfolio subject to any preferences, rights or
privileges of any classes of shares within the Portfolio. Generally, each class
of shares issued by a particular Portfolio would differ as to the allocation of
certain expenses of the Portfolio, such as distribution and administrative
expenses, permitting, among other things, different levels of services or
methods of distribution among various classes. Shares are fully paid and
nonassessable when issued, are transferable without restriction and have no
preemptive or conversion rights. As of July 7, 1997, Roney & Co. owned more than
25% of the outstanding shares of the Money Market and Government Portfolios;
Stifel Nicolaus and Company Inc. owned more than 25% of each Portfolio and each
may be deemed a control person of the Portfolio of the Fund. The Fund is not
required to hold annual shareholders' meetings and does not intend to do so.
However, it will hold special meetings as required or deemed desirable for such
purposes as electing trustees, changing fundamental policies or approving an
investment management agreement. Subject to the Agreement and Declaration of
Trust of the Fund, shareholders may remove trustees. Shareholders will vote by
Portfolio and not in the aggregate or by class except when voting in the
aggregate is required under the Investment Company Act of 1940, such as for the
election of trustees, or when the Board of Trustees determines that voting by
class is appropriate.
17
<PAGE> 21
CAT 1-8/97 (LOGO)printed on recycled paper
Cash Account
Trust
Prospectus
August 1, 1997
<PAGE> 22
CASH ACCOUNT TRUST
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
LOCATION IN STATEMENT OF
ITEM NUMBER ADDITIONAL INFORMATION
OF FORM N-1A ------------------------
<S> <C> <C>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Inapplicable
13. Investment Objectives and Policies....... Investment Restrictions; Municipal Securities;
Appendix--Ratings of Investments
14. Management of the Fund................... Investment Manager and Shareholder Services;
Officers and Trustees
15. Control Persons and Principal Holders of
Securities............................... Officers and Trustees
16. Investment Advisory and Other Services... Investment Manager and Shareholder Services; Officers
and Trustees
17. Brokerage Allocation and Other
Practices................................ Portfolio Transactions
18. Capital Stock and Other Securities....... Shareholder Rights
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Purchase and Redemption of Shares;
Dividends Net Asset Value, and Taxes
20. Tax Status............................... Dividends, Net Asset Value and Taxes
21. Underwriters............................. Investment Manager and Shareholder Services
22. Calculation of Performance Data.......... Performance
23. Financial Statements..................... Financial Statements
</TABLE>
<PAGE> 23
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 1, 1997
CASH ACCOUNT TRUST
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
1-800-231-8568
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus of Cash Account Trust (the "Fund") dated
August 1, 1997. The prospectus may be obtained without charge from the Fund.
------------------
TABLE OF CONTENTS
[CAPTION]
<TABLE>
PAGE
<S> <C>
Investment Restrictions..................................... B-1
Municipal Securities........................................ B-3
Investment Manager and Shareholder Services................. B-4
Portfolio Transactions...................................... B-7
Purchase and Redemption of Shares........................... B-7
Dividends, Net Asset Value and Taxes........................ B-8
Performance................................................. B-9
Officers and Trustees....................................... B-12
Special Features............................................ B-14
Shareholder Rights.......................................... B-16
Appendix--Ratings of Investments............................ B-18
</TABLE>
The financial statements appearing in the Fund's 1997 Annual Report to
Shareholders are incorporated herein by reference. The Fund's Annual Report
accompanies this Statement of Additional Information.
CAT-33 8/96 (LOGO)printed on recycled paper
<PAGE> 24
INVESTMENT RESTRICTIONS
The Fund has adopted for the Money Market Portfolio, the Government Securities
Portfolio and the Tax-Exempt Portfolio certain investment restrictions which,
together with the investment objective and policies of each Portfolio, cannot be
changed for a Portfolio without approval by holders of a majority of its
outstanding voting shares. As defined in the Investment Company Act of 1940,
this means the lesser of the vote of (a) 67% of the shares of the Portfolio
present at a meeting where more than 50% of the outstanding shares are present
in person or by proxy or (b) more than 50% of the outstanding shares of the
Portfolio.
The Money Market Portfolio and the Government Securities Portfolio individually
may not:
(1) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States Government, its agencies or instrumentalities) if, as a
result, more than 5% of the value of the Portfolio's assets would be invested in
securities of that issuer.
(2) Purchase more than 10% of any class of securities of any issuer. All debt
securities and all preferred stocks are each considered as one class.
(3) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and policies).
(4) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
money market instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Portfolio's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Portfolio will, within three days (not including
Sundays and holidays), reduce its indebtedness to the extent necessary. The
Portfolio will not borrow for leverage purposes.
(5) Make short sales of securities, or purchase any securities on margin except
to obtain such short-term credits as may be necessary for the clearance of
transactions.
(6) Write, purchase or sell puts, calls or combinations thereof.
(7) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more than
5% of the securities of such issuer.
(8) Invest for the purpose of exercising control or management of another
issuer.
(9) Invest in commodities or commodity futures contracts or in real estate (or
real estate limited partnerships), although it may invest in securities which
are secured by real estate and securities of issuers which invest or deal in
real estate.
(10) Invest in interests in oil, gas or other mineral exploration or development
programs or leases, although it may invest in the securities of issuers which
invest in or sponsor such programs.
(11) Underwrite securities issued by others except to the extent the Portfolio
may be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities.
(12) Issue senior securities as defined in the Investment Company Act of 1940.
Additionally, the Money Market Portfolio may not:
(13) Concentrate 25% or more of the value of the Portfolio's assets in any one
industry; provided, however, that (a) the Portfolio reserves freedom of action
to invest up to 100% of its assets in obligations of, or guaranteed by, the
United States Government, its agencies or instrumentalities in accordance with
its investment objective and policies and (b) the Portfolio will invest at least
25% of its assets in obligations issued by banks in accordance
B-1
<PAGE> 25
with its investment objective and policies. However, the Portfolio may, in the
discretion of its investment adviser, invest less than 25% of its assets in
obligations issued by banks whenever the Portfolio assumes a temporary defensive
posture.
The Tax-Exempt Portfolio may not:
(1) Purchase securities if as a result of such purchase more than 25% of the
Portfolio's total assets would be invested in any industry or in any one state.
Municipal Securities and obligations of, or guaranteed by, the U.S. Government,
its agencies or instrumentalities are not considered an industry for purposes of
this restriction.
(2) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the U.S. Government, its agencies or instrumentalities) if as a result more
than 5% of the value of the Portfolio's assets would be invested in the
securities of such issuer. For purposes of this limitation, the Portfolio will
regard the entity that has the primary responsibility for the payment of
interest and principal as the issuer.
(3) Make loans to others (except through the purchase of debt obligations or
repurchase agreements in accordance with its investment objective and policies).
(4) Borrow money except as a temporary measure for extraordinary or emergency
purposes and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
money market instruments (any such borrowings under this section will not be
collateralized). If, for any reason, the current value of the Portfolio's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Portfolio will, within three days (not including
Sundays and holidays), reduce its indebtedness to the extent necessary. The
Portfolio will not borrow for leverage purposes.
(5) Make short sales of securities or purchase securities on margin, except to
obtain such short-term credits as may be necessary for the clearance of
transactions.
(6) Write, purchase or sell puts, calls or combinations thereof, although the
Portfolio may purchase Municipal Securities subject to Standby Commitments in
accordance with its investment objective and policies.
(7) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more than
5% of the securities of such issuer.
(8) Invest for the purpose of exercising control or management of another
issuer.
(9) Invest in commodities or commodity futures contracts or in real estate (or
real estate limited partnerships) except that the Portfolio may invest in
Municipal Securities secured by real estate or interests therein.
(10) Invest in interests in oil, gas or other mineral exploration or development
programs or leases, although it may invest in Municipal Securities of issuers
which invest in or sponsor such programs or leases.
(11) Underwrite securities issued by others except to the extent the Portfolio
may be deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of portfolio securities.
(12) Issue senior securities as defined in the Investment Company Act of 1940.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The
Portfolios did not borrow in the latest fiscal period and have no present
intention of borrowing during the coming year as permitted for each Portfolio by
investment restriction number 4. In any event, borrowings would only be made as
permitted by such restrictions. The Tax-Exempt Portfolio may invest more than
25% of its total assets in industrial development bonds. The Fund has agreed
with certain state regulators that, so long as required by any state where the
Fund's shares are offered for sale, the Money Market Portfolio and the
Government Securities
B-2
<PAGE> 26
Portfolio of the Fund, as a non-fundamental policy that may be changed without
shareholder vote, individually may not:
(i) Invest more than 5% of the Portfolio's total assets in securities of issuers
(other than obligations of, or guaranteed by, the United States Government, its
agencies or instrumentalities) which with their predecessors have a record of
less than three years continuous operation.
(ii) Invest more than 5% of the Portfolio's total assets in securities
restricted as to disposition under the federal securities laws (except
commercial paper issued under Section 4(2) of the Securities Act of 1933).
(iii) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
In addition, the Fund has agreed with certain state regulators that, so long as
required by any state where the Fund's shares are offered for sale, the
Tax-Exempt Portfolio of the Fund, as a non-fundamental policy that may be
changed without shareholder vote, may not:
(i) Invest more than 5% of the Portfolio's total assets in industrial
development bonds sponsored by companies which with their predecessors have less
than three years' continuous operation.
(ii) Invest more than 5% of the Portfolio's total assets in securities
restricted as to disposition under the Federal securities laws (except
commercial paper issued under Section 4(2) of the Securities Act of 1933).
(iii) Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
MUNICIPAL SECURITIES
Municipal Securities which the Tax-Exempt Portfolio may purchase include,
without limitation, debt obligations issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities such
as airports, bridges, highways, housing, hospitals, mass transportation, public
utilities, schools, streets, and water and sewer works. Other public purposes
for which Municipal Securities may be issued include refunding outstanding
obligations, obtaining funds for general operating expenses and obtaining funds
to loan to other public institutions and facilities.
Municipal Securities, such as industrial development bonds, are issued by or on
behalf of public authorities to obtain funds for purposes including privately
operated airports, housing, conventions, trade shows, ports, sports, parking or
pollution control facilities or for facilities for water, gas, electricity or
sewage and solid waste disposal. Such obligations, which may include lease
arrangements, are included within the term Municipal Securities if the interest
paid thereon qualifies as exempt from federal income tax. Other types of
industrial development bonds, the proceeds of which are used for the
construction, equipment, repair or improvement of privately operated industrial
or commercial facilities, may constitute Municipal Securities, although current
Federal tax laws place substantial limitations on the size of such issues.
Municipal Securities generally are classified as "general obligation" or
"revenue." General obligation notes are secured by the issuer's pledge of its
full credit and taxing power for the payment of principal and interest. Revenue
notes are payable only from the revenues derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source. Industrial development bonds that are Municipal
Securities are in most cases revenue bonds and generally do not constitute the
pledge of the credit of the issuer of such bonds.
Examples of Municipal Securities that are issued with original maturities of one
year or less are short-term tax anticipation notes, bond anticipation notes,
revenue anticipation notes, construction loan notes, pre-refunded municipal
bonds, warrants and tax-free commercial paper.
B-3
<PAGE> 27
Tax anticipation notes typically are sold to finance working capital needs of
municipalities in anticipation of receiving property taxes on a future date.
Bond anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under the Federal Revenue Sharing Program. Construction loan
notes are instruments insured by the Federal Housing Administration with
permanent financing by "Fannie Mae" (the Federal National Mortgage Association)
or "Ginnie Mae" (the Government National Mortgage Association) at the end of the
project construction period. Pre-refunded municipal bonds are bonds which are
not yet refundable, but for which securities have been placed in escrow to
refund an original municipal bond issue when it becomes refundable. Tax-free
commercial paper is an unsecured promissory obligation issued or guaranteed by a
municipal issuer. The Tax-Exempt Portfolio may purchase other Municipal
Securities similar to the foregoing, which are or may become available,
including securities issued to pre-refund other outstanding obligations of
municipal issuers.
The Federal bankruptcy statutes relating to the adjustments of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material adverse changes in the
rights of holders of obligations issued by such subdivisions or authorities.
Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states and legislation has been introduced to effect changes in public school
finances in some states. In other instances, there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or Federal law that ultimately could affect the
validity of those Municipal Securities or the tax-free nature of the interest
thereon.
INVESTMENT MANAGER AND SHAREHOLDER SERVICES
INVESTMENT MANAGER. Zurich Kemper Investments, Inc. ("ZKI") is the Fund's
investment manager. ZKI is wholly owned by ZKI Holding Corp. ZKI Holding Corp.
is a more than 90% owned subsidiary of Zurich Holding Company of America, Inc.,
which is a wholly owned subsidiary of Zurich Insurance Company, a leading
internationally recognized provider of insurance and financial services in
property/casualty and life insurance, reinsurance and structured financial
solutions as well as asset management. Pursuant to the investment management
agreement, ZKI acts as the Fund's investment adviser, manages its investments,
administers its business affairs, furnishes office facilities and equipment,
provides clerical, bookkeeping and administrative services and permits any of
its officers or employees to serve without compensation as trustees or officers
of the Fund if elected to such positions. The Fund pays the expenses of its
operations, including the fees and expenses of independent auditors, counsel,
custodian and transfer agent and the cost of share certificates, reports and
notices to shareholders, costs of calculating net asset value, brokerage
commissions or transaction costs, taxes, registration fees, the fees and
expenses of qualifying the Fund and its shares for distribution under federal
and state securities laws and membership dues in the Investment Company
Institute or any similar organization. The Fund's expenses generally are
allocated among the Portfolios on the basis of relative net assets at the time
of allocation, except that expenses directly attributable to a particular
Portfolio are charged to that Portfolio.
The investment management agreement provides that ZKI shall not be liable for
any error of judgment or of law, or for any loss suffered by the Fund in
connection with the matters to which the agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
ZKI in the performance of its obligations and duties, or by reason of its
reckless disregard of its obligations and duties under the agreement.
The investment management agreement continues in effect from year to year for
each Portfolio subject thereto so long as its continuation is approved at least
annually by (a) a majority vote of the trustees who are not parties to such
agreement or interested persons of any such party except in their capacity as
trustees of the Fund, cast in person at a meeting called for such purpose, and
(b) by the shareholders of each Portfolio subject thereto or the
B-4
<PAGE> 28
Board of Trustees. If continuation is not approved for a Portfolio, the
investment management agreement nevertheless may continue in effect for any
Portfolio for which it is approved and ZKI may continue to serve as investment
manager for the Portfolio for which it is not approved to the extent permitted
by the Investment Company Act of 1940. The agreement may be terminated at any
time upon 60 days notice by either party, or by a majority vote of the
outstanding shares of a Portfolio subject thereto with respect to that
Portfolio, and will terminate automatically upon assignment. Additional
Portfolios may be subject to different agreements.
For the services and facilities furnished to the Money Market, Government
Securities and Tax-Exempt Portfolios, the Portfolios pay an annual investment
management fee, payable monthly, on a graduated basis of .22% of the first $500
million of combined average daily net assets of such Portfolios, .20% of the
next $500 million .175% of the next $1 billion, .16% of the next $1 billion and
.15% of combined average daily net assets of such Portfolios over $3 billion.
ZKI has agreed to reimburse the Fund should all operating expenses of the Fund,
including the investment management fees of ZKI but excluding taxes, interest,
distribution services fees, extraordinary expenses, brokerage commissions or
transaction costs and any other properly excludable expenses, exceed the
applicable state expense limitations. Currently, there are no state expense
limitations in effect. The investment management fee is computed based on
average daily net assets of the Portfolios and allocated among the Portfolios
based upon the relative net assets of each. Pursuant to the investment
management agreement, the Money Market, Government Securities and Tax-Exempt
Portfolios paid ZKI fees of $975,000, $483,000 and $69,000 respectively, for the
fiscal year ended April 30, 1997; $677,000, $102,000 and $26,000, respectively,
for the fiscal year ended April 30, 1996 and $554,000, $114,000 and $65,000,
respectively, for the fiscal year ended April 30, 1995. ZKI has agreed to
temporarily waive its management fee and absorb certain operating expenses of
the Portfolios to the extent described in the prospectus. See "Investment
Manager and Shareholder Services" in the prospectus. If the fee waiver had not
been in effect ZKI would have received investment management fees from the Money
Market, Government Securities and Tax-Exempt Portfolios of $1,150,000, $744,000
and $212,000, respectively for the fiscal year ended April 30, 1997, and
$891,000, $386,000 and $153,000, respectively, for the fiscal year ended April
30, 1996 and $621,000, $188,000 and $107,000 respectively for the fiscal year
ended April 30, 1995. ZKI waived or absorbed operating expenses for the Money
Market, Government Securities and Tax-Exempt Portfolios of $175,000, $261,000
and $143,000, respectively for the year ended April 30, 1997; $214,000, $288,000
and $139,000, respectively, for the fiscal year ended April 30, 1996; and
$173,000, $129,000 and $82,000, respectively, for the fiscal year ended April
30, 1995.
