Filed with the Securities and Exchange Commission on September 3, 1999.
File No. 33-32476
File No. 811-5970
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 /___/
Pre-Effective Amendment No /___/
Post-Effective Amendment No. 14 / X /
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And/or
REGISTRATION STATEMENT UNDER THE /___/
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 15
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Cash Account Trust
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(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, Illinois, 60606
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 537-7000
Philip J. Collora
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Scudder Kemper Investments, Inc.
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222 South Riverside Plaza
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Chicago, Illinois 60606
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/___/ Immediately upon filing pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (1)
/___/ 75 days after filing pursuant to paragraph (a) (2)
/___/ On __________________ pursuant to paragraph (b)
/ X / On November 10, 1999 pursuant to paragraph (a) (1)
/___/ On __________________ pursuant to paragraph (a) (2) of Rule 485.
If Appropriate, check the following box:
/___/ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
November 10, 1999
Prospectus
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
TAX-EXEMPT PORTFOLIO
Scudder Tax-Exempt Cash Institutional Shares
Scudder Tax-Exempt Cash Managed Shares
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
CONTENTS
ABOUT THE PORTFOLIO...........................................................3
Investment objective.................................................3
Main investment strategies...........................................3
Risk management strategies...........................................4
Main risks...........................................................4
Past performance.....................................................5
Portfolio management.................................................8
Year 2000 readiness..................................................8
ABOUT YOUR INVESTMENT.........................................................9
Share price..........................................................9
Minimum balances.....................................................9
Initial purchase by wire............................................10
Additional purchases by wire........................................10
Initial Purchase by mail............................................11
Additional purchases by mail........................................11
By Automatic Investment Plan (Managed Shares
Only)............................................................11
Purchase restrictions...............................................11
Processing time.....................................................11
Checkwriting (Managed Shares Only)..................................12
Redemption by mail..................................................13
To redeem shares by mail follow the following
instructions:.......................................................13
Telephone Redemption................................................13
Third party transactions............................................14
Redemption-in-kind..................................................14
Distributions.......................................................14
Taxes...............................................................15
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<PAGE>
ABOUT THE PORTFOLIO
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Investment objective
The portfolio seeks to provide maximum current income that is exempt from
Federal income taxes to the extent consistent with stability of capital.
The portfolio's investment objective and fundamental policies may not be changed
without a vote of shareholders.
Main investment strategies
The portfolio pursues its objective by investing primarily through a
professionally managed, diversified portfolio of short-term high quality
tax-exempt municipal obligations. All such securities purchased mature in 12
months or less. The portfolio maintains a dollar weighted average maturity of 90
days or less.
Under normal market conditions, at least 80% of the portfolio's total assets
will, as a fundamental policy, be invested in obligations issued by or on behalf
of states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, the
income from which is exempt from Federal income tax. These are generally
referred to as "municipal securities." The portfolio does not consider bonds
whose interest is subject to the alternative minimum tax as municipal securities
for purposes of this limitation. The portfolio focuses its investments in first
tier securities (securities generally rated in the highest short-term category
by at least two nationally recognized rating services).
Municipal securities are debt obligations issued to obtain funds for various
purposes, including the construction of a wide range of public facilities such
as airports, bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes for which
municipal securities may be issued include:
o to refund outstanding obligations
o to obtain funds for general operating purposes, or
o to obtain funds to loan to other public institutions and facilities.
The two classifications of municipal securities are "general obligation" and
"revenue" bonds. General obligation bonds are secured by the issuers pledge of
full faith, credit and taxing power for payment of principal and interest.
Revenue bonds are payable only from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source. Industrial development bonds
which are municipal securities are in most cases revenue bonds and generally do
not constitute the pledge of the credit of the issuer of such bonds. The
portfolio may invest all or any part of its assets in municipal securities that
are industrial development bonds. Moreover, although the portfolio does not
currently intend to do so on a regular basis, it may invest more than 25% or its
assets in municipal securities that are repayable out of revenue streams
generated from economically related projects or facilities, if such investment
is deemed necessary or appropriate by the portfolio's investment manager.
The portfolio may invest in floating rate and variable rate instruments
(obligations that do not bear interest at fixed rates). Accordingly, as interest
rates decrease or increase, the potential for capital appreciation or
depreciation is less than for fixed-rate obligations.
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Securities are selected based on the investment managers' perception of monetary
conditions, the available supply of appropriate investment, and the investment
managers' projections for short-term interest rate movements. Sales of portfolio
holdings are typically made to implement investment strategy or to meet
shareholder redemptions. Issues with short maturities are generally held until
maturity.
Risk management strategies
For temporary defensive purposes or when acceptable short-term municipal
securities are not available, the portfolio may invest its assets in cash, cash
equivalents, or taxable securities. Taxable interest income from these
investments may be taxable to shareholders as ordinary income. In such a case,
the portfolio would not be pursuing, and may not achieve, its investment
objective.
Main risks
As with most money market funds, the major factor affecting the portfolio's
performance is fluctuations in short-term interest rates. If short-term interest
rates fall, the portfolio's yield is also likely to fall. Floating or variable
rate securities have yields which adjust with changes in interest rates.
Accordingly, as interest rates decrease or increase the potential for capital
appreciation or depreciation is less than for fixed rate obligations. Moreover,
the portfolio managers' strategy or choice of specific investments may not
perform as expected. The portfolio may have lower returns than other portfolios
that invest in longer-term or lower quality securities. It is also possible that
securities in the portfolio's investment portfolio could deteriorate in quality
or go into default.
The municipal securities market is narrower and less liquid, with fewer
investors, issuers and market makers, than the taxable securities market. The
more limited marketability of municipal securities may make it more difficult in
certain circumstances to dispose of large investments advantageously. In
addition, certain municipal securities may lose their tax-exempt status in the
event of a change in the applicable tax laws.
Industrial development bonds, which are municipal securities, generally do not
constitute the pledge of the credit of the issuer of such bonds. The portfolio
may invest all or any part of its assets in municipal securities that are
industrial development bonds.
To the extent that the portfolio invests in taxable securities, a portion of its
income would be taxable.
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the portfolio.
4
<PAGE>
Past performance
No Performance is provided for the Scudder Tax-Exempt Cash Institutional Shares
("Institutional Shares") and Scudder Tax-Exempt Cash Managed Shares ("Managed
Shares") since they do not have a full calendar year of performance. For
reference, the chart and table below shows how the total returns for the
portfolio's Service Shares have varied from year to year, which may give you
some indication of risk. Of course, past performance is not necessarily an
indication of future performance. While Service Shares are not offered in this
prospectus, they have substantially similar gross performance of Institutional
and Managed Shares because both are invested in the same portfolio of
securities. However, Institutional and Managed Shares will generally have higher
returns to the extent that they have lower expenses.
Total returns of the Service Shares for years ended December 31
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Bar Chart
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For the period included in the bar chart, the Service Shares' highest return for
a calendar quarter was _____% (the first quarter of 1991), and the Service
Shares' lowest return for a calendar quarter was ____% (the second quarter of
1993).
The Service Shares' year-to-date total return as of June 30, 1999 was 1.10%.
Average Annual Total Returns
For periods ended Tax-Exempt
December 31, 1998 Portfolio-Service
Shares
One Year 2.70%
Five Years 2.82%
Since Portfolio 2.81%
Inception*
* Inception date for the Service Shares of the portfolio is December 3, 1990.
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7-Day Yield (Service Shares)
On December 31, 1998 2.81%
Fee and expense information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold Institutional or Managed Shares of the
portfolio.
<TABLE>
<CAPTION>
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<S> <C> <C>
Shareholder Fees (fees paid directly from your investment): Institutional Managed Shares
Shares
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Maximum sales charge (load) imposed on purchases (as % of offering NONE NONE
price)
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Maximum deferred sales charge (load) (as % of redemption proceeds) NONE NONE
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Maximum sales charge (load) imposed on reinvested NONE NONE
dividends/distributions
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Redemption fee (as % of amount redeemed, if applicable) NONE NONE
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Exchange fee NONE NONE
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Annual portfolio operating expenses (expenses that are deducted
from portfolio assets):
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Management fee 0.xx% 0.xx%
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Distribution (12b-1) fees 0.xx% 0.xx%
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Other expenses 0.xx%* 0.xx%*
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Total annual portfolio operating expenses 0.xx% 0.xx%
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Expense reimbursement 0.xx% 0.xx%
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Net expenses 0.xx%** 0.xx%**
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</TABLE>
* "Other Expenses" are based are based on estimated amounts for each class for
the current fiscal year.
** By contract, expenses will be capped at ____% through July 31, 2000.
[ASF Language to be added]
Example
This example is to help you compare the cost of investing in the Institutional
or Managed Shares of the portfolio with the cost of investing in other mutual
funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the Institutional and Managed
Shares' respective expenses as shown above. It assumes a 5% annual return, the
reinvestment of all dividends and distributions, the sale of shares at the end
of each period, and "Annual portfolio operating expenses" remaining the same
each year except the first year. [The first year of the example takes into
account the "Net expenses" as shown above.]
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The expenses would be the same whether you sold your shares at the end of each
period or continued to hold them. Actual portfolio expenses and return vary from
year to year, and may be higher or lower than those shown.
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Institutional Shares Managed Shares
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One Year $
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Three Years $
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Five Years $
- ---------------------------------------------------------------
Ten Years $
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7
<PAGE>
Investment adviser
The portfolio retains the investment management firm of Scudder Kemper
Investments, Inc., the ("Adviser"), 345 Park Avenue, New York, New York, to
manage its daily investment and business affairs subject to the policies
established by the portfolio's Board. The Adviser actively manages the
portfolio's investments. Professional management can be an important advantage
for investors who do not have the time or expertise to invest directly in
individual securities. The Adviser is one of the largest and most experienced
investment management organizations worldwide managing more than $280 billion in
assets globally for mutual fund investors, retirement and pension plans,
institutional and corporate clients, and private family and individual accounts.
The Adviser; the portfolio's Principal Underwriter, Kemper Distributors, Inc.
("KDI"); the portfolio's Shareholder Servicing Agent, Kemper Service Company;
and the portfolio's Accounting Agent, Scudder Fund Accounting Corporation, have
contractually agreed to maintain the total annualized expenses of the
portfolio's Managed Shares and Institutional Shares at no more than ___% and
___%, respectively of the average daily net assets of each class the portfolio
through _______, 2000. As a result, the Adviser received an investment
management fee of 0.18% of the portfolio's average daily net assets on an annual
basis for the fiscal year ended April 30, 1999, after giving effect to an
expense reimbursement arrangement in effect for that period.
Portfolio management
The following investment professionals are associated
with the portfolios as indicated:
Name & Title Joined the Background
Portfolio
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. 1990 Joined the Adviser in 1973 and began
Lead Manager (inception) his investment career at that time.
He has been responsible for the
trading and portfolio management of
money market portfolios since 1974.
- --------------------------------------------------------------------------------
Jerri I. Cohen 1998 Joined the Adviser in 1981 as an
Manager accountant and began her investment
career in 1992 as a money market
trader.
Year 2000 readiness
Like all mutual portfolios, this portfolio could be affected by the inability of
some computer systems to recognize the year 2000. The Adviser has a year 2000
readiness program designed to address this problem, and is also researching the
readiness of suppliers and business partners as well as issuers of securities
the portfolio owns. Still, there's some risk that the year 2000 problem could
materially affect the portfolio's operations (such as its ability to calculate
net asset value and process purchases and redemptions), its investments, or
securities markets in general.
8
<PAGE>
ABOUT YOUR INVESTMENT
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TRANSACTION INFORMATION
Share price
Scudder Fund Accounting Corporation determines the net asset value per share of
the portfolio on each day the New York Stock Exchange is open for trading, at
12:00 noon and 4:00 p.m. Eastern time.
The portfolio seeks to maintain a net asset value of $1.00 per share, and values
its portfolio instruments at amortized cost. Calculations are made to compare
the value of the portfolio's investments, valued at amortized cost, with
market-based values. In order to value its investments at amortized cost, the
portfolio purchases only securities with a maturity of 397 days or less, and
maintains a dollar-weighted average portfolio maturity of 90 days or less. In
addition, the Fund limits its portfolio investments to securities that meet the
quality and diversification requirements under federal law.
The net asset value per share is the value of one share, and is determined by
dividing the value of the portfolio's total net assets attributable to the
applicable class, less liabilities attributable to that class, by the total
number of shares outstanding for that class.
Minimum balances
Institutional Shares
The minimum initial investment and account balance is $1,000,000. There is no
required minimum investment amount for subsequent investments.
Managed Shares
The minimum initial investment and account balance is $100,000. The minimum for
each additional investment is $1,000 and $100 for IRAs.
For each class of shares account balances will be reviewed periodically and the
Adviser reserves the right, following 60 days written notice to shareholders, to
redeem all shares in accounts that have a value below the required minimum for
at least 30 days where such a reduction in value has occurred due to a
redemption, exchange or transfer out of the account.
The minimum investment requirements may be waived or lowered for investments
effected through banks and other institutions that have entered into special
arrangements with the Distributor on behalf of the portfolio and for investments
effected on a group basis by certain other entities and their employees, such as
pursuant to a payroll deduction plan and for investments made in an Individual
Retirement Account. Investment minimums may also be waived for Trustees and
Officers of the Trust.
9
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Initial purchase by wire
1. You may open an account by calling toll free from any continental state:
1-800-537-3177. Give the fund(s) and class(es) to be invested in, name(s)
in which the account is to be registered, address, Social Security or
taxpayer identification number, dividend payment election, amount to be
wired, name of the wiring bank and name and telephone number of the person
to be contacted in connection with the order. An account number will then
be assigned.
2. Instruct the wiring bank to transmit the specified amount to:
UMB Bank N.A.
10th and Grand Avenue
Kansas City, Missouri 64106
ABA Number 101-000-695
DDA#48:98-0119-985-4
Attention: Tax Exempt Portfolio: (Institutional Shares or Managed Shares
as the case may be.)
Account Number (as assigned by telephone and amount invested
in the portfolio
3. Complete a Purchase Application. Indicate the services to be used. A
complete Purchase Application must be received by Kemper Services Company
(the "Shareholder Servicing Agent") before the Expedited Redemption can be
used. Mail the Purchase Application to:
Kemper Service Company
Attn: South Institutional Funds Client Services
222 South Riverside Plaza, 33th Floor
Chicago, IL 60606
Orders for shares of the portfolio will become effective when an investor's bank
wire order is received by UMB Bank, N.A. or when a check is converted into
federal funds.
Orders for purchase of shares received by wire transfer in the form of Federal
Funds will be effected at the next determined net asset value. Shares purchased
by wire will receive that day's dividend if effected at or prior to the 12:00
noon Eastern time net asset value determination, otherwise such shares will
receive the dividend for the next calendar day if effected at 4:00 p.m. Eastern
time. Order for purchase accompanied by a check or other negotiable bank draft
will be accepted and effected as of 4:00 p.m. Eastern time on the next business
day following receipt, and such shares will receive the dividend for the next
calendar day following the day when the purchase is effected. If an order
accompanied by a check drawn on a foreign bank, funds must normally be collected
on such check before shares will be purchased.
Additional purchases by wire.
Instruct the wiring bank to transmit the specified amount to UMB Bank, N.A. with
the information stated above.
