<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CASH ACCOUNT TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
October 1997
Kemper
Important News
for Cash Account Trust Shareholders
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE IS A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.
================================================================================
Q&A
QUESTIONS AND ANSWERS
Q WHAT IS HAPPENING?
A Zurich Insurance Company, the parent of your Fund's investment manager (Zurich
Kemper Investments, Inc. or "ZKI") has entered into an agreement with Scudder,
Stevens & Clark, Inc. ("Scudder") whereby Zurich will acquire approximately 70%
of Scudder. Upon completion of the transaction, Scudder will change its name to
Scudder Kemper Investments, Inc. ("SKI") and ZKI will be combined with SKI.
Because of the transaction, it is necessary for your Fund to approve a new
investment management agreement.
The following pages elaborate on Scudder, the proposed new investment management
agreement and the Fund Board's evaluation of Zurich and Scudder. A vote is also
being sought on a Rule 12b-1 plan (the provisions of which are the same as in
the current Rule 12b-1 plan), the election of trustees to the Board of Trustees,
the selection of independent auditors, and a change in investment policies to
permit a master/feeder fund structure in the future.
Q WHAT IS SCUDDER?
A Scudder is one of America's oldest and largest investment management firms. It
manages assets invested in equities, fixed income and money market instruments
in both developed and emerging markets. Scudder provides investment services for
open-end and closed-end funds, and private and institutional clients.
Q HOW WILL THE ZURICH/SCUDDER TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A Your Fund and your Fund investment will not change. You will still own the
same shares in the same Fund. If the new investment management agreement and
Rule 12b-1 plans are approved, your Fund shares will not change, the advisory
fee rates for your Fund will not change, and the fee rate payable under your
Fund's 12b-1 plan will not change.
Zurich and Scudder have committed to provide all resources necessary to provide
your Fund with top quality investment management and shareholder services.
[KEMPER LOGO]
<PAGE> 3
Q WILL THE INVESTMENT ADVISORY AND RULE 12B-1 FEE RATES BE THE SAME?
A Yes, the investment advisory and Rule 12b-1 fee rates for your Fund will
remain the same.
Q WHAT IS A MASTER/FEEDER FUND?
A Rather than investing directly in a portfolio of securities, a feeder fund is
authorized to pool its assets with other mutual funds for investment in a master
fund. A purpose of a master/feeder fund structure is to achieve operational
efficiencies.
Q HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A After careful consideration, the board members of your Fund, including all of
the independent members, recommend that you vote "For" all the items on the
enclosed proxy card.
Q WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY SOLICITATION?
A ZKI--not your Fund--is paying all costs of the Funds' shareholder meeting and
proxy solicitation.
Q WHOM DO I CALL FOR MORE INFORMATION?
A Please call Shareholder Services at (800) 537-1988.
ABOUT THE PROXY CARD
[PROXY CARD SAMPLE] Because each Fund must vote separately, you are being sent a
proxy card for each Fund account that you have.
Please vote all issues shown on each proxy card that you receive.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each proxy card. On Item 1 (election of trustees),
mark--For All, Withhold All or For All Except. If you mark an X in the For All
Except box, you should print the name(s) or number(s) relating to the
individual(s) for whom you wish to withhold authority. On all other Items,
mark--For, Against or Abstain. Then sign, date and return each of your proxy
cards in the accompanying postage-paid envelope. All registered owners of an
account, as shown in the address on the proxy card, must sign the proxy card.
If you are signing for a corporation, trust or estate, please indicate your
title or position.
We appreciate your continuing support and look forward to serving your future
investment needs.
THANK YOU FOR MAILING YOUR
PROXY CARD PROMPTLY!
<PAGE> 4
CASH ACCOUNT TRUST
222 South Riverside Plaza Chicago, Illinois 60606
Telephone (800) 537-1988
October 10, 1997
Dear Cash Account Trust Shareholder:
As you read in the Questions and Answers (Q & A) on the outside cover, Zurich
Insurance Company ("Zurich") has entered into an agreement with Scudder, Stevens
& Clark, Inc. ("Scudder") pursuant to which Zurich will acquire approximately
70% of Scudder. Upon completion of the transaction, Scudder will change its name
to Scudder Kemper Investments, Inc. ("SKI"), and your Fund's investment manager,
Zurich Kemper Investments, Inc. ("ZKI") will be combined with SKI. Because of
the transaction, it is necessary for your Fund to approve a new investment
management agreement and a new Rule 12b-1 Plan.
If the new investment management agreement and Rule 12b-1 Plan are approved,
your Fund shares will not change, the advisory fee rates for your Fund will not
change, and the fee rate payable under your Fund's Rule 12b-1 Plan will not
change. Further, you should continue to receive the high quality investment
management and shareholder services that you have come to expect over the years.
Your Fund Board has unanimously approved the proposals and recommends them for
your approval. I encourage you to vote in favor of the proposals.
As always, we thank you for your confidence and support.
Sincerely,
/s/ Stephen B. Timbers
Stephen B. Timbers
President [KEMPER LOGO]
<PAGE> 5
CASH ACCOUNT TRUST
222 South Riverside Plaza Chicago, Illinois 60606
Telephone (800) 537-1988
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 3, 1997 AND PROXY STATEMENT
October 10, 1997
To the Shareholders:
You are invited to attend a special meeting of shareholders of Cash Account
Trust (the "Fund"). The meeting will be held in the Presentation Room on the
32nd Floor at the offices of the Fund, 222 South Riverside Plaza, Chicago,
Illinois on Wednesday, December 3, 1997 at 2:30 p.m., Chicago time, for the
following purposes and to transact such other business as may properly come
before the meeting or any adjournment of the meeting:
1. To elect nine (9) Trustees to the Board of Trustees.
2. To ratify or reject the selection of Ernst & Young LLP as independent
auditors for the current fiscal year.
3. To approve or disapprove a new investment management agreement with Scudder
Kemper Investments, Inc. ("SKI") (or with Zurich Kemper Investments, Inc.
("ZKI") transferable to SKI).
4. To approve or disapprove a new Rule 12b-1 distribution plan with Zurich
Kemper Distributors, Inc. ("ZKDI").
5. To approve or disapprove changes in the Fund's fundamental investment
policies to permit a master/feeder fund structure.
The Board of Trustees of the Fund has selected the close of business on
September 15, 1997 as the record date for the determination of shareholders of
the Fund entitled to notice of and to vote at the meeting. Shareholders are
entitled to one vote for each share held.
- ------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
- ------------------------------------------------------------------------------
<PAGE> 6
The accompanying proxy is solicited by the Board of Trustees (the "Board") of
the Fund for voting at the special meeting of shareholders of the Fund to be
held on Wednesday, December 3, 1997, and at any and all adjournments thereof
(the "Meeting"). This proxy statement was first mailed to shareholders on or
about October 10, 1997.
The Fund is a "series company" that issues various series of shares. (Each
series also is sometimes described herein as a "Fund.") Each series has its own
investment objective and policies and operates independently for purposes of
investments, dividends and redemptions. The series of the Fund are: Money Market
Portfolio ("MMP"), Government Securities Portfolio ("GSP") and Tax-Exempt
Portfolio ("TEP").
The shareholders of the Fund are being asked to vote on five items. On Item 1
(election of trustees) and Item 2 (ratification of selection of auditors), the
Fund will vote in the aggregate and not by series. On Item 3 (approval of new
investment management agreement), Item 4 (approval of new Rule 12b-1 Plan) and
Item 5 (approval of a change in the Fund's fundamental investment policies to
permit a master/feeder fund), each series will vote separately. The Board
recommends an affirmative vote on all items. The vote required to approve each
item is described under the section of this proxy statement entitled
"Miscellaneous."
The Board of the Fund has fixed the close of business on September 15, 1997 as
the record date for the determination of shareholders of the Fund entitled to
notice of and to vote at the Meeting. As of September 15, 1997, shares of the
Fund were issued and outstanding as follows:
<TABLE>
<CAPTION>
SERIES SHARES
- ------ ------
<S> <C>
MMP....................................... 769,588,030
GSP....................................... 618,941,259
TEP....................................... 285,056,108
</TABLE>
INTRODUCTION
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding Corp.
("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens & Clark,
Inc. ("Scudder") and the representatives of the beneficial owners of the capital
stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich will become the
majority stockholder in Scudder with an approximately 70% interest, and ZKI will
become a wholly-owned subsidiary of, or be combined with, Scudder
("Transaction"). Upon completion of the Transaction, Scudder will change its
name to Scudder Kemper Investments, Inc. ("SKI"). Scudder, a New York-based
investment adviser and the investment manager for the Scudder and AARP Funds,
has approximately $125 billion under management. ZKI, a
2
<PAGE> 7
Chicago-based investment adviser and the investment manager for the Kemper
Funds, and its affiliates have approximately $85 billion under management. The
headquarters of SKI will be in New York. Edmond D. Villani, Scudder's Chief
Executive Officer, will continue as Chief Executive Officer of SKI and will
become a member of Zurich's Corporate Executive Board. Some of the terms of the
Transaction are also set forth in a form of second amended and restated Security
Holders Agreement ("New SHA") to be entered into among the beneficial owners of
the capital stock of Scudder, the Scudder Representatives, Scudder, Zurich, ZKIH
and the Scudder Kemper Investments, Inc. Executive Defined Contribution Plan
Trust.
Consummation of the Transaction would constitute an "assignment," as that term
is defined in the Investment Company Act of 1940 ("1940 Act"), of the Fund's
current investment management agreement with ZKI. As required by the 1940 Act,
the current investment management agreement provides for its automatic
termination in the event of its assignment. Accordingly, as discussed further
below, a new investment management agreement between the Fund and SKI is being
proposed for approval by shareholders of the Fund.
DESCRIPTION OF THE TRANSACTION.
Under the Transaction Agreement, Zurich will pay $866.7 million in cash to
acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in SKI to a defined contribution plan for the
benefit of Scudder and ZKI employees, as well as cash and warrants on Zurich
shares for award to Scudder employees, in each case subject to five-year vesting
schedules. After giving effect to the Transaction, current Scudder stockholders
will have a 29.6% fully diluted equity interest in SKI and Zurich will have a
69.5% fully diluted interest in SKI. Scudder's name will be changed to Scudder
Kemper Investments, Inc.
The purchase price for Scudder or for ZKI in the Transaction is subject to
adjustment based on the effect on revenues of non-consenting clients, and will
be reduced if the annualized investment management fee revenues (excluding the
effect of market changes, but taking into account new assets under management)
from clients at the time of closing, as a percentage of such revenues as of June
30, 1997 (the "Revenue Run Rate Percentage"), is less than 90%.
At the closing, Zurich and the other stockholders of SKI will enter into the New
SHA. Under the New SHA, Scudder stockholders will be entitled to designate three
of the seven members of the SKI board and two of the four members of an
Executive Committee, which will be the
3
<PAGE> 8
primary management-level committee of SKI. Zurich will be entitled to designate
the other four members of the SKI board and the other two members of the
Executive Committee.
The names, addresses and principal occupations of the initial Scudder-designated
directors of SKI are as follows: LYNN S. BIRDSONG, 345 Park Avenue, New York,
New York, Managing Director of Scudder; CORNELIA M. SMALL, 345 Park Avenue, New
York, New York, Managing Director of Scudder; and EDMOND D. VILLANI, 345 Park
Avenue, New York, New York, President, Chief Executive Officer and Managing
Director of Scudder.
The names, addresses and principal occupations of the initial Zurich-designated
directors of SKI are as follows: LAWRENCE W. CHENG, Mythenquai 2, Zurich,
Switzerland, Chief Investment Officer for Investments and Institutional Asset
Management and the corporate functions of Securities and Real Estate for Zurich
and a member of the Corporate Executive Board of Zurich; STEVEN M. GLUCKSTERN,
Mythenquai 2, Zurich, Switzerland, responsible for Reinsurance, Structured
Finance, Capital Market Products and Strategic Investments, and a member of the
Corporate Executive Board of Zurich; ROLF HUEPPI, Mythenquai 2, Zurich,
Switzerland, Chairman of the Board and Chief Executive Officer of Zurich; and
MARKUS ROHRBASSER, Mythenquai 2, Zurich, Switzerland, Chief Financial Officer
and a member of the Corporate Executive Board of Zurich.
The initial Scudder-designated Executive Committee members will be Messrs.
Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
The New SHA requires the approval of a majority of the Scudder-designated
directors for certain decisions, including changing the name of SKI, effecting a
public offering before April 15, 2005, causing SKI to engage substantially in
non-investment management and related business, making material acquisitions or
divestitures, making changes in SKI's capital structure, dissolving or
liquidating SKI, or entering into certain affiliated transactions with Zurich.
The New SHA also provides for various put and call rights with respect to SKI
stock held by current Scudder employees, limitations on Zurich's ability to
purchase other asset management companies outside of SKI, rights of Zurich to
repurchase SKI stock upon termination of employment of SKI personnel, and
registration rights for stock held by continuing Scudder stockholders.