Certain officers or trustees of the Fund are also directors or officers of ZKI
and of ZKDI as indicated under "Officers and Trustees."
DISTRIBUTOR AND ADMINISTRATOR. Pursuant to an administration, shareholder
services and distribution agreement ("distribution agreement"), ZKDI serves as
primary administrator and principal underwriter for the Fund to provide
information and services for existing and potential shareholders. The
distribution agreement provides that ZKDI shall appoint various firms 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, the Fund pays ZKDI a distribution services fee,
payable monthly, at the annual rate of .60% of average daily net assets with
respect to the Money Market and Government Securities Portfolios and .50% of
average daily net assets with respect to the Tax-Exempt Portfolio. Expenditures
by ZKDI on behalf of the Portfolios need not be made on the same basis that such
fees are allocated. The fees are accrued daily as an expense of the Portfolios.
As principal underwriter for the Fund, ZKDI acts as agent of the Fund in the
sale of its shares. ZKDI 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 ZKDI pays for the printing and distribution of copies
thereof used in connection with the offering of shares to prospective investors.
ZKDI also pays for supplementary sales literature and advertising costs.
B-5
<PAGE> 29
ZKDI has related administration services and selling group agreements ("services
agreements") with various firms to provide cash management and other services
for Fund shareholders. Such services and assistance may include, but may not be
limited to, establishing and maintaining shareholder accounts and records,
processing purchase and redemption transactions, providing automatic investment
in Fund shares of client account balances, answering routine inquiries regarding
the Fund, assisting clients in changing account options, designations and
addresses, and such other services as may be agreed upon from time to time and
as may be permitted by applicable statute, rule or regulation. ZKDI also may
provide some of the above services for the Fund. ZKDI normally pays such firms
for services at a maximum annual rate of .60% of average daily net assets of
those accounts in the Money Market and Government Securities Portfolios that
they maintain and service and .50% of average daily net assets of those accounts
in the Tax-Exempt Portfolio that they maintain and service. ZKDI in its
discretion may pay certain firms additional amounts. During the fiscal year
ended April 30, 1997, the Money Market, Government Securities and Tax-Exempt
Portfolios paid distribution services fees of $3,287,000, $2,127,000 and
$500,000, respectively. Of such amounts, ZKDI remitted pursuant to related
services agreements $5,929,000 as service fees to firms. During the fiscal year
ended April 30, 1997, ZKDI incurred underwriting, distribution and
administrative expenses in the approximate amounts noted: service fees to firms
($5,929,000); advertising and literature ($0); prospectus printing ($0);
marketing and sales expenses ($440,000) and other expenses ($0); for a total of
$6,369,000. A portion of the aforesaid marketing, sales and operating expenses
could be considered overhead expense.
The distribution agreement and the related services agreements with firms
constitute the Rule 12b-1 plan of the Fund. Rule 12b-1 under the Investment
Company Act of 1940 regulates the manner in which an investment company may,
directly or indirectly, bear the expenses of distributing its shares.
The distribution agreement continues in effect from year to year so long as such
continuance is approved 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 the agreement. The
agreement automatically terminates in the event of its assignment and may be
terminated at any time without penalty by the Fund or by KDI upon six months'
notice. Termination by the Fund may be by vote of a majority of the Board of
Trustees, or a majority of the Trustees who are not interested persons of the
Fund and who have no direct or indirect financial interest in the agreement, or
a "majority of the outstanding voting securities" of the Fund as defined under
the Investment Company Act of 1940. The distribution agreement may not be
amended to increase the fee to be paid by the Fund without approval by a
majority of the outstanding voting securities of the Fund and all material
amendments must in any event be approved by the Board of Trustees in the manner
described above with respect to the continuation of the agreement. The
Portfolios of the Fund will vote separately with respect to the distribution
agreement.
CUSTODIAN, TRANSFER AGENT 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 02110, 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.
Pursuant to a services agreement with IFTC, Zurich Kemper Service Company
("ZKSvC"), an affiliate of ZKI, serves as "Shareholder Service Agent." IFTC
receives, as transfer agent, and pays to ZKSvC annual account fees of a maximum
of $13 per account plus out-of-pocket expense reimbursement. During the fiscal
year ended April 30, 1997, IFTC remitted shareholder service fees in the amount
of $1,348,000 to ZKSvC as Shareholder Service Agent.
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Fund's independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Fund's annual financial statements, review certain
regulatory reports and the Fund's federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Fund. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
LEGAL COUNSEL. Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601, serves as legal counsel for the Fund.
B-6
<PAGE> 30
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken principally to pursue the objective of
each Portfolio in relation to movements in the general level of interest rates,
to invest money obtained from the sale of Fund shares, to reinvest proceeds from
maturing portfolio securities and to meet redemptions of Fund shares. This may
increase or decrease the yield of a Portfolio depending upon management's
ability to correctly time and execute such transactions. Since a Portfolio's
assets are invested in securities with short maturities, its portfolio will turn
over several times a year. Securities with maturities of less than one year are
excluded from required portfolio turnover rate calculations, each Portfolio's
portfolio turnover rate for reporting purposes will be zero.
ZKI and its affiliates furnish investment management services for the Kemper
Funds and other clients including affiliated insurance companies. These entities
may share some common research and trading facilities. At times investment
decisions may be made to purchase or sell the same investment security for a
Portfolio and for one or more of the other clients of ZKI or its affiliates.
When two or more of such clients are simultaneously engaged in the purchase or
sale of the same security through the same trading facility, the transactions
are allocated as to amount and price in a manner considered equitable to each.
ZKI, in effecting purchases and sales of portfolio securities for the account of
each Portfolio, will implement the Fund's policy of seeking the best execution
of orders. Consistent with this policy, orders for portfolio transactions are
placed with broker-dealer firms giving consideration to the quality, quantity
and nature of the firm's professional services which include execution,
financial responsibility, responsiveness clearance procedures, wire service
quotations and statistical and other research information provided to the Fund
and ZKI and its affiliates. Subject to seeking best execution of an order,
brokerage is allocated on the basis of all services provided. Any research
benefits derived are available for all clients including clients of ZKI and its
affiliates. The Fund expects that purchases and sales of portfolio securities
usually will be principal transactions. Portfolio securities will normally be
purchased directly from the issuer or from an underwriter or market maker for
the securities. There are normally no brokerage commissions paid by the Fund 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 asked prices.
PURCHASE AND REDEMPTION OF SHARES
Shares of a Portfolio are sold at their net asset value next determined after an
order and payment are received in the form described in the Fund's prospectus.
The minimum initial investment is $1,000 and the minimum subsequent investment
is $100 but such minimum amounts may be changed at any time. The Fund may waive
the minimum for purchases by trustees, directors, officers or employees of the
Fund or ZKI and its affiliates. An investor wishing to open an account should
use the Account Information Form available from the Fund or financial services
firms. Orders for the purchase of shares that are accompanied by a check drawn
on a foreign bank (other than a check drawn on a Canadian bank in U.S. Dollars)
will not be considered in proper form and will not be processed unless and until
the Fund determines that it has received payment of the proceeds of the check.
The time required for such a determination will vary and cannot be determined in
advance.
The Fund may suspend the right of redemption or delay payment more than seven
days (a) during any period when the New York Stock Exchange ("Exchange") is
closed other than customary weekend and holiday closings or during any period in
which trading on the Exchange is restricted, (b) during any period when an
emergency exists as a result of which (i) disposal of a Portfolio's investments
is not reasonably practicable, or (ii) it is not reasonably practicable for the
Fund to determine the value of its net assets, or (c) for such other periods as
the Securities and Exchange Commission may by order permit for the protection of
the Fund's shareholders.
Although it is the Fund's present policy to redeem in cash, if the Board of
Trustees determines that a material adverse effect would be experienced by the
remaining shareholders if payment were made wholly in cash, the
B-7
<PAGE> 31
Fund will pay the redemption price in whole or in part by a distribution of
portfolio securities in lieu of cash, in conformity with the applicable rules of
the Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees deems fair and equitable. If such a distribution
occurred, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition could incur certain
transaction costs. Such a redemption would not be so liquid as a redemption
entirely in cash. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940 pursuant to which the Fund is obligated to redeem
shares of a Portfolio solely in cash up to the lesser of $250,000 or 1% of the
net assets of the Portfolio during any 90-day period for any one shareholder of
record.
DIVIDENDS, NET ASSET VALUE AND TAXES
DIVIDENDS. Dividends are declared daily and paid monthly. Shareholders will
receive dividends in additional shares unless they elect to receive cash.
Dividends will be reinvested monthly in shares of the Portfolio at the net asset
value normally on the 21st day of each month if a business day, otherwise on the
next business day. The Fund will pay shareholders who redeem their entire
accounts all unpaid dividends at the time of the redemption not later than the
next dividend payment date. Upon written request to the Shareholder Service
Agent, a shareholder may elect to have Fund dividends invested without sales
charge in shares of another Kemper Mutual Fund offering this privilege at the
net asset value of such other fund. See "Special Features--Exchange Privilege"
for a list of such other Kemper Mutual Funds. To use this privilege of investing
Fund dividends in shares of another Kemper Mutual Fund, shareholders must
maintain a minimum account value of $1,000 in this Fund and must maintain a
minimum account value of $1,000 in the fund in which dividends are reinvested.
Each Portfolio calculates its dividends based on its daily net investment
income. For this purpose, the net investment income of the Portfolio consists of
(a) accrued interest income plus or minus amortized discount or premium
(excluding market discount for the Tax-Exempt Portfolio), (b) plus or minus all
short-term realized gains and losses on investments and (c) minus accrued
expenses allocated to the Portfolio. Expenses of the Fund are accrued each day.
While each Portfolio's investments are valued at amortized cost, there will be
no unrealized gains or losses on such investments. However, should the net asset
value of a Portfolio deviate significantly from market value, the Board of
Trustees could decide to value the investments at market value and then
unrealized gains and losses would be included in net investment income above.
Dividends are reinvested monthly and shareholders will receive monthly
confirmations of dividends and of purchase and redemption transactions except
that confirmations of dividend reinvestment for Individual Retirement Accounts
and other fiduciary accounts for which Investors Fiduciary Trust Company acts as
trustee will be sent quarterly.
NET ASSET VALUE. As described in the prospectus, each Portfolio values its
portfolio instruments at amortized cost, which does not take into account
unrealized capital gains or losses. This involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Portfolio
would receive if it sold the instrument. Calculations are made to compare the
value of a Portfolio's investments valued at amortized cost with market values.
Market valuations are obtained by using actual quotations provided by market
makers, estimates of market value, or values obtained from yield data relating
to classes of money market instruments published by reputable sources at the
mean between the bid and asked prices for the instruments. If a deviation of
1/2 of 1% or more were to occur between the net asset value per share
calculated by reference to market values and a Portfolio's $1.00 per share net
asset value, or if there were any other deviation that the Board of Trustees of
the Fund believed would result in a material dilution to shareholders or
purchasers, the Board of Trustees would promptly consider what action, if any,
should be initiated. If a Portfolio's net asset value per share (computed using
market values) declined, or were expected to
B-8
<PAGE> 32
decline, below $1.00 (computed using amortized cost), the Board of Trustees of
the Fund might temporarily reduce or suspend dividend payments in an effort to
maintain the net asset value at $1.00 per share. As a result of such reduction
or suspension of dividends or other action by the Board of Trustees, an investor
would receive less income during a given period than if such a reduction or
suspension had not taken place. Such action could result in investors receiving
no dividend for the period during which they hold their shares and receiving,
upon redemption, a price per share lower than that which they paid. On the other
hand, if a Portfolio's net asset value per share (computed using market values)
were to increase, or were anticipated to increase above $1.00 (computed using
amortized cost), the Board of Trustees of the Fund might supplement dividends in
an effort to maintain the net asset value at $1.00 per share.
TAXES. Interest on indebtedness which is incurred to purchase or carry shares of
a mutual fund portfolio which distributes exempt-interest dividends during the
year is not deductible for Federal income tax purposes. Further, the Tax-Exempt
Portfolio may not be an appropriate investment for persons who are "substantial
users" of facilities financed by industrial development bonds held by the
Tax-Exempt Portfolio or are "related persons" to such users; such persons should
consult their tax advisers before investing in the Tax-Exempt Portfolio.
The "Superfund Act of 1986" (the "Superfund Act") imposes a separate tax on
corporations at a rate of 0.12 percent of the excess of such corporation's
"modified alternative minimum taxable income" over $2 million. A portion of
tax-exempt interest, including exempt-interest dividends from the Tax-Exempt
Portfolio, may be includible in modified alternative minimum taxable income.
Corporate shareholders are advised to consult their tax advisers with respect to
the consequences of the Superfund Act.
PERFORMANCE
As reflected in the prospectus, the historical performance calculation for a
Portfolio may be shown in the form of "yield," "effective yield" and, for the
Tax-Exempt Portfolio only, "tax equivalent yield." These various measures of
performance are described below. ZKI has agreed to temporarily absorb certain
operating expenses of the Portfolios to the extent described in the prospectus.
Without this expense absorption, the performance results noted herein would have
been lower.
Each Portfolio's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. Under that
method, the yield quotation is based on a seven-day period and is computed for
each Portfolio as follows. The first calculation is net investment income per
share, which is accrued interest on portfolio securities, plus or minus
amortized discount or premium (excluding market discount for the Tax-Exempt
Portfolio), less accrued expenses. This number is then divided by the price per
share (expected to remain constant at $1.00) at the beginning of the period
("base period return"). The result is then divided by 7 and multiplied by 365
and the resulting yield figure is carried to the nearest one-hundredth of one
percent. Realized capital gains or losses and unrealized appreciation or
depreciation of investments are not included in the calculation. For the seven
day period ended April 30, 1997, the Money Market Portfolio's yield was 4.71%;
the Government Securities Portfolio's yield was 4.78%; and the Tax-Exempt
Portfolio's yield was 3.39%.
Each Portfolio's effective yield is determined by taking the base period return
(computed as described above) and calculating the effect of assumed compounding.
The formula for the effective yield is: (base period return +1)(365,7) - 1. For
the seven-day period ended April 30, 1997, the Money Market Portfolio's
effective yield was 4.82%; the Government Securities Portfolio's effective yield
was 4.90%; and the Tax-Exempt Portfolio's effective yield was 3.45%.
The tax equivalent yield of the Tax-Exempt Portfolio is computed by dividing
that portion of the Portfolio's yield (computed as described above) which is
tax-exempt by (one minus the stated Federal income tax rate) and adding the
product to that portion, if any, of the yield of the Portfolio that is not
tax-exempt. Based upon an assumed marginal Federal income tax rate of 37.1% and
the Tax-Exempt Portfolio's yield computed as described above for the seven-day
period ended April 30, 1997, the Tax-Exempt Portfolio's tax equivalent yield for
the
B-9
<PAGE> 33
period was 5.48%. For additional information concerning tax-exempt yields, see
"Tax-Exempt versus Taxable Yield" below.
Each Portfolio's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in the Portfolio will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
which the investment in the Portfolio is held, but also on such matters as
Portfolio expenses.
Investors have an extensive choice of money market funds and money market
deposit accounts and the information below may be useful to investors who wish
to compare the past performance of the Money Market Portfolio, the Government
Securities Portfolio and the Tax-Exempt Portfolio with that of their
competitors. Past performance cannot be a guarantee of future results.