10
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Initial Purchase by mail
1. Complete a Purchase Application and indicate the services to be used.
2. Mail the Purchase Application and check payable to "______" to the
Shareholder Servicing Agent at the address set forth above.
Additional purchases by mail.
1. Send a check with a letter of instruction including your account number and
the portfolio and class name, to the appropriate address listed above.
Write your fund account number on the check. If the check is returned to
the Portfolio because of insufficient funds a $10 fee will be charged.
2. Mail the check to the Shareholder Services Agent at the address set forth
above.
By Automatic Investment Plan (Managed Shares Only)
You may arrange to make investments of $50 or more on a regular basis through
your automatic deductions from your bank checking account. Please call
1-800-537-3177 for more information and enrollment.
Purchase restrictions
The portfolio and KDI each reserves the right to reject or limit purchases of
shares for any reason. Also, from time to time, the portfolio may temporarily
suspend the offering of its shares to new investors. During the period of such
suspension, persons who are already shareholders normally are permitted to
continue to purchase additional shares and to have dividends reinvested.
Processing time
Payment for shares you sell will be made as promptly as practicable but in no
event later than seven days after receipt of a properly executed request. If you
have share certificates, those must accompany your order in proper form for
transfer. When you place an order to sell shares for which the portfolio may not
yet have received good payment (i.e. purchases by check or certain Automated
Clearing House Transactions), a portfolio may delay transmittal of the proceeds
until it has determined that collected funds have been received for the purchase
of such shares. This may be up to 10 days from receipt by the portfolio of the
purchase amount. If shares being redeemed were acquired from an exchange of
shares of a mutual fund that were offered subject to a contingent deferred sales
charge, the redemption of such shares by the portfolio may be subject to a
contingent deferred sales charge as explained in the prospectus for the other
fund.
11
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Redeeming shares
Upon receipt by the Shareholder Servicing Agent of a redemption request in
proper form, shares of the portfolio will be redeemed at their next determined
net asset value. (See "Share Price"). For the shareholders convenience, the
Trust has established several different redemption procedures.
The Trust may suspend the right of redemption during any period when (i) trading
on the Exchange is restricted or the Exchange is closed, (ii) the SEC has by
order permitted such suspension, (iii) an emergency, as defined by rules of the
SEC, exists making disposal of portfolio securities or determination of the
value of the net assets of the portfolio not reasonably practicable.
Redemption by Expedited Redemption Service
If Expedited Redemption Service has been elected on the Purchase Application on
file with the Shareholder Servicing Agent, redemption of shares may be requested
by telephoning the Transfer Agent on any day the Trust and the Custodian are
open for business.
No redemption of shares purchased by check will be permitted pursuant to the
Expedited Redemption Service until ten business days after those shares have
been credited to the shareholder's account.
1. Telephone the request to the Shareholder Servicing Agent by calling
toll-fee from any continental state: 1-800-537-3177
2. Fax your request to 1-800-537-9960, or
3. Mail the request to the Shareholder Servicing Agent at the address set
forth above.
Proceeds of Expedited Redemptions will be wired to your bank indicated in the
Purchase Application. If an Expedited Redemption request for the portfolio is
received by the Transfer Agent by 12:00 noon (Eastern time) on a day when the
Trust and the Custodian are open for business, the redemption proceeds will be
transmitted to your bank that same day. Such Expedited Redemption requests
received after 12:00 noon and prior to 4:00 p.m. (Eastern time) will be honored
the same day if such redemption can be accomplished in time to meet the Federal
Reserve Wire System schedules. In the case of investments in the portfolio that
have been effected through banks and other institutions that have entered into
special arrangements with the Trust, the full amount of the redemption proceeds
will be transmitted by wire.
Checkwriting (Managed Shares Only)
You may redeem shares by writing checks against your account balance in amounts
of at least $1,000 but no more than $5 million. A $10 service charge will be
assessed for checks that are written for less than $1,000. If there are
12
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insufficient shares in your account to meet the withdrawal, checks will be
returned and a $10 service charge will be assessed by the portfolio's
shareholder servicing agent.
Your portfolio investments will continue to earn dividends until your check is
presented to the portfolio for payment. You should not attempt to close an
account by check because the exact balance at the time the check clears will not
be known when the check is written.
Redemption by mail.
To redeem shares by mail follow the following instructions:
1. Write a letter of instruction. Indicate the dollar amount or number of
shares to be redeemed. Refer to your portfolio account number and give your
Social Security or taxpayer identification number (where applicable).
2. Sign the letter in exactly the same way the account was registered. If
there is more than one owner of the shares, all must sign.
3. A signature guarantee is required unless you sell shares worth $50,000 or
less and the proceeds are payable to the shareholder of record at the
address of record. You can obtain a guarantee from most brokerage houses
and financial institutions, although not from a notary public. The
Portfolio will normally send you the proceeds within one business day
following your request, but may take up to seven business days (or longer
in the case of shares recently purchased by check).
4. Mail letter to the Shareholder Servicing Agent at the address set forth
under "Initial Purchase By Wire."
Telephone Redemption
To speak with a service representative, call 1-800-537-3177 from 8:30 a.m. to
6:00 p.m. eastern time. You may have redemption proceeds of up to $50,000 sent
to your address of record.
Redemption by Fax
Send your fax to 1-800-537-9960 and include:
o the name of the portfolio and the class and account number you are
redeeming from;
o your name(s) and address as they appear on the account;
o the dollar amount or number of shares you wish to redeem;
o your signature(s) as it appears on your account; and
o a daytime phone number.
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A representative will call to confirm your request before processing.
Redemption by Automatic Withdrawal Plan (Managed Shares Only)
You may arrange to receive automatic cash payments periodically. Call
1-800-537-3177 for information and an enrollment form.
Share certificates
When certificates for shares have been issued, they must be mailed to or
deposited with the Transfer Agent, along with a duly endorsed stock power, and
accompanied by a written request for redemption. Redemption requests and a stock
power must be endorsed by an account holder, with signatures guaranteed. The
redemption request and stock power must be signed exactly as the account is
registered, including any special capacity of the registered owner. Additional
documentation may be requested, and a signature guarantee is normally required,
from institutional and fiduciary account holders, such as corporations,
custodians (e.g., under the Uniform Transfer to Minors Act), executors,
administrators, trustees or guardians.
Third party transactions
If you buy and sell shares of the portfolio with the assistance of a financial
service firm (other than the portfolio's distributor), that member may charge a
fee for that service. This prospectus should be read in connection with such
firms' material regarding their fees and services. You should contact your firm
for information concerning purchasing and selling shares.
Redemption-in-kind
The portfolio reserves the right to honor any request for redemption or
repurchase order by "redeeming in kind," that is, by giving you marketable
securities (which typically will involve brokerage costs for you to liquidate)
rather than cash; in most cases, the portfolio won't make a redemption in kind
unless you requests over 90-day period total more than $250,000 or 1% of the
portfolio's assets, whichever is less.
Distributions
The portfolio's dividends are declared daily and distributed monthly to you. Any
dividends or capital gains distributions declared in October, November or
December with a record date in such month and paid during the following January
will be treated by you for federal income tax purposes as if received on
December 31 of the calendar year declared.
A shareholder may choose to receive distributions in cash or have them
reinvested in additional shares of the same class of the portfolio. If an
investment is in the form of a retirement plan, all dividends and capital gains
distributions must be reinvested into your account.
Dividends will be reinvested unless you elect to receive them in cash. The tax
status of dividends is the same whether they are reinvested or paid in cash.
Exchanges among other mutual Funds may also be taxable events.
14
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Taxes
Generally, dividends from net investment income are taxable to shareholders as
ordinary income. Long-term capital gains distributions, if any, are taxable to
shareholders as long-term capital gains, regardless of length of time
shareholders have owned shares. Short-term capital gains and any other taxable
income distributions are taxable as ordinary income. A portion of dividends from
ordinary income may qualify for the dividends-received deduction for
corporations. Dividends received from the Tax-Exempt Portfolio are exempt from
federal income tax.
The portfolio sends detailed tax information about the amount and type of its
distributions by January 31 of the following year.
The portfolio may be required to withhold U.S. federal income tax at the rate of
31% of all taxable distributions payable to shareholders who fail to provide the
portfolio with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Any such withheld amounts may be credited against the
shareholder's U.S. federal income tax liability.
You may be subject to state, local, and foreign taxes on portfolio distributions
and dispositions of portfolio shares. You should consult your tax advisor
regarding the particular tax consequences of an investment in a portfolio.
15
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Additional information about Institutional and Managed Shares of the portfolio
may be found in the Statement of Additional Information and in shareholder
reports. Shareholder inquiries may be made by calling the toll-free telephone
number listed below. The Statement of Additional Information contains more
detailed information on the portfolio's investments and operations. The
semiannual and annual shareholder reports contain a discussion of the market
conditions and the investment strategies that significantly affected the
portfolio's performance during the last fiscal year, as well as a listing of
portfolio holdings and financial statements. These and other Fund documents may
be obtained without charge from the following sources:
<TABLE>
<CAPTION>
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<S> <C>
By telephone Call Institutional Funds Client Services at 1-800-537-3177
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By mail Scudder Kemper Investment, Inc.
222 S. Riverside Plaza, 33rd Floor
Attn: Institutional Client Services
Chicago, IL 60606
or
Public reference Section Securities and Exchange Commission
Washington, D.C. 20549-6009
- --------------------------------------------------------------------------------------------------------
By Fax 1-800-537-9960
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In Person Public reference Room
Securities and Exchange Commission,
Washington, D.C.
(Call 1-800-SEC-0330)
- --------------------------------------------------------------------------------------------------------
By Internet http://www.sec.gov
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http://institutionalfunds.scudder.com
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email address: [email protected]
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</TABLE>
The Statement of Additional Information dated November 10, 1999 is incorporated
by reference into this prospectus (is legally a part of this prospectus).
Investment Company Act file number:
Cash Account Trust 811-
16
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CASH ACCOUNT TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 10, 1999
Tax-Exempt Portfolio
Scudder Tax-Exempt Cash Institutional Shares
Scudder Tax-Exempt Cash Managed Shares
222 South Riverside Plaza, Chicago, Illinois 60606
1-800-231-8568
This Statement of Additional Information contains information about the
Scudder Tax-Exempt Cash Institutional Shares ("Institutional Shares") and
Scudder Tax-Exempt Cash Managed Shares ("Managed Shares") of Tax-Exempt
Portfolio (the "Portfolio) offered by Cash Account Trust (the "Trust") an
open-end diversified management investment company. This Statement of Additional
Information is not a prospectus and should be read in conjunction with the
Institutional and Managed Shares' prospectus of the Portfolio dated November 10,
1999. The prospectus may be obtained without charge from the Trust at the
address or telephone number on this cover or the firm from which this Statement
of Additional Information was received and is also available along with other
related materials at the SEC's Internet web site (http://www.sec.gov). The
Portfolio's Annual Report, dated April 30, 1999 is incorporated by reference
into and is hereby deemed to be a part of this Statement of Additional
Information.
TABLE OF CONTENTS
INVESTMENT RESTRICTIONS...................................................2
INVESTMENT POLICIES AND TECHNIQUES........................................3
INVESTMENT MANAGER AND SHAREHOLDER SERVICES...............................7
PORTFOLIO TRANSACTIONS...................................................10
PURCHASE AND REDEMPTION OF SHARES........................................11
DIVIDENDS, NET ASSET VALUE AND TAXES.....................................15
PERFORMANCE..............................................................17
OFFICERS AND TRUSTEES....................................................19
SPECIAL FEATURES.........................................................22
SHAREHOLDER RIGHTS.......................................................24
APPENDIX -- RATINGS OF INVESTMENTS.......................................25
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INVESTMENT RESTRICTIONS
The Trust has adopted for the Portfolio certain investment restrictions which,
together with the investment objective and policies of the Portfolio (except for
policies designated as non-fundamental and limited in regard to the Portfolio to
the policies in the first and fifth paragraphs under "Investment Policies and
Techniques-Tax-Exempt Portfolio" below), cannot be changed for the Portfolio
without approval by holders of a majority of its outstanding voting shares. As
defined in the Investment Company Act of 1940 (the "1940 Act"), this means the
lesser of the vote of (a) 67% of the shares of the Portfolio present at a
meeting where more than 50% of the outstanding shares are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Portfolio.
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The Portfolio may not:
(1) Purchase securities if as a result of such purchase more than
25% of the Portfolio's total assets would be invested in any
industry or in any one state. Municipal Securities and
obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities are not considered an industry
for purposes of this restriction.
(2) Purchase securities of any issuer (other than obligations of,
or guaranteed by, the U.S. Government, its agencies or
instrumentalities) if as a result more than 5% of the value of
the Portfolio's assets would be invested in the securities of
such issuer. For purposes of this limitation, the Portfolio
will regard the entity that has the primary responsibility for
the payment of interest and principal as the issuer.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its
investment objective and policies).
(4) Borrow money except as a temporary measure for extraordinary
or emergency purposes and then only in an amount up to
one-third of the value of its total assets, in order to meet
redemption requests without immediately selling any money
market instruments (any such borrowings under this section
will not be collateralized). If, for any reason, the current
value of the Portfolio's total assets falls below an amount
equal to three times the amount of its indebtedness from money
borrowed, the Portfolio will, within three days (not including
Sundays and holidays), reduce its indebtedness to the extent
necessary. The Portfolio will not borrow for leverage
purposes.
(5) Make short sales of securities or purchase securities on
margin, except to obtain such short-term credits as may be
necessary for the clearance of transactions.
(6) Write, purchase or sell puts, calls or combinations thereof,
although the Portfolio may purchase Municipal Securities
subject to Standby Commitments in accordance with its
investment objective and policies.
(7) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment
adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer and together own more than 5% of the
securities of such issuer.
(8) Invest for the purpose of exercising control or management of
another issuer.
(9) Invest in commodities or commodity futures contracts or in
real estate (or real estate limited partnerships) except that
the Portfolio may invest in Municipal Securities secured by
real estate or interests therein.
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(10) Invest in interests in oil, gas or other mineral exploration
or development programs or leases, although it may invest in
Municipal Securities of issuers which invest in or sponsor
such programs or leases.
(11) Underwrite securities issued by others except to the extent
the Portfolio may be deemed to be an underwriter, under the
federal securities laws, in connection with the disposition of
portfolio securities.
(12) Issue senior securities as defined in the 1940 Act.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The Portfolio
did not borrow in the latest fiscal period and have no present intention of
borrowing during the coming year as permitted for the Portfolio by investment
restriction number 4. In any event, borrowings would only be made as permitted
by such restrictions. The Portfolio may invest more than 25% of its total assets
in industrial development bonds.
In addition, the Portfolio, as a non-fundamental policy that may be changed
without shareholder vote, may not:
(i) Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or
acquisition of assets.
INVESTMENT POLICIES AND TECHNIQUES
Descriptions in this Statement of Additional Information of the particular
investment practice or technique in which the Portfolio may engage or a
financial instrument which the Portfolio may purchase are meant to describe the
spectrum of investments that Scudder Kemper Investments, Inc. (the "Adviser"),
in its discretion, might, but is not required to, use in managing the
Portfolio's assets. The Adviser may, in its discretion, at any time, employ such
practice, technique or instrument for one or more funds but not for all funds
advised by it. Furthermore, it is possible that certain types of financial
instruments or investment techniques described herein may not be available,
permissible, economically feasible or effective for their intended purposes in
all markets. Certain practices, techniques, or instruments may not be principal
activities of the Portfolio, but, to the extent employed, could, from time to
time, have a material impact on the Portfolio's performance.