The Transaction is subject to a number of conditions, including approval by
Scudder stockholders; the Revenue Run Rate Percentages of Scudder and ZKI being
at least 75%; Scudder and ZKI having obtained director and stockholder approvals
from U.S.-registered funds representing 90% of the assets of such funds under
management as of June 30, 1997; the absence of any restraining order or
injunction preventing the Transaction,
4
<PAGE> 9
or any litigation challenging the Transaction that is reasonably likely to
result in an injunction or invalidation of the Transaction; and the continued
accuracy of the representations and warranties contained in the Transaction
Agreement. The Transaction is expected to close during the fourth quarter of
1997.
ITEM 1. ELECTION OF BOARD OF TRUSTEES
At the Meeting, nine (9) trustees are to be elected to constitute the Board of
the Fund. All the nominees, except Messrs. Daniel Pierce and Edmond Villani,
were elected to the Board of the Fund at a special meeting of shareholders held
on September 19, 1995.
It is intended that the proxies will be voted for the election of the nominees
described below. The nominees, if elected, will take office upon consummation of
the Transaction and their election and qualification is contingent upon
consummation of the Transaction. The term of each person elected as trustee will
be from the date of the consummation of the Transaction until the next meeting
of shareholders, if any, called for the purpose of electing trustees and until
the election and qualification of a successor or until such trustee sooner dies,
resigns or is removed as provided in the Agreement and Declaration of Trust of
the Fund ("Declaration of Trust"). If the Transaction is not consummated, the
current trustees of the Fund will continue to serve as the Fund's Board (which
are those identified as such below, along with Mr. Stephen B. Timbers, the
president and chief executive officer at ZKI). Since the Fund does not hold
annual meetings, trustees will hold office for an indeterminate period.
All the nominees listed below have consented to serve as trustees of the Fund,
if elected. In case any nominee shall be unable or shall fail to act as a
trustee by virtue of an unexpected occurrence, the proxies may be voted for such
other person(s) as shall be determined by the persons acting under the proxies
in their discretion.
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
- ------------------------------------------------ -----------------
<S> <C>
David W. Belin (06/20/28) 1989
Member, Belin Lamson McCormick Zumbach Flynn,
P.C. (attorneys)
Lewis A. Burnham (01/08/33) 1989
Director, Management Consulting Services,
McNulty & Company; formerly, Executive Vice
President, Anchor Glass Container Corporation
Donald L. Dunaway (03/08/37) 1989
Retired; formerly, Executive Vice President,
A.O. Smith Corporation
</TABLE>
5
<PAGE> 10
<TABLE>
<CAPTION>
NAME (DATE OF BIRTH), PRINCIPAL YEAR FIRST BECAME
OCCUPATION AND AFFILIATIONS A TRUSTEE
- ------------------------------------------------ -----------------
<S> <C>
Robert B. Hoffman (12/11/36) 1989
Senior Vice President and Chief Financial
Officer, Monsanto Company; formerly, Vice
President, FMC Corporation; prior thereto,
Director, Executive Vice President and Chief
Financial Officer, Staley Continental, Inc.
Donald R. Jones (01/17/30) 1989
Retired; Director, Motorola, Inc.; formerly,
Executive Vice President and Chief Financial
Officer, Motorola, Inc.
Shirley D. Peterson (09/03/41) 1995
President, Hood College; formerly, partner,
Steptoe & Johnson (attorneys); prior thereto,
Commissioner, Internal Revenue Service; prior
thereto, Assistant Attorney General, U.S.
Department of Justice; Director, Bethlehem Steel
Corp.
*Daniel Pierce (03/18/34) Nominee
Chairman of the Board and Managing Director,
Scudder; Director, Fiduciary Trust Company;
Director, Fiduciary Company Incorporated; Board
member of 14 investment companies advised by
Scudder.
William P. Sommers (07/22/33) 1989
President and Chief Executive Officer, SRI
International; formerly, Executive Vice
President, Iameter; prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton,
Inc. (Retired); Director, Rohr, Inc.;
Therapeutic Discovery Corp.; and Litton
Industries.
*Edmond D. Villani (03/04/47) Nominee
President, Chief Executive Officer and Managing
Director, Scudder.
</TABLE>
- ---------------
* Interested persons of Scudder as defined in the Investment Company Act of
1940.
All the nominees, except Messrs. Pierce and Villani, serve as board members of
26 Kemper Funds. Mr. Pierce and Mr. Villani have each been nominated to serve as
a board member of 39 Kemper Funds. A "Kemper Fund" is an investment company for
which ZKI or its affiliates serve as investment manager.
6
<PAGE> 11
The Board of Trustees of the Fund has a nominating committee, the members of
which are Messrs. Burnham and Sommers, and Ms. Peterson. The nominating
committee proposed the nominees for election by the shareholders; and the Board
of Trustees, including the non-interested trustees, concurred. The nominating
committee met once during the Fund's fiscal year ended April 30, 1997.
Shareholders wishing to submit the name of a candidate for consideration by the
nominating committee should submit their recommendations to the secretary of the
Fund.
The Fund's audit committee is composed of Messrs. Dunaway, Hoffman and Jones.
The audit committee met three times during the Fund's fiscal year ended April
30, 1997. The audit committee of the Fund makes recommendations regarding the
selection of independent auditors for the Fund, confers with the independent
auditors regarding the Fund's financial statements, the results of audits and
related matters and performs such other tasks as the Board of Trustees of the
Fund assigns.
The Board of the Fund met six times during the Fund's fiscal year ended April
30, 1997. Each then current trustee attended 75% or more of the respective
meetings of the Board and the committees of which he or she was a member that
were held during that period.
The Fund pays trustees who are not interested persons of the Fund a monthly
retainer and an attendance fee for each Board meeting and committee meeting
attended, plus expense reimbursement. As reflected above, the trustees currently
serve as trustees of various investment companies for which ZKI or its
affiliates serve as investment manager. Trustees or officers who are "interested
persons" receive no compensation from the Fund.
The table below shows, for each trustee entitled to receive compensation from
the Fund, the aggregate compensation paid or accrued by the Fund for its fiscal
year ended April 30, 1997 and the total compensation that Kemper Funds paid or
accrued to each trustee during the calendar year 1996.
<TABLE>
<CAPTION>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION KEMPER FUNDS
NAME OF TRUSTEE PAID BY THE 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>
7
<PAGE> 12
- ---------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Funds. Deferred amounts accrue interest
monthly at a rate equal to the yield of Zurich Money Funds -- Zurich Money
Market Fund.
(2) Includes compensation for service on the boards of 22 Kemper Funds with 40
fund portfolios. Each trustee currently serves as trustee of 26 Kemper Funds
with 47 fund portfolios.
FUND OFFICERS. Information about the executive officers of the Fund, with their
respective dates of birth and terms of office indicated, is set forth below.
Philip J. Collora (11/15/45), vice president of the Fund since 11/28/89, and
secretary of the Fund since 01/25/95, is senior vice president and assistant
secretary of ZKI.
Jerome L. Duffy (06/29/36), treasurer of the Fund since 09/07/89, is senior vice
president of ZKI.
Charles R. Manzoni, Jr. (01/23/47), vice president of the Fund since 09/04/96,
is executive vice president, secretary and general counsel of ZKI; secretary ZKI
Holding Corp.; secretary ZKI Agency, Inc., and formerly, Partner Gardner, Carton
& Douglas.
John E. Neal (03/09/50), vice president of the Fund since 01/18/96, is president
of Kemper Funds Group, a unit of ZKI, and director of ZKI, Zurich Kemper Value
Advisors, Inc. ("ZKVA") and Zurich Kemper Distributors, Inc. ("ZKDI").
Robert C. Peck, Jr. (10/01/46), vice president of the Fund since 08/02/97, is
executive vice president and chief investment officer -- fixed income of ZKI and
formerly, executive vice president and chief investment officer of an
unaffiliated investment management firm.
Frank J. Rachwalski, Jr. (03/26/45), vice president of the Fund since 11/28/89,
is senior vice president of ZKI.
John W. Stuebe (01/07/49), vice president of the Fund since 01/23/92, is vice
president of ZKI.
Stephen B. Timbers (08/08/44), president of the Fund since 03/11/95, is
president, chief executive officer, chief investment officer and director of ZKI
and director of ZKDI, ZKVA and LTV Corporation; formerly, president and chief
operating officer of Kemper Corporation. Mr. Timbers is also trustee of the
Fund.
Elizabeth C. Werth (10/01/47), assistant secretary of the Fund since 03/17/90,
is vice president, ZKI and vice president and director of state registrations,
ZKDI.
8
<PAGE> 13
The officers of the Fund are elected by the Board of the Fund on an annual basis
to serve until their successors are elected and qualified. It is anticipated
that, after consummation of the Transaction, the Board of the Fund will elect
new officers who are expected to include persons currently affiliated with
Scudder.
SHAREHOLDINGS
Set forth in Exhibit A is the number of shares of each Fund owned beneficially
by each trustee and nominee as of August 26, 1997.
As of August 26, 1997, no person is known to the Fund to own beneficially more
than five percent of the shares of any series of the Fund.
ITEM 2. SELECTION OF INDEPENDENT AUDITORS
A majority of the members of the Board who are not "interested" persons of the
Fund has selected Ernst & Young LLP, independent auditors, to audit the books
and records of the Fund for the current fiscal year. This firm has served in
this capacity for the Fund since the Fund was organized and has no direct or
indirect financial interest in the Fund except as independent auditors. The
selection of Ernst & Young LLP as independent auditors of the Fund is being
submitted to the shareholders for ratification. A representative of Ernst &
Young LLP is expected to be present at the Meeting and will be available to
respond to any appropriate questions raised at the Meeting and may make a
statement.
BOARD OF TRUSTEES RECOMMENDATION
The Board of the Fund recommends that shareholders vote FOR the ratification of
the selection of independent auditors.
ITEM 3. NEW INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Zurich Kemper Investments, Inc. ("ZKI") is the investment adviser and manager
for the Fund. ZKI and its indirect parent, Zurich Insurance Company ("Zurich"),
entered into a transaction agreement with Scudder, Stevens & Clark, Inc.
("Scudder") whereby Zurich will acquire approximately 70% of Scudder. Upon
completion of the Transaction, Scudder will change its name to Scudder Kemper
Investments, Inc. ("SKI") and ZKI will be combined with SKI.
As discussed above, consummation of the Transaction would constitute an
"assignment," as that term is defined in the Investment Company Act of 1940 (the
"1940 Act"), of the Fund's current investment management agreement with ZKI. As
required by the 1940 Act, the current investment
9
<PAGE> 14
management agreement provides for its automatic termination in the event of its
assignment. In anticipation of the Transaction, a new investment management
agreement ("management agreement") between the Fund and SKI is being proposed
for approval by shareholders of the Fund. (Depending on the timing of the
combination of the Scudder and ZKI organizations, the new investment management
agreement may initially be between the Fund and ZKI for some period following
the Transaction and then be transferred to SKI without further action on the
part of shareholders of the Fund. Accordingly, approval of the new agreement
with SKI would also include approval of any interim agreement with ZKI following
the assignment of the current agreement. SKI or ZKI, as party to the new
investment management agreement, is sometimes referred to in this proxy
statement as the "investment manager.") A copy of the form of the new management
agreement is attached hereto as Exhibit B.
BOARD OF TRUSTEES RECOMMENDATION
The Board of the Fund met on June 30, 1997, August 1-2, 1997, August 18, 1997,
and September 15, 1997 to consider the Transaction and its anticipated effects
upon ZKI and the investment management and other services provided to the Fund
by ZKI and its affiliates. In addition, the Independent Trustees also met
separately with counsel on a number of occasions to discuss the Transaction. On
September 15, 1997 the Board of the Fund, including a majority of the trustees
who are not parties to such agreement or interested persons of any such party,
voted unanimously to approve the new management agreement and to recommend it to
shareholders for their approval.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees Evaluation" near the end of this
Item 3.
The Board of the Fund recommends that shareholders vote FOR approval of the new
management agreement.
THE CURRENT INVESTMENT MANAGEMENT AGREEMENT
The current management agreement provides that the Fund's investment manager
acts as investment adviser, manages the Fund's investments, administers the
Fund's business affairs, furnishes offices, necessary facilities and equipment,
provides clerical, bookkeeping and administrative services, provides shareholder
and information services and permits any of its officers or employees to serve
without compensation as trustees or officers of the Fund if duly elected to such
positions. Under the current management agreement, the Fund agrees to assume and
pay the charges and expenses of its operations including, by way of example, the
compensation of the trustees other than those affiliated with the investment
10
<PAGE> 15
manager, charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, of any registrar of the Fund and of the
custodian (including fees for safekeeping of securities), costs of calculating
net asset value, all costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, costs of share
certificates, membership dues in the Investment Company Institute or any similar
organization, reports and notices to shareholders, other like miscellaneous
expenses and all taxes and fees to federal, state or other governmental
agencies.
For the services and facilities furnished, the Fund pays an investment
management fee, payable monthly, at the annual rate shown below. The annual
management fee rate is a percentage of average daily net assets payable under
the current management agreement for the Fund. The investment management fee and
the expense limitation are computed based on average daily net assets of all
series of the Fund in the aggregate and allocated among the series based upon
the relative net assets of each series. Exhibit G shows the management fees paid
by the Fund of ZKI for the Fund's fiscal year ended April 30, 1997.