As indicated in the prospectus (see "Performance"), the performance of the
Fund's Portfolios may be compared to that of other mutual funds tracked by
Lipper Analytical Services, Inc. ("Lipper"). Lipper performance calculations
include the reinvestment of all capital gain and income dividends for the
periods covered by the calculations. A Portfolio's performance also may be
compared to other money market funds as reported by IBC Financial Data, Inc.
Money Fund Report(R) or Money Market Insight(R), reporting services on money
market funds. As reported by IBC, all investment results represent total return
(annualized results for the period net of management fees and expenses) and one
year investment results would be effective annual yields assuming reinvestment
of dividends.
Lipper and IBC Financial Data, Inc. reported the following results for the Money
Market Portfolio and the Government Securities Portfolio.
LIPPER ANALYTICAL SERVICES, INC. IBC FINANCIAL DATA, INC.
<TABLE>
<CAPTION>
MONEY MARKET AVERAGE
PORTFOLIO'S YIELD
RANKING VS MONEY ALL TAXABLE
MONEY MARKET MARKET MONEY
INSTRUMENT PORTFOLIO'S MARKET
PERIOD ENDED 4/30/97 FUNDS PERIOD YIELD FUNDS
-------------------- ------------ ------ ----------- -----------
<S> <C> <C> <C> <C>
3 Months......................... 211 out of 307 30 Days ended 4/30/97................ 4.71% 4.94%
1 Month.......................... 186 out of 307 7 Days ended 4/30/97................. 4.83 5.08
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT
SECURITIES GOVERNMENT
PORTFOLIO'S RANKING VS SECURITIES
U.S. GOVERNMENT PORTFOLIO'S
PERIOD ENDED 4/30/97 MONEY MARKET FUNDS PERIOD YIELD
-------------------- ---------------------- ------ -----------
<S> <C> <C> <C>
3 Months.............................. 77 out of 115 30 Days ended 4/30/97................. 4.74%
1 Month............................... 52 out of 115 7 Days ended 4/29/97.................. 4.91
<CAPTION>
AVERAGE
YIELD
ALL TAXABLE
GOVERNMENT
PERIOD ENDED 4/30/97 MONEY FUNDS
-------------------- -----------
<S> <C>
3 Months.............................. 4.75%
1 Month............................... 4.87
</TABLE>
The following investment comparisons are based upon information reported by
Lipper and IBC Financial Data, Inc. In the comparison of the Tax-Exempt
Portfolio's performance to the IBC Financial Data, Inc. Average Yield for All
Taxable Money Market Funds and to the Lipper Money Market Instrument Funds
Average, the performance of that Portfolio has been adjusted on a taxable
equivalent basis assuming a marginal Federal tax
B-10
<PAGE> 34
rate of 37.1% (see "Tax-Exempt versus Taxable Yield" below for more information
concerning taxable equivalent performance).
LIPPER ANALYTICAL SERVICES, INC. IBC FINANCIAL DATA, INC.
<TABLE>
<CAPTION>
TAX-EXEMPT AVERAGE
PORTFOLIO'S RANKING VS YIELD ALL
TAX-EXEMPT MONEY TAX-EXEMPT TAX-FREE MONEY
PERIOD ENDED 4/30/97 MARKET FUNDS PERIOD PORTFOLIO MARKET FUNDS
-------------------- ---------------------- ------ ---------- --------------
<S> <C> <C> <C> <C>
3 Months.......................... 108 out of 139 30 Days ended 4/30/97............. 2.93% 3.17%
1 Month........................... 102 out of 139 7 Days ended 4/29/97.............. 3.34 3.63
</TABLE>
<TABLE>
<CAPTION>
LIPPER LIPPER AVERAGE
TAX-EXEMPT TAX-EXEMPT MONEY TAX-EXEMPT YIELD ALL
MONEY PORTFOLIO MARKET PORTFOLIO TAXABLE
MARKET TAXABLE INSTRUMENT TAXABLE MONEY
PERIOD ENDED TAX-EXEMPT FUND EQUIVALENT FUNDS EQUIVALENT MARKET
4/30/97 PORTFOLIO AVERAGE BASIS** AVERAGE PERIOD BASIS** FUNDS
------------ ---------- ---------- ---------- ---------- ------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Month*................ .24% .26% .45% .39% 30 Days ended 4/30/97... 4.66% 4.94%
7 Days ended
4/29/97***.............. 5.31 5.08
</TABLE>
- ---------------
* These results are not annualized.
** Source: ZKI (not reported in IBC or Lipper).
*** Yield shown for taxable funds is for the 7 days ended 4/30/97.
A Portfolio's performance also may be compared on a before or after-tax basis to
various bank products, including the average rate of bank and thrift institution
money market deposit accounts, interest bearing checking accounts and 6-month
maturity certificates of deposit as reported in the BANK RATE MONITOR National
IndexTM of 100 leading bank and thrift institutions as published by the BANK
RATE MONITORTM, N. Palm Beach, Florida 33408. The rates published by the BANK
RATE MONITOR National IndexTM are averages of the personal account rates offered
on the Wednesday prior to the date of publication by 100 large bank and thrifts
in the top ten Consolidated Standard Metropolitan Statistical Areas. With
respect to money market deposit accounts and interest bearing checking accounts,
account minimums range upward from $2,000 in each institution and compounding
methods vary. Interest bearing checking accounts generally offer unlimited
checkwriting while money market deposit accounts generally restrict the number
of checks that may be written. If more than one rate is offered, the lowest rate
is used. Rates are determined by the financial institution and are subject to
change at any time specified by the institution. Generally, the rates offered
for these products take market conditions and competitive product yields into
consideration when set. Bank products represent a taxable alternative income
producing product. Bank and thrift institution account deposits may be insured.
Shareholder accounts in the Fund are not insured. Bank passbook savings accounts
share some liquidity features with money market mutual fund accounts but they
may not offer all of the features available from a money market mutual fund,
such as checkwriting. Bank passbook savings accounts normally offer a fixed rate
of interest, while the yield of each Portfolio of the Fund fluctuates. Bank
checking accounts normally do not pay interest but share some liquidity features
with money market mutual fund accounts (e.g., the ability to write checks
against the account). Bank certificates of deposit may offer fixed or variable
rates for a set term. (Normally, a variety of terms are available.) Withdrawal
of these deposits prior to maturity normally will be subject to a penalty. In
contrast, shares of a Portfolio are redeemable at the net asset value (normally
$1.00 per share) next determined after a request is received, without charge.
Investors also may want to compare a Portfolio's performance to that of U.S.
Treasury bills or notes because such instruments represent alternative income
producing products. Treasury obligations are issued in selected denominations.
Rates of U.S. Treasury obligations are fixed at the time of issuance and payment
of principal and interest is backed by the full faith and credit of the U.S.
Treasury. The market value of such instruments generally will fluctuate
inversely with interest rates prior to maturity and will equal par value at
maturity. Generally, the values of obligations with shorter maturities will
fluctuate less than those with longer maturities. Each Portfolio's yield will
fluctuate. Also, while each Portfolio seeks to maintain a net asset value per
share of $1.00, there is no assurance that it will be able to do so.
B-11
<PAGE> 35
TAX-EXEMPT VERSUS TAXABLE YIELD. You may want to determine which
investment--tax-exempt or taxable--will provide you with a higher after-tax
return. To determine the taxable equivalent yield, simply divide the yield from
the tax-exempt investment by the sum of [1 minus your marginal tax rate]. The
tables below are provided for your convenience in making this calculation for
selected tax-exempt yields and taxable income levels. These yields are presented
for purposes of illustration only and are not representative of any yield that
the Tax-Exempt Portfolio may generate. Both tables are based upon current law as
to the 1997 tax rate schedules.
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS UNDER
$121,200
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TAXABLE INCOME YOUR
MARGINAL A TAX-EXEMPT YIELD OF:
FEDERAL TAX 2% 3% 4% 5% 6% 7%
IS EQUIVALENT TO A TAXABLE YIELD
SINGLE JOINT RATE OF:
- ----------------------------------------------------------------------------------------
$24,650 - $59,750 $41,200 - $99,600 28.0% 2.78 4.17 5.56 6.94 8.33 9.72
- ----------------------------------------------------------------------------------------
Over $59,750 Over $99,600 31.0 2.90 4.35 5.80 7.25 8.70 10.14
========================================================================================
</TABLE>
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS OVER
$121,200*
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TAXABLE INCOME YOUR
MARGINAL A TAX-EXEMPT YIELD OF:
FEDERAL TAX 2% 3% 4% 5% 6% 7%
SINGLE JOINT RATE IS EQUIVALENT TO A TAXABLE YIELD OF:
- ---------------------------------------------------------------------------------------------
$ 59,750 - $124,650 $ 99,600 - $151,750 31.9% 2.94 4.41 5.87 7.34 8.81 10.28
- ---------------------------------------------------------------------------------------------
$124,650 - $271,050 $151,750 - $271,050 37.1 3.18 4.77 6.36 7.95 9.54 11.13
- ---------------------------------------------------------------------------------------------
Over $271,050 Over $271,050 40.8 3.38 5.07 6.76 8.45 10.14 11.82
=============================================================================================
</TABLE>
- ---------------
* This table assumes a decrease of $3.00 of itemized deductions for each $100
of adjusted gross income over $121,200. For a married couple with adjusted
gross income between $181,800 and $304,300 (single between $121,200 and
$243,700), add 0.7% to the above Marginal Federal Tax Rate for each personal
and dependency exemption. The taxable equivalent yield is the tax-exempt
yield divided by: 100% minus the adjusted tax rate. For example, if the table
tax rate is 37.1% and you are married with no dependents, the adjusted tax
rate is 38.5% (37.1% + 0.7% + 0.7%). For a tax-exempt yield of 6%, the
taxable equivalent yield is about 9.8% (6% / (100% - 38.5%)).
OFFICERS AND TRUSTEES
The officers and trustees of the Fund, their birthdates, their principal
occupations and their affiliations, if any, with ZKI and ZKDI, are as follows
(the number following each person's title is the number of investment companies
managed by ZKI ("Kemper Managed Funds") for which he or she holds similar
positions):
DAVID W. BELIN (6/20/28), Trustee (26), 2000 Financial Center, 7th and Walnut,
Des Moines, Iowa; Member, Belin Harris Lamson McCormick Zumbach Flynn P.C.
(attorneys).
LEWIS A. BURNHAM (1/8/33), Trustee (26), 16410 Avila Boulevard, Tampa, Florida;
Director, Management Consulting Services, McNulty & Company; formerly, Executive
Vice President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY (3/8/37), Trustee (26), 7515 Pelican Bay Blvd., Naples,
Florida; Retired; formerly, Executive Vice President, A.O. Smith Corporation
(diversified manufacturer).
ROBERT B. HOFFMAN (12/11/36), Trustee (26), 800 North Lindbergh Boulevard, St.
Louis, Missouri; Senior Vice President and Chief Financial Officer, Monsanto
Company (chemical products); formerly, Vice
B-12
<PAGE> 36
President, FMC Corporation (manufacturer of machinery and chemicals); prior
thereto, Director, Executive Vice President and Chief Financial Officer, Staley
Continental, Inc. (food products).
DONALD R. JONES (1/17/30), Trustee (26), 1776 Beaver Pond Road, Inverness,
Illinois; Retired; Director, Motorola, Inc. (manufacturer of electronic
equipment and components); formerly, Executive Vice President and Chief
Financial Officer, Motorola, Inc.
DOMINIQUE P. MORAX (10/2/48), Trustee*(39), 222 South Riverside Plaza, Chicago,
Illinois; Chief Executive Officer and Chief Investment Officer, ZIMI, Director,
ZKI.
SHIRLEY D. PETERSON (9/3/41), Trustee (26), 401 Rosemont Avenue, Frederick,
Maryland; President, Hood College; formerly, Partner, Steptoe & Johnson
(attorneys); prior thereto, Commissioner, Internal Revenue Service; prior
thereto, Assistant Attorney General, U.S. Department of Justice.
WILLIAM P. SOMMERS (7/22/33), Trustee (26), 333 Ravenswood Avenue, Menlo Park,
California; President and Chief Executive Officer, SRI International (research
and development); prior thereto, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton Inc. (management consulting
firm) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
STEPHEN B. TIMBERS (8/8/44), President and Trustee*(39), 222 South Riverside
Plaza, Chicago, Illinois; President, Chief Executive Officer, Chief Investment
Officer and Director, ZKI; Director, ZKDI, Dreman Value Advisors, Inc. and LTV
Corporation.
CHARLES R. MANZONI, JR. (1/23/47), Vice President*(39), 222 South Riverside
Plaza, Chicago, Illinois; Executive Vice President, Secretary and General
Counsel of ZKI; Secretary, ZKI Holding Corp.; Secretary, ZKI Agency, Inc.;
formerly, Partner, Gardner, Carton & Douglas (attorneys).
PHILIP J. COLLORA (11/15/45), Vice President and Secretary*(39), 222 South
Riverside Plaza, Chicago, Illinois; Attorney, Senior Vice President and
Assistant Secretary, ZKI.
JEROME L. DUFFY (6/29/36), Treasurer*(39), 222 South Riverside Plaza, Chicago,
Illinois; Senior Vice President, ZKI.
JOHN E. NEAL (3/9/50), Vice President*(39), 222 South Riverside Plaza, Chicago,
Illinois; President, Kemper Funds Group, a unit of ZKI; Director, ZKI, Dreman
Value Advisors, Inc. and ZKDI.
ROBERT C. PECK, JR. (10/1/46), Vice President(39), 222 South Riverside Plaza,
Chicago, Illinois; Executive Vice President and Chief Investment Officer, ZKI.
FRANK J. RACHWALSKI, JR. (3/26/45), Vice President*(9), 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President, ZKI.
JOHN W. STUEBE (1/7/49), Vice President*(2), 222 South Riverside Plaza, Chicago,
Illinois; First Vice President, ZKI and ZKDI.
ELIZABETH C. WERTH (10/1/47), Assistant Secretary*(32), 222 South Riverside
Plaza, Chicago, Illinois; Vice President and Director of State Registrations,
ZKI and ZKDI.
* Interested persons as defined in the Investment Company Act of 1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Fund. The table below shows amounts paid or
accrued to those trustees who are not designated "interested
B-13
<PAGE> 37
persons" during the Fund's fiscal year ended April 30, 1997 and the total
compensation that Kemper Managed Funds paid to each trustee during the calendar
year 1996.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE KEMPER MANAGED
COMPENSATION FUNDS
NAME OF TRUSTEE FROM FUND PAID TO TRUSTEES(2)
--------------- ------------ -------------------
<S> <C> <C>
David W. Belin(1)........................................... $4,000 $143,400
Lewis A. Burnham............................................ 3,000 88,800
Donald L. Dunaway(1)........................................ 3,700 141,200
Robert B. Hoffman........................................... 3,400 92,100
Donald R. Jones............................................. 3,500 92,100
Shirley D. Peterson......................................... 3,400 89,800
William P. Sommers.......................................... 3,200 87,500
</TABLE>
- ---------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Fund. Deferred amounts accrue interest
monthly at a rate approximate to the yield of Zurich Money Funds--Zurich
Money Market Fund. Total deferred fees and interest accrued for the latest
and all prior fiscal years are $12,100 for Mr. Belin and $12,700 for Mr.
Dunaway from Cash Account Trust.
(2) Includes compensation for service on the Boards of 26 Kemper funds with 40
fund portfolios. Each trustee currently serves as trustee of 26 Kemper Funds
with 46 fund portfolios.