The Portfolio described in this Statement of Additional Information seeks to
provide maximum current income consistent with the stability of capital. The
Portfolio is managed to maintain a net asset value of $1.00 per share.
The Trust is a money market mutual fund designed to provide its shareholders
with professional management of short-term investment dollars. It is designed
for investors who seek maximum current income consistent with stability of
capital. The Trust pools individual and institutional investors' money that it
uses to buy high quality money market instruments. The Trust is a series
investment company that is able to provide investors with a choice of separate
investment portfolios. It currently offers three investment Portfolios: the
Money Market Portfolio, the Government Securities Portfolio and the Tax-Exempt
Portfolio. The Tax-Exempt Portfolio currently offers three classes of shares:
the Service Shares, the Scudder Tax-Exempt Cash Managed Shares (the "Managed
Shares"), and the Scudder Tax-Exempt Cash Institutional Shares (the
"Institutional Shares"). Institutional and Managed Shares are described herein.
Because the Portfolio combines its shareholders' money, it can buy and sell
large blocks of securities, which reduces transaction costs and maximizes
yields. The Trust is managed by investment professionals who analyze market
trends to take advantage of changing conditions and who seek to minimize risk by
diversifying the Portfolio's investments. The Portfolio's investments are
subject to price fluctuations resulting from rising or declining interest rates
and is subject to the ability of the issuers of such investments to make payment
at maturity. However, because of their short maturities, liquidity and high
quality ratings, high quality money market instruments, such as those in which
the Portfolio invests are generally considered to be among the safest available.
Thus, the Portfolio is
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designed for investors who want to avoid the fluctuations of principal commonly
associated with equity or long-term bond investments. There can be no guarantee
that the Portfolio will achieve its objective or that it will maintain a net
asset value of $1.00 per share.
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Tax-Exempt Portfolio. The Portfolio seeks maximum current income that is exempt
from Federal income taxes to the extent consistent with stability of capital.
The Portfolio pursues its objective primarily through a professionally managed,
diversified portfolio of short-term high quality tax-exempt municipal
obligations. Under normal market conditions at least 80% of the Portfolio's
total assets will, as a fundamental policy, be invested in obligations issued by
or on behalf of states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, the income from which is exempt from Federal income tax
("Municipal Securities"). The Portfolio may not invest in bonds whose net market
may be subject to alternative minimum tax. In compliance with the position of
the staff of the Securities and Exchange Commission, the Portfolio does not
consider "private activity" bonds to be Municipal Securities for purposes of the
80% limitation. This is a fundamental policy so long as the staff maintains its
position, after which it would become non-fundamental.
Municipal Securities, such as industrial development bonds, are issued by or on
behalf of public authorities to obtain funds for purposes including privately
operated airports, housing, conventions, trade shows, ports, sports, parking or
pollution control facilities or for facilities for water, gas, electricity or
sewage and solid waste disposal. Such obligations, which may include lease
arrangements, are included within the term Municipal Securities if the interest
paid thereon qualifies as exempt from federal income tax. Other types of
industrial development bonds, the proceeds of which are
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used for the construction, equipment, repair or improvement of privately
operated industrial or commercial facilities, may constitute Municipal
Securities, although current Federal tax laws place substantial limitations on
the size of such issues.
Municipal Securities which the Portfolio may purchase include, without
limitation, debt obligations issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, public
utilities, schools, streets, and water and sewer works. Other public purposes
for which Municipal Securities may be issued include refunding outstanding
obligations, obtaining funds for general operating expenses and obtaining funds
to loan to other public institutions and facilities.
Tax anticipation notes typically are sold to finance working capital needs of
municipalities in anticipation of receiving property taxes on a future date.
Bond anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under the Federal Revenue Sharing Program. Construction loan
notes are instruments insured by the Federal Housing Administration with
permanent financing by Fannie Mae or "Ginnie Mae" (the Government National
Mortgage Association) at the end of the project construction period.
Pre-refunded municipal bonds are bonds which are not yet refundable, but for
which securities have been placed in escrow to refund an original municipal bond
issue when it becomes refundable. Tax-free commercial paper is an unsecured
promissory obligation issued or guaranteed by a municipal issuer. The Tax-Exempt
Portfolio may purchase other Municipal Securities similar to the foregoing,
which are or may become available, including securities issued to pre-refund
other outstanding obligations of municipal issuers.
The Portfolio will invest only in Municipal Securities that at the time of
purchase: (a) are rated within the two highest-ratings for Municipal Securities
(Aaa or Aa) assigned by Moody's or (AAA or AA) assigned by S&P; (b) are
guaranteed or insured by the U.S. Government as to the payment of principal and
interest; (c) are fully collateralized by an escrow of U.S. Government
securities acceptable to the Portfolio's investment manager; (d) have at the
time of purchase Moody's short-term Municipal Securities rating of MIG-2 or
higher or a municipal commercial paper rating of P-2 or higher, or S&P's
municipal commercial paper rating of A-2 or higher; (e) are unrated, if longer
term Municipal Securities of that issuer are rated within the two highest rating
categories by Moody's or S&P; or (f) are determined to be at least equal in
quality to one or more of the above ratings in the discretion of the Portfolio's
investment manager. In addition, the Portfolio limits its investments to
securities that meet the quality requirements of Rule 2a-7 under the Investment
Company Act of 1940. See "Net Asset Value."
Dividends representing net interest income received by the Portfolio on
Municipal Securities will be exempt from federal income tax when distributed to
the Portfolio's shareholders. Such dividend income may be subject to state and
local taxes. The Portfolio's assets will consist of Municipal Securities,
taxable temporary investments as described below and cash. The Portfolio
considers short-term Municipal Securities to be those that mature in one year or
less. Examples of Municipal Securities that are issued with original maturities
of one year or less are short-term tax anticipation notes, bond anticipation
notes, revenue anticipation notes, construction loan notes, pre-refunded
municipal bonds, warrants and tax-free commercial paper.
Municipal Securities generally are classified as "general obligation" or
"revenue" issues. General obligation bonds are secured by the issuer's pledge of
its full credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Industrial development bonds held by the Portfolio are
in most cases revenue bonds and generally are not payable from the unrestricted
revenues of the issuer, and do not constitute the pledge of the credit of the
issuer of such bonds. Among other types of instruments, the Portfolio may
purchase tax-exempt commercial paper, warrants and short-term municipal notes
such as tax anticipation notes, bond anticipation notes, revenue anticipation
notes, construction loan notes and other forms of short-term loans. Such notes
are issued with a short-term maturity in anticipation of the receipt of tax
payments, the proceeds of bond placements or other revenues. See "Appendix" for
a more detailed discussion of the Moody's and S&P ratings outlined above. The
Portfolio may invest in short-term "private activity" bonds.
The Portfolio may purchase securities that provide for the right to resell them
to an issuer, bank or dealer at an agreed upon price or yield within a specified
period prior to the maturity date of such securities. Such a right to resell is
referred
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to as a "Standby Commitment." Securities may cost more with Standby Commitments
than without them. Standby Commitments will be entered into solely to facilitate
portfolio liquidity. A Standby Commitment may be exercised before the maturity
date of the related Municipal Security if the Portfolio's investment adviser
revises its evaluation of the creditworthiness of the underlying security or of
the entity issuing the Standby Commitment. The Portfolio's policy is to enter
into Standby Commitments only with issuers, banks or dealers that are determined
by the Portfolio's investment manager to present minimal credit risks. If an
issuer, bank or dealer should default on its obligation to repurchase an
underlying security, the Portfolio might be unable to recover all or a portion
of any loss sustained from having to sell the security elsewhere.
The Portfolio may purchase high quality Certificates of Participation in trusts
that hold Municipal Securities. A Certificate of Participation gives the
Portfolio an undivided interest in the Municipal Security in the proportion that
the Portfolio's interest bears to the total principal amount of the Municipal
Security. These Certificates of Participation may be variable rate or fixed rate
with remaining maturities of one year or less. A Certificate of Participation
may be backed by an irrevocable letter of credit or guarantee of a financial
institution that satisfies rating agencies as to the credit quality of the
Municipal Security supporting the payment of principal and interest on the
Certificate of Participation. Payments of principal and interest would be
dependent upon the underlying Municipal Security and may be guaranteed under a
letter of credit to the extent of such credit. The quality rating by a rating
service of an issue of Certificates of Participation is based primarily upon the
rating of the Municipal Security held by the trust and the credit rating of the
issuer of any letter of credit and of any other guarantor providing credit
support to the issue. The Portfolio's investment manager considers these factors
as well as others, such as any quality ratings issued by the rating services
identified above, in reviewing the credit risk presented by a Certificate of
Participation and in determining whether the Certificate of Participation is
appropriate for investment by the Portfolio. It is anticipated by the
Portfolio's investment manager that, for most publicly offered Certificates of
Participation, there will be a liquid secondary market or there may be demand
features enabling the Portfolio to readily sell its Certificates of
Participation prior to maturity to the issuer or a third party. As to those
instruments with demand features, the Portfolio intends to exercise its right to
demand payment from the issuer of the demand feature only upon a default under
the terms of the Municipal Security, as needed to provide liquidity to meet
redemptions, or to maintain a high quality investment portfolio.
The Portfolio may purchase and sell Municipal Securities on a when-issued or
delayed delivery basis. A when-issued or delayed delivery transaction arises
when securities are bought or sold for future payment and delivery to secure
what is considered to be an advantageous price and yield to the Portfolio at the
time it enters into the transaction. In determining the maturity of portfolio
securities purchased on a when-issued or delayed delivery basis, the Portfolio
will consider them to have been purchased on the date when it committed itself
to the purchase.
A security purchased on a when-issued basis, like all securities held by the
Portfolio, is subject to changes in market value based upon changes in the level
of interest rates and investors' perceptions of the creditworthiness of the
issuer. Generally such securities will appreciate in value when interest rates
decline and decrease in value when interest rates rise. Therefore if, in order
to achieve higher interest income, the Portfolio remains substantially fully
invested at the same time that it has purchased securities on a when-issued
basis, there will be a greater possibility that the market value of the
Portfolio's assets will vary from $1.00 per share because the value of a
when-issued security is subject to market fluctuation and no interest accrues to
the purchaser prior to settlement of the transaction.
The Portfolio will only make commitments to purchase Municipal Securities on a
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but the Portfolio reserves the right to sell these securities
before the settlement date if deemed advisable. The sale of these securities may
result in the realization of gains that are not exempt from federal income tax.
In seeking to achieve its investment objective, the Portfolio may invest all or
any part of its assets in Municipal Securities that are industrial development
bonds. Moreover, although the Portfolio does not currently intend to do so on a
regular basis, it may invest more than 25% of its assets in Municipal Securities
that are repayable out of revenue streams generated from economically related
projects or facilities, if such investment is deemed necessary or appropriate by
the Portfolio's investment manager. To the extent that the Portfolio's assets
are concentrated in Municipal Securities payable from revenues on economically
related projects and facilities, the Portfolio will be subject to the risks
presented by such projects to a greater extent than it would be if the
Portfolio's assets were not so concentrated.
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From time to time, as a defensive measure or when acceptable short-term
Municipal Securities are not available, the Tax-Exempt Portfolio may invest in
taxable "temporary investments" that include: obligations of the U.S.
Government, its agencies or instrumentalities; debt securities rated within the
two highest grades by Moody's or S&P; commercial paper rated in the two highest
grades by either of such rating services; certificates of deposit of domestic
banks with assets of $1 billion or more; and any of the foregoing temporary
investments subject to repurchase agreements. Repurchase agreements are
discussed below. Interest income from temporary investments is taxable to
shareholders as ordinary income. Although the Portfolio is permitted to invest
in taxable securities (limited under normal market conditions to 20% of the
Portfolio's total assets), it is the Portfolio's primary intention to generate
income dividends that are not subject to federal income taxes.
The Federal bankruptcy statutes relating to the adjustments of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material adverse changes in the
rights of holders of obligations issued by such subdivisions or authorities.
Litigation challenging the validity under state constitutions of present systems
of financing public education has been initiated or adjudicated in a number of
states and legislation has been introduced to effect changes in public school
finances in some states. In other instances, there has been litigation
challenging the issuance of pollution control revenue bonds or the validity of
their issuance under state or Federal law that ultimately could affect the
validity of those Municipal Securities or the tax-free nature of the interest
thereon.
The Portfolio may invest in repurchase agreements, which are instruments under
which the Portfolio acquires ownership of a security from a broker-dealer or
bank that agrees to repurchase the security at a mutually agreed upon time and
price (which price is higher than the purchase price), thereby determining the
yield during the Portfolio's holding period. Maturity of the securities subject
to repurchase may exceed one year. In the event of a bankruptcy or other default
of a seller of a repurchase agreement, the Portfolio might have expenses in
enforcing its rights, and could experience losses, including a decline in the
value of the underlying securities and loss of income. The Portfolio will not
purchase illiquid securities, including time deposits and repurchase agreements
maturing in more than seven days if, as a result thereof, more than 10% of the
Portfolio's net assets valued at the time of the transaction would be invested
in such securities.
The Portfolio may invest in Variable Rate Securities, instruments having rates
of interest that are adjusted periodically or that "float" continuously
according to formulae intended to minimize fluctuation in values of the
instruments. The interest rate of Variable Rate Securities ordinarily is
determined by reference to or is a percentage of an objective standard such as a
bank's prime rate, the 90-day U.S. Treasury Bill rate, or the rate of return on
commercial paper or bank certificates of deposit. Generally, the changes in the
interest rate on Variable Rate Securities reduce the fluctuation in the market
value of such securities. Accordingly, as interest rates decrease or increase,
the potential for capital appreciation or depreciation is less than for
fixed-rate obligations. Some Variable Rate Securities ("Variable Rate Demand
Securities") have a demand feature entitling the purchaser to resell the
securities at an amount approximately equal to amortized cost or the principal
amount thereof plus accrued interest. As is the case for other Variable Rate
Securities, the interest rate on Variable Rate Demand Securities varies
according to some objective standard intended to minimize fluctuation in the
values of the instruments. The Portfolio determines the maturity of Variable
Rate Securities in accordance with Rule 2a-7, which allows the Portfolio to
consider certain of such instruments as having maturities shorter than the
maturity date on the face of the instrument .
The Portfolio may not borrow money except as a temporary measure for
extraordinary or emergency purposes, and then only in an amount up to one-third
of the value of its total assets, in order to meet redemption requests without
immediately selling any portfolio securities. Any such borrowings under this
provision will not be collateralized. The Portfolio will not borrow for leverage
purposes.
Repurchase Agreements. The Portfolio may enter into repurchase agreements with
any member bank of the Federal Reserve System or any domestic broker/dealer
which is recognized as a reporting Government securities dealer if the
creditworthiness of the bank or broker/dealer has been determined by the Adviser
to be at least as high as that of other obligations the Portfolio may purchase
or to be at least equal to that of issuers of commercial paper rated within the
two highest grades assigned by Moody's, S&P or Duff.