<TABLE>
<CAPTION>
APPLICABLE ASSETS MANAGEMENT FEE
- ----------------- --------------
<S> <C>
$0 -- $500 million............................... .22 of 1%
$500 million -- $1 billion....................... .20 of 1%
$1 billion -- $2 billion......................... .175 of 1%
$2 billion -- $3 billion......................... .16 of 1%
$3 billion and over.............................. .15 of 1%
</TABLE>
The management agreement provides that the Fund's investment manager will
reimburse the Fund should the operating expenses of the Fund, including the
investment management fee, but excluding taxes, interest, distribution fees,
extraordinary expenses and brokerage commissions or transaction costs, and any
other properly excludable expenses, exceed on an annual basis the applicable
state expense limitations. Currently, there are no state expense limitations in
effect. ZKI has agreed to temporarily waive fees and absorb expenses in addition
to the limitation described above. The amounts of waived fees and absorbed
expenses for the fiscal year ended April 30, 1997 are included in Exhibit G.
The management agreement provides that the Fund's investment manager shall not
be liable for any error or judgment or of law, or for any loss suffered by the
Fund in connection with the matters to which the management agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Fund's investment manager in the performance of its
obligations and duties or by reason of its reckless disregard of its obligations
and duties under the management agreement.
11
<PAGE> 16
The management agreement may be terminated for the Fund or series thereof
without penalty upon sixty (60) days written notice by either party, or by a
majority vote of the outstanding shares of the Fund or series thereof, and
automatically terminates in the event of its assignment.
ZKI has acted as investment adviser and manager for the Fund since it commenced
public offering of its shares as shown below. Also shown is the date of the
current management agreement, the date when the current management agreement was
last approved by the trustees and the shareholders of the Fund, the purpose of
the last submission to shareholders of the current management agreement and the
date to which the current management agreement continues.
<TABLE>
<CAPTION>
APPROVAL OF CURRENT CURRENT
COMMENCEMENT DATE OF AGREEMENT BY AGREEMENT
OF INVESTMENT CURRENT ----------------------- CONTINUED BY
FUND OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS TRUSTEES TO
- ---- ------------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
MMP 12/03/90 01/04/96 09/15/97 09/19/95(a) 12/01/98
GSP 12/03/90 01/04/96 09/15/97 09/19/95(a) 12/01/98
TEP 12/03/90 01/04/96 09/15/97 09/19/95(a) 12/01/98
</TABLE>
- ---------------
(a) The current management agreement was last submitted to shareholders for
approval in connection with the Zurich/Kemper merger.
NEW INVESTMENT MANAGEMENT AGREEMENT
The new investment management agreement for the Fund is substantially similar to
the current investment management agreement. While the form of the agreement is
different (i.e., a form generally used by Scudder), there is no material
difference in the substance of the obligations of the investment manager under
the agreement except that, under a separate agreement with Scudder Fund
Accounting Corporation ("SFAC"), a subsidiary of Scudder, SFAC, rather than the
Fund's investment manager, will compute the net asset value for the Fund. SFAC
will not charge the Fund for this service and has no current intention to do so;
however, subject to Board approval, at some time in the future, SFAC may seek
payment for its services under the agreement. In addition, the management fee
under the new agreement is paid at the end of each month and is computed as 1/12
of the applicable annual rate based upon the average daily net assets for such
month; whereas, under the current agreement, the management fee is paid at the
end of each month and is computed at the annual rate based upon the average
daily net assets. While the annual rates are the same under the current and new
agreements, depending upon the level of net assets at any time, the fees paid
may differ. Also, the expense limitation has been deleted because there are no
longer any state expense limitations in effect.
The new management agreement for the Fund will be dated as of the date of the
consummation of the Transaction, which is expected to occur in
12
<PAGE> 17
the fourth quarter of 1997, but in no event later than February 28, 1998. The
new management agreement will be for an initial term ending on the same date as
would the current management agreement but for the Transaction, and may continue
thereafter from year to year if specifically approved at least annually by the
vote of "a majority of the outstanding voting securities" of the Fund, as
defined under the 1940 Act, or by the Board and, in either event, the vote of a
majority of the trustees who are not parties to the agreement or interested
persons of any such party, cast in person at a meeting called for such purpose.
BOARD OF TRUSTEES EVALUATION
On June 27, 1997, the Board of the Fund was informed of the Transaction.
Thereafter, the Board was given extensive information about the Transaction and
Scudder. The Board met with senior management personnel of Zurich and Scudder
and had extended discussions regarding Zurich's and Scudder's plans for ZKI, SKI
and the Fund. Throughout the process, the Independent Trustees of the Board had
the assistance of legal counsel, who prepared, among other things, an analysis
of the Board's fiduciary obligations. The Board met on June 30, 1997, August
1-2, 1997, August 18, 1997 and September 15, 1997 to consider the Transaction
and its effects on the Fund. The Independent Trustees also met separately with
counsel on a number of occasions to discuss the Transaction. As a result of its
review and consideration of the Transaction and the proposed new management
agreements, at its meeting on September 15, 1997, the Board of the Fund voted
unanimously to approve the new management agreement and to recommend it to the
shareholders of the Fund for their approval.
In connection with its review, the Board obtained substantial information
regarding: the management, financial position and business of Scudder; the
history of Scudder's business and operations; the investment performance of the
investment companies and private accounts advised by Scudder; the anticipated
effect of the Transaction on the Fund and their shareholders; and future plans
of Zurich and Scudder with respect to ZKI, SKI and the Fund. The Board also
received information regarding the terms of the Transaction and comprehensive
financial information, including: employment agreements with senior Scudder
executives; incentive stock compensation to be given to key ZKI personnel; and
anticipated SKI management and board of directors.
In connection with their deliberations, the Board of the Fund obtained certain
assurances from Zurich and Scudder, including the following:
- - Zurich and Scudder have provided to the Board such information as is
reasonably necessary to evaluate the new management and other agreements.
13
<PAGE> 18
- - Zurich looks upon SKI as the core of Zurich's global asset management
strategy. With that focus, Zurich will devote to SKI and its affairs all
attention and resources that are necessary to provide for the Fund top quality
investment management, shareholder, administrative and product distribution
services.
- - Scudder looks upon the Kemper Funds as a core part of Scudder's global asset
management strategy. With that focus, Scudder will devote to the Kemper Funds
and their affairs all attention and resources that are necessary to provide
for the Fund top quality investment management, shareholder, administrative
and product distribution services.
- - The Transaction will not result in any change in the Fund's investment
objectives or policies.
- - The Transaction is not expected to result in any adverse change in the
investment management or operations of the Fund; and neither Zurich nor
Scudder plans to make any material change in the manner in which investment
advisory services or other services are rendered to the Fund which has the
potential to have a material adverse effect upon the Fund.
- - Zurich and Scudder are committed to the continuance, without interruption, of
services to the Fund of the type and quality currently provided by ZKI and its
subsidiaries, or superior thereto.
- - Zurich and Scudder plan to maintain or enhance the SKI facilities and
organization.
- - In order to retain and attract key personnel, Zurich and Scudder intend for
SKI to maintain overall compensation policies and practices at market levels
or better.
- - Zurich and Scudder intend to maintain the distinct brand identity of the
Kemper and Scudder Funds and are committed to strengthening and enhancing both
brands and the distribution channels for both families of Funds, while
maintaining their separate brand identity.
- - Scudder has in place a detailed and comprehensive plan of action to
effectively deal with the year 2000 issue for all SKI operations. The Kemper
Funds will not be transferred from their current systems unless certain
conditions are met.
- - Zurich and Scudder will promptly advise the Board of decisions materially
affecting the SKI organization as they relate to the Fund. Neither this, nor
any of the other above commitments will be altered by Zurich or Scudder
without the Board's prior consideration.
Zurich and Scudder assured the Board that they intend to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of
14
<PAGE> 19
its affiliated persons to receive any amount or benefit in connection with a
change in control of the investment adviser so long as two conditions are met.
First, for a period of three years after the Transaction, at least 75% of the
board members of the investment company must not be "interested persons" of such
investment adviser. The composition of the Board of the Fund, currently and as
proposed, would be in compliance with this provision of Section 15(f). (See Item
1 -- "Election of Board of Trustees.") Second, an "unfair burden" must not be
imposed upon the investment company as a result of such transaction or any
express or implied terms, conditions or understandings applicable thereto. The
term "unfair burden" is defined in Section 15(f) to include any arrangement
during the two-year period after the Transaction whereby the investment adviser,
or any interested person of any such adviser, receives or is entitled to receive
any compensation, directly or indirectly, from the investment company or its
shareholders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide ordinary compensation as principal underwriter for such
investment company). Zurich and Scudder are not aware of any express or implied
term, condition, arrangement or understanding that would impose an "unfair
burden" on the Fund as a result of the Transaction. Zurich and Scudder have
agreed that they, and their affiliates, will take no action that would have the
effect of imposing an "unfair burden" on the Fund as a result of the
Transaction. In furtherance thereof, ZKI has undertaken to pay the costs of
preparing and distributing proxy materials to and of holding the meetings of the
Fund's shareholders as well as other fees and expenses in connection with the
Transaction, including the fees and expenses of legal counsel to the Fund and
the Independent Trustees, and Zurich has agreed to indemnify the Fund and the
Independent Trustees for and against any liability and expenses based upon any
action or omission by the Independent Trustees in connection with their
consideration of and action with respect to the Transaction. In addition,
Scudder has agreed to indemnify the Fund and the Independent Trustees for and
against any liability and expenses based upon any misstatements or omissions by
Scudder to the Independent Trustees in connection with their consideration of
the Transaction.
In evaluating the new management agreement, the Board took into account that the
fees and expenses payable by the Fund under the new management agreement are the
same as under the current management agreement, that the services provided to
the Fund are the same (except for services to be provided under a separate Fund
Accounting Agreement as described above) and that the other terms are
substantially similar. The Board also took into consideration the extent to
which portfolio managers and research personnel would continue their functions
with SKI. The Board also considered Scudder's representation that
15
<PAGE> 20
the Fund's shareholder service providers and the terms of the shareholder
service agreements were not being proposed to be changed. The Board noted that,
in previously approving the continuation of the current management agreement,
the Board had considered a number of factors, including the nature and quality
of services provided by ZKI; investment performance, both of the Fund itself and
relative to that of competitive investment companies; investment management fees
and expense ratios of the Fund and competitive investment companies; ZKI
profitability from managing the Fund; fall-out benefits to ZKI from its
relationship to the Fund, including revenues derived from services provided to
the Fund by affiliates of ZKI; and the potential benefits to ZKI and to the Fund
and their shareholders of receiving research services from broker/dealer firms
in connection with the allocation of portfolio transactions to such firms.
The Board discussed the Transaction with the senior management of ZKI, Scudder
and Zurich and among themselves. The Board considered that Zurich is a large,
well-established company with substantial resources, and, as noted above, has
undertaken to devote such resources to SKI as are necessary to provide the Fund
with top quality services. The Board also considered that Scudder is a large,
well-established investment advisory firm with a substantial number of highly
rated funds.
As a result of their review and consideration of the Transaction and the new
management agreement, at its meeting on September 15, 1997, the Board of the
Fund voted unanimously to approve the new management agreement and to recommend
it to the shareholders of the Fund for their approval.
The Board of the Fund recommends that shareholders vote FOR approval of the new
management agreement.
ITEM 4. NEW RULE 12B-1 DISTRIBUTION PLAN
INTRODUCTION
Rule 12b-1 under the 1940 Act (the "Rule"), provides, among other things, that
an investment company (mutual fund) may bear expenses of distributing its shares
only pursuant to a plan (a "Rule 12b-1 Plan") adopted in accordance with the
Rule. Pursuant to an administration, shareholder services and distribution
agreement ("distribution agreement") Zurich Kemper Distributors, Inc. ("ZKDI"),
serves as distributor, administrator and principal underwriter to the Fund to
provide information and services for existing and potential shareholders. Since
the distribution agreement provides for fees that are used by ZKDI to pay for
distribution and administration services, the agreement and the plan contained
therein are approved and reviewed in accordance with Rule 12b-1.
16
<PAGE> 21
Consummation of the Transaction may constitute an "assignment," as that term is
defined in the 1940 Act, of the Fund's Rule 12b-1 Plan, which provides for its
automatic termination in the event of its assignment. In anticipation of the
Transaction a new Rule 12b-1 Plan is being submitted for shareholder approval of
the Fund's shareholders. THE NEW RULE 12B-1 PLAN IS ON THE SAME TERMS AS THE
FUND'S CURRENT RULE 12B-1 PLAN. A form of the new Rule 12b-1 Plan for the Fund
is attached hereto as Exhibit C. NO CHANGE IN FEES IS BEING PROPOSED.
On September 15, 1997, the Board of the Fund, including a majority of the
"non-interested" trustees, voted unanimously to approve the new Rule 12b-1 Plan
for the Fund, and directed that it be submitted to the shareholders of the Fund
at the Meeting, along with a recommendation that they approve the Rule 12b-1
Plan.
If the new Rule 12b-1 Plan is approved by a series of the Fund, it will become
effective for that series and will replace the current Rule 12b-1 Plan upon
consummation of the Transaction.