On July 7, 1997, the officers and trustees of the Fund, as a group, owned less
than 1% of the then outstanding shares of each Portfolio. No person owned of
record 5% or more of the outstanding shares of any class of any Fund, except the
persons indicated in the chart below:
<TABLE>
<CAPTION>
NAME AND ADDRESS % OWNED PORTFOLIO
---------------- ------- ---------
<S> <C> <C>
Roney & Co. ................................................ 35.30% Money Market
1 Griswold 50.83 Government Securities
Detroit, MI 48226 23.06 Tax-Exempt
Stifel Nicolaus and Company Inc. ........................... 48.72 Money Market
500 N. Broadway 30.86 Government Securities
St. Louis, MO 63102 28.98 Tax-Exempt
DST Systems, Inc. .......................................... 5.80 Money Market
127 W. 10th Street
Kansas City, MO 64105
May Financial Corp. ........................................ 7.09 Government Securities
8333 Douglas Ave.
Dallas, TX 75225
</TABLE>
SPECIAL FEATURES
EXCHANGE PRIVILEGE. Subject to the limitations described below, Class A Shares
(or the equivalent) of the following Kemper Mutual Funds may be exchanged for
each other at their relative net asset values: Kemper Technology Fund, Kemper
Total Return Fund, Kemper Growth Fund, Kemper Small Capitalization Equity Fund,
Kemper Income and Capital Preservation Fund, Kemper Municipal Bond Fund, Kemper
Diversified Income Fund, Kemper High Yield Fund, Kemper U.S. Government
Securities Fund, Kemper International Fund, Kemper State Tax-Free Income Series,
Kemper Adjustable Rate U.S. Government Fund, Kemper Blue Chip Fund, Kemper
Global Income Fund, Kemper Target Equity Fund (series are subject to a limited
offering period), Kemper
B-14
<PAGE> 38
Intermediate Municipal Bond Fund, Kemper Cash Reserves Fund, Kemper U.S.
Mortgage Fund, Kemper Short-Intermediate Government Fund, Kemper Dreman Fund,
Inc., Kemper Value+Growth Fund, Kemper Quantitative Equity Fund, Kemper Horizon
Fund, Kemper Europe Fund, Kemper Asian Growth Fund and Kemper Aggressive Growth
Fund ("Kemper Mutual Funds") and certain "Money Market Funds" (Zurich Money
Funds, Cash Equivalent Fund, Tax-Exempt California Money Market Fund, Cash
Account Trust, Investors Municipal Cash Fund and Investors Cash Trust). Shares
of Money Market Funds and Kemper Cash Reserves Fund that were acquired by
purchase (not including shares acquired by dividend reinvestment) are subject to
the applicable sales charge on exchange. In addition, shares of a Kemper Mutual
Fund in excess of $1,000,000 (except Zurich Yieldwise Money Fund and Kemper Cash
Reserves Fund) acquired by exchange from another Fund may not be exchanged
thereafter until they have been owned for 15 days (the "15-Day Hold Policy").
For purposes of determining whether the 15-Day Hold Policy applies to a
particular exchange, the value of the shares to be exchanged shall be computed
by aggregating the value of shares being exchanged for all accounts under common
control, discretion or advice, including without limitation accounts
administered by a financial services firm offering market timing, asset
allocation or similar services. Series of Kemper Target Equity Fund will be
available on exchange only during the Offering Period for such series as
described in the prospectus for such series. Cash Equivalent Fund, Tax-Exempt
California Money Market Fund, Cash Account Trust, Investors Municipal Cash Fund
and Investors Cash Trust are available on exchange but only through a financial
services firm having a services agreement with ZKDI with respect to such funds.
Exchanges may only be made for funds that are available for sale in the
shareholder's state of residence. Currently, Tax-Exempt California Money Market
Fund is available for sale only in California and the portfolios of Investors
Municipal Cash Fund are available for sale in certain states.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged.
Exchanges are made based on relative dollar values of the shares involved in the
exchange. There is no service fee for an exchange; however, financial services
firms may charge for their services in expediting exchange transactions.
Exchanges will be effected by redemption of shares of the fund held and purchase
of shares of the other fund. For federal income tax purposes, any such exchange
constitutes a sale upon which a gain or loss may be realized, depending upon
whether the value of the shares being exchanged is more or less than the
shareholder's adjusted cost basis. Shareholders interested in exercising the
exchange privilege may obtain an exchange form and prospectuses of the other
funds from financial services firms or ZKDI. Exchanges also may be authorized by
telephone if the shareholder has given authorization. Once the authorization is
on file, the Shareholder Service Agent will honor requests by telephone at
1-800-231-8568 or in writing subject to the limitations on liability described
in the prospectus. Any share certificates must be deposited prior to any
exchange of such shares. During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to implement the
telephone exchange privilege. The exchange privilege is not a right and may be
suspended, terminated or modified at any time. Except as otherwise permitted by
applicable regulation, 60 days' prior written notice of any termination or
material change will be provided.
SYSTEMATIC WITHDRAWAL PROGRAM. An owner of $5,000 or more of a Portfolio's
shares may provide for the payment from the owner's account of any requested
dollar amount up to $50,000 to be paid to the owner or the owner's designated
payee monthly, quarterly, semi-annually or annually. The $5,000 minimum account
size is not applicable to Individual Retirement Accounts. Dividend distributions
will be reinvested automatically at net asset value. A sufficient number of full
and fractional shares will be redeemed to make the designated payment. Depending
upon the size of the payments requested, redemptions for the purpose of making
such payments may reduce or even exhaust the account. The program may be amended
on thirty days notice by the Fund and may be terminated at any time by the
shareholder or the Fund. Firms provide varying arrangements for their clients to
redeem Fund shares on a periodic basis. Such firms may independently establish
minimums for such services.
B-15
<PAGE> 39
TAX-SHELTERED RETIREMENT PROGRAMS. The Shareholder Service Agent provides
retirement plan services and documents and ZKDI can establish your account in
any of the following types of retirement plans:
- - Individual Retirement Accounts (IRAs) trusteed by Investors Fiduciary Trust
Company ("IFTC"). This includes Simplified Employee Pension Plan (SEP) IRA
accounts and prototype documents.
- - 403(b) Custodial Accounts also trusteed by IFTC. This type of plan is
available to employees of most non-profit organizations.
- - Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum contribution per participant is the lesser of 25% of
compensation or $30,000.
Brochures describing the above plans as well as providing model defined benefit
plans, target benefit plans, 457 plans, 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
The brochures for plans trusteed by IFTC describe the current fees payable to
IFTC for its services as trustee. Investors should consult with their own tax
advisers before establishing a retirement plan.
ELECTRONIC FUNDS TRANSFER PROGRAMS. For your convenience, the Fund has
established several investment and redemption programs using electronic funds
transfer via the Automated Clearing House (ACH). There is currently no charge by
the Fund for these programs. To use these features, your financial institution
(your employer's financial institution in the case of payroll deposit) must be
affiliated with an Automated Clearing House (ACH). This ACH affiliation permits
the Shareholder Service Agent to electronically transfer money between your bank
account, or employer's payroll bank in the case of Direct Deposit, and your Fund
account. Your bank's crediting policies of these transferred funds may vary.
These features may be amended or terminated at any time by the Fund.
Shareholders should contact Zurich Kemper Service Company at 1-800-621-1048 or
the financial services firm through which their account was established for more
information. These programs may not be available through some firms that
distribute shares of the Fund.
SHAREHOLDER RIGHTS
The Fund generally is not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust of the Fund ("Declaration of Trust"),
however, shareholder meetings will be held in connection with the following
matters: (a) the election or removal of trustees if a meeting is called for such
purpose; (b) the adoption of any contract for which shareholder approval is
required by the Investment Company Act of 1940 ("1940 Act"); (c) any termination
of the Fund to the extent and as provided in the Declaration of Trust; (d) any
amendment of the Declaration of Trust (other than amendments changing the name
of the Fund or any Portfolio, establishing a Portfolio, supplying any omission,
curing any ambiguity or curing, correcting or supplementing any defective or
inconsistent provision thereof); and (e) such additional matters as may be
required by law, the Declaration of Trust, the By-laws of the Fund, or any
registration of the Fund with the Securities and Exchange Commission or any
state, or as the trustees may consider necessary or desirable. The shareholders
also would vote upon changes in fundamental investment objectives, policies or
restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of a
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described below) or a majority
of the trustees. In accordance with the 1940 Act (a) the Fund will hold a
shareholder meeting for the election of trustees at such time as less than a
majority of the trustees have been elected by shareholders, and (b) if, as a
result of a vacancy in the Board of Trustees, less than two-thirds of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10%
B-16
<PAGE> 40
of the outstanding shares. Upon the written request of ten or more shareholders
who have been such for at least six months and who hold shares constituting at
least 1% of the outstanding shares of the Fund stating that such shareholders
wish to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Fund has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting in
person or by proxy of at least 30% of the shares entitled to vote on a matter
shall constitute a quorum. Thus, a meeting of shareholders of the Fund could
take place even if less than a majority of the shareholders were represented on
its scheduled date. Shareholders would in such a case be permitted to take
action which does not require a larger vote than a majority of a quorum, such as
the election of trustees and ratification of the selection of auditors. Some
matters requiring a larger vote under the Declaration of Trust, such as
termination or reorganization of the Fund and certain amendments of the
Declaration of Trust, would not be affected by this provision; nor would matters
which under the 1940 Act require the vote of a "majority of the outstanding
voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Fund (or any Portfolio or class) by notice to the shareholders
without shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Fund. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Fund and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
the Fund or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Fund property for all losses and expenses of any
shareholder held personally liable for the obligations of the Fund and the Fund
will be covered by insurance which the trustees consider adequate to cover
foreseeable tort claims. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered by ZKI remote and not
material, since it is limited to circumstances in which a disclaimer is
inoperative and the Fund itself is unable to meet its obligations.
B-17
<PAGE> 41
APPENDIX--RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2, PRIME-1, PRIME-2 AND DUFF 1, DUFF 2 COMMERCIAL PAPER RATINGS
Commercial paper rated by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements.
Long-term senior debt is rated "A" or better. The issuer has access to at least
two additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determine whether the
issuer's commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by them
in assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations. Relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated Prime-1, 2 or 3.
The rating Duff-1 is the highest commercial paper rating assigned by Duff &
Phelps Inc. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors that are supported by ample
asset protection. Risk factors are minor. Paper rated Duff-2 is regarded as
having good certainty of timely payment, good access to capital markets and
sound liquidity factors and company fundamentals. Risk factors are small.
MIG-1 AND MIG-2 MUNICIPAL NOTES
Moody's Investors Service, Inc.'s ratings for state and municipal notes and
other short-term loans will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of the
first importance in bond risk are of lesser importance in the short run. Loans
designated MIG-1 are of the best quality, enjoying strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both. Loans designated
MIG-2 are of high quality, with margins of protection ample although not so
large as in the preceding group.
STANDARD & POOR'S CORPORATION BOND RATINGS, CORPORATE BONDS
AAA. This is the highest rating assigned by Standard & Poor's Corporation to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA. Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
B-18
<PAGE> 42
MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
AAA. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
DUFF & PHELP'S INC. BOND RATINGS
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA--High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
B-19
<PAGE> 43
Cash Account Trust 2
- ----------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at April 30, 1997
(Value in thousands)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Corporate Obligations Value
<S> <C>
BANKING--6.4%
- ----------------------------------------------------------
(a)Bankers Trust New York Corp.
5.69%, 5/1/97 $ 12,996
- ----------------------------------------------------------
Credit Lyonnais N.A. Inc.
5.80%, 7/22/97 14,805
- ----------------------------------------------------------
Sumitomo Bank Capital Markets, Inc.
5.54%, 5/12/97 9,983
- ----------------------------------------------------------
37,784
BUSINESS LOANS--19.5%
- ----------------------------------------------------------
Heller Financial, Inc.
5.85%, 7/14/97 9,881
- ----------------------------------------------------------
International Securitization Corp.
5.68%, 6/23/97 14,876
- ----------------------------------------------------------
Jet Funding Corp.
5.82%, 7/31/97 14,783
- ----------------------------------------------------------
National Fleet Funding Corp.
5.42%, 5/13/97 14,973
- ----------------------------------------------------------
Preferred Receivables Funding Corp.
5.68%, 5/8/97 9,989
- ----------------------------------------------------------
Sigma Finance, Inc.
5.68%, 6/16/97 14,892
- ----------------------------------------------------------
Strategic Asset Funding Corp.
5.83%, 6/30/97 14,856
- ----------------------------------------------------------
WCP Funding Inc.
5.65%, 6/2/97 9,950
- ----------------------------------------------------------
Working Capital Management Co., L.P.
5.72%, 6/10/97 9,937
- ----------------------------------------------------------
114,137
CAPITAL AND EQUIPMENT LENDING--9.6%
- ----------------------------------------------------------
BTM Capital Corp.
5.82%, 7/15/97 14,821
- ----------------------------------------------------------
(a)Caterpillar Financial Services Corp.
5.63%, 5/28/97 15,000
- ----------------------------------------------------------
SRD Finance Inc.
5.72%, 6/19/97 14,884
- ----------------------------------------------------------
(a)Sanwa Business Credit Corp.
5.71%, 5/16/97 11,499
- ----------------------------------------------------------
56,204
CAPTIVE BUSINESS LENDING--2.9%
- ----------------------------------------------------------
(a)(b) Capital One Funding Corp.
5.70%, 5/7/97 8,868
- ----------------------------------------------------------
(a)FINOVA Capital Corp.
5.77%, 5/15/97 8,000
- ----------------------------------------------------------
16,868
</TABLE>
<TABLE>
<CAPTION>
Corporate Obligations Value
<S> <C>
CONSUMER LENDING--6.5%
- ----------------------------------------------------------
Barton Capital Corp.
5.69%, 5/15/97 $ 14,967
- ----------------------------------------------------------
(a)Federal National Mortgage Association
5.68%, 5/6/97 4,963
- ----------------------------------------------------------
(a)Household International, Inc.
5.67%, 5/27/97 5,001
- ----------------------------------------------------------
Sears Roebuck Acceptance Corp.
5.66%, 6/9/97 12,921
- ----------------------------------------------------------
37,852
DIVERSIFIED FINANCE--6.8%
- ----------------------------------------------------------
(a)CIT Group Holdings, Inc.
5.62%, 5/1/97 14,697
- ----------------------------------------------------------
Dynamic Funding Corp.
5.80%, 7/7/97 9,894
- ----------------------------------------------------------
STRAIT Capital Corp.
5.53%, 5/15/97 14,968
- ----------------------------------------------------------
39,559
FINANCIAL SERVICES--14.0%
- ----------------------------------------------------------
(a)Bear Stearns Companies Inc.
5.69% - 5.72%, 5/6/97 - 5/19/97 18,000
- ----------------------------------------------------------
(a)Goldman, Sachs Group, L.P.
5.70%, 5/18/97 13,000
- ----------------------------------------------------------
(a)(b)Lehman Brothers Holdings Inc.
5.75%, 5/21/97 18,000
- ----------------------------------------------------------
(a)Merrill Lynch & Co., Inc.
5.65%, 5/19/97 12,998
- ----------------------------------------------------------
Nomura Holding America Inc.
5.84%, 7/16/97 9,879
- ----------------------------------------------------------
(a)Salomon Inc.
5.89%, 5/7/97 10,000
- ----------------------------------------------------------
81,877
HEALTH CARE--1.7%
- ----------------------------------------------------------
Columbia/HCA Healthcare Corp.
5.68%, 6/17/97 9,927
- ----------------------------------------------------------
STATE OBLIGATION--.4%
- ----------------------------------------------------------
(a)Texas, General Obligation
5.63%, 5/7/97 2,255
- ----------------------------------------------------------
</TABLE>
<PAGE> 44
Cash Account Trust 3
- ---------------------------------------------------------
MONEY MARKET PORTFOLIO
Investments at April 30, 1997
(Value in thousands)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
UTILITIES--8.1%
- ----------------------------------------------------------
Brazos River Authority, Texas
5.67%, 6/6/97 $ 8,000
- ----------------------------------------------------------
Frontier Corp.
5.53%, 5/16/97 14,966
- ----------------------------------------------------------
Gulf Coast Waste Authority, Texas
5.43%, 5/7/97 14,223
- ----------------------------------------------------------
New Hampshire
Industrial Development Authority
5.67%, 6/6/97 10,000
- ----------------------------------------------------------
47,189
- ----------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS--75.9%
(average maturity: 32 days) 443,652
- ----------------------------------------------------------
CERTIFICATES OF DEPOSIT
(a)AmSouth Bank of Alabama
5.59%, 5/7/97 13,996
- ----------------------------------------------------------
Bayerische Landesbank
5.72%, 7/24/97 9,999
- ----------------------------------------------------------
(a)Key Bank, N.A.