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A repurchase agreement provides a means for the Portfolio to earn taxable income
on funds for periods as short as overnight. It is an arrangement under which the
purchaser (i.e., the Portfolio) acquires a security ("Obligation") and the
seller agrees, at the time of sale, to repurchase the Obligation at a specified
time and price. Securities subject to a repurchase agreement are held in a
segregated account and the value of such securities kept at least equal to the
repurchase price on a daily basis. The repurchase price may be higher than the
purchase price, the difference being income to the Portfolio, or the purchase
and repurchase prices may be the same, with interest at a stated rate due to the
Portfolio together with the repurchase price on the date of repurchase. In
either case, the income to the Portfolio (which is taxable) is unrelated to the
interest rate on the Obligation itself. Obligations will be held by the
custodian or in the Federal Reserve Book Entry system.
For purposes of the 1940 Act, a repurchase agreement is deemed to be a loan from
the Portfolio to the seller of the Obligation subject to the repurchase
agreement and is therefore subject to the Portfolio's investment restriction
applicable to loans. It is not clear whether a court would consider the
Obligation purchased by the Portfolio subject to a repurchase agreement as being
owned by that Portfolio or as being collateral for a loan by the Portfolio to
the seller. In the event of the commencement of bankruptcy or insolvency
proceedings with respect to the seller of the Obligation before repurchase of
the Obligation under a repurchase agreement, the Portfolio may encounter delay
and incur costs before being able to sell the security. Delays may involve loss
of interest or decline in price of the Obligation. If the court characterized
the transaction as a loan and the Portfolio has not perfected an interest in the
Obligation, the Portfolio may be required to return the Obligation to the
seller's estate and be treated as an unsecured creditor of the seller. As an
unsecured creditor, the Portfolio is at risk of losing some or all of the
principal and income involved in the transaction. As with any unsecured debt
obligation purchased for the Portfolio, the Adviser seeks to minimize the risk
of loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the Obligation. Apart from the risk of
bankruptcy or insolvency proceedings, there is also the risk that the seller may
fail to repurchase the Obligation, in which case the Portfolio may incur a loss
if the proceeds to the Portfolio of the sale to a third party are less than the
repurchase price. However, if the market value of the Obligation subject to the
repurchase agreement becomes less than the repurchase price (including
interest), the Portfolio will direct the seller of the Obligation to deliver
additional securities so that the market value of all securities subject to the
repurchase agreement will equal or exceed the repurchase price. It is possible
that the Portfolio will be unsuccessful in seeking to enforce the seller's
contractual obligation to deliver additional securities.
INVESTMENT MANAGER AND SHAREHOLDER SERVICES
Investment Manager. Scudder Kemper Investments, Inc. (the "Adviser"), 345 Park
Avenue, New York, New York, is the Portfolio's investment manager. The Adviser
is approximately 70% owned by Zurich Financial Services, Inc., a newly formed
global insurance and financial services company. Its officers and employees own
the balance of the Adviser. Pursuant to the investment
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management agreement, the Adviser acts as the Portfolio's investment manager,
manages its investments, administers its business affairs, furnishes office
facilities and equipment, provides clerical and administrative services and
permits any of its officers or employees to serve without compensation as
trustees or officers of the Trust if elected to such positions. The Trust pays
the expenses of its operations, including the fees and expenses of its
independent auditors, counsel, custodian and transfer agent and the cost of
share certificates, reports and notices to shareholders, costs of calculating
net asset value and maintaining all accounting records thereto, brokerage
commissions or transaction costs, taxes, registration fees, the fees and
expenses of qualifying the Trust and its shares for distribution under federal
and state securities laws and membership dues in the Investment Company
Institute or any similar organization. The Trust's expenses generally are
allocated among the Portfolios of the Trust on the basis of relative net assets
at the time of allocation, except that expenses directly attributable to the
particular Portfolio are charged to that Portfolio.
The investment management agreement provides that the Adviser shall not be
liable for any error of judgment or of law, or for any loss suffered by the
Trust in connection with the matters to which the agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Adviser in the performance of its obligations and duties, or by
reason of its reckless disregard of its obligations and duties under the
agreement.
The investment management agreement continues in effect from year to year for
the Portfolio subject thereto so long as its continuation is approved at least
annually by (a) a majority vote of the trustees who are not parties to such
agreement or interested persons of any such party except in their capacity as
trustees of the Trust, cast in person at a meeting called for such purpose, and
(b) the shareholders of the Portfolio subject thereto or the Board of Trustees.
If continuation is not approved for the Portfolio, the investment management
agreement nevertheless may continue in effect for any Portfolio for which it is
approved and the Adviser may continue to serve as investment manager for the
Portfolio for which it is not approved to the extent permitted by the Investment
Company Act of 1940. The agreement may be terminated at any time upon 60 days
notice by either party, or by a majority vote of the outstanding shares of the
Portfolio subject thereto with respect to that Portfolio, and will terminate
automatically upon assignment. Additional Portfolios may be subject to different
agreements.
At December 31, 1997, pursuant to the terms of an agreement, Scudder, Stevens &
Clark, Inc. ("Scudder"), and Zurich Insurance Company ("Zurich"), formed a new
global organization by combining Scudder with Zurich Kemper Investments, Inc.
("ZKI"), a former subsidiary of Zurich and the former investment manager to the
Portfolios and Scudder changed its name to Scudder Kemper Investments, Inc.
On September 7, 1998, the businesses of Zurich (including Zurich's 70% interest
in The Adviser) and the financial services businesses of B.A.T Industries p.l.c.
("B.A.T") were combined to form a new global insurance and financial services
company known as Zurich Financial Services Group. By way of a dual holding
company structure, former Zurich shareholders initially owned approximately 57%
of Zurich Financial Services Group, with the balance initially owned by former
B.A.T shareholders.
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Upon consummation of this transaction, the Portfolio's existing investment
management agreement with the Adviser was deemed to have been assigned and,
therefore, terminated. The Board has approved a new investment management
agreement (the "Agreement") with the Adviser, which is substantially identical
to the current investment management agreement, except for the date of execution
and termination. This agreement became effective on September 7, 1998 upon the
termination of the then current investment management agreement and was approved
at a shareholder meeting held in December 1998.
For the services and facilities furnished to the Money Market, Government
Securities and Tax-Exempt Portfolios, the Portfolios pay a monthly investment
management fee on a graduated basis at 1/12 of 0.22% of the first $500 million
of combined average daily net assets of such Portfolios, 0.20% of the next $500
million 0.175% of the next $1 billion, 0.16% of the next $1 billion and 0.15% of
combined average daily net assets of such Portfolios over $3 billion. The
investment management fee is computed based on the combined average daily net
assets of the Portfolios and allocated among the Portfolios based upon the
relative net assets of each. Pursuant to the investment management agreement,
the Money Market, Government Securities and Tax-Exempt Portfolios paid the
Adviser fees of $3,120,000 $1,167,000 and $699,000, respectively, for the fiscal
year ended April 30, 1999; $1,888,000, $1,020,000 and $530,000 respectively, for
the fiscal year ended April 30, 1998; and $975,000, and $483,000 and $69,000,
respectively, for the fiscal year ended April 30, 1997. The Adviser and certain
affiliates have agreed to limit certain operating expenses of the Portfolios to
the extent described in the prospectus. If certain expense limits or fee waivers
had not been in effect during the periods described, the Adviser would have
received investment management fees from the Money Market, Government Securities
and Tax-Exempt Portfolios of $4,086,000 $1,270,000 and $699,000, respectively,
for the fiscal year ended April 30, 1999; $2,463,000, $1,301,000 and $630,000,
respectively, for the fiscal year ended April 30, 1998, and $1,150,000, $744,000
and $212,000, respectively, for the fiscal year ended April 30, 1997. The
Adviser absorbed operating expenses for the Money Market, Government Securities
and Tax-Exempt Portfolios of $2,233,000, $103,000 and $0 respectively, for the
fiscal year ended April 30, 1999; $1,253,000, $281,000 and $100,000,
respectively, for the year ended April 30, 1998; $175,000, $261,000 and
$143,000, respectively, for the fiscal year ended April 30, 1997.
Certain officers or trustees of the Trust are also directors or officers of the
Adviser as indicated under "Officers and Trustees."
Fund Accounting Agent. Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of the Adviser, is responsible for determining the daily net asset
value per share of the Portfolio and maintaining all accounting records related
thereto. Currently, SFAC receives no fee for its services to the Portfolios;
however, subject to Board approval, at some time in the future, SFAC may seek
payment for its services under this agreement.
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Distributor and Administrator. Pursuant to an underwriting and distribution
agreement ("distribution agreement"), Kemper Distributors, Inc. ("KDI"), 222
South Riverside Plaza, Chicago, Illinois 60606, an affiliate of the Adviser,
serves as distributor and principal underwriter for the Trust to provide
information and services for existing and potential shareholders. The
distribution agreement provides that KDI shall appoint various firms to provide
cash management services for their customers or clients through the Trust.
As principal underwriter for the Trust, KDI acts as agent of the Trust in the
sale of its shares of the Portfolio. KDI pays all its expenses under the
distribution agreement. The Trust pays the cost for the prospectus and
shareholder reports to be set in type and printed for existing shareholders, and
KDI pays for the printing and distribution of copies thereof used in connection
with the offering of shares to prospective investors. KDI also pays for
supplementary sales literature and advertising
costs. KDI has related selling group agreements with various firms to provide
distribution services for Fund shareholders. KDI receives no compensation from
the Trust as principal underwriter for the Shares and pays all expenses of
distribution of the Shares not otherwise paid by dealers and other financial
services firms. KDI may, from time to time, pay or allow discounts, commissions
or promotional incentives, in the form of cash, to firms that sell shares of the
Portfolio.
The distribution agreement continues in effect from year to year so long as such
continuance is approved at least annually by a vote of the Board of Trustees of
the Trust, including the Trustees who are not interested persons of the Trust
and who have no direct or indirect financial interest in the agreement. The
distribution agreement automatically terminates in the event of its assignment
and may be terminated at any time without penalty by the Trust or by KDI upon 60
days' written notice. Termination of the distribution agreement by the Trust may
be by vote of a majority of the Board of Trustees, or a majority of the Trustees
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the agreement, or a "majority of the outstanding voting
securities" of the Trust as defined under the 1940 Act.
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Administrative services are provided to the Managed Shares of the Portfolio
under an administration services agreement ("administration agreement") with
KDI. KDI bears all its expenses of providing services pursuant to the
administration agreement between KDI and the Managed Shares of the Portfolio,
including the payment of service fees. Managed Shares of the Portfolio currently
pay KDI an administrative services fee, payable monthly, at an annual rate of up
to 0.15% of average daily net assets attributable to those shares of the
Portfolio. In the discretion of the Board of Trustees of the Trust, this
administrative service fee may be increased to 0.25% of average daily net
assets.
KDI has entered into related arrangements with various banks, broker-dealer
firms and other service or administrative firms ("firms") that provide services
and facilities for their customers or clients who are investors in Managed
Shares of the Portfolio. The firms provide such office space and equipment,
telephone facilities and personnel as is necessary or beneficial for providing
information and services to their clients. Such services and assistance may
include, but are not limited to, establishing and maintaining accounts and
records, processing purchase and redemption transactions, answering routine
inquiries regarding the Portfolio, assistance to clients in changing dividend
and investment options, account designations and addresses and such other
administrative services as may be agreed upon from time to time and permitted by
applicable statute, rule or regulation. Currently, KDI pays each firm a service
fee, normally payable monthly, at an annual rate of up to 0.15% of the net
assets in the Portfolio's Managed Share accounts that it maintains and services.
Firms to which service fees may be paid may include affiliates of KDI.
In addition, KDI may from time to time, from its own resources pay certain firms
additional amounts for ongoing administrative services and assistance provided
to their customers and clients who are shareholders of the Managed Shares of the
Portfolio.
KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for the Managed Shares of the
Portfolio.
Custodian, Transfer Agent and Shareholder Service Agent. State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, as custodian,
has custody of all securities and cash of the Trust. It attends to the
collection of principal and income, and payment for and collection of proceeds
of securities bought and sold by the Portfolio. Pursuant to a services agreement
with Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas
City, Missouri 64105, Kemper Service Company ("KSvC"), an affiliate of the
Adviser, serves as "Shareholder Service Agent." IFTC receives, as transfer
agent, and pays to KSvC annual account fees of a maximum of $13 per account plus
out-of-pocket expense reimbursement. During the fiscal year ended April 30,
1999, IFTC remitted shareholder service fees in the amount of $698,000 to KSvC
as Shareholder Service Agent with respect to service provided to the Portfolio.
Firms provide varying arrangements for their clients with respect to the
purchase and redemption of Portfolio shares and the confirmation thereof. Such
firms are responsible for the prompt transmission of purchase and redemption
orders. Some firms may establish higher minimum investment requirements than set
forth below. A firm may arrange with its clients for other investment or
administrative services. Such firms may independently establish and charge
additional amounts to their clients for such services, which charges would
reduce the clients' yield or return. Firms may also hold Portfolio shares in
nominee or street name as agent for and on behalf of their clients. In such
instances, the Trust's transfer agent will have no information with respect to
or control over the accounts of specific shareholders. Such shareholders may
obtain access to their accounts and information about their accounts only from
their firm. Certain of these firms may receive compensation from the Managed
Shares of the Portfolio for recordkeeping and other expenses relating to these
nominee accounts. In addition, certain privileges with respect to the purchase
and redemption of shares (such as check writing redemptions) or the reinvestment
of dividends may not be available through such firms or may
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only be available subject to conditions and limitations. Some firms may
participate in a program allowing them access to their clients' accounts for
servicing including, without limitation, transfers of registration and dividend
payee changes; and may perform functions such as generation of confirmation
statements and disbursement of cash dividends. The prospectus should be read in
connection with such firm's material regarding its fees and services.
Independent Auditors and Reports to Shareholders. The Trust's independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Trust's annual financial statements, review certain
regulatory reports and the Trust's federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Trust. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
Legal Counsel. Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601, serves as legal counsel for the Trust.
PORTFOLIO TRANSACTIONS
Brokerage Commissions
Allocation of brokerage is supervised by the Adviser.
The primary objective of the Adviser in placing orders for the purchase and sale
of securities for the Portfolio is to obtain the most favorable net results,
taking into account such factors as price, commission where applicable, size of
order, difficulty of execution and skill required of the executing
broker/dealer. The Adviser seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through the familiarity of
the Scudder Investor Services, Inc. ("SIS"), a corporation registered as a
broker-dealer and a subsidiary of the Adviser. with commissions charged on
comparable transactions, as well as by comparing commissions paid by The
Portfolio to reported commissions paid by others. The Adviser routinely reviews
commission rates, execution and settlement services performed and makes internal
and external comparisons.
The Portfolio's purchases and sales of fixed-income securities are generally
placed by the Adviser with primary market makers for these securities on a net
basis, with out any brokerage commission being paid by the Portfolio. Trading
does, however, involve transaction costs. Transactions with dealers serving as
primary market makers reflect the spread between the bid and asked prices.
Purchases of underwritten issues may be made, which will include an underwriting
fee paid to the underwriter.