DESCRIPTION OF THE NEW RULE 12B-1 PLAN
As noted above, a form of the new Rule 12b-1 Plan is attached as Exhibit C and
this summary is qualified in its entirety by reference to Exhibit C. THE NEW
RULE 12B-1 PLAN DESCRIBED BELOW IS ON THE SAME TERMS AS THE CURRENT RULE 12B-1
PLAN FOR THE FUND.
Under the Fund's new Rule 12b-1 Plan, ZKDI shall appoint various financial
services firms, such as broker-dealers or banks, to provide cash management
services for their customers or clients through the Fund. The firms are to
provide 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, ZKDI receives a fee, payable monthly, at the annual rate of .60 of 1%
average daily net assets of MMP and GSP and .50 of 1% of average daily net
assets of TEP. The fees are accrued daily as an expense of the Fund.
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 supplemental literature and advertising costs.
ZKDI has related services agreements with various broker-dealer firms to provide
cash management and other services for Fund shareholders. ZKDI also has services
agreements with banking firms to provide such
17
<PAGE> 22
services, except for certain underwriting or distribution services which the
banks may be prohibited from providing under the Glass-Steagall Act, for their
clients who wish to invest in the Fund. ZKDI normally pays such firms at a
maximum annual rate of .60 of 1% of average daily net assets of those accounts
in MMP and GSP that they maintain and service and .50 of 1% of average daily net
assets of those accounts of TEP that they maintain and service. ZKDI may in its
discretion pay certain firms additional amounts. ZKDI may elect to keep a
portion of the total distribution fee to compensate itself for functions
performed for the Fund or to pay for sales materials or other promotional
activities.
The table below shows, for each series, the date the 12b-1 Plan was adopted, the
date last approved by the trustees and the date to which it continues.
<TABLE>
<CAPTION>
RULE 12B-1 PLAN
-------------------------------------
DATE APPROVED BY DATE
FUND ADOPTED TRUSTEES CONTINUED TO
- ---- -------- ----------- ------------
<S> <C> <C> <C>
MMP........................... 01/04/96 09/15/97 12/01/98
GSP........................... 01/04/96 09/15/97 12/01/98
TEP........................... 01/04/96 09/15/97 12/01/98
</TABLE>
Since the fees payable to ZKDI under the distribution agreement are based upon
percentages of the average daily net assets 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. 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
payment 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. Shown below are the amounts paid by each series to ZKDI under
the distribution agreement.
<TABLE>
<CAPTION>
RULE 12B-1 PLAN FEES
FISCAL PAID BY FUND
FUND YEAR END ($000)
- ---- -------- --------------------
<S> <C> <C>
MMP................................. 04/30/97 $3,287
GSP................................. 04/30/97 $2,127
TEP................................. 04/30/97 $ 506
</TABLE>
The new Rule 12b-1 Plan will be in effect for an initial term ending on the same
date as would the current Rule 12b-1 Plan but for the Transaction
18
<PAGE> 23
and may continue thereafter from year to year for a series if specifically
approved at least annually by vote of "a majority of the outstanding voting
securities" of that series, as defined under the 1940 Act, or by the Board,
including, in either event, the vote of a majority of the "non-interested"
trustees, cast in person at a meeting called for such purpose.
Pursuant to the new Rule 12b-1 Plan, ZKDI will prepare reports to the Board of
the Fund on a quarterly basis showing the amounts paid to the various firms and
such other information as from time to time the Board may reasonably request.
The Rule requires the Board to review such reports at least quarterly.
In approving the new Rule 12b-1 Plan, the Board of the Fund determined, as with
the current Rule 12b-1 Plan, that there is a reasonable likelihood that the new
Rule 12b-1 Plan would benefit the Fund and its shareholders. In doing so, each
Board considered several factors, including that the new Rule 12b-1 Plan would
(i) enable investors to choose the purchasing option best suited to their
individual situations, thereby encouraging current shareholders to make
additional investments in the Fund and attracting new investors and assets to
the Fund to the benefit of the Fund and its shareholders, (ii) facilitate
distribution of the Fund's shares, (iii) help maintain the competitive position
of the Fund in relation to other funds that have implemented or are seeking to
implement similar distribution arrangements, and (iv) permit possible economies
of scale through increased Fund size.
BOARD OF TRUSTEES RECOMMENDATION
As a result of its consideration of the foregoing factors, the Board of the Fund
voted unanimously to approve the new Rule 12b-1 Plan and to submit it to the
shareholders for their approval.
The Board of the Fund recommends that shareholders vote FOR approval of the new
Rule 12b-1 Plan.
ITEM 5. CHANGES TO THE FUND'S FUNDAMENTAL INVESTMENT POLICIES TO PERMIT A
MASTER FUND/FEEDER FUND STRUCTURE
For greater investment flexibility, ZKI has recommended that each series of the
Fund (for this purpose each Series being referred to as a "Fund") make certain
changes to its fundamental investment policies to permit the Fund to invest all
or substantially all of its investable assets, except to the extent required to
remain uninvested to satisfy near-term cash requirements, in an open-end
management investment company having the same investment objectives and
substantially similar policies and restrictions as the Fund (a "Master Fund").
The proposed fundamental investment policies are set forth in Exhibit D.
19
<PAGE> 24
The proposed changes to each Fund's fundamental investment policies would permit
the Fund to adopt a "Master Fund/Feeder Fund Structure." Rather than investing
directly in a portfolio of securities, the Fund would be authorized to pool its
assets with other mutual funds for investment in a Master Fund, making it a
"Feeder Fund." A purpose of such an arrangement is to achieve operational
efficiencies, assuming that the assets of the Master Fund are greater than the
assets of any individual Feeder Fund. While the Board has not determined that
any Fund should convert to a Master Fund/Feeder Fund Structure at this time, the
Board believes it could be in the best interests of some or all Funds at some
future date, and in that case the Board could do so without further approval by
shareholders.
If the proposed changes in the investment policies are approved by shareholders
of a Fund, the Fund's Board could vote at some time in the future to convert
that Fund into a Feeder Fund under which all or substantially all of the
investment assets of the Fund would be invested in a Master Fund. The Feeder
Fund would transfer its assets to a Master Fund in exchange for an interest in
the Master Fund having the same net asset value as the value of the assets
transferred. (The ownership interests of the Fund's shareholders will not be
altered by this change.)
Under the Declaration of Trust, the affirmative vote of the shareholders of the
affected series entitled to vote more than fifty percent of the votes entitled
to be cast on the matter is required to sell or transfer substantially all of
the assets of the Fund. One way to convert a Fund to a Master Fund/Feeder Fund
Structure is through a sale or transfer of assets. Thus, approval to convert a
Fund into a Master/Feeder Fund Structure through a sale or transfer of assets
requires, under a conservative interpretation of the Declaration of Trust, the
affirmative vote of a majority of the shares of the Fund (or the affected series
of the Fund, if applicable). Approval of Item 5 by shareholders is also,
therefore, deemed to constitute approval of the Board's discretionary authority
to convert a Fund into a Master Fund/Feeder Fund Structure through a sale or
transfer of assets.
Any Master Fund in which a Feeder Fund would invest would be required to have
the same investment objective and substantially similar policies and
restrictions as the Feeder Fund. Accordingly, by investing in a Master Fund, a
Feeder Fund would continue to pursue its present investment objectives and
policies in substantially the same manner as it does currently, except that it
would do so through its investment in the Master Fund rather than through direct
investments in the types of securities dictated by its investment objectives and
policies. The Master Fund, whose shares could be offered to institutional
investors in addition to a Feeder Fund, would invest in the same type of
securities in which the Fund would have invested directly, providing
substantially the same investment results to the Feeder Fund's shareholders.
However, the
20
<PAGE> 25
expense ratios, the yields, and the total returns of other investors in the
Master Fund may be different from those of the Feeder Fund due to differences in
Feeder Fund expenses.
By investing substantially all of its assets in a Master Fund, a Feeder Fund may
be in a position to realize directly or indirectly certain economies of scale,
in that a larger investment portfolio resulting from multiple Feeder Funds is
expected to achieve a lower ratio of operating expenses to net assets. A Master
Fund may be offered to an undetermined number of institutional investors.
However, there can be no assurance that any such additional investments in a
Master Fund by other Feeder Funds will take place or that economies of scale may
be realized.
If a Fund invests substantially all of its assets in a Master Fund, the Fund may
no longer require active portfolio management services. In this event, if the
shareholders of a Fund approve the proposed policy changes and the Board
converts the Fund into a Feeder Fund, then the existing investment management
agreement may be terminated or no fee would be charged; in such case, the Fund's
Board would likely enter into an administration agreement for the provision of
certain administrative services to the Fund, likely including those currently
provided under the existing investment management agreement, with compensation
at such rates as may be approved by the Board.
MASTER FUNDS. The investment objective of any Master Fund would be the same as
the investment objective of the applicable Feeder Fund that would invest in it.
If the Board votes to convert a Fund into a Feeder Fund, the Fund's assets will
no longer be directly invested in the securities of multiple issuers, but rather
will be invested in the securities of a single issuer, i.e., the Master Fund,
which would be registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). A Master Fund may
have a different Board than the Feeder Fund.
A Feeder Fund may withdraw its investment in a Master Fund at any time if the
Board determines that it is in the best interest of the shareholders of the
Feeder Fund to do so or if the investment policies or restrictions of the Master
Fund were changed so that they were inconsistent with the policies and
restrictions of the Feeder Fund. Upon any such withdrawal, the Board of the
Feeder Fund would consider what action might be taken, including the investment
of all the assets of the Feeder Fund in another pooled investment entity having
substantially the same investment objective as the Feeder Fund or the retaining
of an investment adviser to directly invest the Fund's assets in accordance with
its investment objective and policies. If another pooled investment vehicle with
substantially the same investment objective could not be found, it might
21
<PAGE> 26
have a significant impact on the investment of shareholders in the Feeder Fund.
Whenever a Feeder Fund is asked to vote on a proposal by the Master Fund, the
Feeder Fund will hold a meeting of shareholders if required by applicable law or
its policies, and cast its vote with respect to the Master Fund in the same
proportion as its shareholders vote on the proposal.
Once its assets are invested in a Master Fund, a Feeder Fund will value its
holdings (i.e., shares issued by the Master Fund) at their fair value, which
will be based upon the daily net asset value of the Master Fund. The net income
of the Feeder Fund will be determined at the same time and on the same days as
the net income of the Master Fund is determined, which are the same time and
days that the Feeder Fund uses for this purpose.
TAX CONSIDERATIONS. The implementation of the proposed new Master Fund/Feeder
Fund structure is not expected to have any adverse tax effects on the Fund or
its shareholders.
The Feeder Fund would be expected to intend to continue to qualify and elect to
be treated as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"). To so qualify, a Feeder
Fund must meet certain income, distribution, and diversification requirements.
It is expected that the Feeder Fund's investment in a Master Fund will satisfy
these requirements. Provided the Feeder Fund meets these requirements and
distributes all of its net investment income and realized capital gains to its
shareholders in accordance with the timing requirements imposed by the Code, the
Feeder Fund will not pay any Federal income or excise taxes.
BOARD OF TRUSTEES RECOMMENDATION
As a result of its consideration of the foregoing facts, the Board of the Fund
voted unanimously to approve the change in fundamental investment policies to
permit a Master/Feeder fund structure conversion at the Board's discretion and
to submit them to the shareholders for their approval.
The Board of the Fund recommends that shareholders vote FOR approval of the new
fundamental investment policies permitting conversion, at the Board's
discretion, into a Master Fund/Feeder Fund structure.
OTHER INFORMATION
ZKI. 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
management of investment funds for more than forty-nine
22
<PAGE> 27
years. ZKI and its affiliates provide investment advice and manage investment
portfolios for the Kemper Funds, affiliated insurance companies and other
corporate, pension, profit-sharing and individual accounts representing
approximately $85 billion under management. ZKI acts as investment manager or
principal underwriter for 32 open-end and seven closed-end investment companies,
with 86 separate investment portfolios, representing more than 2.5 million
shareholder accounts. ZKI is an indirect subsidiary of Zurich Insurance Company,
a leading internationally recognized provider of insurance and financial
services in property/casualty and life insurance, reinsurance and structured
financial solutions as well as asset management ("Zurich").
The investment companies to which ZKI and its affiliates render investment
management services, and the related management fees, are identified in Exhibit
E.
The names, addresses and principal occupations of the principal executive
officer and the directors of ZKI are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Stephen B. Timbers, Chief President, Chief Executive
Executive Officer and Director Officer and Chief Investment
222 South Riverside Plaza Officer, ZKI
Chicago, Illinois 60606
John E. Neal, Director President, Kemper Funds Group
222 South Riverside Plaza
Chicago, Illinois 60606
William E. Chapman II, Director President, Kemper Retirement
222 South Riverside Plaza Plans Group
Chicago, Illinois 60606
</TABLE>
TRANSFER AGENT AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105 is the Fund's
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Zurich Kemper Service Company ("ZKSC"), an affiliate of ZKI, serves as
"Shareholder Service Agent" of the Fund and, as such, performs all of IFTC's
duties as transfer agent and dividend-paying agent. IFTC receives as transfer
agent, and pays to ZKSC, annual account fees of a maximum of $13 plus
out-of-pocket expense reimbursement. For the most recently completed fiscal year
IFTC remitted shareholder service fees to ZKSC as set forth in Exhibit G. It is
anticipated that ZKSC will continue to provide transfer agent services after
consummation of the Transaction.
