Filed with the Securities and Exchange Commission on June 18, 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. 12 / X /
--
And/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 13 / X /
--
Cash Account Trust
------------------
(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, Illinois, 60606
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 537-7000
Philip J. Collora
-----------------
Scudder Kemper Investments, Inc.
--------------------------------
222 South Riverside Plaza
-------------------------
Chicago, Illinois 60606
-----------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
<TABLE>
<CAPTION>
<S> <C>
/ / Immediately upon filing pursuant to paragraph (b) / / days after filing pursuant to paragraph (a) (1)
/ / days after filing pursuant to paragraph (a) (2) / / On (date) pursuant to paragraph (a) (2) of Rule 485.
/ X / On September 1, 1999 pursuant to paragraph (a) (1) / / On (date) pursuant to paragraph (b)
/ / If Appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously filed post-effective amendment
</TABLE>
<PAGE>
September 1, 1999
Prospectus
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
Cash Account Trust
Money Market Portfolio*
Government Securities Portfolio
Tax-Exempt Portfolio
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.
* Service Shares
<PAGE>
CONTENTS
ABOUT THE PORTFOLIOS.....................................................3
Money Market Portfolio...................................................3
Government Securities Portfolio..........................................7
Tax-Exempt Portfolio....................................................11
Investment adviser......................................................16
ABOUT YOUR INVESTMENT...................................................20
Buying shares...........................................................20
Selling and exchanging shares...........................................22
Distributions...........................................................22
Taxes...................................................................23
Transaction information.................................................23
2
<PAGE>
ABOUT THE PORTFOLIOS
- --------------------
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Investment objective
The portfolio seeks maximum current income consistent with stability of capital.
Included in the "Investment restrictions" section is a listing of those
restrictions which cannot be changed without a vote of shareholders. Except as
otherwise noted, the portfolio's investment objective and other policies may not
be changed without a vote of shareholders.
Main investment strategies
The portfolio pursues its objective by investing exclusively in the following
types of U.S. dollar-denominated money market instruments that mature in 12
months or less:
1- Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2- Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
banks (including their foreign branches) and Canadian chartered banks having
total assets in excess of $1 billion.
3- Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets in
excess of $10 billion.
4- Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) are rated high quality by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
Phelps, Inc. ("Duff"); or (ii) if unrated, are determined to be at least equal
in quality to one or more of the above ratings in the discretion of the
portfolio's investment manager. Currently, only obligations in the top two
categories are considered to be rated high quality. The two highest rating
categories of Moody's, S&P and Duff for commercial paper are Prime-1 and
Prime-2, A-1 and A-2 and Duff 1 and Duff 2, respectively. For other debt
obligations, the two highest rating categories for such services are Aaa and Aa,
AAA and AA and AAA and AA, respectively.
5- Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. The maturities of the securities subject to
repurchase may be greater than 12 months.
In addition, the portfolio limits its investments to securities that meet the
quality, maturity and diversification requirements of federal law.
The portfolio will normally invest at least 25% of its assets in obligations
issued by banks.
3
<PAGE>
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the portfolio, unless the portfolio's
Board determines that selling the security would not be in the best interest of
the portfolio.
Of course, there can be no guarantee that by following these investment
strategies, the portfolio will achieve its objective.
Other investments
To a more limited extent, the portfolio may, but is not required to, utilize
other investments and investment techniques that may impact portfolio
performance including, but not limited to, floating and variable rate
instruments (obligations that do not bear interest at fixed rates).
Risk management strategies
The portfolio manages credit risk by investing primarily in high quality
securities, whose issuers are considered unlikely to default. The portfolio
manages interest rate risk by limiting the maturity of each of its individual
securities and the weighted average maturity of the portfolio overall.
For temporary defensive purposes, the portfolio may invest less than 25% of its
assets in obligations issued by banks. 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. Moreover, the
portfolio managers' strategy or choice of specific investments may not perform
as expected. The portfolio may have lower returns than other funds that invest
in longer-term, lower-quality securities. It is possible, however, that
securities in the portfolio could be downgraded in credit rating or go into
default.
Investments by the portfolio in Eurodollar certificates of deposit issued by
London branches of U.S. banks, and different obligations issued by foreign
entities, including foreign banks, involve additional risks than investments in
securities of domestic branches of U.S. banks. These risks include, but are not
limited to, potentially unfavorable currency exchange rates, potentially
inadequate reserves, political disturbances, and incomplete or inaccurate public
information.
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Company 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>
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the portfolio by illustrating how the portfolio has performed. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the portfolio's highest return for a
calendar quarter was ___% (cite quarter), and the portfolio's lowest return for
a calendar quarter was -___% (cite quarter).