5.64%, 5/1/97 9,998
- ----------------------------------------------------------
MBNA America Bank N.A.
5.75%, 7/21/97 10,000
- ----------------------------------------------------------
(a)Morgan Guaranty Trust
5.63%, 5/1/97 9,996
- ----------------------------------------------------------
(a)Old Kent Bank
5.70%, 5/1/97 18,000
- ----------------------------------------------------------
(a)PNC Bank, N.A.
5.62%, 5/1/97 9,995
- ----------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT--14.0%
(average maturity: 21 days) 81,984
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
(C)REPURCHASE AGREEMENTS
(Dated 4/97, collateralized by Federal Home Loan
Mortgage Corp. and Federal National Mortgage
Association securities)
- ----------------------------------------------------------
Nomura Securities International, Inc.
(held at The Bank of New York)
5.57% - 5.65%, 5/21/97 - 6/27/97 $ 40,000
- ----------------------------------------------------------
Salomon Brothers Inc.
(held at The Bank of New York)
5.65%, 6/11/97 25,000
- ----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--11.1%
(average maturity: 42 days) 65,000
- ----------------------------------------------------------
TOTAL INVESTMENTS--101.0%
(average maturity: 32 days) 590,636
- ----------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(1.0%) (5,689)
- ----------------------------------------------------------
NET ASSETS--100% $584,947
==========================================================
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 45
Cash Account Trust 4
- ----------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
Investments at April 30, 1997
(Value in thousands)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Short-Term Notes Value
<S> <C>
(Issued or guaranteed by U.S. Government agencies
or instrumentalities)
- -----------------------------------------------------------
(a)Export-Import Bank of the United States
Kuwait Investment Authority
5.92%, 5/15/97 $ 6,498
- -----------------------------------------------------------
Federal Home Loan Bank
(a) 5.51%, 5/2/97 - 5/27/97 11,198
5.99%, 9/18/97 2,999
- -----------------------------------------------------------
Federal Home Loan Mortgage Corp.
6.16%, 9/1/97 2,856
- -----------------------------------------------------------
Federal National Mortgage Association
(a) 5.53% - 5.68%, 5/3/97 - 5/6/97 27,353
5.76% - 6.10%, 7/25/97 - 9/3/97 11,066
- -----------------------------------------------------------
(a)Overseas Private Investment Corp.
Omolon
5.66%, 5/6/97 26,000
- -----------------------------------------------------------
(a)Student Loan Marketing Association
5.55% - 5.62%, 5/6/97 - 6/30/97 96,666
- -----------------------------------------------------------
TOTAL SHORT-TERM NOTES--33.9%
(average maturity: 16 days) 184,636
- -----------------------------------------------------------
(c)REPURCHASE AGREEMENTS
(Dated 3/97 and 4/97, collateralized by Federal
Home Loan Mortgage Corp., Federal National
Mortgage Association, Government National
Mortgage Association and U.S. Treasury
securities)
- -----------------------------------------------------------
Bear, Stearns & Co. Inc.
5.66% - 5.75%, 5/7/97 - 7/2/97 50,000
- -----------------------------------------------------------
CS First Boston Inc.
(held at The Chase Manhattan Bank)
5.58%, 5/1/97 20,000
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Short-Term Notes Value
<S> <C>
Chase Securities, Inc.
(held at The Chase Manhattan Bank)
5.55%, 5/1/97 $ 20,000
- -----------------------------------------------------------
Goldman, Sachs & Co.
(held at The Bank of New York)
5.40% - 5.45%, 5/2/97 - 5/5/97 21,000
- -----------------------------------------------------------
Lehman Government Securities Inc.
(held at The Chase Manhattan Bank)
5.48%, 5/7/97 23,000
- -----------------------------------------------------------
Merrill Lynch Government Securities, Inc.
(held at The Chase Manhattan Bank)
5.43%, 5/5/97 22,000
- -----------------------------------------------------------
Morgan Stanley & Co. Inc.
(held at The Bank of New York)
5.59% - 5.68%, 6/11/97 - 7/30/97 80,000
- -----------------------------------------------------------
Nomura Securities International, Inc.
(held at The Bank of New York)
5.55% - 5.60%, 5/14/97 - 5/21/97 77,000
- -----------------------------------------------------------
Salomon Brothers Inc.
(held at The Bank of New York)
5.65% - 5.73%, 6/18/97 - 7/15/97 76,000
- -----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS--71.4%
(average maturity: 29 days) 389,000
- -----------------------------------------------------------
TOTAL INVESTMENTS--105.3%
(average maturity: 25 days) 573,636
- -----------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(5.3)% (29,135)
- -----------------------------------------------------------
NET ASSETS--100% $544,501
- -----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 46
Cash Account Trust 5
- ---------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at April 30, 1997
(Value in thousands)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
(a)Variable Rate Demand Securities Value
<S> <C>
ARIZONA
- ---------------------------------------------------------
Apache County
Industrial Development Authority
4.50% $ 6,000
- ---------------------------------------------------------
Health Facilities Authority
4.55% 2,000
- ---------------------------------------------------------
Maricopa County
Pollution Control Corp.
4.60% 2,600
CALIFORNIA
- ---------------------------------------------------------
Los Angeles
Harbor Improvement Corp.
4.70% 6,500
- ---------------------------------------------------------
Sacramento County
Housing Authority
4.70% 3,400
DISTRICT OF COLUMBIA
- ---------------------------------------------------------
General Obligation
4.15% 1,100
FLORIDA
- ---------------------------------------------------------
Alachua County
Health Facilities Authority
4.50% 3,800
- ---------------------------------------------------------
Dade County
Health Facilities Authority
4.40% 1,600
ILLINOIS
- ---------------------------------------------------------
Development Finance Authority
5.00% 2,000
- ---------------------------------------------------------
Elgin
Judson College Project
4.65% 4,000
- ---------------------------------------------------------
Rockford
Industrial Project Revenue
4.80% 2,300
- ---------------------------------------------------------
Student Assistance Commission
4.60% 1,000
INDIANA
- ---------------------------------------------------------
Health Facility Financing Authority
4.62% 5,645
- ---------------------------------------------------------
Ossian
Economic Development Revenue
4.80% 1,000
- ---------------------------------------------------------
Rockport
Pollution Control Revenue
4.05% 2,000
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(a)Variable Rate Demand Securities Value
<S> <C>
Seymour
Economic Development Revenue
4.40% $ 3,600
KENTUCKY
- ---------------------------------------------------------
Boone County
Pollution Control Revenue
3.65% 4,000
- ---------------------------------------------------------
Bowling Green
Industrial Building Revenue
4.40% 2,400
- ---------------------------------------------------------
Mayfield
Multi-City Lease Revenue
4.15% 5,000
LOUISIANA
- ---------------------------------------------------------
Public Facilities Authority
4.50% 5,500
NEW HAMPSHIRE
- ---------------------------------------------------------
Business Finance Authority
4.60% 2,000
NEW MEXICO
- ---------------------------------------------------------
Farmington
Pollution Control Revenue
4.53% 6,200
NORTH CAROLINA
- ---------------------------------------------------------
Lenoir County
Pollution Control Financing Authority
4.75% 1,000
- ---------------------------------------------------------
Medical Care Commission
Hospital Revenue
4.65% 4,250
OHIO
- ---------------------------------------------------------
Medina County
Health Care Facilities Revenue
4.70% 4,500
OREGON
- ---------------------------------------------------------
Economic Development Revenue
4.70% 4,500
PENNSYLVANIA
- ---------------------------------------------------------
Delaware County
Redevelopment Authority
5.17% 5,000
- ---------------------------------------------------------
Delaware Valley
Regional Finance Authority
4.60% 7,200
- ---------------------------------------------------------
Emmaus
General Authority Revenue
4.56% 7,000
- ---------------------------------------------------------
</TABLE>
<PAGE> 47
Cash Account Trust 6
- ---------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at April 30, 1997
(Value in thousands)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
Lehigh County
Industrial Development Authority
3.65% $ 5,000
- ---------------------------------------------------------
Philadelphia
Redevelopment Authority
4.70% 1,500
TENNESSEE
- ---------------------------------------------------------
Clarksville
Public Building Authority
4.70% 4,300
- ---------------------------------------------------------
Maury County
Industrial Development Board
4.90% 2,000
- ---------------------------------------------------------
Smyrna Housing Association
Multi-Family Housing Revenue
4.90% 5,000
TEXAS
- ---------------------------------------------------------
Corpus Christi
Industrial Development Corp.
4.15% 2,100
- ---------------------------------------------------------
Port Arthur
Industrial Development Corp.
4.55% 5,000
UTAH
- ---------------------------------------------------------
Springville
Industrial Development Revenue
4.60% 1,150
VIRGINIA
- ---------------------------------------------------------
Louisa County
Industrial Development Authority
4.70% 2,000
WASHINGTON
- ---------------------------------------------------------
Port Angeles
Industrial Development Corp.
4.40% 3,500
WISCONSIN
- ---------------------------------------------------------
Eau Claire
Solid Waste Disposal Revenue
4.70% 1,800
- ---------------------------------------------------------
TOTAL VARIABLE RATE
DEMAND SECURITIES--63.6%
(average maturity: 6 days) 140,445
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
OTHER SECURITIES
ALASKA
- ---------------------------------------------------------
Valdez
Marine Terminal Revenue
3.45% - 3.75%, 5/13/97 - 7/24/97 $ 6,000
ARIZONA
- ---------------------------------------------------------
Salt River Project
Agricultural Improvement and Power District
3.70%, 6/23/97 3,500
CALIFORNIA
- ---------------------------------------------------------
Revenue Anticipation Warrants
3.97%, 6/30/97 700
COLORADO
- ---------------------------------------------------------
Platte River Power Authority
3.50%, 5/12/97 1,000
FLORIDA
- ---------------------------------------------------------
Orange County
Governmental Regional Financing
3.75%, 6/23/97 3,500
- ---------------------------------------------------------
Orlando
Waste Water System Revenue
3.55%, 6/20/97 1,000
- ---------------------------------------------------------
Sarasota County
Public Hospital District
3.50%, 5/14/97 2,850
- ---------------------------------------------------------
Sunshine State
Governmental Financing Commission
3.70%, 6/20/97 3,000
GEORGIA
- ---------------------------------------------------------
Municipal Electric Authority
3.40%, 5/12/97 2,650
INDIANA
- ---------------------------------------------------------
Gary
Environmental Improvement Revenue
3.80%, 7/24/97 1,000
- ---------------------------------------------------------
Jasper County
Pollution Control Revenue
3.50% - 3.85%, 5/9/97 - 7/18/97 6,535
KENTUCKY
- ---------------------------------------------------------
Danville
Multi-City Lease Revenue
3.70%, 6/20/97 3,490
- ---------------------------------------------------------
Pendleton County
Multi-County Lease Revenue
3.40%, 5/8/97 - 5/12/97 4,500
- ---------------------------------------------------------
</TABLE>
<PAGE> 48
Cash Account Trust 7
- ---------------------------------------------------------
TAX-EXEMPT PORTFOLIO
Investments at April 30, 1997
(Value in thousands)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
MARYLAND
- ---------------------------------------------------------
Anne Arundel County
Port Facilities Revenue
3.50%, 5/14/97 $ 1,000
MISSISSIPPI
- ---------------------------------------------------------
Claiborne County
Pollution Control Revenue
3.75%, 7/24/97 4,400
NEW HAMPSHIRE
- ---------------------------------------------------------
Business Finance Authority
3.55%, 5/13/97 4,000
NEW YORK
- ---------------------------------------------------------
General Obligation
4.02%, 8/1/97 2,503
- ---------------------------------------------------------
General Obligation
Bond Anticipation Notes
3.85%, 7/23/97 1,300
- ---------------------------------------------------------
Municipal Water Finance Authority
3.75%, 7/31/97 1,000
NORTH CAROLINA
- ---------------------------------------------------------
Municipal Power Agency
3.45%, 5/9/97 2,000
PENNSYLVANIA
- ---------------------------------------------------------
Philadelphia School District
Tax and Revenue Anticipation Notes
4.00%, 6/30/97 801
TEXAS
- ---------------------------------------------------------
Brazoria County
Brazos River Harbor Navigation District
3.55%, 5/14/97 1,000
- ---------------------------------------------------------
Dallas
Area Rapid Transit
3.45%, 5/13/97 1,000
- ---------------------------------------------------------
Harris County
Health Facilities Development Corp.
3.75%, 6/30/97 5,000
- ---------------------------------------------------------
Municipal Power Agency
3.45%, 5/9/97 1,200
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Public Finance Authority
3.45%, 5/12/97 $ 3,000
- ---------------------------------------------------------
San Antonio
Electric and Gas Systems
3.45%, 5/12/97 - 5/14/97 4,400
- ---------------------------------------------------------
Tax and Revenue Anticipation Notes
3.95%, 8/29/97 501
UTAH
- ---------------------------------------------------------
Tooele County
Waste Treatment Revenue
4.15%, 7/15/97 1,400
VIRGINIA
- ---------------------------------------------------------
Chesapeake
Industrial Development Authority
3.40%, 5/15/97 1,000
- ---------------------------------------------------------
Chesterfield County
Industrial Development Authority
3.50% - 3.75%, 5/14/97 - 7/24/97 3,350
- ---------------------------------------------------------
Louisa County
Industrial Development Authority
3.75% - 4.05%, 6/23/97 - 7/16/97 2,000
- ---------------------------------------------------------
Norfolk
Industrial Development Authority
3.45%, 5/13/97 2,315
- ---------------------------------------------------------
TOTAL OTHER SECURITIES--37.6%
(average maturity: 40 days) 82,895
- ---------------------------------------------------------
TOTAL INVESTMENTS--101.2%
(average maturity: 18 days) 223,340
- ---------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(1.2)% (2,549)
- ---------------------------------------------------------
NET ASSETS--100% $220,791
- ---------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 49
Cash Account Trust 8
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIOS OF INVESTMENTS
- --------------------------------------------------------------------------------
Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in Note (a). For each security, cost (for
financial reporting and federal income tax purposes) and carrying value are the
same. Likewise, carrying value approximates principal amount.
(a) Variable rate securities. The rates shown are the current rates at April 30,
1997. The dates shown represent the demand date or the next interest rate change
date. Securities in the Tax-Exempt Portfolio shown without a date are payable
within five business days and are backed by credit support agreements from banks
or insurance institutions.
(b) Illiquid securities. At April 30, 1997, the aggregate value of illiquid
securities was $26,868,000 in the Money Market Portfolio, which represented 4.6%
of net assets.
(c) Repurchase agreements are fully collateralized by U.S. Government
securities. All collateral is held at the Fund's custodian bank, Investors
Fiduciary Trust Company, or at subcustodian banks, as indicated. The collateral
is monitored daily by the Fund so that its market value exceeds the carrying
value of the repurchase agreement.
See accompanying Notes to Financial Statements.