When it can be done consistently with the policy of obtaining the most favorable
net results, it is the Adviser's practice to place such orders with
broker/dealers who supply brokerage and research services to the Adviser or the
Portfolio. The term "research services" includes advice as to the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or purchasers or sellers of securities; and
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts. The
Adviser is authorized when placing portfolio transactions, if applicable, for
the Portfolio to pay a brokerage commission in excess of that which another
broker might charge for executing the same transaction on account of execution
services and the receipt of research services. The Adviser has negotiated
arrangements, which are not applicable to most fixed-income transactions, with
certain broker/dealers pursuant to which a broker/dealer will provide research
services, to the Adviser or the Portfolio in exchange for the direction by the
Adviser of brokerage transactions to the broker/dealer. These arrangements
regarding receipt of research services generally apply to equity security
transactions. The Adviser may place orders with a broker/dealer on the basis
that the broker/dealer has or has not sold shares of the Portfolio. In effecting
transactions in over-the-counter securities, orders are placed with the
principal market makers for the security being traded unless, after exercising
care, it appears that more favorable results are available elsewhere.
To the maximum extent feasible, it is expected that the Adviser will place
orders for portfolio transactions through SIS. SIS will place orders on behalf
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of the Fund with issuers, underwriters or other brokers and dealers. SIS will
not receive any commission, fee or other remuneration from the Fund for this
service.
Although certain research services from broker/dealers may be useful to the
Portfolio and to the Adviser, it is the opinion of the Adviser that such
information only supplements the Adviser's own research effort since the
information must still be analyzed, weighed, and reviewed by the Adviser's
staff. Such information may be useful to the Adviser in providing services to
clients other than the Portfolio, and not all such information is used by the
Adviser in connection with the Portfolio. Conversely, such information provided
to the Adviser by broker/dealers through whom other clients of the Adviser
effect securities transactions may be useful to the Adviser in providing
services to the Portfolio.
The Trustees review, from time to time, whether the recapture for the benefit of
the Portfolio of some portion of the brokerage commissions or similar fees paid
by the Portfolio on portfolio transactions is legally permissible and advisable.
Money market instruments are normally purchased in principal transactions
directly from the issuer or from an underwriter or market maker. There usually
are no brokerage commissions paid by the Portfolio for such purchases. During
the last three fiscal years the Portfolio paid no portfolio brokerage
commissions. Purchases from underwriters will include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers will include the spread between the bid and asked prices.
PURCHASE AND REDEMPTION OF SHARES
Purchase of Shares
Shares of the Portfolio are sold at net asset value through selected financial
services firms, such as broker-dealers and banks ("firms"). Investors must
indicate the Portfolio in which they wish to invest. The Portfolio has
established a minimum initial investment for the Managed Shares of $100,000 and
a initial investment of $100,000 for each subsequent investment. The minimal
initial investment for the Institutional Shares is $1,000,000. There is no
minimum for each subsequent investment. These minimums may be changed at anytime
in management's discretion. Firms offering Portfolio shares may set higher
minimums for accounts they service and may change such minimums at their
discretion. The Trust may waive the minimum for purchases by trustees,
directors, officers or employees of the Trust or the Adviser and its affiliates.
The Portfolio seeks to remain as fully invested as possible at all times in
order to achieve maximum income. Since the Portfolio will be investing in
instruments that normally require immediate payment in Federal Funds (monies
credited to a bank's account with its regional Federal Reserve Bank), the
Portfolio has adopted procedures for the convenience of its shareholders and to
ensure that the Portfolio receives investable funds. An investor wishing to open
an account should use the Account Information Form available from the Trust or
financial services firms. Orders for the purchase of shares that are accompanied
by a check drawn on a foreign bank (other than a check drawn on a Canadian bank
in U.S. Dollars) will not be considered in proper form and will not be processed
unless and until the Portfolio determines that it has received payment of the
proceeds of the check. The time required for such a determination will vary and
cannot be determined in advance.
Orders for purchase of Managed Shares and Institutional Shares of the Portfolio
received by wire transfer in the form of Federal Funds will be effected at the
next determined net asset value. Shares purchased by wire will receive that
day's dividend if effected at or prior to the 12:00 noon Eastern Time net asset
value determination for the Portfolio.
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Orders for purchase accompanied by a check or other negotiable bank draft will
be accepted and effected as of 4:00 p.m. Eastern Time on the next business day
following receipt and such Shares will receive the dividend for the next
calendar day following the day the purchase is effected. If an order is
accompanied by a check drawn on a foreign bank, funds must normally be collected
on such check before Shares will be purchased. See "Purchase and Redemption of
Shares" in the Statement of Additional Information.
If payment is wired in Federal Funds, the payment should be directed to United
Missouri Bank of Kansas City, N.A. (ABA #101-000-695), 10th and Grand Avenue,
Kansas City, MO 64106 for credit to appropriate Fund bank account (CAT
Tax-Exempt Fund 48: 98-0119-985-4) and further credit to your account number.
Redemption of Shares
General. Upon receipt by the Shareholder Service Agent of a request in the form
described below, shares of the Portfolio will be redeemed by the Portfolio at
the next determined net asset value. If processed at 4:00 p.m. Eastern time, the
shareholder will receive that day's dividend. A shareholder may use either the
regular or expedited redemption procedures. Shareholders who redeem all their
shares of the Portfolio will receive the net asset value of such shares and all
declared but unpaid dividends on such shares.
The Portfolio may suspend the right of redemption or delay payment more than
seven days (a) during any period when the New York Stock Exchange ("Exchange")
is closed other than customary weekend and holiday closings or during any period
in which trading on the Exchange is restricted, (b) during any period when an
emergency exists as a result of which (i) disposal of the Portfolio's
investments is not reasonably practicable, or (ii) it is not reasonably
practicable for the Portfolio to determine the value of its net assets, or (c)
for such other periods as the Securities and Exchange Commission may by order
permit for the protection of the Trust's shareholders.
Although it is the Portfolio's present policy to redeem in cash, if the Board of
Trustees determines that a material adverse effect would be experienced by the
remaining shareholders if payment were made wholly in cash, the Portfolio will
pay the redemption price in part by a distribution of portfolio securities in
lieu of cash, in conformity with the applicable rules of the Securities and
Exchange Commission, taking such securities at the same value used to determine
net asset value, and selecting the securities in such manner as the Board of
Trustees may deem fair and equitable. If such a distribution occurs,
shareholders receiving securities and selling them could receive less than the
redemption value of such securities and in addition would incur certain
transaction costs. Such a redemption would not be as liquid as a redemption
entirely in cash. The Trust has elected to be governed by Rule 18f-1 under the
1940 Act pursuant to which the Trust is obligated to redeem shares of the
Portfolio solely in cash up to the lesser of $250,000 or 1% of the net assets of
that Portfolio during any 90-day period for any one shareholder of record.
If shares of the Portfolio to be redeemed were purchased by check or through
certain Automated Clearing House ("ACH") transactions, the Portfolio may delay
transmittal of redemption proceeds until it has determined that collected funds
have been received for the purchase of such shares, which will be up to 10 days
from receipt by the Portfolio of the purchase amount. Shareholders may not use
ACH or Redemption Checks (defined below) until the shares being redeemed have
been owned for at least 10 days and shareholders may not use such procedures to
redeem shares held in certificated form. There is no delay when shares being
redeemed were purchased by wiring Federal Funds.
If shares being redeemed were acquired from an exchange of shares of a mutual
fund that were offered subject to a contingent deferred sales charge as
described in the prospectus for that other fund, the redemption of such shares
by the Portfolio may be subject to a contingent deferred sales charge as
explained in such prospectus.
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individual
and institutional accounts and pre-authorized telephone redemption transactions
for certain institutional accounts. Shareholders may choose these privileges on
the account application or by contacting the Shareholder Service Agent for
appropriate instructions. Please note that the telephone exchange privilege is
automatic unless the shareholder refuses it on the account application. The
Trust or its agents may be liable for any losses, expenses or costs arising out
of fraudulent or unauthorized telephone requests pursuant to these privileges,
unless the
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Trust or its agents reasonably believe, based upon reasonable verification
procedures, that the telephone instructions are genuine. The shareholder will
bear the risk of loss, resulting from fraudulent or unauthorized transactions,
as long as the reasonable verification procedures are followed. The verification
procedures include recording instructions, requiring certain identifying
information before acting upon instructions and sending written confirmations.
Because of the high cost of maintaining small accounts, the Portfolio reserves
the right to redeem an account that falls below the minimum investment level.
Thus, a shareholder who makes only the minimum initial investment and then
redeems any portion thereof might have the account redeemed. A shareholder will
be notified in writing and will be allowed 60 days to make additional purchases
to bring the account value up to the minimum investment level before the
Portfolio redeems the shareholder account.
Financial services firms provide varying arrangements for their clients to
redeem Portfolio shares. Such firms may independently establish and charge
amounts to their clients for such services.
Regular Redemptions. When shares are held for the account of a shareholder by
the Trust's transfer agent, the shareholder may redeem them by sending a written
request with signatures guaranteed to Kemper Service Company, P.O. Box 419153,
Kansas City, Missouri 64141-6153. When certificates for shares have been issued,
they must be mailed to or deposited with the Shareholder Service Agent, along
with a duly endorsed stock power and accompanied by a written request for
redemption. Redemption requests and a stock power must be endorsed by the
account holder with signatures guaranteed by a commercial bank, trust company,
savings and loan association, federal savings bank, member firm of a national
securities exchange or other eligible financial institution. The redemption
request and stock power must be signed exactly as the account is registered
including any special capacity of the registered owner. Additional documentation
may be requested, and a signature guarantee is normally required, from
institutional and fiduciary account holders, such as corporations, custodians
(e.g., under the Uniform Transfers to Minors Act), executors, administrators,
trustees or guardians.
Telephone Redemptions. If the proceeds of the redemption are $50,000 or less and
the proceeds are payable to the shareholder of record at the address of record,
normally a telephone request or a written request by any one account holder
without a signature guarantee is sufficient for redemptions by individual or
joint account holders, and trust, executor, guardian and custodian account
holders, provided the trustee, executor guardian or custodian is named in the
account registration. Other institutional account holders may exercise this
special privilege of redeeming shares by telephone request or written request
without signature guarantee subject to the same conditions as individual account
holders and subject to the limitations on liability, provided that this
privilege has been pre-authorized by the institutional account holder or
guardian account holder by written instruction to the Shareholder Service Agent
with signatures guaranteed. Telephone requests may be made by calling
1-800-231-8568. Shares purchased by check or through certain ACH transactions
may not be redeemed under this privilege of redeeming shares by telephone
request until such shares have been owned for at least 10 days. This privilege
of redeeming shares by telephone request or by written request without a
signature guarantee may not be used to redeem shares held in certificate form
and may not be used if the shareholder's account has had an address change
within 30 days of the redemption request. During periods when it is difficult to
contact the Shareholder Service Agent by telephone, it may be difficult to use
the telephone redemption privilege, although investors can still redeem by mail.
The Portfolio reserves the right to terminate or modify this privilege at any
time.
Expedited Wire Transfer Redemptions. If the account holder has given
authorization for expedited wire redemption to the account holder's brokerage or
bank account, shares can be redeemed and proceeds sent by a federal wire
transfer to a single previously designated account. Requests received by the
Shareholder Service Agent prior to 12:00 noon Eastern time will result in shares
being redeemed that day and normally the proceeds will be sent to the designated
account that day. Once authorization is on file, the Shareholder Service Agent
will honor requests by telephone at 1-800-537-3177 or in writing, subject to the
limitations on liability. The Portfolio is not responsible for the efficiency of
the federal wire system or the account holder's financial services firm or bank.
The Portfolio currently does not charge the account holder for wire transfers.
The account holder is responsible for any charges imposed by the account
holder's firm or bank. There is a $1,000 wire redemption minimum. To change the
designated account to receive wire redemption proceeds, send a written request
to the Shareholder Service Agent with signatures guaranteed as described above,
or contact the firm through which shares of the Portfolio were purchased. Shares
purchased by check or through certain ACH transactions may not be redeemed by
wire transfer until the shares have been owned for at least 10 days. Account
holders may not use this procedure to redeem shares held in certificate
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form. During periods when it is difficult to contact the Shareholder Service
Agent by telephone, it may be difficult to use the expedited wire transfer
redemption privilege. The Portfolio reserves the right to terminate or modify
this privilege at any time.
Redemptions By Draft. (Managed Shares Only) Upon request, shareholders will be
provided with drafts to be drawn on Portfolio ("Redemption Checks"). These
Redemption Checks may be made payable to the order of any person for not more
than $5 million. Shareholders should not write Redemption Checks in an amount
less than $1,000. If the check is less than $1,000 a $10 service fee will be
charged as described below. When a Redemption Check is presented for payment, a
sufficient number of full and fractional shares in the shareholder's account
will be redeemed as of the next determined net asset value to cover the amount
of the Redemption Check. This will enable the shareholder to continue earning
dividends until the Portfolio receives the Redemption Check. A shareholder
wishing to use this method of redemption must complete and file an Account
Application which is available from the Portfolio or firms through which shares
were purchased. Redemption Checks should not be used to close an account since
the account normally includes accrued but unpaid dividends. The Portfolio
reserves the right to terminate or modify this privilege at any time. This
privilege may not be available through some firms that distribute shares of the
Portfolio. In addition, firms may impose minimum balance requirements in order
to offer this feature. Firms may also impose fees to investors for this
privilege or establish variations of minimum check amounts if approved by the
Portfolio.
Unless one signer is authorized on the Account Application, Redemption Checks
must be signed by all account holders. Any change in the signature authorization
must be made by written notice to the Shareholder Service Agent. Shares
purchased by check or through certain ACH transactions may not be redeemed by
Redemption Check until the shares have been on the Portfolio's books for at
least 10 days. Shareholders may not use this procedure to redeem shares held in
certificate form. The Portfolio reserves the right to terminate or modify this
privilege at any time.
The Portfolio may refuse to honor Redemption Checks whenever the right of
redemption has been suspended or postponed, or whenever the account is otherwise
impaired. A $10 service fee will be charged when a Redemption Check is presented
to redeem Portfolio shares in excess of the value of the Portfolio account or in
an amount less than $1,000; when a Redemption Check is presented that would
require redemption of shares that were purchased by check or certain ACH
transactions within 10 days; or when "stop payment" of a Redemption Check is
requested.
Special Features. Certain firms that offer Shares of the Portfolio also provide
special redemption features through charge or debit cards and checks that redeem
Portfolio Shares. Various firms have different charges for their services.
Shareholders should obtain information from their firm with respect to any
special redemption features, applicable charges, minimum balance requirements
and special rules of the cash management program being offered.
Internet access
World Wide Web Site The address of the Kemper site is http://www.kemper.com. The
site offers guidance on global investing and developing strategies to help meet
financial goals and provides access to the Kemper investor relations department
via e-mail. The site also enables users to access or view fund prospectuses and
profiles with links between summary information in Profiles and details in the
Prospectus. Users can fill out new account forms on-line, order free software,
and request literature on funds.
DIVIDENDS, NET ASSET VALUE AND TAXES
Dividends. Dividends are declared daily and paid monthly. Shareholders will
receive dividends in additional shares unless they elect to receive cash.