The portfolio's year-to-date total return as of June 30, 1999 was ____%.
Average Annual Total Returns
Money
For periods ended Market
December 31, 1998 Portfolio
-----------------
One Year __.__%
Five Years __.__%
Since Portfolio __.__%
Inception*
* Inception date for the portfolio is 12/3/90.
7-Day Yield
On December 31, 1998 __.__%
5
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the portfolio.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual portfolio operating expenses (expenses that are deducted from portfolio
assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual portfolio operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%
-------------------------------------------------------------------------------
Net expenses 0.xx%
-------------------------------------------------------------------------------
Example
This example is to help you compare the cost of investing in 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 expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions,
and "Total annual portfolio operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the portfolio's "Net expenses" as shown above. 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 returns vary from year to year, and may be
higher or lower than those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Investment objective
The portfolio seeks to provide maximum current income consistent with stability
of capital.
Included in the "Investment restrictions" section is a listing of those
restrictions which cannot be changed without a vote of shareholders. Except as
otherwise noted, the portfolio's investment objective and other policies may not
be changed without a vote of shareholders.
Main investment strategies
The portfolio pursues its objective by investing exclusively in U.S. Treasury
bills, notes, bonds and other obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and certain repurchase agreements
(instruments under which the portfolio acquires ownership from a broker-dealer
or bank that agrees to repurchase the security at a mutually agreed upon time
and price). All such securities purchased mature in 12 months or less.
Securities are purchased and sold based on the investment manager's perception
of monetary conditions, the available supply of appropriate investments, and the
managers' projections for short-term interest rate movements.
In addition, the portfolio limits its investments to securities that meet the
quality, maturity and diversification requirements of federal law.
Of course, there can be no guarantee that by following these investment
strategies, the portfolio will achieve its objective.
Other investments
To a more limited extent, the portfolio may, but is not required to, utilize
other investments and investment techniques that may impact portfolio
performance including, but not limited to, floating and variable rate
instruments (obligations that do not bear interest at fixed rates). The
maturities of the securities subject to repurchase may be greater than 12
months.
Risk management strategies
The portfolio seeks to minimize credit risk by investing exclusively in
short-term obligations issued or guaranteed by U.S. Government, its agencies or
instrumentalities.
7
<PAGE>
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. Moreover, the
portfolio managers' strategy or choice of specific investments may not perform
as expected. The portfolio may have lower returns than other funds that invest
in longer-term, lower-quality securities or that are not focused on U.S.
Government securities. It is also possible that securities in the portfolio's
investment portfolio could deteriorate in quality or go into default. .
Some securities issued by U.S. Government agencies or instrumentalities are
supported only by the credit of that agency or instrumentality, while other
securities have an additional line of credit with the U.S. Treasury. There is no
guarantee that the U.S. Government will provide support to such agencies or
instrumentalities and such securities may involve risk of loss of principal and
interest.
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Company 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.
8
<PAGE>
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the portfolio by illustrating how the portfolio has performed from year to year.
Of course, past performance is not necessarily an indication of future
performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the portfolio's highest return for a
calendar quarter was ___% (cite quarter), and the portfolio's lowest return for
a calendar quarter was -___% (cite quarter).
The portfolio's year-to-date total return as of June 30, 1999 was ____%.
Average Annual Total Returns
For periods ended Government
December 31, 1998 Securities Portfolio
-----------------
One Year __.__%
Five Years __.__%
Since Portfolio __.__%
Inception*
* Inception date for the portfolio is 12/3/90.
7-Day Yield
On December 31, 1998 __.__%
9
<PAGE>
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
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 shares of the portfolio.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual portfolio operating expenses (expenses that are deducted from portfolio
assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual portfolio operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%
-------------------------------------------------------------------------------
Net expenses 0.xx%
-------------------------------------------------------------------------------
Example
This example is to help you compare the cost of investing in 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 expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions,
and "Total annual portfolio operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the portfolio's "Net expenses" as shown above. 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 returns vary from year to year, and may be
higher or lower than those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
- --------------------------------------------------------------------------------
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.
Included in the "Investment restrictions" section is a listing of those
restrictions which cannot be changed without a vote of shareholders. Except as
otherwise noted, the portfolio's investment objective and other 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. 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 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, maturity and diversification requirements of
federal law.
In addition, the portfolio limits its investments to securities that meet the
quality, maturity and diversification requirements of federal law.
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the portfolio, unless the portfolio's
Board determines that selling the security would not be in the best interest of
the portfolio.