<PAGE> 50
Cash Account Trust 9
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS
CASH ACCOUNT TRUST
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the Money Market, Government Securities and
Tax-Exempt Portfolios, comprising Cash Account Trust, as of April 30, 1997, and
the related statements of operations for the year then ended and changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the fiscal periods since 1993. These financial statements
and financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
April 30, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios comprising Cash Account Trust at April 30, 1997, the results
of their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended and the financial highlights for
each of the fiscal periods since 1993, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 13, 1997
<PAGE> 51
Cash Account Trust 10
- -------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997
(in thousands)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
ASSETS PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Investments, at amortized cost:
Short-term securities $525,636 184,636 223,340
- ------------------------------------------------------------------------------------------------------------
Repurchase agreements 65,000 389,000 --
- ------------------------------------------------------------------------------------------------------------
Receivable for:
Interest 1,359 3,208 893
- ------------------------------------------------------------------------------------------------------------
Securities sold -- -- 2,005
- ------------------------------------------------------------------------------------------------------------
Fund shares sold 24 28 9
- ------------------------------------------------------------------------------------------------------------
Total assets 592,019 576,872 226,247
- ------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Cash overdraft 4,417 10 4,552
- ------------------------------------------------------------------------------------------------------------
Payable for:
Dividends 692 628 142
- ------------------------------------------------------------------------------------------------------------
Fund shares redeemed 1,359 947 609
- ------------------------------------------------------------------------------------------------------------
Securities purchased -- 30,000 --
- ------------------------------------------------------------------------------------------------------------
Management fee 137 311 39
- ------------------------------------------------------------------------------------------------------------
Distribution services fee 296 272 69
- ------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 145 152 32
- ------------------------------------------------------------------------------------------------------------
Trustees' fees and other 26 51 13
- ------------------------------------------------------------------------------------------------------------
Total liabilities 7,072 32,371 5,456
- ------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $584,947 544,501 220,791
- ------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- ------------------------------------------------------------------------------------------------------------
Shares outstanding 584,947 544,501 220,791
- ------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $1.00 1.00 1.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 52
Cash Account Trust 11
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year ended April 30, 1997
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY GOVERNMENT
MARKET SECURITIES TAX-EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME $30,185 19,512 3,634
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 1,150 744 212
- -----------------------------------------------------------------------------------------------------------------------
Distribution services fee 3,287 2,127 506
- -----------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 965 489 141
- -----------------------------------------------------------------------------------------------------------------------
Registration costs 141 87 87
- -----------------------------------------------------------------------------------------------------------------------
Professional fees 32 16 6
- -----------------------------------------------------------------------------------------------------------------------
Reports to shareholders 49 30 10
- -----------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 26 13 6
- -----------------------------------------------------------------------------------------------------------------------
Total expenses before expense waiver 5,650 3,506 968
- -----------------------------------------------------------------------------------------------------------------------
Less expenses waived by the investment manager (175) (261) (143)
- -----------------------------------------------------------------------------------------------------------------------
Total expenses absorbed by the Portfolio 5,475 3,245 825
- -----------------------------------------------------------------------------------------------------------------------
Net investment income 24,710 16,267 2,809
- -----------------------------------------------------------------------------------------------------------------------
Net realized loss on investments (1,416) -- --
- -----------------------------------------------------------------------------------------------------------------------
Change in unrealized depreciation on investments 1,416 -- --
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $24,710 16,267 2,809
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
Years ended April 30, 1997 and 1996
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT TAX-EXEMPT
PORTFOLIO SECURITIES-PORTFOLIO PORTFOLIO
--------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
Net investment income $ 24,710 20,031 16,267 8,773 2,809 2,208
- ----------------------------------------------------------------------------------------------------------------------------
Net realized loss (1,416) -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Change in unrealized depreciation 1,416 (590) -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Capital contribution from investment manager -- 590 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (24,710) (20,031) (16,267) (8,773) (2,809) (2,208)
- ----------------------------------------------------------------------------------------------------------------------------
Capital share transactions (dollar amounts and
number of shares are the same):
Shares sold 2,030,788 1,341,848 1,283,520 684,586 446,705 256,475
- ----------------------------------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 24,932 20,087 16,766 8,850 2,925 2,221
- ----------------------------------------------------------------------------------------------------------------------------
2,055,720 1,361,935 1,300,286 693,436 449,630 258,696
Shares redeemed (1,925,798) (1,285,461) (945,704) (641,537) (295,820) (259,463)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from capital share
transactions and total increase (decrease) in net
assets 129,922 76,474 354,582 51,899 153,810 (767)
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 455,025 378,551 189,919 138,020 66,981 67,748
- ----------------------------------------------------------------------------------------------------------------------------
End of year $ 584,947 455,025 544,501 189,919 220,791 66,981
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 53
Cash Account Trust 12
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
Cash Account Trust (the Fund) is an open-end management investment company
organized as a business trust under the laws of Massachusetts currently offering
three series of shares (Portfolios). The Money Market Portfolio invests
primarily in short-term high quality obligations of major banks and
corporations. The Government Securities Portfolio invests exclusively in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and repurchase agreements thereon. The Tax-Exempt Portfolio
invests in short-term high quality municipal securities.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at amortized cost, which approximates market value. In
the event that a deviation of 1/2 of 1% or more exists between a Portfolio's
$1.00 per share net asset value, calculated at amortized cost, and the net asset
value calculated by reference to market-based values, or if there is any other
deviation that the Board of Trustees believes would result in a material
dilution to shareholders or purchasers, the Board of Trustees will promptly
consider what action should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Interest income is recorded on the accrual basis and
includes amortization of premium and discount on investments.
EXPENSES
Expenses arising in connection with a Portfolio are allocated to that Portfolio.
Other Fund expenses are allocated among the Portfolios in proportion to their
relative net assets.
FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund shares are sold and redeemed on a continuous basis at net asset value. On
each day that the New York Stock Exchange is open for trading, each Portfolio
determines its net asset value per share (NAV) by dividing the total value of
the Portfolio's investments and other assets, less liabilities, by the number of
Portfolio shares outstanding. The NAV is determined at 11:00 a.m., 1:00 p.m. and
3:00 p.m. Chicago time for the Money Market and Government Securities Portfolios
and at 11:00 a.m. and 3:00 p.m. Chicago time for the Tax-Exempt Portfolio. Each
Portfolio declares a daily dividend, equal to its net investment income for that
day, payable monthly. Net investment income consists of all interest income plus
(minus) all taxable realized gains (losses) on portfolio securities, minus all
expenses of the Portfolio.
FEDERAL INCOME TAXES
Each Portfolio has complied with the special provisions of the Internal Revenue
Code available to investment companies and therefore no federal income tax
provision is required.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Fund has a management agreement with Zurich Kemper Investments, Inc. (ZKI)
and pays a management fee at an annual rate of .22% of the first $500 million of
average daily net assets declining to .15% of average daily net assets in excess
of $3 billion. During the year ended April 30, 1997, the Fund incurred
management fees of $2,106,000.
DISTRIBUTION AGREEMENT
The Fund also has an administration, shareholder services and distribution
agreement with Zurich Kemper Distributors, Inc. (ZKDI) (formerly known as Kemper
Distributors, Inc.). For its services as primary distributor, the Fund pays ZKDI
an annual fee of .60% of average daily net assets for the Money Market and
Government Securities Portfolios and .50% of average daily net assets for the
Tax-Exempt Portfolio. For the year ended April 30, 1997, the Fund incurred
distribution fees of $5,920,000. ZKDI has related service agreements with
various firms to provide cash management and other services for Fund
<PAGE> 54
Cash Account Trust 13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shareholders. Under these agreements, ZKDI pays such firms based on the average
daily net assets of those accounts they maintain and service at an annual rate
of .60% for the Money Market and Government Securities Portfolios, and .50% for
the Tax-Exempt Portfolio. During the year ended April 30, 1997, ZKDI paid fees
of $5,929,000 to various firms pursuant to the related service agreements.
SHAREHOLDER SERVICES AGREEMENT
Pursuant to a services agreement with the Fund's transfer agent, Zurich Kemper
Service Company (ZKSvC) (formerly known as Kemper Service Company) is the
shareholder service agent of the Fund. Under the agreement, ZKSvC received
shareholder services fees of $1,348,000 for the year ended April 30, 1997.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of ZKI.
During the year ended April 30, 1997, the Fund made no payments to its officers
and incurred trustees' fees of $28,000 to independent trustees.
EXPENSE ABSORPTION
For the period from May 1, 1996 through January 31, 1997, ZKI agreed to limit
the Portfolios' operating expenses to the following percentages of average daily
net assets: Money Market Portfolio (1.00%), Government Securities Portfolio
(.90%) and Tax-Exempt Portfolio (.80%). Beginning in February, 1997, the expense
limits were increased to the following percentages: Government Securities
Portfolio (.95%) and Tax-Exempt Portfolio (.85%). For the fiscal year ended
April 30, 1997, ZKI absorbed expenses of $579,000.
<PAGE> 55
Cash Account Trust 14
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended April 30,
MONEY MARKET PORTFOLIO 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .04 .02 .02
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 4.60% 4.96 4.38 2.42 2.65
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense waiver 1.00% 1.00 .99 .93 .84
- --------------------------------------------------------------------------------------------------------------------
Net investment income 4.51% 4.83 4.54 2.48 2.59
- --------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses 1.03% 1.05 1.05 1.20 1.36
- --------------------------------------------------------------------------------------------------------------------
Net investment income 4.48% 4.78 4.48 2.21 2.07
- --------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $584,947 455,025 378,551 156,153 34,267
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE:
The Money Market Portfolio's total returns for the years ended April 30, 1996
and 1995 include the effect of a capital contribution from the investment
manager. Without the capital contribution, the total returns would have been
4.80% and 4.16%, respectively.
<TABLE>
<CAPTION>
Year ended April 30,
GOVERNMENT SECURITIES PORTFOLIO 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .05 .05 .04 .02 .02
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 4.69% 5.01 4.37 2.49 2.65
- -------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense waiver .92% .90 .90 .84 .79
- -------------------------------------------------------------------------------------------------------------------
Net investment income 4.59% 4.88 4.66 2.47 2.63
- -------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses .99% 1.06 1.05 1.22 1.18
- -------------------------------------------------------------------------------------------------------------------
Net investment income 4.52% 4.72 4.51 2.09 2.24
- -------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $544,501 189,919 138,020 30,829 28,963
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 56
Cash Account Trust 15
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended April 30,
TAX-EXEMPT PORTFOLIO 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------
Net investment income and dividends declared .03 .03 .03 .02 .02
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $1.00 1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 2.82% 3.16 2.80 1.84 2.13
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses after expense waiver .81% .78 .76 .74 .71
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 2.78% 3.10 3.00 1.82 2.09
- -------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS:
Expenses .96% .98 .93 1.20 1.39
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 2.63% 2.90 2.83 1.36 1.41
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $220,791 66,981 67,748 16,991 10,014
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE FOR ALL PORTFOLIOS:
ZKI has agreed to temporarily waive certain operating expenses. The Other Ratios
to Average Net Assets are computed without this expense waiver.
FEDERAL TAX STATUS OF 1997 DIVIDENDS
All of the dividends from the Money Market and Government Securities Portfolios
are taxable as ordinary income. All of the dividends from the Tax-Exempt
Portfolio constitute tax-exempt interest which is not taxable for federal income
tax purposes; however, a portion of the dividends may be includable in the
alternative minimum tax calculation.
These dividends, whether received in cash or reinvested in shares, must be
included in your federal income tax return and must be reported by the Fund to
the Internal Revenue Service in accordance with U.S. Treasury Department
Regulations.
<PAGE> 57
CASH ACCOUNT TRUST
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(i) Financial statements included in Part A of the Registration
Statement:
Financial Highlights.
(ii) Financial statements included in Part B of the Registration
Statement:
Money Market, Government Securities and Tax-Exempt Portfolios.
Statements of assets and liabilities--April 30, 1997.
Statements of operations for the year ended April 30, 1997.
Statements of changes in net assets for each of the two years in
the period ended April 30, 1997.
Portfolios of investments--April 30, 1997.
Notes to financial statements.
Schedules II, III, IV and V are omitted as the required information is
not present.
Schedule I has been omitted as the required information is presented in
the Portfolio of investments at April 30, 1997.
(b) Exhibits
<TABLE>
<S> <C>
99.b1. Amended and Restated Agreement and Declaration of Trust.(1)
99.b2. By-Laws.(1)
99.b3. Inapplicable.
99.b4. Text of Share Certificate.(1)
99.b5. Investment Management Agreement.(3)
99.b6.(a) Administration, Shareholder Services and Distribution
Agreement.(3)
99.b6.(b) Form of Administration Services and Selling Group
Agreement.(1)
99.b7. Inapplicable.
99.b8. Custody Agreement.(1)
99.b9.(a) Agency Agreement.(1)
99.b9.(b) Supplement to Agency Agreement.(3)
99.b10. Inapplicable.
99.b11. Report and Consent of Independent Auditors.
99.b12. Inapplicable.
99.b13. Inapplicable.
99.b14. Inapplicable.
99.b15. See 99.b6.(a) above.
99.b16. Performance Calculations.(1)
99.b24. Power of Attorney.(2)
99.b485.(b) Representation of Counsel (Rule 485(b)).
27. Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement of Registrant on Form N-1A filed on or about July 28,
1995.
(2) Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement of Registrant on Form N-1A filed on or about July 28,
1995, except for the Power of Attorney of Dominique P. Morax, which is
incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement of Registrant on Form N-1A filed on or about July 26,
1996.
(3) Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement of Registrant on Form N-1A filed on or about July 26,
1996.
C-1
<PAGE> 58
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of July 7, 1997, there were 608, 331 and 529 holders of record of the
Money Market Portfolio, the Government Securities Portfolio and the Tax-Exempt
Portfolio, respectively.
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C-2
<PAGE> 59
ITEM 28(a) BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information pertaining to business and other connections of the
Registrant's investment advisers is hereby incorporated by reference to the
section of the Prospectus captioned "Investment Manager and Underwriter"
and to the section of the Statement of Additional Information captioned
"Investment Manager and Underwriter".
Zurich Kemper Investments, Inc., investment adviser of the Registrant, is
investment adviser of:
Kemper Mutual Funds:
Kemper Technology Fund
Kemper Total Return Fund
Kemper Growth Fund
Kemper Small Capitalization Equity Fund
Kemper Income and Capital Preservation Fund
Kemper National Tax-Free Income Series
Kemper Diversified Income Fund
Kemper High Yield Fund
Cash Equivalent Fund
Kemper U.S. Government Securities Fund
Kemper International Fund
Kemper Portfolios
Kemper State Tax-Free Income Series
Tax-Exempt California Money Market Fund
Kemper Adjustable Rate U.S. Government Fund
Kemper Blue Chip Fund
Kemper Global Income Fund
Kemper Target Equity Fund
Cash Account Trust
Investors Cash Trust
Investors Municipal Cash Fund
Kemper Value Plus Growth Fund
Kemper Quantitative Equity Fund
Kemper Horizon Fund
Kemper Europe Fund
Kemper Asian Growth Fund
Kemper Aggressive Growth Fund
Kemper Closed-End Funds:
Kemper High Income Trust
Kemper Intermediate Government Trust
Kemper Municipal Income Trust
Kemper Multi-Market Income Trust
Kemper Strategic Municipal Income Trust
The Growth Fund of Spain, Inc.
Kemper Strategic Income Fund
Zurich Money Funds
Zurich YieldWise Money Fund
Zurich Kemper Investments, Inc. also furnishes investment advice to and
manages investment portfolios for other clients including Investors Fund Series
and Kemper International Bond Fund.
C-3
<PAGE> 60
Item 28(b)(i) Business and Other Connections of Officers
and Directors of Zurich Kemper Investments, Inc.,
the Investment Adviser
TIMBERS, STEPHEN B.
Director, President, Chief Executive Officer and Chief Investment
Officer, Zurich Kemper Investments, Inc.
Director, Zurich Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Chairman, Zurich Kemper Service Company
Director, Dreman Value Advisors, Inc.
Director, ZKI Agency, Inc.
Director, President, Kemper International Management, Inc.
Trustee and President, Kemper Funds
Director, The LTV Corporation
Governor, Investment Company Institute
NEAL, JOHN E.
Director, Zurich Kemper Investments, Inc.
President, Kemper Funds Group, a unit of Zurich Kemper
Investments, Inc.
Director, President, Zurich Kemper Service Company
Director, Zurich Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Dreman Value Advisors, Inc.
Director, ZKI Agency, Inc.
Director, Community Investment Corporation
Director, Continental Community Development Corporation
Director, K-P Greenway, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
Director, RespiteCare
Director, Urban Shopping Centers, Inc.
Vice President, Kemper Funds
<PAGE> 61
MORAX, DOMINQUE P.
Director, Zurich Kemper Investments, Inc.
Chief Executive Officer and Chief Investment Officer,
Zurich Investment Management Limited
Trustee, Kemper Funds
Executive Committee, ZKI Holding Corporation
CHAPMAN, II, WILLIAM E.
President, Kemper Retirement Plans Group, a unit of Zurich Kemper
Investments, Inc.
Director, Executive Vice President, Zurich Kemper Distributors, Inc.
Executive Vice President, Zurich Kemper Service Company
VOGEL, VICTOR E.
Senior Executive Vice President, Zurich Kemper Investments, Inc.