PORTFOLIO TRANSACTIONS. ZKI is the investment manager for the Fund and ZKI and
its affiliates furnish investment management services for the
23
<PAGE> 28
Kemper Funds and other clients including affiliated insurance companies. At
times investment decisions may be made to purchase or sell the same investment
securities for the Fund and for one or more of the other clients managed by 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
a Fund, will implement the Fund's policy of seeking 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
each firm's professional services, which include execution, financial
responsibility, responsiveness, clearance procedures, wire service quotations
and statistical and other research information provided to a Fund and 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 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 ask prices.
The Fund did not pay any brokerage commissions during its fiscal year ended
April 30, 1997.
SKI. It is expected that SKI (including ZKI under SKI's ownership) will
implement portfolio transaction policies that are substantially similar to those
currently used by the Adviser. In addition, to the maximum extent feasible, it
is expected that SKI will place orders for portfolio transactions through
Scudder Investor Services, Inc., Two International Place, Boston, Massachusetts
02110 ("SIS") (a corporation registered as a broker/dealer and a subsidiary of
Scudder), which will in turn place orders on behalf of the Fund with issuers,
underwriters or other brokers and dealers. SIS will not receive any commission,
fee or other remuneration from a Fund for this service.
SCUDDER. Scudder, Stevens & Clark, Inc. ("Scudder"), 345 Park Avenue, New York,
New York 10154, is one of America's oldest and largest investment management
firms. It manages approximately $125 billion in assets globally, about $50
billion of which are invested in equities and the balance in fixed income and
money market investments. Scudder manages approximately $45 billion in a variety
of open-end and closed-end funds
24
<PAGE> 29
for nearly two million shareholder accounts. The firm also provides investment
services for private and institutional clients, such as trusts, endowments, and
corporate employee benefit plans. Scudder manages more than $25 billion
internationally in both developed and emerging markets. The firm is one of the
world's largest managers of pension fund assets invested overseas.
Scudder manages two families of pure no-load mutual funds. The Scudder Family of
Funds (approximately $23 billion) comprises 53 money market, bond and equity
mutual funds. The AARP Investment Program from Scudder, a family of 15 funds
(approximately $14 billion), is designed to address the needs of the more than
33 million members of the American Association of Retired Persons. The balance
of the funds under management (approximately $5 billion) comprises offshore,
variable life insurance and other kinds of funds.
The investment companies to which Scudder renders investment management services
that have similar investment objectives to the Fund, and the related fees, are
identified in Exhibit F.
The names, addresses and principal occupations of the principal executive
officer and the directors of Scudder are as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Daniel Pierce, Director Chairman of the Board and
Two International Place Managing Director, Scudder
Boston, Massachusetts 02110
Edmond D. Villani, Chief President, Chief Executive
Executive Officer and Director Officer and Managing Director,
345 Park Avenue Scudder
New York, New York 10154
Stephen R. Beckwith, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Lynn S. Birdsong, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Nicholas Bratt, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
E. Michael Brown, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
</TABLE>
25
<PAGE> 30
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Managing Director, Scudder
Mark S. Casady, Director
Two International Place
Boston, Massachusetts 02110
Linda C. Coughlin, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
Margaret D. Hadzima, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Jerard K. Hartman, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Richard A. Holt, Director Managing Director, Scudder
Two Prudential Plaza
180 North Stetson, Suite 5400
Chicago, Illinois 60601
John T. Packard, Director Managing Director, Scudder
101 California Street
San Francisco, California 94111
Kathryn L. Quirk, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Cornelia M. Small, Director Managing Director, Scudder
345 Park Avenue
New York, New York 10154
Stephen A. Wohler, Director Managing Director, Scudder
Two International Place
Boston, Massachusetts 02110
</TABLE>
After consummation of the Transaction, it is anticipated that the principal
executive officer and directors of SKI will be as follows:
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Lynn Birdsong, Director Senior Executive Officer --
345 Park Avenue International Operations, SKI
New York, New York 10154
</TABLE>
26
<PAGE> 31
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Member of Corporate Executive
Lawrence Cheng, Director Board and Chief Investment
Mythenquai 2 Officer for Investments and
8002 Zurich, Switzerland International Asset Management,
Zurich
Steven Gluckstern, Director Member of Corporate Executive
Mythenquai 2 Board and responsible for
8002 Zurich, Switzerland Reinsurance, Structured
Finance, Capital Market
Products and Strategic
Investments, Zurich
Rolf Hueppi, Director Chairman and Chief Executive
Mythenquai 2 Officer, Zurich; Chairman of
8002 Zurich, Switzerland Board of Directors, SKI
Markus Rohrbasser, Director Chief Financial Officer and
Mythenquai 2 Member of Corporate Executive
8002 Zurich, Switzerland Board, Zurich
Cornelia Small, Director Senior Executive Officer --
345 Park Avenue Investment Management, SKI
New York, New York 10154
Edmond Villani, Chief Executive Chief Executive Officer, SKI
Officer and Director
345 Park Avenue
New York, New York 10154
</TABLE>
MISCELLANEOUS
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by ZKI, including any additional solicitation made by
letter, telephone or telegraph. In addition to solicitation by mail, certain
officers and representatives of the Fund, officers and employees of ZKI and
certain financial services firms and their representatives, who will receive no
extra compensation for their services, may solicit proxies by telephone,
telegram or personally. In addition, ZKI has retained First Data Corp. to
solicit proxies on behalf of the Fund's Board and the boards of the other Kemper
Funds, the fee for which will be borne by ZKI. A COPY OF YOUR FUND'S ANNUAL
REPORT AND ANY MORE RECENT SEMI-ANNUAL REPORT ARE AVAILABLE WITHOUT CHARGE UPON
REQUEST BY WRITING TO THE FUND, 222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS
60606 OR BY CALLING 1-800-621-1048.
27
<PAGE> 32
PROPOSALS OF SHAREHOLDERS
As a Massachusetts business trust, the Fund is not required to hold annual
shareholder meetings, but will hold special meetings as required or deemed
desirable. Since the Fund does not hold regular meetings of shareholders, the
anticipated date of the next special shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy solicitation
material for a special shareholder meeting must be received by the Fund no later
than four months prior to the date when proxy statements are mailed to
shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Trustees of the Fund is not aware of any matters that will be
presented for action at the Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote the
shares as to any such other matters in accordance with their best judgment in
the interest of the Fund.
VOTING, QUORUM
Each share of the Fund is entitled to one vote on each matter submitted to a
vote of the Shareholders at the Meeting; no shares have cumulative voting
rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR the election of the persons who have been nominated as trustees for the Fund
and FOR Items 2, 3, 4 and 5. Shareholders who execute proxies may revoke them at
any time before they are voted, either by writing to the Fund or in person at
the time of the Meeting. Proxies given by telephone or electronically
transmitted instruments may be counted if obtained pursuant to procedures
designed to verify that such instructions have been authorized.
Item 1 (election of trustees) requires a plurality vote of the shares of the
Fund. This means that the nine nominees receiving the largest number of votes
will be elected. Item 2 (ratification of selection of independent auditors)
requires the affirmative vote of a majority of the shares voting on the matter.
Item 3 (approval of new investment management agreement) and Item 4 (approval of
new Rule 12b-1 Plan) require the affirmative vote of a "majority of the
outstanding voting securities" of the Fund. The term "majority of the
outstanding voting securities" as defined in the 1940 Act means: the affirmative
vote of the lesser of (1) 67% of the voting securities of the Fund present at
the meeting if more than 50% of the outstanding shares of the Fund are present
in person or by proxy, or (2) more than 50% of the outstanding shares of the
Fund. Item 5
28
<PAGE> 33
(approval of change in fundamental investment policies to permit Master
Fund/Feeder Fund structure) requires the affirmative vote of more than 50% of
the shares of the Fund. If an Item is not approved, the Board would consider
appropriate action.
On Items 1 and 2, the Fund will vote in the aggregate and not by series. On
Items 3, 4 and 5, each series of the Fund will vote separately.
The Declaration of Trust of the Fund provides that the presence at a shareholder
meeting in person or by proxy of at least 30% of the shares of a Fund
constitutes a quorum for the Fund. Thus, the meeting could not take place on its
scheduled date if less than 30% of the shares of the Fund were represented. If,
by the time scheduled for the meeting, a quorum of shareholders of the Fund is
not present or if a quorum is present but sufficient votes in favor of any of
the items are not received, the persons named as proxies may propose one or more
adjournments of the meeting for the Fund to permit further soliciting of proxies
from its shareholders. Any such adjournment will require the affirmative vote of
a majority of the shares of the Fund present (in person or by proxy) at the
session of the meeting to be adjourned. The persons named as proxies will vote
in favor of any such adjournment if they determine that such adjournment and
additional solicitation are reasonable and in the interest of the Fund's
shareholders.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1, abstentions and broker non-votes will have no
effect; the nine nominees receiving the largest number of votes will be elected.
On Item 2, abstentions and broker non-votes will not be counted as "votes cast"
and will have no effect on the result of the vote. On Items 3, 4 and 5,
abstentions and broker non-votes will be considered to be both present at the
Meeting and issued and outstanding and, as a result, will have the effect of
being counted as voted against the Items.
The Board of Trustees of the Fund recommends an affirmative vote on all items.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
Philip J. Collora,
Secretary
29
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<S> <C>
Shareholdings....................................... Exhibit A
(Trustees and Officers)
Form of Investment Management Agreement............. Exhibit B
Form of Administration, Shareholder Services
and Distribution Agreement.......................... Exhibit C
Proposed Fundamental Investment Policies............ Exhibit D
Kemper Funds Net Assets and Management Fees......... Exhibit E
Investment Objectives and Advisory Fees for Funds
Advised by Scudder, Stevens & Clark, Inc............ Exhibit F
Fees and Expenses................................... Exhibit G
</TABLE>
30
<PAGE> 35
EXHIBIT A
SHAREHOLDINGS
TRUSTEES AND OFFICERS. Listed below is the number of shares of the Fund owned
beneficially by each trustee and nominee as of August 26, 1997. Also shown is
the number of shares owned beneficially by the trustees and officers as a group.
In each case, the amounts shown are less than 1% of the outstanding shares of
such series of the Fund.
<TABLE>
<CAPTION>
TRUSTEES AND
OFFICERS
SERIES BELIN BURHNAM DUNAWAY HOFFMAN JONES PETERSON PIERCE SOMMERS TIMBERS VILLANI AS A GROUP
- ------ ----- ------- ------- ------- ----- -------- ------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MMP.................. 0 0 1,121 0 0 0 0 1,250 0 0 2,370
GSP.................. 0 0 0 0 0 0 0 0 0 0 0
TEP.................. 1,165 0 0 0 0 0 0 0 0 0 1,165
</TABLE>
A-1
<PAGE> 36
EXHIBIT B
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
CASH ACCOUNT TRUST
222 SOUTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
, 199
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
INVESTMENT MANAGEMENT AGREEMENT
Ladies and Gentlemen:
Cash Account Trust (the "Trust") has been established as a Massachusetts
business Trust to engage in the business of an investment company. Pursuant to
the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the Trust's shares
of beneficial interest, par value $ per share, (the "Shares") in
separate series, or funds. The Board of Trustees has authorized the Money Market
Portfolio, Government Securities Portfolio and Tax-Exempt Portfolio (each a
"Fund"). Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
The Trust, on behalf of each Fund has selected you to act as the investment
manager of the Fund and to provide certain other services, as more fully set
forth below, and you have indicated that you are willing to act as such
investment manager and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Trust on behalf of each Fund agrees with
you as follows:
1. DELIVERY OF DOCUMENTS. The Trust engages in the business of investing and
reinvesting the assets of each Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's Registration Statement
on Form N-1A, as amended from time to time, (the "Registration Statement") filed
by the Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the Trust.
The Trust has also furnished you with copies properly
B-1
<PAGE> 37
certified or authenticated of each of the following additional documents related
to the Trust and each Fund:
(a) The Declaration dated , 19 , as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders of the Fund
selecting you as investment manager and approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of Beneficial Interest
dated , 19 relating to the Fund.
The Trust will furnish you from time to time with copies, properly certified or
authenticated, of all amendments of or supplements, if any, to the foregoing,
including the Prospectus, the SAI and the Registration Statement.