Dividends will be reinvested monthly in shares of the Portfolio at the net asset
value normally on the last calendar of each month if a business day, otherwise
on the next business day. The Portfolio will pay shareholders who redeem their
entire accounts all unpaid dividends at the time of the redemption not later
than the next dividend payment date. Upon written request to the Shareholder
Service Agent, a shareholder may elect to have Portfolio dividends invested
without sales charge in shares of another Kemper Mutual Fund offering this
privilege at the net asset value of such other fund. See "Special Features --
Exchange Privilege" for a list of such other Kemper Mutual Funds. To use this
privilege of investing Portfolio dividends in of another Kemper Mutual Fund,
shareholders must maintain a minimum account value of $100,000 and 1,000,000 for
the
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Managed and Institutional shares of this Portfolio, respectively, and also must
maintain a minimum account value of $100,000 and 1,000,000 in the corresponding
shares of the fund in which dividends are reinvested.
The Portfolio calculates its dividends based on its daily net investment income.
For this purpose, the net investment income of the Portfolio consists of (a)
accrued interest income plus or minus amortized discount or premium, excluding
market discount for the Portfolio, (b) plus or minus all short-term realized
gains and losses on investments and (c) minus accrued expenses allocated to the
Portfolio. Expenses of the Portfolio are accrued each day. While the Portfolio's
investments are valued at amortized cost, there will be no unrealized gains or
losses on such investments. However, should the net asset value of the Portfolio
deviate significantly from market value, the Board of Trustees could decide to
value the investments at market value and then unrealized gains and losses would
be included in net investment income above. Dividends are reinvested monthly and
shareholders will receive monthly confirmations of dividends and of purchase and
redemption transactions except that confirmations of dividend reinvestment for
Individual Retirement Accounts and other fiduciary accounts for which Investors
Fiduciary Trust Company acts as trustee will be sent quarterly.
If the shareholder elects to receive dividends in cash, checks will be mailed
monthly, within five business days of the reinvestment date (described below),
to the shareholder or any person designated by the shareholder. At the option of
the shareholder, cash dividends may be sent by Federal Funds wire. Shareholders
may request to have dividends sent by wire on the Account Application or by
contacting the Shareholder Service Agent (see "Purchase of Shares"). The
Portfolio reinvests dividend checks (and future dividends) in shares of the
Portfolio if checks are returned as undeliverable. Dividends and other
distributions in the aggregate amount of $10 or less are automatically
reinvested in shares of the Portfolio unless the shareholder requests that such
policy not be applied to the shareholder's account.
Net Asset Value. As described in the prospectus, the Portfolio values its
portfolio instruments at amortized cost, which does not take into account
unrealized capital gains or losses. This involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Portfolio
would receive if it sold the instrument. Calculations are made to compare the
value of the Portfolio's investments valued at amortized cost with market
values. Market valuations are obtained by using actual quotations provided by
market makers, estimates of market value, or values obtained from yield data
relating to classes of money market instruments published by reputable sources
at the mean between the bid and asked prices for the instruments. If a deviation
of 1/2 of 1% or more were to occur between the net asset value per share
calculated by reference to market values and the Portfolio's $1.00 per share net
asset value, or if there were any other deviation that the Board of Trustees of
the Trust believed would result in a material dilution to shareholders or
purchasers, the Board of Trustees would promptly consider what action, if any,
should be initiated. If the Portfolio's net asset value per share (computed
using market values) declined, or were expected to decline, below $1.00
(computed using amortized cost), the Board of Trustees of the Trust might
temporarily reduce or suspend dividend payments in an effort to maintain the net
asset value at $1.00 per share. As a result of such reduction or suspension of
dividends or other action by the Board of Trustees, an investor would receive
less income during a given period than if such a reduction or suspension had not
taken place. Such action could result in investors receiving no dividend for the
period during which they hold their shares and receiving, upon redemption, a
price per share lower than that which they paid. On the other hand, if the
Portfolio's net asset value per share (computed using market values) were to
increase, or were anticipated to increase above $1.00 (computed using amortized
cost), the Board of Trustees of the Trust might supplement dividends in an
effort to maintain the net asset value at $1.00 per share. Redemption orders
received in connection with the administration of checkwriting programs by
certain dealers or other financial services firms prior to the determination of
the Portfolio's net asset value also may be processed on a confirmed basis in
accordance with the procedures established by KDI.
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<PAGE>
TAXES
The Portfolio intends to continue to qualify under the Code as a regulated
investment company and, if so qualified, will not be liable for Federal income
taxes to the extent its earnings are distributed. This Portfolio also intends to
meet the requirements of the Code applicable to regulated investment companies
distributing tax-exempt interest dividends and, accordingly, dividends
representing net interest received on Municipal Securities will not be included
by shareholders in their gross income for Federal income tax purposes, except to
the extent such interest is subject to the alternative minimum tax as discussed
below. Dividends representing taxable net investment income (such as net
interest income from temporary investments in obligations of the U.S.
Government) and net short-term capital gains, if any, are taxable to
shareholders as ordinary income. Net interest on certain "private activity
bonds" issued on or after August 8,1986 is treated as an item of tax preference
and may, therefore, be subject to both the individual and corporate alternative
minimum tax. To the extent provided by regulations to be issued by the Secretary
of the Treasury, exempt-interest dividends from the Portfolio are to be treated
as interest on private activity bonds in proportion to the interest income the
Portfolio receives from private activity bonds, reduced by allowable deductions.
For the 1998 calendar year xx% of the net interest income was derived from
"private activity bonds. "
Exempt-interest dividends, except to the extent of interest from "private
activity bonds," are not treated as a tax-preference item. For a corporate
shareholder, however, such dividends will be included in determining such
corporate shareholder's "adjusted current earnings." Seventy-five percent of the
excess, if any, of "adjusted current earnings" over the corporate shareholder's
other alternative minimum taxable income with certain adjustments will be a
tax-preference item. Corporate shareholders are advised to consult their tax
advisers with respect to alternative minimum tax consequences.
Shareholders will be required to disclose on their Federal income tax returns
the amount of tax-exempt interest earned during the year, including
exempt-interest dividends received from the Portfolio.
Individuals whose modified income exceeds a base amount will be subject to
Federal income tax on up to 85% of their Social Security benefits. Modified
income includes adjusted gross income, tax-exempt interest, including
exempt-interest dividends from the Portfolio, and 50% of Social Security
benefits.
The tax exemption of dividends from the Portfolio for Federal income tax
purposes does not necessarily result in exemption under the income or other tax
laws of any state or local taxing authority. The laws of the several states and
local taxing authorities vary with respect to the taxation of such income and
shareholders of the Portfolios are advised to consult their own tax advisers as
to the status of their accounts under state and local tax laws.
The Portfolio is required by law to withhold 31% of taxable dividends paid to
certain shareholders who do not furnish a correct taxpayer identification number
(in the case of individuals, a social security number) and in certain other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts are
required by law to withhold 20% of the taxable portion of any distribution that
is eligible to be "rolled over." The 20% withholding requirement does not apply
to distributions from IRAs or any part of a distribution that is transferred
directly to another qualified retirement plan, 403(b)(7) account, or IRA.
Shareholders should consult their tax advisers regarding the 20% withholding
requirement.
Interest on indebtedness which is incurred to purchase or carry shares of a
mutual fund which distributes exempt-interest dividends during the year is not
deductible for Federal income tax purposes. Further, the Portfolio may not
21
<PAGE>
be an appropriate investment for persons who are "substantial users" of
facilities financed by industrial development bonds held by the Portfolio or are
"related persons" to such users; such persons should consult their tax advisers
before investing in the Portfolio.
The "Superfund Act of 1986" (the "Superfund Act") imposes a separate tax on
corporations at a rate of 0.12 percent of the excess of such corporation's
"modified alternative minimum taxable income" over $2 million. A portion of
tax-exempt interest, including exempt-interest dividends from the Tax-Exempt
Portfolio, may be includable in modified alternative minimum taxable income.
Corporate shareholders are advised to consult their tax advisers with respect to
the consequences of the Superfund Act.
Shareholders normally will receive monthly confirmations of dividends and of
purchase and redemption transactions except that confirmations of dividend
reinvestment for IRAs and other fiduciary accounts for which Investors Fiduciary
Trust Company serves as trustee will be sent quarterly. Firms may provide
varying arrangements with their clients with respect to confirmations. Tax
information will be provided annually. Shareholders are encouraged to retain
copies of their account confirmation statements or year-end statements for tax
reporting purposes. However, those who have incomplete records may obtain
historical account transaction information at a reasonable fee.
PERFORMANCE
From time to time, the Trust may advertise several types of performance
information for the Portfolio, including "yield" and "effective yield" and, in
the case of the Portfolio, "tax equivalent yield". Each of these figures is
based upon historical earnings and is not representative of the future
performance of the Portfolio. The yield of the Portfolio refers to the net
investment income generated by a hypothetical investment in the Portfolio over a
specific seven-day period. This net investment income is then annualized, which
means that the net investment income generated during the seven-day period is
assumed to be generated each week over an annual period and is shown as a
percentage of the investment. The effective yield is calculated similarly, but
the net investment income earned by the investment is assumed to be compounded
when annualized. The effective yield will be slightly higher than the yield due
to this compounding effect.
The Adviser temporarily has agreed to absorb certain operating expenses of the
Portfolio to the extent specified in the prospectus. Without this expense
absorption, the performance results noted herein for the Portfolio would have
been lower.
The Portfolio's seven-day yield is computed in accordance with a standardized
method prescribed by rules of the Securities and Exchange Commission. Under that
method, the yield quotation is based on a seven-day period and is computed for
the Portfolio as follows. The first calculation is net investment income per
share, which is accrued interest on portfolio securities, plus or minus
amortized discount or premium, less accrued expenses. This number is then
divided by the price per share (expected to remain constant at $1.00) at the
beginning of the period ("base period return"). The result is then divided by 7
and multiplied by 365 and the resulting yield figure is carried to the nearest
one-hundredth of one percent. Realized capital gains or losses and unrealized
appreciation or depreciation of investments are not included in the
calculations.
The Portfolio's seven-day effective yield is determined by taking the base
period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the seven-day effective yield is:
(seven-day base period return +1)365/7 - 1. The Portfolio may also advertise a
thirty-day effective yield in which case the formula is (thirty-day base period
return +1)365/30 - 1.
The tax equivalent yield of the Portfolio is computed by dividing that portion
of the Portfolio's yield (computed as described above) which is tax-exempt by
(one minus the stated Federal income tax rate) and adding the product to that
portion, if any, of the yield of the Portfolio that is not tax-exempt.
22
<PAGE>
Because these Managed Shares and Institutional Shares are new class there is not
a yield set. For additional information concerning tax-exempt yields, see
"Tax-Exempt versus Taxable Yield" below.
The Portfolio's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in the Portfolio will
actually yield for any given future period. Actual yields will depend not only
on changes in interest rates on money market instruments during the period in
which the investment in the Portfolio is held, but also on such matters as
Portfolio expenses.
Investors have an extensive choice of money market funds and money market
deposit accounts and the information below may be useful to investors who wish
to compare the past performance of the Portfolio with that of its competitors.
Past performance cannot be a guarantee of future results.
Information may be quoted from publications such as Morningstar, Inc., The Wall
Street Journal, Money Magazine, Forbes, Barron's Fortune, The Chicago Tribune,
USA Today, Institutional Investor and Registered Rerpresentative. The Trust may
depict the historical performance of the securities in which the Portfolio may
invest over periods reflecting a variety of market or economic conditions either
alone or in comparison with alternative investments performance indexes of those
investments or economic indicators. The Portfolio may also describe its
portfolio holdings and depict its size or relative size compared to other mutual
funds, the number and make-up of its shareholder base and other descriptive
factors concerning the Portfolio.
The performance of the Portfolio may be compared to that of other mutual funds
tracked by Lipper, Inc. ("Lipper"). Lipper performance calculations include the
reinvestment of all capital gain and income dividends for the periods covered by
the calculations. The Portfolio's performance also may be compared to other
money market funds reported by IBC Financial Data, Inc., Money Fund Report (R),
or Money Market Insight (R), reporting services on money market funds. As
reported by IBC Financial Data, Inc., all investment results represent total
return (annualized results for the period net of management fees and expenses)
and one year investment results would be effective annual yields assuming
reinvestment of dividends.
The rates published by the BANK RATE MONITOR National Index(TM) are averages of
the personal account rates offered on the Wednesday prior to the date of
publication by 100 of the leading bank and thrift institutions in the ten
largest Consolidated Metropolitan Statistical Areas. Account minimums range
upward from $2,000 in each institution and compounding methods vary. Interest
bearing checking accounts generally offer unlimited checking while money market
deposit accounts generally restrict the number of checks that may be written. If
more than one rate is offered, the lowest rate is used. Rates are determined by
the financial institution and are subject to change at any time specified by the
institution. Bank products represent an alternative income producing product.
Bank and thrift institution account deposits may be insured. Shareholder
accounts in the Portfolio are not insured. Bank passbook savings accounts share
some liquidity features with money market mutual fund accounts but they may not
offer all the features available from a money market mutual fund, such as
checkwriting. Bank passbook savings accounts normally offer a fixed rate of
interest, while the yield of the Portfolio fluctuates. Bank checking accounts
normally do not pay interest but share some liquidity features with money market
mutual fund accounts (e.g., the ability to write checks against the account).
Bank certificates of deposit may offer fixed or variable rates for a set term.
(Normally, a variety of terms are available.) Withdrawal of these deposits prior
to maturity normally will be subject to a penalty. In contrast, shares of the
Portfolio are redeemable at the net asset value next determined (normally $1.00
per share) after a request is received, without charge.
Investors also may want to compare the Portfolio's performance to that of U.S.
Treasury bills or notes because such instruments represent alternative income
producing products. Treasury obligations are issued in selected denominations.
Rates of U.S. Treasury obligations are fixed at the time of issuance and payment
of principal and interest is backed by the full faith and credit of the U.S.
Treasury. The market value of such instruments generally will fluctuate
inversely with interest rates prior to maturity and will equal par value at
maturity. Generally, the values of obligations with shorter maturities will
fluctuate less than those with longer maturities. The Portfolio's yield will
fluctuate. Also, while the Portfolio seeks to maintain a net asset value per
share of $1.00, there is no assurance that it will be able to do so. In
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<PAGE>
addition, investors may want to compare the Portfolio's performance to the
Consumer Price Index either directly or by calculating its "real rate of
return," which is adjusted for the effects of inflation.
Tax-Exempt versus Taxable Yield. You may want to determine which investment --
tax-exempt or taxable -- will provide you with a higher after-tax return. To
determine the taxable equivalent yield, simply divide the yield from the
tax-exempt investment by the sum of [1 minus your marginal tax rate]. The tables
below are provided for your convenience in making this calculation for selected
tax-exempt yields and taxable income levels. These yields are presented for
purposes of illustration only and are not representative of any yield that the
Tax-Exempt Portfolio may generate. Both tables are based upon current law as to
the 1999 tax rate schedules.