Trustee, Zurich Kemper Investments, Inc. Profit Sharing Plan & Money
Purchase Pension Plan
Executive Vice President, Zurich Kemper Service Company
BEIMFORD, JR., JOSEPH P.
Executive Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Galaxy Offshore, Inc.
Vice President, Investors Cash Trust
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Global Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper International Bond Fund
Vice President, Kemper Investors Fund
Vice President, Zurich Money Funds
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Municipal Income Trust
Vice President, Kemper National Tax-Free Income Series
Vice President, Kemper Portfolios
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Income Fund
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Kemper U.S. Government Securities Fund
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
<PAGE> 62
Managing Director, Zurich Investment Management, Inc.
DUDASIK, PATRICK H.
Executive Vice President and Chief Financial Officer, Zurich Kemper
Investments, Inc.
Executive Vice President, Chief Financial Officer and Treasurer,
Dreman Value Advisors, Inc.
Chief Financial Officer and Treasurer, Zurich Investment Management, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Distributors, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Service Company
Treasurer, ZKI Agency, Inc.
FROEHLICH, PH.D, ROBERT J.
Executive Vice President, Chief Investment Strategist Zurich Kemper
Investments, Inc.
GREENAWALT, JAMES L.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, President, Zurich Kemper Distributors, Inc.
Director, President, ZKI Agency, Inc.
LANGBAUM, GARY A.
Executive Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Total Return Fund
Vice President, Kemper Investors Fund
MANZONI, JR., CHARLES R.
Executive Vice President, Secretary & General Counsel, Zurich Kemper
Investments, Inc.
Vice President, Kemper Funds
Secretary, ZKI Agency, Inc.
Secretary, Zurich Kemper Service Company
Secretary, Zurich Kemper Distributors, Inc.
Secretary, ZKI Holding Corporation
Secretary, Zurich Investment Management, Inc.
Secretary, Dreman Value Advisors, Inc.
MURRIHY, MAURA J.
Executive Vice President, Zurich Kemper Investments, Inc.
REYNOLDS, STEVEN H.
Executive Vice President, Chief Investment Officer - Equities, Zurich
Kemper Investments, Inc.
Vice President, Kemper Technology Fund
Vice President, Kemper Total Return Fund
Vice President, Kemper Growth Fund
Vice President, Kemper Small Capitalization Equity Fund
Vice President, Kemper International Fund
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Value Plus Growth Fund
Vice President, Kemper Quantitative Equity Fund
Vice President, Kemper Target Equity Fund
Vice President, Kemper Horizon Fund
Vice President, Kemper Investors Fund
Vice President, The Growth Fund of Spain, Inc.
Vice President, Kemper Europe Fund
<PAGE> 63
ROBERTS, SCOTT A.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Senior Managing Director, Zurich Investment Management, Inc.
SILIGMUELLER, DALE S.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Executive Vice President, Zurich Kemper Service Company
WEISS, ROBERT D.
Executive Vice President, Zurich Kemper Investments, Inc.
Director, Senior Managing Director, Zurich Investment Management, Inc.
BUKOWSKI, DANIEL J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Quantitative Equity Fund
Vice President, Kemper Value Plus Growth Fund
Vice President, Kemper Investors Fund
BUTLER, DAVID H.
Senior Vice President, Zurich Kemper Investments, Inc.
CERVONE, DAVID M.
Senior Vice President, Zurich Kemper Investments, Inc.
CESSINE, ROBERT S.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Investors Fund
CHESTER, TRACY McCORMICK
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Blue Chip Fund
Vice President, Kemper Target Equity Fund
CHIEN, CHRISTINE
Senior Vice President, Zurich Kemper Investments, Inc.
CIARLELLI, ROBERT W.
Senior Vice President, Zurich Kemper Investments, Inc.
Executive Vice President, Zurich Kemper Service Company
COLLORA, PHILIP J.
Senior Vice President and Assistant Secretary, Zurich Kemper
Investments, Inc.
Vice President and Secretary, Kemper Funds
<PAGE> 64
Assistant Secretary, Kemper International Management, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
Assistant Secretary, Dreman Value Advisors, Inc.
Assistant Secretary, ZKI Agency, Inc.
DUFFY, JEROME L.
Senior Vice President, Zurich Kemper Investments, Inc.
Treasurer, Kemper Funds
FENGER, JAMES E.
Senior Vice President, Zurich Kemper Investments, Inc.
FINK, THOMAS M.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
GALLAGHER, MICHAEL L.
Senior Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Kemper Service Company
GOERS, RICHARD A.
Senior Vice President, Zurich Kemper Investments, Inc.
GREENWALD, MARSHALL L.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
HARRINGTON, MICHAEL E.
Senior Vice President, Zurich Kemper Investments, Inc.
KEITH, GEORGE
Senior Vice President, Zurich Kemper Investments, Inc.
KLEIN, GEORGE
Senior Vice President, Zurich Kemper Investments, Inc.
Director, Managing Director, Zurich Investment Management, Inc.
KLEIN, MARTIN
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
KOCHER, GARY
Senior Vice President, Zurich Kemper Investments, Inc.
KORTH, FRANK D.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Technology Fund
McNAMARA, MICHAEL A.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
<PAGE> 65
Vice President, Kemper Investors Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
MOELLER, JAMES V.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
MOORE, C. PERRY
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, ZKI Agency, Inc.
MIER, CHRISTOPHER J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper National Tax-Free Income Series
Vice President, Kemper Municipal Income Trust
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Municipal Income Trust
RABIEGA, CRAIG F.
Senior Vice President, Zurich Kemper Investments, Inc.
First Vice President, Zurich Kemper Service Company
RACHWALSKI, JR. FRANK J.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Investors Cash Trust
Vice President, Kemper Investors Fund
Vice President, Zurich Money Funds
Vice President, Kemper Portfolios
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
RESIS, JR., HARRY E.
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
SILVIA, JOHN E.
Senior Vice President, Zurich Kemper Investments, Inc.
SMITH, JR., EDWARD BYRON
Senior Vice President, Zurich Kemper Investments, Inc.
SWANSON, DAVID
Senior Vice President, Zurich Kemper Investments, Inc.
<PAGE> 66
VANDENBERG, RICHARD
Senior Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper U.S. Government Securities Fund
Vice President, Kemper Portfolios
Vice President, Kemper Adjustable Rate U.S. Government Fund
VINCENT, CHRISTOPHER T.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
WONNACOTT, LARRY R.
Senior Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
BAZAN, KENNETH M.
First Vice President, Zurich Kemper Investments, Inc.
Director, K-P Greenway, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
BOEHM, JONATHAN J.
First Vice President, Zurich Kemper Investments, Inc.
Senior Vice President, Zurich Kemper Service Company
BURROW, DALE R.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Strategic Municipal Income Trust
BYRNES, ELIZABETH A.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Intermediate Government Trust
CHRISTIANSEN, HERBERT A.
First Vice President, Zurich Kemper Investments, Inc.
First Vice President, Zurich Kemper Service Company
COHEN, JERRI I.
First Vice President, Zurich Kemper Investments, Inc.
DeMAIO, CHRIS C.
First Vice President, Zurich Kemper Investments, Inc.
Vice President and Chief Accounting Officer, Zurich Kemper Service
Company
<PAGE> 67
DEXTER, STEPHEN P.
First Vice President, Zurich Kemper Investments, Inc.
DOYLE, DANIEL J.
First Vice President, Zurich Kemper Investments, Inc.
HALE, DAVID D.
First Vice President, Zurich Kemper Investments, Inc.
HAUSKEN, PHILIP D.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Distributors, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
HORTON, ROBERT J.
First Vice President, Zurich Kemper Investments, Inc.
INNES, BRUCE D.
First Vice President, Zurich Kemper Investments, Inc.
Co-President, International Association of Corporate and
Professional Recruiters
JACOBS, PETER M.
First Vice President, Zurich Kemper Investments, Inc.
KEELEY, MICHELLE M.
First Vice President, Zurich Kemper Investments, Inc.
KIEL, CAROL L.
First Vice President, Zurich Kemper Investments, Inc.
KNAPP, WILLIAM M.
First Vice President, Zurich Kemper Investments, Inc.
LASKA, ROBERTA E.
First Vice President, Zurich Kemper Investments, Inc.
LAUGHLIN, ANN M.
First Vice President, Zurich Kemper Investments, Inc.
LENTZ, MAUREEN P.
First Vice President, Zurich Kemper Investments, Inc.
McCRINDLE-PETRARCA, SUSAN
First Vice President, Zurich Kemper Investments, Inc.
McGOVERN, KAREN
First Vice President, Zurich Kemper Investments, Inc.
MICHAEL, DIANNE
First Vice President, Zurich Kemper Investments, Inc.
MINER, EDWARD
First Vice President, Zurich Kemper Investments, Inc.
MURRAY, SCOTT S.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
NORRIS, JOHNSTON A.
First Vice President, Zurich Kemper Investments, Inc.
<PAGE> 68
PANOZZO, ROBERTA L.
First Vice President, Zurich Kemper Investments, Inc.
PONTECORE, SUSAN E.
First Vice President, Zurich Kemper Investments, Inc.
RADIS, STEVE A.
First Vice President, Zurich Kemper Investments, Inc.
RATEKIN, DIANE E.
First Vice President, Assistant General Counsel and Assistant
Secretary, Zurich Kemper Investments, Inc.
Assistant Secretary, Zurich Kemper Distributors, Inc.
SMITH, ROBERT G.
First Vice President, Zurich Kemper Investments, Inc.
STUEBE, JOHN W.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
TEPPER, SHARYN A.
First Vice President, Zurich Kemper Investments, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
TRUTTER, JONATHAN W.
First Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
WETHERALD, ROBERT F.
First Vice President, Zurich Kemper Investments, Inc.
WILLSON, STEPHEN R.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Kemper Strategic Municipal Income Trust
WITTNEBEL, MARK E.
First Vice President, Zurich Kemper Investments, Inc.
ADAMS, DONALD
Vice President, Zurich Kemper Investments, Inc.
ALLEN, PATRICIA L.
Vice President, Zurich Kemper Investments, Inc.
ANTONAK, GEORGE A.
Vice President, Zurich Kemper Investments, Inc.
BALASUBRAMANIAM, KALAMADI
Vice President, Zurich Kemper Investments, Inc.
BARRY, JOANN M.
Vice President, Zurich Kemper Investments, Inc.
BARSANTI, WILLIAM
Vice President, Zurich Kemper Investments, Inc.
<PAGE> 69
BIEBERLY, CHRISTINE A.
Vice President, Zurich Kemper Investments, Inc.
BODEM, RICHARD A.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
BRENNAN, ELEANOR R.
Vice President, Zurich Kemper Investments, Inc.
BUCHANAN, PAMELA S.
Vice President, Zurich Kemper Investments, Inc.
BURKE, MARY PAT
Vice President, Zurich Kemper Investments, Inc.
BURSHTAN, DAVID H.
Vice President, Zurich Kemper Investments, Inc.
CARNEY, ANNE T.
Vice President, Zurich Kemper Investments, Inc.
CACCIOLA, RONALD
Vice President, Zurich Kemper Investments, Inc.
Managing Director, Zurich Investment Management, Inc.
CARTER, PAUL J.
Vice President and Compliance Manager, Zurich Kemper Investments, Inc.
CECOLA, MARY
Vice President, Zurich Kemper Investments, Inc.
CRAWSHAW, SUSAN
Vice President, Zurich Kemper Investments, Inc.
ESOLA, CHARLES J.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
FRIHART, THORA A.
Vice President, Zurich Kemper Investments, Inc.
GERACI, AUGUST L.
Vice President, Zurich Kemper Investments, Inc.
GOLAN, JAMES S.
Vice President, Zurich Kemper Investments, Inc.
GRAY, PATRICK
Vice President, Zurich Kemper Investments, Inc.
GROOTENDORST, TONYA
Vice President, Zurich Kemper Investments, Inc.
HECHT, MARC L.
Vice President, Zurich Kemper Investments, Inc.
Assistant Secretary, Zurich Kemper Distributors, Inc.
Assistant Secretary, ZKI Holding Corporation
Assistant Secretary, ZKI Agency, Inc.
Assistant Secretary, Zurich Investment Management, Inc.
Assistant Secretary, Dreman Value Advisors, Inc.
<PAGE> 70
HUOT, LISA L.
Vice President, Zurich Kemper Investments, Inc.
JASINSKI, R. ANTHONY
Vice President, Zurich Kemper Investments, Inc.
KARWOWSKI, KENNETH F.
Vice President, Zurich Kemper Investments, Inc.
KENNEDY, PATRICK J.
Vice President, Zurich Kemper Investments, Inc.
KOCH, DEBORAH L.
Vice President, Zurich Kemper Investments, Inc.
KOURY, KATHRYN E.
Vice President, Zurich Kemper Investments, Inc.
KOWALCZYK, MARK A.
Vice President, Zurich Kemper Investments, Inc.
Vice President, ZKI Agency, Inc.
KRANZ, KATHY J.
Vice President, Zurich Kemper Investments, Inc.
KRUEGER, PAMELA D.
Vice President, Zurich Kemper Investments, Inc.
KYCE, JOYCE
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
LAUTZ, STEPHEN
Vice President, Zurich Kemper Investments, Inc.
LeFEBVRE, THOMAS J.
Vice President, Zurich Kemper Investments, Inc.
MARKLEY, DAVID
Vice President, Zurich Kemper Investments, Inc.
MATZA, LINDA
Vice President, Zurich Kemper Investments, Inc.
McGINN, MARTHA R.
Vice President, Zurich Kemper Investments, Inc.
MILLER, GARY L.
Vice President, Zurich Kemper Investments, Inc.
MILLIGAN, BRIAN J.
Vice President, Zurich Kemper Investments, Inc.
<PAGE> 71
MULLEN, TERRENCE
Vice President, Zurich Kemper Investments, Inc.
MURPHY, THOMAS M.
Vice President, Zurich Kemper Investments, Inc.
NEVILLE, BRIAN P.
Vice President, Zurich Kemper Investments, Inc.
NORMAN, JR., DONALD L.
Vice President, Zurich Kemper Investments, Inc.
NOWAK, GREGORY J.
Vice President, Zurich Kemper Investments, Inc.
PANOZZO, ALBERT R.
Vice President, Zurich Kemper Investments, Inc.
PAXTON, THOMAS
Vice President, Zurich Kemper Investments, Inc.
QUADRINI, LISA L.
Vice President, Zurich Kemper Investments, Inc.
RANDALL, JR., WALTER R.
Vice President, Zurich Kemper Investments, Inc.
ROBINSON, DEBRA A.
Vice President, Zurich Kemper Investments, Inc.
RODGERS, JOHN B.
Vice President, Zurich Kemper Investments, Inc.
ROKOSZ, PAUL A.
Vice President, Zurich Kemper Investments, Inc.
ROSE, KATIE M.
Vice President, Zurich Kemper Investments, Inc.
RUDIN, MICHELLE I.
Vice President, Zurich Kemper Investments, Inc.
SAENGER, MARYELLEN
Vice President, Zurich Kemper Investments, Inc.
SOPHER, EDWARD O.
Vice President, Zurich Kemper Investments, Inc.
<PAGE> 72
SPILLER, KATHLEEN A.
Vice President, Zurich Kemper Investments, Inc.
SPURLING, CHRIS
Vice President, Zurich Kemper Investments, Inc.
STROMM, LAWRENCE D.
Vice President, Zurich Kemper Investments, Inc.
THOMAS, JILL
Vice President, Zurich Kemper Investments, Inc.
TRUNSKY, JUDITH C.
Vice President, Zurich Kemper Investments, Inc.
VANDEMERKT, RICHARD J.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
WALKER, ANGELA
Vice President, Zurich Kemper Investments, Inc.
WATKINS, JAMES K.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Service Company
WERTH, ELIZABETH C.
Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Distributors, Inc.
Assistant Secretary, Kemper Open-End Funds
WILNER, MITCHELL
Vice President, Zurich Kemper Investments, Inc.
WIZER, BARBARA K.
Vice President, Zurich Kemper Investments, Inc.
ZURAWSKI, CATHERINE N.
Vice President, Zurich Kemper Investments, Inc.