2. PORTFOLIO MANAGEMENT SERVICES. As manager of the assets of each Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable efforts to manage
each Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. Each Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing each
Fund in accordance with the requirements set forth in this section 2, you shall
be entitled to receive and act upon advice of counsel to the Trust. You shall
also make available to the Trust promptly upon request all of the Funds'
investment records and ledgers as are necessary to assist the Trust in complying
with the requirements of the 1940 Act and other applicable laws. To the extent
required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Trust are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
B-2
<PAGE> 38
investments to be purchased, sold or entered into by each Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
each Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of each Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
3. ADMINISTRATIVE SERVICES. In addition to the portfolio management services
specified above in section 2, you shall furnish at your expense for the use of
each Fund such office space and facilities in the United States as the Fund may
require for its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative services on behalf
of each Fund necessary for operating as an open end investment company and not
provided by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, records and reports and any other information required under
the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the Fund; assisting
in the resolution of accounting issues that
B-3
<PAGE> 39
may arise with respect to the Fund's operations and consulting with the Fund's
independent accountants, legal counsel and the Fund's other agents as necessary
in connection therewith; establishing and monitoring the Fund's operating
expense budgets; reviewing the Fund's bills; processing the payment of bills
that have been approved by an authorized person; assisting the Fund in
determining the amount of dividends and distributions available to be paid by
the Fund to its shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and dividend paying
agent, the custodian, and the accounting agent with such information as is
required for such parties to effect the payment of dividends and distributions;
and otherwise assisting the Trust as it may reasonably request in the conduct of
the Fund's business, subject to the direction and control of the Trust's Board
of Trustees. Nothing in this Agreement shall be deemed to shift to you or to
diminish the obligations of any agent of the Funds or any other person not a
party to this Agreement which is obligated to provide services to the Fund.
4. ALLOCATION OF CHARGES AND EXPENSES. Except as otherwise specifically
provided in this section 4, you shall pay the compensation and expenses of all
Trustees, officers and executive employees of the Trust (including each Fund's
share of payroll taxes) who are affiliated persons of you, and you shall make
available, without expense to the Fund, the services of such of your directors,
officers and employees as may duly be elected officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
shall provide at your expense the portfolio management services described in
section 2 hereof and the administrative services described in section 3 hereof.
You shall not be required to pay any expenses of a Fund other than those
specifically allocated to you in this section 4. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent for which the
Trust is responsible pursuant to the terms of the Fund Accounting Services
Agreement, custodians, subcustodians, transfer agents, dividend
B-4
<PAGE> 40
disbursing agents and registrars; payment for portfolio pricing or valuation
services to pricing agents, accountants, bankers and other specialists, if any;
expenses of preparing share certificates and, except as provided below in this
section 4, other expenses in connection with the issuance, offering,
distribution, sale, redemption or repurchase of securities issued by the Fund;
expenses relating to investor and public relations; expenses and fees of
registering or qualifying Shares of the Fund for sale; interest charges, bond
premiums and other insurance expense; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; the
compensation and all expenses (specifically including travel expenses relating
to Trust business) of Trustees, officers and employees of the Trust who are not
affiliated persons of you; brokerage commissions or other costs of acquiring or
disposing of any portfolio securities of the Fund; expenses of printing and
distributing reports, notices and dividends to shareholders; expenses of
printing and mailing Prospectuses and SAIs of the Fund and supplements thereto;
costs of stationery; any litigation expenses; indemnification of Trustees and
officers of the Trust; and costs of shareholders' and other meetings.
You shall not be required to pay expenses of any activity which is primarily
intended to result in sales of Shares of a Fund if and to the extent that (i)
such expenses are required to be borne by a principal underwriter which acts as
the distributor of the Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such expenses, or (ii)
the Trust on behalf of the Fund shall have adopted a plan in conformity with
Rule 12b-1 under the 1940 Act providing that the Fund (or some other party)
shall assume some or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by the principal
underwriter pursuant to the underwriting agreement or are not permitted to be
paid by a Fund (or some other party) pursuant to such a plan.
5. MANAGEMENT FEE. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3, and 4 hereof, the Trust
on behalf of the Funds shall pay you in United States Dollars on the last day of
each month the unpaid balance of a fee equal to the excess of (a) 1/12 of .22 of
1 percent of the average daily net assets as defined below of all of the Funds
for such month; provided that, for any calendar month during which the average
of such values exceeds $500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $500,000,000 shall be 1/12 of
.20 of 1 percent of such portion; provided that, for any calendar month during
which the average of such values exceeds $1 billion, the fee payable for that
month based on the portion of the average of such values in excess of $1 billion
shall be 1/12 of .175 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds
B-5
<PAGE> 41
$2 billion, the fee payable for that month based on the portion of the average
of such values in excess of $2 billion shall be 1/12 of .16 of 1 percent of such
portion; and provided that, for any calendar month during which the average of
such values exceeds $3 billion, the fee payable for that month based on the
portion of the average of such values in excess of $3 billion shall be 1/12 of
.15 of 1 percent of such portion; over (b) any compensation waived by you from
time to time (as more fully described below). You shall be entitled to receive
during any month such interim payments of your fee hereunder as you shall
request, provided that no such payment shall exceed 75 percent of the amount of
your fee then accrued on the books of the Funds and unpaid.
The "average daily net assets" of a Fund shall mean the average of the values
placed on the Fund's net assets as of 4:00 p.m. (New York time) on each day on
which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of a Fund shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 5, the value of the net
assets of a Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If a Fund determines the value of the net assets of its portfolio more than once
on any day, then the last such determination thereof on that day shall be deemed
to be the sole determination thereof on that day for the purposes of this
section 5.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of a Fund's expenses, as if such waiver or
limitation were fully set forth herein.
6. AVOIDANCE OF INCONSISTENT POSITION; SERVICES NOT EXCLUSIVE. In connection
with purchases or sales of portfolio securities and other investments for the
account of each Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for each Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of a Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
B-6
<PAGE> 42
Your services to each Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and services to others. In acting under this Agreement, you shall be an
independent contractor and not an agent of the Trust. Whenever a Fund and one or
more other accounts or investment companies advised by you have available funds
for investment, investments suitable and appropriate for each shall be allocated
in accordance with procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in a manner
believed by you to be equitable. Each Fund recognizes that in some cases this
procedure may adversely affect the size of the position that may be acquired or
disposed of for the Fund.
7. LIMITATION OF LIABILITY OF MANAGER. As an inducement to your undertaking to
render services pursuant to this Agreement, the Trust agrees that you shall not
be liable under this Agreement for any error of judgment or mistake of law or
for any loss suffered by a Fund in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect you against any liability to the Trust, the Fund
or its shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.
8. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall remain in
force for each Fund until , 19 , and continue in force from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually (a) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Trustees of the Trust, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to a Fund at any time, without the
payment of any penalty, by the vote of a majority of the outstanding voting
securities of the Fund or by the Trust's Board of Trustees on 60 days' written
notice to you, or by you on 60 days' written notice to the Trust. This Agreement
shall terminate automatically in the event of its assignment.
This Agreement may be terminated with respect to a Fund at any time without the
payment of any penalty by the Board of Trustees or by vote
B-7
<PAGE> 43
of a majority of the outstanding voting securities of the Fund in the event that
it shall have been established by a court of competent jurisdiction that you or
any of your officers or directors has taken any action which results in a breach
of your covenants set forth herein.
9. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
10. LIMITATION OF LIABILITY FOR CLAIMS. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "Cash Account
Trust" refers to the Trustees under the Declaration collectively as Trustees and
not as individuals or personally, and that no shareholder of a Fund, or Trustee,
officer, employee or agent of the Trust, shall be subject to claims against or
obligations of the Trust or of the Fund to any extent whatsoever, but that the
Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as set
forth in the Declaration and you agree that the obligations assumed by the Trust
on behalf of each Fund pursuant to this Agreement shall be limited in all cases
to the Fund and its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or any other
series of the Trust, or from any Trustee, officer, employee or agent of the
Trust. You understand that the rights and obligations of each Fund, or series,
under the Declaration are separate and distinct from those of any and all other
series.
11. MISCELLANEOUS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
In interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
B-8
<PAGE> 44
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause any
Fund to fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Trust on behalf of each Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
CASH ACCOUNT TRUST
By:
--------------------------------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By:
--------------------------------------------------
President
B-9
<PAGE> 45
EXHIBIT C
FORM OF
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
AGREEMENT made this day of , 199 , by and between CASH
ACCOUNT TRUST, a Massachusetts business trust (the "Fund"), and ZURICH KEMPER
DISTRIBUTORS, INC., a Delaware corporation ("ZKDI").
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby appoints ZKDI to act as administrator, distributor and
principal underwriter for the distribution of shares of beneficial interest
(hereinafter called "shares") of the Fund in jurisdictions wherein shares of the
Fund may legally be offered for sale; provided, however, that the Fund in its
absolute discretion may (a) issue or sell shares directly to holders of shares
of the Fund upon such terms and conditions and for such consideration, if any,
as it may determine, whether in connection with the distribution of subscription
or purchase rights, the payment or reinvestment of dividends or distributions,
or otherwise; or (b) issue or sell shares at net asset value to the shareholders
of any other investment company, for which ZKDI shall act as exclusive
distributor, who wish to exchange all or a portion of their investment in shares
of such other investment company for shares of the Fund.
ZKDI shall appoint various broker-dealers and other financial services firms
("Firms") to provide a cash management service for their clients through the
Fund. The Firms shall provide such office space and equipment, telephone
facilities, personnel, literature distribution, advertising and promotion as is
necessary or beneficial for providing information and services to potential and
existing shareholders of the Fund and to assist the Fund's shareholder service
agent in servicing accounts of the Firm's clients who own Fund shares
("clients"). Such services and assistance may include, but are not limited to,
establishment and maintenance of shareholder accounts and records, processing
purchase and redemption transactions, automatic investment in Fund shares of
client account cash balances, answering routine client inquiries regarding the
Fund, assistance to clients in changing dividend options, account designations
and addresses, and such other services as the Fund or ZKDI may reasonably
request. ZKDI may also provide some of the above services for the Fund directly.
This Agreement applies to the three currently authorized series of shares of the
Fund ("Portfolios"). These Portfolios are the "Money Market
C-1
<PAGE> 46
Portfolio," the "Government Securities Portfolio" and the "Tax-Exempt
Portfolio."
ZKDI accepts such appointment and agrees during the term hereof to render such
services and to assume the obligations herein set forth for the compensation
herein provided. ZKDI shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund. It is understood and agreed that ZKDI, by
separate agreement with the Fund, may also serve the Fund in other capacities.
The services of ZKDI to the Fund under this Agreement are not to be deemed
exclusive, and ZKDI shall be free to render similar services or other services
to others.
In carrying out its duties and responsibilities hereunder, ZKDI will, pursuant
to separate administration services and selling group agreements ("services
agreements"), appoint various Firms to provide administrative, distribution and
other services contemplated hereunder directly to or for the benefit of existing
and potential shareholders who may be clients of such Firms. Such Firms shall at
all times be deemed to be independent contractors retained by ZKDI and not the
Fund. ZKDI and not the Fund will be responsible for the payment of compensation
to such Firms for such services.
ZKDI will use its best efforts with reasonable promptness to sell such part of
the authorized shares of the Fund remaining unissued as from time to time shall
be effectively registered under the Securities Act of 1933 ("Securities Act"),
at prices determined as hereinafter provided and on terms hereinafter set forth,
all subject to applicable Federal and state laws and regulations and to the
Agreement and Declaration of Trust of the Fund. The price the Fund shall receive
for all shares purchased from the Fund shall be the net asset value used in
determining the public offering price applicable to the sale of such shares.
2. ZKDI shall sell shares of the Fund to or through qualified Firms in such
manner, not inconsistent with the provisions hereof and the then effective
registration statement of the Fund under the Securities Act (and related
prospectus), as ZKDI may determine from time to time, provided that no Firm or
other person shall be appointed or authorized to act as agent of the Fund
without the prior consent of the Fund. In addition to sales made by it as agent
of the Fund, ZKDI may, in its discretion, also sell shares of the Fund as
principal to persons with whom it does not have services agreements.
Shares of the Fund offered for sale or sold by ZKDI shall be so offered or sold
at a price per share determined in accordance with the then current prospectus
relating to the sale of such shares except as departure from
C-2
<PAGE> 47
such prices shall be permitted by the rules and regulations of the Securities
and Exchange Commission; provided, however, that any public offering price for
shares of the Fund shall be the net asset value per share. The net asset value
per share of each Portfolio of the Fund shall be determined in the manner and at
the times set forth in the then current prospectus of the Fund relating to such
shares.
ZKDI will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the public offering price of the Fund's shares,
and neither ZKDI nor any such Firms shall withhold the placing of purchase
orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered under the
Securities Act for sale as herein contemplated such shares as ZKDI shall
reasonably request and as the Securities and Exchange Commission shall permit to
be so registered. Notwithstanding any other provision hereof, the Fund may
terminate, suspend or withdraw the offering of shares whenever, in its sole
discretion, it deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as ZKDI may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to ZKDI from time to time such information
with respect to the Fund and its shares as ZKDI may reasonably request for use
in connection with the sale of shares of the Fund.
5. ZKDI shall issue and deliver or shall arrange for various Firms to issue and
deliver on behalf of the Fund such confirmations of sales made by it as agent
pursuant to this Agreement as may be required. At or prior to the time of
issuance of shares, ZKDI will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
ZKDI may specify.
6. ZKDI shall order shares of the Fund from the Fund only to the extent that it
shall have received purchase orders therefor. ZKDI will not make, or authorize
any Firms or others to make, any short sales of shares of the Fund. ZKDI, as
agent of and for the account of the Fund, may repurchase the shares of the Fund
at such prices and upon such terms and conditions as shall be specified in the
current prospectus of the Fund. In selling or reacquiring shares of the Fund for
the account of the Fund, ZKDI will in all respects conform to the requirements
of all state and Federal laws and the Rules of Fair Practice of the National
Association of Securities
C-3
<PAGE> 48
Dealers, Inc., relating to such sale or reacquisition, as the case may be, and
will indemnify and save harmless the Fund from any damage or expense on account
of any wrongful act by ZKDI or any employee, representative or agent of ZKDI.