Of course, there can be no guarantee that by following these investment
strategies, the portfolio will achieve its objective.
11
<PAGE>
Other investments
To a more limited extent, the portfolio may, but is not required to, utilize
other investments and investment techniques that may impact portfolio
performance including, but not limited to, floating and variable rate
instruments (obligations that do not bear interest at fixed rates), and
repurchase agreements (instruments under which the portfolio acquires ownership
from a broker-dealer or bank that agrees to repurchase the security at a
mutually agreed upon time and price). The maturities of the securities subject
to repurchase may be greater than 12 months.
Risk management strategies
The portfolio seeks to minimize credit risk by investing primarily in high
quality securities, whose issuers are considered unlikely to default, based on
their credit rating.
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.
Principal 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. 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, lower-quality securities. It is also possible that
securities in the portfolio's investment portfolio could be downgraded in credit
rating 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 may involve more risk than general obligation bonds
because they are generally secured by the revenues of the facility being
financed rather than the taxing power of the municipality.
Some securities issued by U.S. Government agencies or instrumentalities are
supported only by the credit of that agency or instrumentality, while other
securities have an additional line of credit with the U.S. Treasury. There is no
guarantee that the U.S. Government will provide support to such agencies or
instrumentalities and such securities may involve risk of loss of principal and
interest.
12
<PAGE>
To the extent that the fund 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 Company 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.
13
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
- --------------------------------------------------------------------------------
Past performance
The chart and table that follow illustrate the changes in the portfolio's
performance from year to year, as well as performance over time. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the portfolio's highest return for a
calendar quarter was xx% (the quarter of ), and the portfolio's lowest return
for a calendar quarter was xx% (the quarter of ).
The portfolio's year-to-date total return as of June 30, 1999 was ____%.
Average Annual Total Returns
For periods ended Tax-Exempt
December 31, 1998 Portfolio
One Year __.__%
Five Years __.__%
Since Portfolio __.__%
Inception*
* Inception date for the portfolio is 12/3/90.
7-Day Yield
On December 31, 1998 __.__%
14
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
- --------------------------------------------------------------------------------
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 shares of the portfolio.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual portfolio operating expenses (expenses that are deducted from portfolio
assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual portfolio operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%
-------------------------------------------------------------------------------
Net expenses 0.xx%
-------------------------------------------------------------------------------
Example
This example is to help you compare the cost of investing in 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 expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions,
and "Total annual portfolio operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the portfolio's "Net expenses" as shown above. 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 returns vary from year to year, and may be
higher or lower than those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
15
<PAGE>
Investment adviser
Each portfolio retains the investment management firm of Scudder Kemper
Investments, Inc., the ("Adviser"), Two International Place, Boston, MA, to
manage each portfolio's daily investment and business affairs subject to the
policies established by the portfolios' Board. The Adviser actively manages each
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. Scudder Kemper Investments, Inc. is one of the largest
and most experienced investment management organizations worldwide. It is one of
the ten largest mutual fund companies in the U.S., 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.
Money Market Portfolio
[The Adviser and certain affiliated service providers have contractually agreed
to maintain the total annualized expenses of the portfolio at no more than 0.xx%
of the average daily net assets of the portfolio through _______, 2000.] The
Adviser received an investment management fee of 0.xx% of the portfolio's
average daily net assets on an annual basis for the fiscal year ended _______,
1999, after giving effect to an expense reimbursement arrangement in effect for
that period.
Government Securities Portfolio
[The Adviser and certain affiliated service providers have contractually agreed
to maintain the total annualized expenses of the portfolio at no more than 0.xx%
of the average daily net assets of the portfolio through _______, 2000.] The
Adviser received an investment management fee of 0.xx% of the portfolio's
average daily net assets on an annual basis for the fiscal year ended _______,
1999, after giving effect to an expense reimbursement arrangement in effect for
that period.
Tax-Exempt Portfolio
[The Adviser and certain affiliated service providers have contractually agreed
to maintain the total annualized expenses of the portfolio at no more than 0.xx%
of the average daily net assets of the portfolio through _______, 2000.] The
Adviser received an investment management fee of 0.xx% of the portfolio's
average daily net assets on an annual basis for the fiscal year ended _______,
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:
16
<PAGE>
Money Market Portfolio
Name & Title Joined the Background
Portfolio
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. Joined the Adviser in 1973 and began
Lead Manager his investment career at that time.
He has been responsible for
the trading and portfolio management
of money market portfolios since
1974.