Taxable Equivalent Yield Table for Persons Whose Adjusted Gross Income is Under
$124,500
<TABLE>
<CAPTION>
Your
Taxable Income Marginal A Tax-Exempt Yield of:
Federal
Tax 2% 3% 4% 5% 6% 7%
Single Joint Rate Is Equivalent to a Taxable Yield of:
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$25,350 - $61,400 $42,350 - $102,300 28.0% 2.78 4.17 5.56 6.94 8.33 9.72
- ---------------------------------------------------------------------------------------------------------------------
Over $61,400 Over $102,300 31.0 2.90 4.35 5.80 7.25 8.70 10.14
</TABLE>
Taxable Equivalent Yield Table for Persons Whose Adjusted Gross Income is Over
$124,500*
<TABLE>
<CAPTION>
Your
Marginal A Tax-Exempt Yield of:
Federal
Tax 2% 3% 4% 5% 6% 7%
Single Joint Rate Is Equivalent to a Taxable Yield of:
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$61,400-$128,100 $ 102,300 - $155,950 31.9% 2.94 4.41 5.87 7.34 8.81 10.28
- ---------------------------------------------------------------------------------------------------------------------------
$128,100-$278,450 $155,950 - $278,450 37.1 3.18 4.77 6.36 7.95 9.54 11.13
- ---------------------------------------------------------------------------------------------------------------------------
24
<PAGE>
Over $278,450 Over $278,450 40.8 3.38 5.07 6.76 8.45 10.14 11.82
</TABLE>
* This table assumes a decrease of $3.00 of itemized deductions for each $100
of adjusted gross income over $124,500. For a married couple with
adjusted gross income between $186,800 and $309,300 (single between
$124,500 and $247,000), add 0.7% to the above Marginal Federal Tax
Rate for each personal and dependency exemption. The taxable
equivalent yield is the tax-exempt yield divided by: 100% minus the
adjusted tax rate. For example, if the table tax rate is 37.1% and you
are married with no dependents, the adjusted tax rate is 38.5% (37.1%
+ 0.7% + 0.7%). For a tax-exempt yield of 6%, the taxable equivalent
yield is about 9.8% (6% / (100% - 38.5%)).
OFFICERS AND TRUSTEES
The officers and trustees of the Trust, their birthdates, their principal
occupations and their affiliations, if any, with the Adviser and KDI, are listed
below. All persons named as officers and trustees also serve in similar
capacities for other funds advised by the Adviser:
JOHN W. BALLANTINE (2/16/46), Trustee, 1500 North Lake Shore Drive, Chicago,
Illinois; First Chicago NBD Corporation/The First National Bank of Chicago:
1996-1998 Executive Vice President and Chief Risk Management Officer; 1995-1996
Executive Vice President and Head of International Banking; 1992-1995 Executive
Vice President, Chief Credit and Market Risk Officer.
LEWIS A. BURNHAM (1/8/33), Trustee, 16410 Avila Boulevard, Tampa, Florida;
Retired; formerly, Partner, Business Resources Group; formerly, Executive Vice
President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY (3/8/37), Trustee, 7515 Pelican Bay Boulevard, Naples,
Florida; Retired; formerly, Executive Vice President, A.O. Smith Corporation
(diversified manufacturer).
ROBERT B. HOFFMAN (12/11/36), Trustee, 1530 North State Parkway, Chicago,
Illinois; Chairman, Harnischfeger Industries, Inc. (machinery for the mining and
paper industries); formerly, Vice Chairman and Chief Financial Officer, Monsanto
Company (agricultural, pharmaceutical and nutritional/food products); formerly,
Vice President, Head of International Operations, FMC Corporation (manufacturer
of machinery and chemicals).
DONALD R. JONES (1/17/30), Trustee, 182 Old Wick Lane, Inverness, Illinois;
Retired; Director, Motorola, Inc. (manufacturer of electronic equipment and
components); formerly, Executive Vice President and Chief Financial Officer,
Motorola, Inc.
SHIRLEY D. PETERSON (9/3/41), Trustee, 401 Rosemont Avenue, Frederick, Maryland;
President, Hood College; formerly, Partner, Steptoe & Johnson (attorneys); prior
thereto, Commissioner, Internal Revenue Service; prior thereto, Assistant
Attorney General, U.S. Department of Justice; Director, Bethlehem Steel Corp.
25
<PAGE>
WILLIAM P. SOMMERS (7/22/33), Trustee, 24717 Harbour View Drive, Ponte Vedra
Beach, Florida; Consultant and Director, SRI Consulting; prior thereto President
and Chief Executive Officer, SRI International (research and development); prior
thereto, Executive Vice President, Iameter (medical information and educational
service provider); prior thereto, Senior Vice President and Director, Booz,
Allen & Hamilton Inc. (management consulting firm); Director, PSI Inc.,
Evergreen Solar, Inc. and Litton Industries.
MARK S. CASADY (9/21/60), President*, 345 Park Avenue, New York, New York;
Managing Director, Adviser; formerly, Institutional Sales Manager of an
unaffiliated mutual fund distributor.
PHILIP J. COLLORA (11/15/45), Vice President and Secretary*, 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President and Assistant Secretary,
Adviser.
THOMAS W. LITTAUER (4/26/55), Vice President and Trustee*, Two International
Place, Boston, Massachusetts; Managing Director, Adviser; formerly, Head of
Broker Dealer Division of an unaffiliated investment management firm during
1997; prior thereto, President of Client Management Services of an unaffiliated
investment management firm from 1991 to 1996.
ANN M. McCREARY (11/6/56), Vice President*, 345 Park Avenue, New York, New York;
Managing Director, Adviser.
ROBERT C. PECK, JR. (10/1/46), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Adviser; formerly, Executive Vice
President and Chief Investment Officer with an unaffiliated investment
management firm from 1988 to June 1997.
KATHRYN L. QUIRK (12/3/52), Vice President*, 345 Park Avenue, New York, New
York; Managing Director, Adviser.
FRANK J. RACHWALSKI, JR. (3/26/45), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Adviser.
CORNELIA M. SMALL (7/28/44), Trustee*, 345 Park Avenue, New York, NY; Managing
Director, Scudder Kemper.
LINDA J. WONDRACK (9/12/64), Vice President*, Two International Place, Boston,
Massachusetts; Senior Vice President, Adviser.
JOHN R. HEBBLE (6/27/58), Treasurer*, Two International Place, Boston,
Massachusetts; Senior Vice President, Adviser.
BRENDA LYONS (2/21/63), Assistant Treasurer*, Two International Place, Boston,
Massachusetts; Senior Vice President, Adviser.
CAROLINE PEARSON (4/1/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Senior Vice President, Adviser; formerly, Associate,
Dechert Price & Rhoads (law firm) 1989 to 1997.
MAUREEN E. KANE (2/14/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Vice President, Adviser; formerly, Assistant Vice
President of an unaffiliated investment management firm; prior
26
<PAGE>
thereto, Associate Staff Attorney of an unaffiliated investment management firm;
Associate, Peabody & Arnold (law firm).
* Interested persons as defined in the 1940 Act.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Trust. The table below shows amounts paid or
accrued to those trustees who are not designated "interested persons" during the
Trust's fiscal year ended April 30, 1999 and the total compensation that Kemper
managed funds paid to each trustee during the calendar year 1998.
<TABLE>
<CAPTION>
Aggregate Total Compensation Kemper Managed Funds
Name of Trustee Compensation From Trust Paid to Trustees (2)
- --------------- ----------------------- --------------------
<S> <C> <C>
John W. Ballantine $X.xx $X.xx
Lewis A. Burnham $X,xxx $Xxx,xxx
Donald L. Dunaway (1) X,xxx Xxx,xxx
Robert B. Hoffman X,xxx Xxx,xxx
Donald R. Jones X,xxx Xxx,xxx
Shirley D. Peterson X,xxx Xxx,xxx
William P. Sommers X,xxx Xxx,xxx
</TABLE>
(1) Includes deferred fees pursuant to deferred compensation agreements with
the Trust. Deferred amounts accrue interest monthly at a rate approximate
to the yield of Zurich Money Funds -- Zurich Money Market Fund. Total
deferred fees and interest accrued for the latest and all prior fiscal
years are $xx,xxx for Mr. Dunaway from Cash Account Trust.
(2) John W. Ballantine became a Trustee on May 18, 1999.
(3) Includes compensation for service on the Boards of xx Kemper funds with xx
fund portfolios. Each trustee currently serves as trustee of xx Kemper
Funds with xx fund portfolios.
27
<PAGE>
The Board of Trustees is responsible for the general oversight of each Fund's
business. A majority of the Board's members are not affiliated with Scudder
Kemper Investments, Inc. These "Independent Trustees" have primary
responsibility for assuring that the Fund is managed in the best interests of
its shareholders.
The Board of Trustees reviews the investment performance of the Funds and other
operational matters, including policies and procedures designed to ensure
compliance with various regulatory requirements. At least annually, the
Independent Trustees review the fees paid to the Adviser and its affiliates for
investment advisory services and other administrative and shareholder services.
In this regard, they evaluate, among other things, each Fund's investment
performance, the quality and efficiency of the various other services provided,
costs incurred by the Adviser and its affiliates and comparative information
regarding fees and expenses of competitive funds. They are assisted in this
process by the Funds' independent public accountants and by independent legal
counsel selected by the Independent Trustees.
On October 1, 1999, the officers and trustees of the Trust, as a group, owned
less than 1% of the then outstanding shares of the Portfolio. No person owned of
record 5% or more of the outstanding shares of any class of any Portfolio,
except the persons indicated in the chart below:
Name and Address % Owned Portfolio
- ---------------- ------- ---------
TBD Tax-Exempt
SPECIAL FEATURES
Exchange Privilege. Subject to the limitations described below, Class A Shares
(or the equivalent) of the following Kemper Mutual Funds may be exchanged for
each other at their relative net asset values: Kemper Technology Fund, Kemper
Total Return Fund, Kemper Growth Fund, Kemper Small Capitalization Equity Fund,
Kemper Income and Capital Preservation Fund, Kemper Municipal Bond Fund, Kemper
Diversified Income Fund, Kemper High Yield Series, Kemper U.S. Government
Securities Fund, Kemper International Fund, Kemper State Tax-Free Income Series,
Kemper Adjustable Rate U.S. Government Fund, Kemper Blue Chip Fund, Kemper
Global Income Fund, Kemper Target Equity Fund (series are subject to a limited
offering period), Kemper Intermediate Municipal Bond Fund, Kemper Cash Reserves
Fund, Kemper U.S. Mortgage Fund, Kemper Short-Intermediate Government Fund,
Kemper Value Series, Inc., Kemper Value Plus Growth Fund, Kemper Quantitative
Equity Fund, Kemper Horizon Fund, Kemper Europe Fund, Kemper Asian Growth Fund,
Kemper Aggressive Growth Fund, Kemper Global/International Series, Inc., Kemper
Securities Trust and Kemper Equity Trust ("Kemper Mutual Funds") and certain
"Money Market Funds" (Zurich Money Funds, Zurich Yieldwise Money Fund, Cash
Equivalent Fund, Tax-Exempt California Money Market Fund, Cash Account Trust,
Investors Municipal Cash Fund and Investors Cash Trust). Shares of Money Market
Funds and Kemper Cash Reserves Fund that were acquired by purchase (not
including shares acquired by dividend reinvestment) are subject to the
applicable sales charge on exchange. In addition, shares of a Kemper Mutual Fund
in excess of $1,000,000 (except Money Market Fund and Kemper Cash Reserves Fund)
acquired by exchange from another Fund may not be exchanged thereafter until
they have been owned for 15 days (the "15-Day Hold Policy"). In addition to the
current limits on exchanges of shares with a value over $1,000,000, shares of a
Kemper Fund with a value of $1,000,000 or less (except Money Market Fund and
Kemper Cash Reserves Fund) acquired by exchange from another Kemper Fund, or
from a Money Market Fund, may not be exchanged thereafter until they have been
owned for 15 days, if, in the investment manager's judgment, the exchange
activity may have an adverse effect on the fund. In particular, a pattern of
exchanges that coincides with a "market timing" strategy may be disruptive to
the Kemper Fund and therefore may be subject to the 15-day hold policy. For
purposes of determining whether the 15-Day Hold Policy applies to a particular
exchange, the value of the shares to be exchanged shall be computed by
aggregating the value of shares being exchanged for all accounts under common
28
<PAGE>
control, discretion or advice, including without limitation accounts
administered by a financial services firm offering market timing, asset
allocation or similar services. Series of Kemper Target Equity Fund will be
available on exchange only during the Offering Period for such series as
described in the prospectus for such series. Cash Equivalent Fund, Tax-Exempt
California Money Market Fund, Cash Account Trust, Investors Municipal Cash Fund
and Investors Cash Trust are available on exchange but only through a financial
services firm having a services agreement with KDI with respect to such funds.
Exchanges may only be made for funds that are available for sale in the
shareholder's state of residence. Currently, Tax-Exempt California Money Market
Fund is available for sale only in California and the portfolios of Investors
Municipal Cash Fund are available for sale in certain states.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged.
Exchanges are made based on relative dollar values of the shares involved in the
exchange. There is no service fee for an exchange; however, financial services
firms may charge for their services in expediting exchange transactions.
Exchanges will be effected by redemption of shares of the fund held and purchase
of shares of the other fund. For federal income tax purposes, any such exchange
constitutes a sale upon which a gain or loss may be realized, depending upon
whether the value of the shares being exchanged is more or less than the
shareholder's adjusted cost basis. Shareholders interested in exercising the
exchange privilege may obtain an exchange form and prospectuses of the other
funds from financial services firms or KDI. Exchanges also may be authorized by
telephone if the shareholder has given authorization. Once the authorization is
on file, the Shareholder Service Agent will honor requests by telephone at
1-800-231-8568 or in writing subject to the limitations on liability described
in the prospectus. Any share certificates must be deposited prior to any
exchange of such shares. During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to implement the
telephone exchange privilege. The exchange privilege is not a right and may be
suspended, terminated or modified at any time. Except as otherwise permitted by
applicable regulation, 60 days' prior written notice of any termination or
material change will be provided.
Systematic Withdrawal Program [(Managed Shares Only)]. An owner of [$5,000] or
more of the Portfolio's shares may provide for the payment from the owner's
account of any requested dollar amount up to $50,000 to be paid to the owner or
the owner's designated payee monthly, quarterly, semi-annually or annually. The
$5,000 minimum account size is not applicable to Individual Retirement Accounts.
Dividend distributions will be reinvested automatically at net asset value. A
sufficient number of full and fractional shares will be redeemed to make the
designated payment. Depending upon the size of the payments requested,
redemptions for the purpose of making such payments may reduce or even exhaust
the account. The program may be amended on thirty days notice by the Portfolio
and may be terminated at any time by the shareholder or the Portfolio. Firms
provide varying arrangements for their clients to redeem shares of the Portfolio
on a periodic basis. Such firms may independently establish minimums for such
services.
Tax-Sheltered Retirement Programs. The Shareholder Service Agent provides
retirement plan services and documents and KDI can establish your account in any
of the following types of retirement plans:
o Individual Retirement Accounts (IRAs) trusteed by Investors Fiduciary
Trust Company ("IFTC"). This includes Simplified Employee Pension Plan
(SEP) IRA accounts and prototype documents.
o 403(b) Custodial Accounts also trusteed by IFTC. This type of plan is
available to employees of most non-profit organizations.
o Prototype money purchase pension and profit-sharing plans may be
adopted by employers. The maximum contribution per participant is the
lesser of 25% of compensation or $30,000.
Brochures describing the above plans as well as providing model defined benefit
plans, target benefit plans, 457 plans, 401(k) plans and materials for
establishing them are available from the Shareholder Service Agent upon request.