<PAGE> 73
Item 28(b)(ii) Business and Other Connections of Officers and Directors of
Zurich Investment Management Limited, the Investment Sub-Advisor
JOHNS, GORDON K.
Director, Managing Director, Zurich Investment Management Limited
Director, Thames Heritage Parade Limited
NEAL, JOHN E.
Director, Zurich Investment Management Limited
President, Kemper Funds Group, a unit of Zurich Kemper
Investments, Inc.
Director, Zurich Kemper Investments, Inc.
Director, President, Kemper Service Company
Director, Zurich Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Dreman Value Advisors, Inc.
Director, ZKI Agency, Inc.
Director, Community Investment Corporation
Director, Continental Community Development Corporation
Director, K-P Greenway, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
Director, RespiteCare
Director, Urban Shopping Centers, Inc.
Vice President, Kemper Funds
TIMBERS, STEPHEN B.
Director, Zurich Investment Management Limited
Director, President, Chief Executive Officer and Chief Investment
Officer, Zurich Kemper Investments, Inc.
Director, Dreman Value Advisors, Inc.
Director, Zurich Kemper Distributors, Inc.
Director, Zurich Investment Management, Inc.
Director, Chairman, Kemper Service Company
Director, President, Kemper International Management, Inc.
Trustee and President, Kemper Funds
Director, The LTV Corporation
Director, Investment Analysts Society of Chicago
Governor, Investment Company Institute
Director, ZKI Agency, Inc.
FERRO, DENNIS H.
Director, Managing Director-Equities, Zurich Investment
Management Limited
<PAGE> 74
DUDASIK, PATRICK H.
Director and Treasurer, Zurich Investment Management Limited
Senior Vice President, Zurich Kemper Investments, Inc.
Executive Vice President, Chief Financial Officer and Treasurer,
Dreman Value Advisors, Inc.
Vice President and Treasurer, Zurich Investment Management, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Distributors, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Service Company
Treasurer, ZKI Agency, Inc.
THOUIN-LEERKAMP, EDITH A.
Director-European Equities, Zurich Investment Management Limited
HAAS, RICHARD D.W.
Director, Finance Director, Compliance Officer and Joint
Secretary, Zurich Investment Management Limited
PRIDEAUX, TERENCE C.
Director, Zurich Investment Management Limited
KOMAROMY, LESLIE J.S.
Director, Zurich Investment Management Limited
WALLIS, STEPHEN P.
Director, Zurich Investment Management Limited
MASON, ANDREW
Director-Asian Equities, Zurich Investment Management Limited
SHANKAR, RAVI
Director-Fixed Income Strategy, Zurich Investment Management
Limited
SLENDEBROEK, MARC J.
Associate Director, Zurich Investment Management Limited
GRAHAM, ANDREW
Associate Director, Zurich Investment Management Limited
BOORMAN, JONATHAN J.
Associate Director, Zurich Investment Management Limited
<PAGE> 75
Item 28 (b)(iv) Business and Other Connections of Officers and
Directors of Zurich Investment Management, Inc., the Investment Adviser
WEISS, ROBERT D.
Senior Managing Director, Zurich Investment Management, Inc.
Executive Vice President, Zurich Kemper Investments, Inc.
ROBERTS, SCOTT A.
Director, Senior Managing Director, Zurich Investment Management, Inc.
Executive Vice President, Zurich Kemper Investments, Inc.
CACCIOLA, RONALD M.
Managing Director, Zurich Investment Management, Inc.
Vice President, Zurich Kemper Investments, Inc.
CUSICK, JAMES S.
Managing Director, Zurich Investment Management, Inc.
FINK, THOMAS M.
Managing Director, Zurich Investment Management, Inc.
Senior Vice President, Zurich Kemper Investments, Inc.
<PAGE> 76
GREENWALD, MARSHALL L.
Managing Director, Zurich Investment Management, Inc.
Senior Vice President, Zurich Kemper Investments, Inc.
HICKMAN, JOANNE
Managing Director, Zurich Investment Management, Inc.
KLEIN, GEORGE
Director, Managing Director, Zurich Investment Management, Inc.
Senior Vice President, Zurich Kemper Investments, Inc.
KLEIN, MARTIN
Managing Director, Zurich Investment Management, Inc.
MOELLER, JAMES V.
Managing Director, Zurich Investment Management, Inc.
Senior Vice President, Zurich Kemper Investments, Inc.
TRUTTER, JONATHAN W.
Managing Director, Zurich Investment Management, Inc.
First Vice President, Zurich Kemper Investments, Inc.
<PAGE> 77
VINCENT, CHRISTOPHER T.
Managing Director, Zurich Investment Management, Inc.
Senior Vice President, Zurich Kemper Investments, Inc.
WONNACOTT, LARRY R.
Managing Director, Zurich Investment Management, Inc.
Senior Vice President, Zurich Kemper Investments, Inc.
DUDASIK, PATRICK H.
Chief Financial Officer, Treasurer, Zurich Investment Management, Inc.
Executive Vice President and Chief Financial Officer, Zurich Kemper
Investments, Inc.
Executive Vice President, Chief Financial Officer and Treasurer,
Dreman Value Advisors, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Distributors, Inc.
Treasurer and Chief Financial Officer, Zurich Kemper Service Company
Treasurer, ZKI Agency, Inc.
MANZONI, JR., CHARLES R.
Secretary, Zurich Investment Management, Inc.
Executive Vice President, Secretary & General Counsel, Zurich Kemper
Investments, Inc.
Vice President, Kemper Funds
Secretary, ZKI Agency, Inc.
Secretary, Zurich Kemper Service Company
Secretary, Zurich Kemper Distributors, Inc.
Secretary, ZKI Holding Corporation
Secretary, Dreman Value Advisors, Inc.
COLLORA, PHILIP J.
Assistant Secretary, Zurich Investment Management, Inc.
Senior Vice President and Assistant Secretary, Zurich Kemper
Investments, Inc.
Vice President and Secretary, Kemper Funds
Assistant Secretary, Kemper International Management, Inc.
Assistant Secretary, Dreman Value Advisors, Inc.
Assistant Secretary, ZKI Agency, Inc.
<PAGE> 78
HANSKEN, PHILIP D.
Assistant Secretary, Zurich Investment Management, Inc.
First Vice President, Zurich Kemper Investments, Inc.
Vice President, Zurich Kemper Distributors, Inc.
HECHT, MARC L.
Assistant Secretary, Zurich Investment Management, Inc.
Vice President, Zurich Kemper Investments, Inc.
Assistant Secretary, Zurich Kemper Distributors, Inc.
Assistant Secretary, ZKI Holding Corporation
Assistant Secretary, ZKI Agency, Inc.
Assistant Secretary, Dreman Value Advisors, Inc.
TEPPER, SHARYN A.
Assistant Secretary, Zurich Investment Management, Inc.
First Vice President, Zurich Kemper Investments, Inc.
TIMBERS, STEPHEN B.
Director, Zurich Investment Management, Inc.
Director, President, Chief Executive Officer and Chief Investment
Officer, Zurich Kemper Investments, Inc.
Director, Zurich Kemper Distributors, Inc.
Director, Chairman, Zurich Kemper Service Company
Director, Dreman Value Advisors, Inc.
Director, ZKI Agency, Inc.
Director, President, Kemper International Management, Inc.
Trustee and President, Kemper Funds
Director, The LTV Corporation
Governor, Investment Company Institute
<PAGE> 79
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Zurich Kemper Distributors, Inc. acts as principal underwriter of
the Registrant's shares and acts as principal underwriter of the Kemper Funds,
Investors Fund Series and Kemper International Bond Fund.
(b) Information on the officers and directors of Zurich Kemper
Distributors, Inc., principal underwriter for the Registrant is set forth
below. The principal business address is 222 South Riverside Plaza, Chicago,
Illinois 60606.
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
---- ---------------- ----------
<S> <C> <C>
James L. Greenawalt Director, President None
William E. Chapman, II Director, Executive Vice President None
John E. Neal Director Vice President
Stephen B. Timbers Director President/Trustee
Patrick H. Dudasik Financial Principal, Treasurer
and Chief Financial Officer None
Linda A. Bercher Senior Vice President None
Thomas V. Bruns Senior Vice President None
Terry Cunningham Senior Vice President None
John H. Robison, Jr. Senior Vice President None
Henry J. Schulthesz Senior Vice President None
Philip D. Hausken Vice President None
Carlene D. Merold Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Charles R. Manzoni, Jr. Secretary Vice President
Marc L. Hecht Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
</TABLE>
(c) Not applicable.
<PAGE> 80
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents are maintained at the offices of the
Registrant, the offices of Registrant's investment adviser, Zurich Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at the
offices of the Registrant's principal underwriter, Zurich Kemper Distributors,
Inc., 222 South Riverside Plaza, Chicago, Illinois 60606 or, in the case of
records concerning custodial functions, at the offices of the custodian,
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas City,
Missouri 64105 or, in the case of records concerning transfer agency functions,
at the offices of IFTC and of the shareholder service agent, Zurich Kemper
Service Company, 811 Main Street, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-18
<PAGE> 81
S I G N A T U R E S
-------------------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago and State of Illinois, on the 25th day
of July, 1997
CASH ACCOUNT TRUST
By /s/ Stephen Timbers
-----------------------------------
Stephen B. Timbers, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on July 25, 1997 on behalf of the
following persons in the capacities indicated.
Signature Title
--------- -----
/s/ Stephen Timbers President
---------------------------------- (Principal
Stephen B. Timbers Executive Officer)
and Trustee
/s/David W. Belin* Trustee
----------------------------------
/s/Lewis A. Burnham* Trustee
----------------------------------
/s/Donald L. Dunaway* Trustee
----------------------------------
/s/Robert B. Hoffman* Trustee
----------------------------------
/s/Donald R. Jones* Trustee
----------------------------------
/s/Dominique P. Morax* Trustee
----------------------------------
/s/Shirley D. Peterson* Trustee
----------------------------------
/s/William P. Sommers* Trustee
----------------------------------
/s/ Jerome Duffy Treasurer (Principal
--------------------------------- Financial and
Jerome L. Duffy Accounting Officer)
*Philip J. Collora signs this document pursuant to powers of attorney filed
with Post-Effective Amendment No. 5 to the Registration Statement of Registrant
on Form N-1A filed on or about July 28, 1995 (except for the Power of Attorney
of Dominique P. Morax which was filed with Post-Effective Amendment No. 6 to the
Registration Statement of Registrant on Form N-1A filed on or about July 26,
1996).
/s/ Philip Collora
---------------------------------
Philip J. Collora
<PAGE> 82
INDEX TO EXHIBITS
<TABLE>
<S> <C>
Exhibits
99.b1. Amended and Restated Agreement and Declaration of Trust.(1)
99.b2. By-Laws.(1)
99.b3. Inapplicable.
99.b4. Text of Share Certificate.(1)
99.b5. Investment Management Agreement.(3)
99.b6.(a) Administration, Shareholder Services and Distribution
Agreement.(3)
99.b6.(b) Form of Administration Services and Selling Group
Agreement.(1)
99.b7. Inapplicable.
99.b8. Custody Agreement.(1)
99.b9.(a) Agency Agreement.(1)
99.b9.(b) Supplement to Agency Agreement.(3)
99.b10. Inapplicable.
99.b11. Report and Consent of Independent Auditors.
99.b12. Inapplicable.
99.b13. Inapplicable.
99.b14. Inapplicable.
99.b15. See 99.b6.(a) above.
99.b16. Performance Calculations.(1)
99.b24. Power of Attorney.(2)
99.b485.(b) Representation of Counsel (Rule 485(b)).
27. Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement of Registrant on Form N-1A filed on or about July 28,
1995.
(2) Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement of Registrant on Form N-1A filed on or about July 28,
1995, except for the Power of Attorney of Dominique P. Morax, which is
incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement of Registrant on Form N-1A filed on or about July 26,
1996.
(3) Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement of Registrant on Form N-1A filed on or about July 26,
1996.
<PAGE> 1
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Cash Account Trust
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the Money Market, Government Securities and
Tax-Exempt Portfolios, comprising Cash Account Trust, as of April 30, 1997, and
the related statements of operations for the year then ended and changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the fiscal periods since 1991. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of April 30, 1997, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios comprising Cash Account Trust at April 30, 1997, the results
of their operations for the year then ended, the changes in their net assets
for each of the two years in the period then ended and the financial highlights
for each of the fiscal periods referred to above, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
June 13, 1997
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors and Reports to Shareholders" and to the
use of our report dated June 13, 1997 in the Registration Statement of Cash
Account Trust on Form N-1A and its incorporation by reference in the related
Prospectus filed with the Securities and Exchange Commission in this
Post-Effective Amendment No. 7 to the Registration Statement under the
Securities Act of 1933 (File 33-32476) and in this Amendment No. 8 to the
Registration Statement under the Investment Company Act of 1940 (File No.
811-5970).
ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
July 21, 1997
<PAGE> 1
[VEDDER PRICE LETTERHEAD]
July 25, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Cash Account Trust
To The Commission:
We are counsel to the above-referenced investment company (the "Fund")
and as such have participated in the preparation and review of Post-Effective
Amendment No. 7 to the Fund's registration statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485, we hereby represent that such amendment does not contain
disclosures which would render it ineligible to become effective pursuant to
paragraph(b) thereof.
Very truly yours,
/s/ VEDDER, PRICE, KAUFMAN & KAMMHOLZ
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
DAS/COK/de
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1997
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000858372
<NAME> CASH ACCOUNT TRUST
<SERIES>
<NUMBER> 01
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 590,636
<INVESTMENTS-AT-VALUE> 590,636
<RECEIVABLES> 1,383
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 592,019
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,072
<TOTAL-LIABILITIES> 7,072
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 584,947
<SHARES-COMMON-STOCK> 584,947
<SHARES-COMMON-PRIOR> 455,025
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 584,547
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 30,185
<OTHER-INCOME> 0
<EXPENSES-NET> (5,475)
<NET-INVESTMENT-INCOME> 24,710
<REALIZED-GAINS-CURRENT> (1,416)
<APPREC-INCREASE-CURRENT> 1,416
<NET-CHANGE-FROM-OPS> 24,710
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (24,710)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,030,788
<NUMBER-OF-SHARES-REDEEMED> (1,925,798)
<SHARES-REINVESTED> 24,932
<NET-CHANGE-IN-ASSETS> 129,922
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,150
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,650
<AVERAGE-NET-ASSETS> 547,802
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1997
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000858372
<NAME> CASH ACCOUNT TRUST
<SERIES>
<NUMBER> 02
<NAME> GOVERNMENT SECURITIES PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 573,636
<INVESTMENTS-AT-VALUE> 573,636
<RECEIVABLES> 3,236
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 576,872
<PAYABLE-FOR-SECURITIES> 30,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,371
<TOTAL-LIABILITIES> 32,371
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 544,501
<SHARES-COMMON-STOCK> 544,501
<SHARES-COMMON-PRIOR> 189,919
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 544,501
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 19,512
<OTHER-INCOME> 0
<EXPENSES-NET> (3,245)
<NET-INVESTMENT-INCOME> 16,267
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 16,267
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16,267)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,283,520
<NUMBER-OF-SHARES-REDEEMED> (945,704)
<SHARES-REINVESTED> 16,766
<NET-CHANGE-IN-ASSETS> 354,582
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 744
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,506
<AVERAGE-NET-ASSETS> 354,577
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1997
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000858372
<NAME> CASH ACCOUNT TRUST
<SERIES>
<NUMBER> 03
<NAME> TAX-EXEMPT PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 223,340
<INVESTMENTS-AT-VALUE> 223,340
<RECEIVABLES> 2,907
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 226,247
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,456
<TOTAL-LIABILITIES> 5,456
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 220,791
<SHARES-COMMON-STOCK> 220,791
<SHARES-COMMON-PRIOR> 66,981
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 220,791
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,634
<OTHER-INCOME> 0
<EXPENSES-NET> (825)
<NET-INVESTMENT-INCOME> 2,009
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,809
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,809)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 446,705
<NUMBER-OF-SHARES-REDEEMED> (295,820)
<SHARES-REINVESTED> 2,925
<NET-CHANGE-IN-ASSETS> 153,810
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 212
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 968
<AVERAGE-NET-ASSETS> 101,204
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