- --------------------------------------------------------------------------------
Geoffrey Gibbs Joined the Adviser in 1996 as a trader
Manager for money market funds and began his
investment career in 1994.
Government Securities Portfolio
Name & Title Joined the Background
Portfolio
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. Joined the Adviser in 1973 and began
Lead Manager his investment career at that time.
He has been responsible for the trading
and portfolio management of money market
portfolios since 1974.
- --------------------------------------------------------------------------------
Dean Meddaugh Joined the Adviser in 1996 as a money
Manager market trader, and in 1998 became a
money market manager. He began his
investment career in 1994 as an
accountant for an unaffiliated
investment management firm.
Tax-Exempt Portfolio
Name & Title Joined the Background
Portfolio
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. Joined the Adviser in 1973 and began
Lead Manager 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 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 other mutual funds and financial and business organizations worldwide, the
portfolios could be adversely affected if computer systems on which a portfolio
relies,
17
<PAGE>
which primarily include those used by the investment manager, its affiliates or
other service providers, are unable to correctly process date-related
information on and after January 1, 2000. This risk is commonly called the Year
2000 Issue. Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the portfolios' business
and operations. The investment manager has commenced a review of the Year 2000
Issue as it may affect the portfolios and is taking steps it believes are
reasonably designed to address the Year 2000 Issue, although there can be no
assurances that these steps will be sufficient. In addition, there can be no
assurances that the Year 2000 Issue will not have an adverse effect on the
companies whose securities are held by a portfolio or on global markets or
economies generally.
18
<PAGE>
Financial highlights
The financial highlights table for each portfolio is intended to help you
understand financial performance for the periods indicated. The total return
figures show what an investor would have earned (or lost) on an investment in a
portfolio assuming reinvestment of all dividends and distributions. This
information has been audited by Ernst & Young LLP, whose report, along with the
financial statements, is included in each annual report, which is available upon
request (see back cover).
- --------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
To Be Updated
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
To Be Updated
- --------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
- --------------------------------------------------------------------------------
To Be Updated
19
<PAGE>
ABOUT YOUR INVESTMENT
- ---------------------
Buying shares
Shares of each portfolio may be purchased at net asset value, with no sales
charge through selected financial services firms, such as broker-dealers and
banks. Investors must indicate the portfolio in which they wish to invest.
Each portfolio seeks to be as fully invested as possible at all times in order
to achieve maximum income. Since the portfolios 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), each portfolio has
adopted procedures for the convenience of its shareholders and to ensure that it
receives investable funds.
Orders for purchase of shares of a portfolio received by wire transfer in the
form of Federal Funds will be effected at the next determined net asset value.
Shares purchased by wire will receive (i) that day's dividend if effected at or
prior to the 1:00 p.m. Central time net asset value determination for the Money
Market Portfolio and the Government Securities Portfolio and at or prior to the
11:00 a.m. Central time net asset value determination for the Tax-Exempt
Portfolio; (ii) the dividend for the next calendar day if effected at the 3:00
p.m. (for any portfolio) or 8:00 p.m. (for the Government Securities Portfolio)
Central time net asset value determination provided such payment is received by
3:00 p.m. Central time; or (iii) the dividend for the next business day if
effected at the 8:00 p.m. Central time net asset value determination and payment
is received after 3:00 p.m. Central time on such date for the Government
Securities Portfolio. Confirmed share purchases that are effective at the 8:00
p.m. Central time net asset value determination for the Government Securities
Portfolio will receive dividends upon receipt of payment for such transactions
in the form of Federal Funds in accordance with the time provisions immediately
above.
Orders for purchase accompanied by a check or other negotiable bank draft will
be accepted and effected as of 3:00 p.m. Central 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 of a portfolio will be purchased.
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 portfolio bank account (CAT
Money Market Portfolio 46: 98-0119-980-3; CAT Government Securities Portfolio
47: 98-0119-983-8; CAT Tax-Exempt Portfolio 48: 98-0119-985-4) and further
credit to your account number.
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Clients of Firms.
Firms provide varying arrangements for their clients with respect to the
purchase and redemption of portfolio shares and the confirmation thereof and may
arrange with their clients for other investment or administrative services. Such
firms are responsible for the prompt transmission of purchase and redemption
orders. Some firms may establish higher minimum investment requirements than set
forth above. Such firms may independently establish and charge additional
amounts to their clients for their services, which charges would reduce their
clients' yield or return. Firms may also hold Portfolio shares in nominee or
street name as agent for and on behalf of their clients. In such instances, the
Portfolio's transfer agent will have no information with respect to or control
over the accounts of specific shareholders. Such shareholders may obtain access
to their accounts and information about their accounts only from their firm.