ZKDI will observe and be bound by all the provisions of the Agreement and
Declaration of Trust of the Fund (and of any fundamental policies adopted by the
Fund pursuant to the Investment Company Act of 1940, notice of which shall have
been given to ZKDI) which at the time in any way require, limit, restrict or
prohibit or otherwise regulate any action on the part of ZKDI.
7. The Fund shall assume and pay all charges and expenses of its operations not
specifically assumed or otherwise to be provided by ZKDI under this Agreement.
The Fund will pay or cause to be paid expenses (including the fees and
disbursements of its own counsel) and all taxes and fees payable to the Federal,
state or other governmental agencies on account of the registration or
qualification of securities issued by the Fund or otherwise. The Fund will also
pay or cause to be paid expenses incident to the issuance of shares of
beneficial interest, such as the cost of share certificates, issue taxes, and
fees of the transfer agent. ZKDI will pay all expenses (other than expenses
which one or more Firms may bear pursuant to any agreement with ZKDI) incident
to the sale and distribution of the shares issued or sold hereunder including,
without limiting the generality of the foregoing, all expenses of printing and
distributing any prospectus and of preparing, printing and distributing or
disseminating any other literature, advertising and selling aids in connection
with the offering of the shares for sale (except that such expenses need not
include expenses incurred by the Fund in connection with the preparation,
typesetting, printing and distribution of any registration statement, prospectus
or report or other communication to shareholders in their capacity as such) and
expenses of advertising in connection with such offering.
8. For the services and facilities described herein, the Fund will pay to ZKDI
at the end of each calendar month a distribution services fee computed at an
annual rate of 0.60 of 1% of the average daily net assets of the Money Market
Portfolio and the Government Securities Portfolio and at an annual rate of 0.50
of 1% of the average daily net assets of the Tax-Exempt Portfolio. The fees
shall be charged to each Portfolio of the Fund subject to this Agreement based
upon the average daily net assets of such Portfolio and at the annual rate
applicable to such Portfolio as provided above. For the month and year in which
this Agreement becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement is in effect
during the month and year, respectively.
The net asset value of each Portfolio of the Fund shall be calculated in
accordance with the provisions of the Fund's current prospectus. On each
C-4
<PAGE> 49
day when net asset value is not calculated, the net asset value of a share of
any Portfolio shall be deemed to be the net asset value of such a share as of
the close of business on the last day on which such calculation was made for the
purpose of the foregoing computations.
9. ZKDI shall prepare reports for the Board of Trustees of the Fund on a
quarterly basis showing amounts paid to the various Firms, the basis for any
discretionary payments made to such Firms and such other information as from
time to time shall be reasonably requested by the Board of Trustees.
This Agreement shall become effective on the date hereof and shall continue
until , 199 and shall continue from year to year thereafter with
respect to each Portfolio, but only so long as such continuance is specifically
approved for each Portfolio at least annually by a vote of the Board of Trustees
of the Fund including the trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in this Agreement or in
any agreement related to this Agreement.
This Agreement may not be amended to increase the amount to be paid to ZKDI for
services hereunder without the vote of a majority of the outstanding voting
securities of each Portfolio of the Fund. All material amendments to this
Agreement must in any event be approved by a vote of the Board of Trustees of
the Fund including the trustees who are not interested persons of the Fund and
who have no direct or indirect financial interest in this Agreement or in any
agreement related to this Agreement, cast in person at a meeting called for such
purpose.
10. This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the Fund
or by ZKDI on sixty (60) days written notice to the other party. The Fund may
effect termination with respect to any Portfolio by a vote of (i) a majority of
the Board of Trustees, (ii) a majority of the trustees who are not interested
persons of the Fund and who have no direct or indirect financial interest in
this Agreement or in any agreement related to this Agreement, or (iii) a
majority of the outstanding voting securities of a Portfolio.
The terms "assignment", "interested" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment Company
Act of 1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of ZKDI to receive
payments on any unpaid balance of the compensation described in Section 8 earned
prior to such termination.
C-5
<PAGE> 50
11. ZKDI will not use or distribute or authorize the use, distribution or
dissemination by Firms or others in connection with the sale of the shares any
statements, other than those contained in the Fund's current prospectus, except
such supplemental literature or advertising as shall be lawful under Federal and
state securities laws and regulations, and will furnish the Fund with copies of
all such material.
12. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
13. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
14. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund. With
respect to any claim by ZKDI for recovery of that portion of the distribution
services fees (or any other liability of the Fund arising hereunder) allocated
to a particular Portfolio, whether in accordance with the express terms hereof
or otherwise, ZKDI shall have recourse solely against the assets of that
Portfolio to satisfy such claim and shall have no recourse against the assets of
any other Portfolio for such purpose.
15. This Agreement shall be construed in accordance with applicable federal law
and the laws of The Commonwealth of Massachusetts.
16. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supercedes all prior agreements between the parties
relating to the subject matter hereof.
C-6
<PAGE> 51
IN WITNESS WHEREOF, the Fund and ZKDI have caused this Agreement to be executed
as of the day and year first above written.
CASH ACCOUNT TRUST
By:
-----------------------------------
Title:
--------------------------------
ATTEST:
-----------------------------
Title:
------------------------------
ZURICH KEMPER
DISTRIBUTORS, INC.
By:
-----------------------------------
Title:
--------------------------------
ATTEST:
-----------------------------
Title:
------------------------------
C-7
<PAGE> 52
EXHIBIT D
PROPOSED FUNDAMENTAL INVESTMENT POLICIES
The following policies are proposed to be changed with respect to the Fund or
its individual Portfolios. The proposed additions are underlined.
The Fund or Portfolio may not:
MMP, GSP, AND TEP:
"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, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE
ASSETS OF THE PORTFOLIO MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY
HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT
POLICIES AS THE PORTFOLIO."
"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, EXCEPT THAT ALL OR SUBSTANTIALLY
ALL OF THE ASSETS OF THE PORTFOLIO MAY BE INVESTED IN ANOTHER REGISTERED
INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY
SIMILAR INVESTMENT POLICIES AS THE PORTFOLIO."
MMP AND GSP:
"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, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
THE PORTFOLIO MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING
THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS
THE PORTFOLIO."
"Purchase more than 10% of any class of securities of any issuer, EXCEPT THAT
ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE PORTFOLIO MAY BE INVESTED IN
ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND
SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE PORTFOLIO. All debt securities
and all preferred stocks are each considered as one class."
MMP:
"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
D-1
<PAGE> 53
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
with its investment objective and policies; EXCEPT THAT ALL OR SUBSTANTIALLY ALL
OF THE ASSETS OF THE PORTFOLIO MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT
COMPANY HAVING THE SAME INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR
INVESTMENT POLICIES AS THE PORTFOLIO. 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."
TEP:
"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,
EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE PORTFOLIO MAY BE
INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME INVESTMENT
OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE PORTFOLIO.
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."
"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, EXCEPT THAT ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE PORTFOLIO
MAY BE INVESTED IN ANOTHER REGISTERED INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY SIMILAR INVESTMENT POLICIES AS THE
PORTFOLIO. 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."
D-2
<PAGE> 54
EXHIBIT E
KEMPER FUNDS NET ASSETS AND MANAGEMENT FEES
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Kemper Technology Fund................. $1,063 A
Kemper Total Return Fund............... 3,021 A
Kemper Growth Fund..................... 2,738 A
Kemper Small Capitalization Equity
Fund................................. 934 F
Kemper Income and Capital Preservation
Fund................................. 573 B
Kemper National Tax-Free Income Series
1. Kemper Municipal Bond Fund........ 3,322 C
2. Kemper Intermediate Municipal Bond
Fund.............................. 22 B
Kemper Diversified Income Fund......... 779 A
Kemper High Yield Series
1. Kemper High Yield Fund............ 4,097 A
2. Kemper High Yield Opportunity
Fund.............................. -- L
Kemper U.S. Government Securities
Fund................................. 4,163 C
Kemper International Fund.............. 472 D
Kemper International Bond Fund......... 26 D
Kemper State Tax-Free Income Series
1. Kemper California Tax-Free Income
Fund.............................. 1,008 B
2. Kemper New York Tax-Free Income
Fund.............................. 286 B
3. Kemper Florida Tax-Free Income
Fund.............................. 104 B
4. Kemper Texas Tax-Free Income
Fund.............................. 12 B
5. Kemper Ohio Tax-Free Income
Fund.............................. 39 B
6. Kemper Michigan Tax-Free Income
Fund.............................. 3 B
7. Kemper New Jersey Tax-Free Income
Fund.............................. 5 B
8. Kemper Pennsylvania Tax-Free
Income Fund....................... 6 B
</TABLE>
E-1
<PAGE> 55
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- -------------
<S> <C> <C>
Kemper Portfolios
1. Kemper Cash Reserves Fund................... $ 208 E
2. Kemper U.S. Mortgage Fund................... 2,960 B
3. Kemper Short-Intermediate Government Fund... 204 B
Kemper Value Fund, Inc.
1. Kemper Contrarian Fund...................... 78 D
2. Kemper-Dreman High Return Equity Fund....... 738 D
3. Kemper Small Cap Value Fund................. 273 D
Kemper Adjustable Rate U.S. Government Fund...... 82 B
Kemper Blue Chip Fund............................ 256 A
Kemper Global Income Fund........................ 132 D
Kemper Value+Growth Fund......................... 39 I
Kemper Quantitative Equity Fund.................. 5 A
Kemper Asian Growth Fund......................... 2 J
Kemper Europe Fund............................... 4 D
Kemper Aggressive Growth Fund.................... -- F
Zurich Money Funds
1. Zurich Money Market Fund.................... 4,362 G
2. Zurich Government Money Fund................ 671 G
3. Zurich Tax-Free Money Fund.................. 771 G
Zurich YieldWise Money Fund...................... 245 G
Cash Equivalent Fund
1. Money Market Portfolio...................... 971 H
2. Government Securities Portfolio............. 404 H
3. Tax-Exempt Portfolio........................ 445 H
Tax-Exempt California Money Market
Fund........................................... 119 H
Cash Account Trust
1. Money Market Portfolio...................... 585 H
2. Government Securities Portfolio............. 545 H
3. Tax-Exempt Portfolio........................ 221 H
Investors Cash Trust
1. Government Securities Portfolio............. 169 K
2. Treasury Portfolio.......................... 63 K
</TABLE>
E-2
<PAGE> 56
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- ----------
<S> <C> <C>
Investors Municipal Cash Fund
1. Investors Florida Municipal Cash Fund...... -- H
2. Investors New Jersey Municipal Cash Fund... -- H
3. Investors Pennsylvania Municipal Cash
Fund....................................... -- H
4. Tax-Exempt New York Money Market Fund...... 61 H
Kemper High Income Trust......................... 215 0.85%
Kemper Intermediate Government Trust............. 269 0.80%
Kemper Municipal Income Trust.................... 466 0.55%
Kemper Multi-Market Income Trust................. 220 0.85%
Kemper Strategic Municipal Income Trust.......... 128 0.60%
The Growth Fund of Spain, Inc.................... 264 1.00%
Kemper Strategic Income Fund..................... 53 0.85%
Kemper Horizon Fund
1. Kemper Horizon 20+ Portfolio............... 63 A
2. Kemper Horizon 10+ Portfolio............... 63 A
3. Kemper Horizon 5 Portfolio................. 31 A
Investors Fund Series
1. Kemper Money Market Portfolio.............. 71 0.50%
2. Kemper Total Return Portfolio.............. 697 0.55%
3. Kemper High Yield Portfolio................ 289 0.60%
4. Kemper Growth Portfolio.................... 487 0.60%
5. Kemper Government Securities Portfolio..... 84 0.55%
6. Kemper International Portfolio............. 163 0.75%
7. Kemper Small Cap Growth
Portfolio.................................. 69 0.65%
8. Kemper Investment Grade Bond Portfolio..... 2 0.60%
9. Kemper Value Portfolio..................... 21 0.75%
10. Kemper Small Cap Value Portfolio........... 13 0.75%
11. Kemper Value+Growth Portfolio.............. 10 0.75%
12. Kemper Horizon 20+ Portfolio............... 4 0.60%
13. Kemper Horizon 10+ Portfolio............... 6 0.60%
14. Kemper Horizon 5 Portfolio................. 3 0.60%
15. Kemper Blue Chip Portfolio................. -- 0.65%
16. Kemper Global Income Portfolio............. -- 0.75%
</TABLE>
E-3
<PAGE> 57
<TABLE>
<CAPTION>
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ----------------- -------------
<S> <C> <C>
Kemper Target Equity Fund
1. Kemper Retirement Fund Series I............ 117 0.50%
2. Kemper Retirement Fund Series II........... 173 0.50%
3. Kemper Retirement Fund Series III.......... 127 0.50%
4. Kemper Retirement Fund Series IV........... 136 0.50%
5. Kemper Retirement Fund Series V............ 137 0.50%
6. Kemper Retirement Fund Series VI........... 73 0.50%
7. Kemper Retirement Fund Series VII.......... 5 0.50%
8. Kemper Worldwide 2004 Fund................. 36 0.60%
</TABLE>
- ---------------
* Total Net Assets, in millions, as of the most recent fiscal year end.