The brochures for plans trusteed by IFTC describe the current fees payable to
IFTC for its services as trustee. Investors should consult with their own tax
advisers before establishing a retirement plan.
Electronic Funds Transfer Programs. For your convenience, the Trust has
established several investment and redemption programs using electronic funds
transfer via the Automated Clearing House (ACH). There is currently no charge by
the Trust for these programs. To use these features, your financial institution
(your employer's financial institution in the case of payroll deposit) must be
affiliated with an Automated Clearing House (ACH). This ACH
29
<PAGE>
affiliation permits the Shareholder Service Agent to electronically transfer
money between your bank account, or employer's payroll bank in the case of
Direct Deposit, and your account. Your bank's crediting policies of these
transferred funds may vary. These features may be amended or terminated at any
time by the Trust. Shareholders should contact Kemper Service Company at
1-800-621-1048 or the financial services firm through which their account was
established for more information. These programs may not be available through
some firms that distribute shares of the Portfolios.
SHAREHOLDER RIGHTS
The Trust generally is not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust ("Declaration of Trust"), however,
shareholder meetings will be held in connection with the following matters: (a)
the election or removal of trustees if a meeting is called for such purpose; (b)
the adoption of any contract for which shareholder approval is required by the
1940 Act; (c) any termination of the Trust to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other than
amendments changing the name of the Trust or any Portfolio, establishing the
Portfolio, supplying any omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision thereof); and (e) such
additional matters as may be required by law, the Declaration of Trust, the
By-laws of the Trust, or any registration of the Trust with the Securities and
Exchange Commission or any state, or as the trustees may consider necessary or
desirable. The shareholders also would vote upon changes in fundamental
investment objectives, policies or restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of a
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described below) or a majority
of the trustees. In accordance with the 1940 Act (a) the Trust will hold a
shareholder meeting for the election of trustees at such time as less than a
majority of the trustees have been elected by shareholders, and (b) if, as a
result of a vacancy in the Board of Trustees, less than two-thirds of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10% of the
outstanding shares. Upon the written request of ten or more shareholders who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of the Trust stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting in
person or by proxy of at least 30% of the shares entitled to vote on a matter
shall constitute a quorum. Thus, a meeting of shareholders of the Portfolio
could take place even if less than a majority of the shareholders were
represented on its scheduled date. Shareholders would in such a case be
permitted to take action which does not require a larger vote than a majority of
a quorum, such as the election of trustees and ratification of the selection of
auditors. Some matters requiring a larger vote under the Declaration of Trust,
such as termination or reorganization of the Portfolio and certain amendments of
the Declaration of Trust, would not be affected by this provision; nor would
matters which under the 1940 Act require the vote of a "majority of the
outstanding voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or any Portfolio or class) by notice to the shareholders
without shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of the
Trust. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by
the Trust or the trustees. Moreover, the Declaration of Trust provides for
indemnification out of Trust property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust and the
Trust will be covered by insurance which the trustees consider adequate to cover
foreseeable tort claims. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered by the Adviser remote and
not material, since it is limited to circumstances in which a disclaimer is
inoperative and the Trust itself is unable to meet its obligations.
30
<PAGE>
APPENDIX -- RATINGS OF INVESTMENTS
COMMERCIAL PAPER RATINGS
A-1, A-2, Prime-1, Prime-2 and Duff 1, Duff 2 Commercial Paper Ratings
Commercial paper rated by Standard & Poor's Corporation has the following
characteristics: Liquidity ratios are adequate to meet cash requirements.
Long-term senior debt is rated "A" or better. The issuer has access to at least
two additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determine whether the
issuer's commercial paper is rated A-1, A-2 or A-3.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's Investors Service, Inc. Among the factors considered by them
in assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations. Relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated Prime-1, 2 or 3.
The rating Duff-1 is the highest commercial paper rating assigned by Duff &
Phelps Inc. Paper rated Duff-1 is regarded as having very high certainty of
timely payment with excellent liquidity factors that are supported by ample
asset protection. Risk factors are minor. Paper rated Duff-2 is regarded as
having good certainty of timely payment, good access to capital markets and
sound liquidity factors and company fundamentals. Risk factors are small.
MIG-1 and MIG-2 Municipal Notes
Moody's Investors Service, Inc.'s ratings for state and municipal notes and
other short-term loans will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of the
first importance in bond risk are of lesser importance in the short run. Loans
designated MIG-1 are of the best quality, enjoying strong protection from
established cash flows of funds for their servicing or from established and
broad-based access to the market for refinancing, or both. Loans designated
MIG-2 are of high quality, with margins of protection ample although not so
large as in the preceding group.
STANDARD & POOR'S CORPORATION BOND RATINGS, CORPORATE BONDS
AAA. This is the highest rating assigned by Standard & Poor's Corporation to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA. Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
MOODY'S INVESTORS SERVICE, INC. BOND RATINGS
Aaa. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of
31
<PAGE>
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
DUFF & PHELP'S INC. BOND RATINGS
AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA -- High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
32
<PAGE>
CASH ACCOUNT TRUST
PART C.
-------
OTHER INFORMATION
-----------------
<TABLE>
<CAPTION>
Item 23. Exhibits:
- -------- ---------
<S> <C> <C> <C>
(a) (a)(1) Amended and Restated Agreement and Declaration of Trust dated
March 17, 1990, is incorporated by reference to Post-Effective
Amendment No. 5 to the Registration Statement.
(a)(2) Establishment and Designation of Classes of Shares of Beneficial
Interest, $0.01 par value, with respect to Money Market Portfolio
Retail, Premier, Institutional, and Service Shares, is
incorporated by reference to Post-Effective Amendment No. 10 to
the Registration Statement.
(b) By-Laws of the Registrant are incorporated by reference to
Post-Effective Amendment No. 5 to the Registration Statement.
(c) (c)(1) Establishment and Designation of Classes of Shares of Beneficial
Interest, $0.01 par value, with respect to Money Market Portfolio
Retail, Premier, Institutional, and Service Shares, is incorporated
by reference to Post-Effective Amendment No. 10 to the Registration
Statement.
(c)(2) Establishment and Designation of Classes of Shares of Beneficial
Interest, $0.01 par value, with respect to Tax Exempt Portfolio
Scudder Managed and Scudder Institutional Shares, to be filed by
subsequent amendment.
(d) Investment Management Agreement between the Registrant and Scudder
Kemper Investments, Inc., dated September 7, 1998, is incorporated
by reference to Post-Effective Amendment No. 9 to the Registration
Statement.
(e) Underwriting and Distribution Services Agreement between the
Registrant and Kemper Distributors, Inc., dated January 15, 1999,
is incorporated by reference to Post-Effective Amendment No. 10 to
the Registration Statement.
(f) Inapplicable.
(g) Custodian Agreement between the Registrant and State Street Bank
and Trust Company ("State Street Bank"), dated April 19, 1999, is
incorporated by reference to Post-Effective Amendment No. 13 to
the Registration Statement.
(h) (h)(1) Agency Agreement between the Registrant and Kemper Service
Company, dated September 6, 1990, is incorporated by reference to
Post-Effective Amendment No. 5 to the Registration Statement.
<PAGE>
(h)(2) Supplement, dated April 1, 1995, to Agency Agreement between the
Registrant and Kemper Service Company, is incorporated by
reference to Post-Effective Amendment No. 6 to the Registration
Statement.
(h)(3) Fund Accounting Services Agreement between the Registrant, on
behalf of Government Securities Portfolio, and Scudder Fund
Accounting Corporation, dated December 31, 1997, is incorporated
by reference to Post-Effective Amendment No. 8 to the Registration
Statement.
(h)(4) Fund Accounting Services Agreement between the Registrant, on
behalf of Money Market Portfolio, and Scudder Fund Accounting
Corporation dated December 31, 1997 is incorporated by reference
to Post-Effective Amendment No. 8 to the Registration Statement.
(h)(5) Fund Accounting Services Agreement between the Registrant, on
behalf of Tax-Exempt Portfolio, and Scudder Fund Accounting
Corporation, dated December 31, 1997, is incorporated by reference
to Post-Effective Amendment No. 8 to the Registration Statement.
(h)(6) Administration and Shareholder Services Agreement between the
Registrant, on behalf of Money Market Portfolio Premier Shares,
and Kemper Distributors, Inc., Inc., dated January 15, 1999, is
incorporated by reference to Post-Effective Amendment No. 10 to
the Registration Statement.
(h)(7) Administration and Shareholder Services Agreement between the
Registrant, on behalf of Money Market Portfolio Retail Shares, and
Kemper Distributors, Inc., Inc. dated January 15, 1999, is
incorporated by reference to Post-Effective Amendment No. 10 to
the Registration Statement.
(h)(8) Administration and Shareholder Services Agreement between the
Registrant, on behalf of Money Market Portfolio Institutional
Shares, and Kemper Distributors, Inc., Inc., dated January 15,
1999, is incorporated by reference to Post-Effective Amendment No.
10 to the Registration Statement.
(h)(9) Administration, Shareholder Services and Distribution Agreement
between the Registrant and Kemper Distributors, Inc., dated
December 31, 1997, incorporated by reference to Post-Effective No.
12 to the Registration Statement.
(i) Legal Opinion of Counsel to be filed by subsequent amendment.
(j) Consent of Independent Accountants to be filed by subsequent
amendment.
(k) Inapplicable.
(l) Inapplicable.
2
<PAGE>
(m) (m)(1) Amended and Restated 12b-1 Plan between the Registrant, on behalf
of Tax-Exempt Portfolio, and Kemper Distributors, Inc. is
incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement.
(m)(2) Amended and Restated 12b-1 Plan between the Registrant, on behalf
of Government Securities Portfolio, and Kemper Distributors, Inc.
is incorporated by reference to Post-Effective Amendment No. 9 to
the Registration Statement.
(m)(3) Amended and Restated 12b-1 Plan between the Registrant, on behalf
of Money Market Portfolio, and Kemper Distributors, Inc. is
incorporated by reference to Post-Effective Amendment No. 9 to the
Registration Statement.
(n) Inapplicable.
(o) Mutual Funds Multi-Distribution System Plan - Rule 18f-3 Plan, is
incorporated by reference to Post-Effective Amendment No. 10 to
the Registration Statement.
</TABLE>
Item 24. Persons Controlled by or under Common Control with Fund.
- -------- --------------------------------------------------------
None
Item 25. Indemnification.
- -------- ----------------
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 26. Business or Other Connections of Investment Adviser
- -------- ---------------------------------------------------
Scudder Kemper Investments, Inc. has stockholders and employees who are
denominated officers but do not as such have corporation-wide responsibilities.
Such persons are not considered officers for the purpose of this Item 26.
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
3
<PAGE>
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
William H. Bolinder Director, Scudder Kemper Investments, Inc.**
Member, Group Executive Board, Zurich Financial Services, Inc.##
Chairman, Zurich-American Insurance Company o
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, ZKI Holding Corporation xx
Gunther Gose Director, Scudder Kemper Investments, Inc.**
CFO and Member, Group Executive Board, Zurich Financial Services, Inc.##
CEO/Branch Offices, Zurich Life Insurance Company##
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of America o
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Cornelia M. Small Director and Vice President, Scudder Kemper Investments, Inc.**
4
<PAGE>
Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President and Director, Scudder, Stevens & Clark Overseas Corporation oo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
</TABLE>
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg,
R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
xxx Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman,
British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
Item 27. Principal Underwriters.
- -------- -----------------------
(a)
Kemper Distributors, Inc. acts as principal underwriter of the Registrant's
shares and also acts as principal underwriter for other funds managed by Scudder
Kemper Investments, Inc.
(b)
The Underwriter has employees who are denominated officers of an operational
area. Such persons do not have corporation-wide responsibilities and are not
considered officers for the purpose of this Item 27.
<TABLE>
<CAPTION>
(1) (2) (3)
Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
<S> <C> <C> <C>
James L. Greenawalt President None
Thomas W. Littauer Director, Chief Executive Officer Vice President
Kathryn L. Quirk Director, Secretary, Chief Legal Vice President
Officer and Vice President
James J. McGovern Chief Financial Officer and Vice None
President
Linda J. Wondrack Vice President and Chief Compliance Vice President
Officer
Paula Gaccione Vice President None
Michael E. Harrington Vice President None
5
<PAGE>
Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
Robert A. Rudell Vice President None
William M. Thomas Vice President None
Todd N. Gierke Assistant Treasurer None
Philip J. Collora Assistant Secretary Vice President and Secretary
Paul J. Elmlinger Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
Mark S. Casady Director, Vice Chairman President
Stephen R. Beckwith Director None
</TABLE>
(c) Not applicable.
Item 28. Location of Accounts and Records.
- -------- ---------------------------------
Accounts, books and other documents are maintained at the offices of
the Registrant, the offices of Registrant's investment adviser, Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at the
offices of the Registrant's principal underwriter, Kemper Distributors, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606 or, in the case of records
concerning custodial functions, at the offices of the custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110 or, in
the case of records concerning transfer agency functions, at the offices of
State Street Bank and Trust Company and of the shareholder service agent, Kemper
Service Company, 811 Main Street, Kansas City, Missouri 64105.
Item 29. Management Services.
- -------- --------------------
Inapplicable.
Item 30. Undertakings.
- -------- -------------
Inapplicable.
6
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this amendment to its Registration
Statement under the Securities Act of 1933 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Chicago and State of Illinois, on the
3rd day of September, 1999.
CASH ACCOUNT TRUST
By /s/ Mark S. Casady
-----------------------
Mark S. Casady, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on September 3, 1999 on behalf of
the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Mark S. Casady September 3, 1999
- --------------------------------------
Mark S. Casady President
/s/ Thomas W. Littauer September 3, 1999
- --------------------------------------
Thomas W. Littauer Chairman and Trustee
/s/ John W. Ballantine September 3, 1999
- --------------------------------------
John W. Ballantine* Trustee
/s/ Lewis A. Burnham September 3, 1999
- --------------------------------------
Lewis A. Burnham* Trustee
/s/ Donald L. Dunaway September 3, 1999
- --------------------------------------
Donald L. Dunaway* Trustee
/s/ Robert B. Hoffman September 3, 1999
- --------------------------------------
Robert B. Hoffman* Trustee
/s/ Donald R. Jones September 3, 1999
- --------------------------------------
Donald R. Jones* Trustee
/s/ Shirley D. Peterson September 3, 1999
- --------------------------------------
Shirley D. Peterson* Trustee
/s/ Cornelia M. Small September 3, 1999
- --------------------------------------
Cornelia M. Small Trustee
<PAGE>
/s/ William P. Sommers September 3, 1999
- --------------------------------------
William P. Sommers* Trustee
/s/ John R. Hebble September 3, 1999
- --------------------------------------
John R. Hebble Treasurer (Principal Financial and
Accounting Officer)
</TABLE>
*By: /s/ Philip J. Collora
---------------------
Philip J. Collora**
** Philip J. Collora signs this document
pursuant to powers of attorney contained in
Post-Effective Amendment No. 8 to the
Registration Statement, filed on August 28,
1998 and pursuant to a power of attorney
contained in Post Effective Amendment No.
12, filed on June 16, 1999.
2
<PAGE>
File No. 33-32476
File No. 811-5970
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 14
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 15
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
CASH ACCOUNT TRUST
<PAGE>
CASH ACCOUNT TRUST
EXHIBIT INDEX