** Scheduled annual management fees payable to ZKI or its affiliates as a
percentage of average daily net assets.
(A) .58 of 1% of the first $250 million, .55 of 1% of the next $750 million,
.53 of 1% of the next $1.5 billion, .51 of 1% of the next $2.5 billion,
.48 of 1% of the next $2.5 billion, .46 of 1% of the next $2.5 billion,
.44 of 1% of the next $2.5 billion and .42 of 1% thereafter.
(B) .55 of 1% of the first $250 million, .52 of 1% of the next $750 million,
.50 of 1% of the next $1.5 billion, .48 of 1% of the next $2.5 billion, .45
of 1% of the next $2.5 billion, .43 of 1% of the next $2.5 billion, .41 of
1% of the next $2.5 billion and .40 of 1% thereafter. ZKI has agreed to
temporarily reduce its management fee and reimburse or pay certain
operating expenses of the Intermediate Municipal, Michigan, New Jersey and
Pennsylvania Funds.
(C) .45 of 1% of the first $250 million, .43 of 1% of the next $750 million,
.41 of 1% of the next $1.5 billion, .40 of 1% of the next $2.5 billion,
.38 of 1% of the next $2.5 billion, .36 of 1% of the next $2.5 billion,
.34 of 1% of the next $2.5 billion and .32 of 1% thereafter.
(D) .75 of 1% of the first $250 million, .72 of 1% of the next $750 million,
.70 of 1% of the next $1.5 billion, .68 of 1% of the next $2.5 billion,
.65 of 1% of the next $2.5 billion, .64 of 1% of the next $2.5 billion,
.63 of 1% of the next $2.5 billion and .62 of 1% thereafter.
(E) .40 of 1% of the first $250 million, .38 of 1% of the next $750 million,
.35 of 1% of the next $1.5 billion, .32 of 1% of the next $2.5 billion, .30
of 1% of the next $2.5 billion, .28 of 1% of the next $2.5 billion, .26 of
1% of the next $2.5 billion and .25 of 1% thereafter.
E-4
<PAGE> 58
(F) Base investment management fee of .65 of 1% of average daily net assets
plus or minus an incentive fee based upon the investment performance of the
fund as compared with the performance of the Standard & Poor's 500 Stock
Index, which may result in a total fee ranging from .35 of 1% to .95 of 1%
for the Small Capitalization Equity Fund, or .45 of 1% to .85 of 1% for the
Aggressive Growth Fund.
(G) .50% of the first $215 million; .375% of the next $335 million; .30% of the
next $250 million; .25% thereafter (on all of the series of Zurich Money
Funds in the aggregate). ZKI has agreed to temporarily reduce its management
fee to 0% for the Zurich YieldWise Money Fund and reimburse or pay 100% of
the Fund's other operating expenses for a period of at least six months from
April 17, 1997.
(H) .22% of the first $500 million; .20% of the next $500 million; .175% of the
next $1 billion; .16% of the next $1 billion; .15% thereafter (in the case
of Cash Equivalent Fund, on the Money Market and Government Securities
Portfolios in the aggregate and on the Tax-Exempt Portfolio individually,
and, in the case of Cash Account Trust, on all of the series in the
aggregate). ZKI has agreed to temporarily absorb operating expenses of the
Cash Account Trust portfolios to the extent, if any, that such expenses
exceed the following percentages of average daily net assets: Money Market
Portfolio (1.00%), Government Securities Portfolio (1.00%) and Tax-Exempt
Portfolio (0.95%). In addition, from time to time, ZKI may voluntarily
absorb certain additional expenses of the Cash Account Trust portfolios.
Also, ZKI has agreed to temporarily waive its management fee and reimburse
or pay operating expenses for the current fiscal year to the extent, if any,
that total operating expenses exceed .80% of average daily net assets of the
New York Fund and .90% of each of the Florida, New Jersey and Pennsylvania
Funds.
(I) .72 of 1% of the first $250 million, .69 of 1% of the next $750 million,
.66 of 1% of the next $1.5 billion, .64 of 1% of the next $2.5 billion, .60
of 1% of the next $2.5 billion, .58 of 1% of the next $2.5 billion, .56 of
1% of the next $2.5 billion, and .54 of 1% thereafter.
(J) .85 of 1% of the first $250 million, .82 of 1% of the next $750 million,
.80 of 1% of the next $1.5 billion, .78 of 1% of the next $2.5 billion, .75
of 1% of the next $2.5 billion, .74 of 1% of the next $2.5 billion, .73 of
1% of the next $2.5 billion, and .72 of 1% thereafter. ZKI has agreed to a
reduction of its management fee by .25% until the earlier of May 1, 1997 or
the date the Fund's net assets reach $100 million.
E-5
<PAGE> 59
(K) .15% of average daily net assets. ZKI has agreed to temporarily waive its
management fee and reimburse or pay operating expenses of each portfolio to
the extent that such expense exceeds .25% of average daily net assets of the
portfolio.
(L) .65 of 1% of the first $250 million, .62 of 1% of the next $750 million,
.60 of 1% of the next $1.5 billion, .58 of 1% of the next $2.5 billion, .55
of 1% of the next $2.5 billion, .53 of 1% of the next $2.5 billion, .51 of
1% of the next $2.5 billion and .49 of 1% thereafter.
E-6
<PAGE> 60
EXHIBIT F
INVESTMENT OBJECTIVES AND ADVISORY FEES
FOR FUNDS ADVISED BY SCUDDER, STEVENS & CLARK, INC.
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
MONEY MARKET
Scudder U.S. Treasury Safety, liquidity, and 0.500% of $ 398,597,054
Money Fund stability of capital net assets+
and, consistent
therewith, current
income.
Scudder Cash Investment Stability of capital 0.500% to $1,430,623,516
Trust while maintaining $250 million
liquidity of capital 0.450% next
and providing current $250 million
income from money 0.400% next
market securities. $500 million
0.350%
thereafter+
Scudder Money Market High level of current 0.250% of $ 384,509,425**
Series income consistent with net assets
preservation of
capital and liquidity
by investing in a
broad range of
short-term money
market instruments.
Scudder Government Money High level of current 0.250% of $ 36,794,563**
Market Series income consistent with net assets
preservation of
capital and liquidity
by investing
exclusively in
obligations issued or
guaranteed by the U.S.
Government or its
agencies or
instrumentalities and
in certain repurchase
agreements.
TAX FREE MONEY MARKET
Scudder Tax Free Money Income exempt from 0.500% to $ 220,245,241
Fund regular federal income $500 million
taxes and stability of 0.480%
principal through thereafter+
investments in
municipal securities.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program assets as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
F-1
<PAGE> 61
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
Scudder Tax Free Money High level of current 0.250% of $ 79,695,218**
Market Series income, consistent net assets
with preservation of
capital and liquidity,
exempt from federal
income tax by
investing primarily in
high quality municipal
obligations.
Scudder California Tax Stability of capital 0.500% of $ 68,695,680
Free Money Fund and the maintenance of net assets+
a constant net asset
value of $1.00 per
share while providing
California tax payers
income exempt from
both California state
personal and regular
federal income tax
through investment in
high quality, short-
term tax-exempt
California municipal
securities.
Scudder New York Tax Stability of capital 0.500% of $ 59,538,652
Free Money Fund and income exempt from net assets+
New York state and New
York City personal
income taxes and
regular federal income
tax through investment
in high quality,
short-term municipal
securities in New
York.
INSURANCE PRODUCTS
Money Market Portfolio Stability of capital 0.370% of $ 97,785,626
and current income net assets
from a portfolio of
money market
instruments.
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
** Program asset as of 7/31/97.
+ Subject to waivers and/or expense limitations.
</TABLE>
F-2
<PAGE> 62
<TABLE>
<CAPTION>
PROGRAM
FUND OBJECTIVE FEE RATE ASSETS*
---- --------- -------- -------
<S> <C> <C> <C>
AARP FUNDS
AARP High Quality Money Current income and 0.350% to $ 412,126,193
Fund liquidity, consistent $2 billion
with maintaining 0.330% next
stability and safety $2 billion
of principal, through 0.300% next
investment in high $2 billion
quality securities. 0.280% next
$2 billion
0.260% next
$3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.100% of
net assets
AARP High Quality Tax Current income free 0.350% to $ 111,264,728
Free Money Fund from federal income $2 billion
taxes and liquidity, 0.330% next
consistent with $2 billion
maintaining stability 0.300% next
and safety of $2 billion
principal, through 0.280% next
investment in $2 billion
high-quality municipal 0.260% next
securities. $3 billion
0.250% next
$3 billion
0.240% thereafter
INDIVIDUAL FUND
FEE
0.100% of
net assets
- ---------------
* Program assets are shown as of a Fund's most recent fiscal year end unless
otherwise indicated.
</TABLE>
F-3
<PAGE> 63
EXHIBIT G
FEES AND EXPENSES
<TABLE>
<CAPTION>
MMP(A) GSP(A) TEP(A)
-------- -------- --------
<S> <C> <C> <C>
Fiscal Year End................. 04/30/97 04/30/97 04/30/97
Management Fees Paid to ZKI..... $975,000 483,000 69,000
Effective Management Fee Rate... .18% .14 .07
Waived Management Fees and
Expenses Absorbed by ZKI...... $175,000 261,000 143,000
Shareholder Service Fees Paid by
IFTC to ZKSC.................. $866,000 371,000 111,000
</TABLE>
- ---------------
(a) 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, through April 30, 1997, the expense limits were increased to
the following percentages: Government Securities Portfolio (.95%) and
Tax-Exempt Portfolio (.85%).
G-1
<PAGE> 64
Thank you
for mailing your proxy card promptly!
================================================================================
WE APPRECIATE YOUR
CONTINUING SUPPORT AND
LOOK FORWARD TO SERVING
YOUR FUTURE INVESTMENT NEEDS.
<PAGE> 65
CASH ACCOUNT TRUST
================================================================================
CASH ACCOUNT TRUST
Government Securities Portfolio
Money Market Portfolio
Tax Exempt Portfolio
Group D
[LOGO]Printed on recycled paper
<PAGE> 66
PLEASE VOTE PROMPTLY!
Your vote is needed! Please vote on the reverse side of this form and sign in
the space below. Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for your other accounts. These are not
duplicates; you should sign and return each proxy card in order for your votes
to be counted. Please return them as soon as possible to help save the cost of
additional mailings.
- PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. -
CASH ACCOUNT TRUST FOR THE SPECIAL
MEETING OF SHAREHOLDERS
DECEMBER 3, 1997
THE SIGNERS OF THIS PROXY HEREBY APPOINT DONALD L. DUNAWAY AND STEPHEN
B. TIMBERS AND EACH OF THEM, ATTORNEYS AND PROXIES, WITH POWER OF SUBSTITUTION
IN EACH, TO VOTE ALL SHARES FOR THE SIGNERS AT THE SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD DECEMBER 3, 1997, AND AT ANY ADJOURNMENTS THEREOF, AS
SPECIFIED HEREIN, AND IN ACCORDANCE WITH THEIR BEST JUDGEMENT, ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THIS MEETING.
Dated ,1997
------------------
Signature(s) (All registered owners of accounts
shown to the left must sign. If signing for a
corporation, estate or trust, please indicate
your capacity or title.)
------------------------------------------------
------------------------------------------------
Signature(s) GROUP D
- --------------------------------------------------------------------------------
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE PROXY CARD BELOW. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY CARD PROMPTLY.
- PLEASE FOLD AND DETACH CARD AT PERFORATION BEFORE MAILING. -
IF NO SPECIFICATION IS MADE HEREIN, ALL SHARES WILL BE VOTED "FOR" THE
PROPOSALS SET FORTH ON THIS PROXY.
THE PROXY IS SOLICITED BY THE BOARD OF THE FUND WHICH RECOMMENDS A VOTE "FOR"
ALL ITEMS.
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS = [X]
<TABLE>
<S><C>
1. To elect the following as trustees: For Withhold For All
All All Except
/ / / / / /
01) David W. Belin, 02) Lewis A. Burnham, 03) Donald L. Dunaway,
04) Robert B. Hoffman, 05) Donald R. Jones, 06) Shirley D. Peterson,
07) Daniel Pierce, 08) William P. Sommers, 09) Edmond D. Villani
-----------------------------------------------------------------------------------------
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), PLEASE WRITE THAT
NOMINEE'S NAME OR NUMBER ON THE LINE ABOVE.
2. To ratify the selection of Ernst & Young LLP
as independent auditors for the For Against Abstain
current fiscal year. / / / / / /
3. To approve a new investment management
agreement with Scudder Kemper Investments,
Inc. ("SKI") (or with Zurich Kemper For Against Abstain
Investments, Inc., transferable to SKI). / / / / / /
4. To approve a new Rule 12b-1
distribution plan with Zurich For Against Abstain
Kemper Distributors, Inc. / / / / / /
5. To approve changes in the Fund's fundamental
investment policies to permit a master/feeder For Against Abstain
fund structure. / / / / / /
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" ALL ITEMS.
</TABLE>
- -------------------------------------------------------------------------------