Certain of these firms may receive compensation through the Portfolio's
Shareholder Service Agent for record-keeping and other expenses relating to
these nominee accounts. In addition, certain privileges with respect to the
purchase and redemption of shares (such as check writing redemptions) or the
reinvestment of dividends may not be available through such firms or may only be
available subject to certain conditions or limitations. Some firms may
participate in a program allowing them access to their clients' accounts for
servicing including, without limitation, transfers of registration and dividend
payee changes; and may perform functions such as generation of confirmation
statements and disbursement of cash dividends. The prospectus should be read in
connection with such firm's material regarding its fees and services.
Other Information.
Each portfolio reserves the right to withdraw all or any part of the offering
made by this prospectus or to reject purchase orders, without prior notice. Each
portfolio also reserves the right at any time to waive or increase the minimum
investment requirements. All orders to purchase shares of a portfolio are
subject to acceptance and are not binding until confirmed or accepted in
writing. Any purchase that would result in total account balances for a single
shareholder in excess of $3 million is subject to prior approval by the
portfolio. Share certificates are issued only on request. A $10 service fee will
be charged when a check for the purchase of shares is returned because of
insufficient or uncollected funds or a stop payment order. Shareholders should
direct their inquiries to the firm from which they received this prospectus or
to Kemper Service Company ("KSvC"), the portfolio's "Shareholder Service Agent,"
811 Main Street, Kansas City, Missouri 64105-2005.
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Selling and exchanging shares
Upon receipt by the Shareholder Service Agent of a request, shares of a
portfolio will be redeemed by the portfolio at the next determined net asset
value. If processed at 3:00 p.m. (for all portfolios) or 8:00 p.m. (for the
Government Securities Portfolio) Central time, the shareholder will receive that
day's dividend. A shareholder may use either the regular or expedited redemption
procedures. Shareholders who redeem all their shares of a portfolio will receive
the net asset value of such shares and all declared but unpaid dividends on such
shares.
Shareholders should contact the financial services firm through which shares
were purchased for redemption instructions. Any shareholder may request that a
portfolio redeem his or her shares. When shares are held for the account of a
shareholder by the portfolios' 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.
An exchange of shares entails the sale of portfolio shares and subsequent
purchase of shares of another Kemper Fund.
Shareholders may obtain additional information about other ways to redeem shares
such as telephone redemptions, expedited wire transfer redemptions, and
redemptions by draft by contacting the Shareholder Service Agent at
1-800-231-8568.
Special Features. Certain firms that offer shares of the Portfolios 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.
Distributions
The portfolios' dividends are declared daily and paid monthly. 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 shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. A portfolio may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in Subchapter M of the Internal
Revenue Code.
[Income dividends and capital gain dividends, if any, of a portfolio will be
credited to shareholder accounts in full and fractional shares of the same
portfolio at net asset value, except that, upon written request to Kemper
Services Company, the Shareholder Service Agent, a shareholder may choose to
receive income and capital gain dividends in cash.]
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A shareholder may choose to receive distributions in cash or have them
reinvested in additional shares of a portfolio. If an investment is in the form
of a retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholders' account. Distributions are generally taxable
whether received in cash or reinvested. Exchanges among other mutual funds are
also taxable events.
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 the 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.
Each portfolio sends detailed tax information about the amount and type of its
distributions by January 31 of the following year.
Each 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.
Transaction information
Share price
Scudder Fund Accounting Corporation determines the net asset value per share of
the fund on each day the New York Stock Exchange is open for trading, at 11:00
a.m., 1:00 p.m. and 3:00 p.m. Central time (for all portfolios) and 8:00 Central
time (for the Government Securities Portfolio).
Each 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 12 months or less and
maintains a dollar-weighted average portfolio maturity of 90 days or less. In
addition, the portfolio limits its portfolio investments to securities that meet
the quality and diversification requirements of federal law.
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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, less all liabilities, by
the number of shares outstanding.
Processing time
Payment for shares you sell will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly executed request.
If you have share certificates, these must accompany your order in proper form
for transfer. When you place an order to sell shares for which a 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 a 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 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 the prospectus.
Signature guarantees
A signature guarantee is required unless you sell $50,000 or less worth of
shares 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 portfolios 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).
Purchase restrictions
The portfolios and their transfer agent each reserves the right to withdraw all
or any part of the offering made by this prospectus and to reject purchase
orders. Also, from time to time, each 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.
Any purchases that would result in total account balances for a single
shareholder in excess of $3 million are subject to prior approval by the
portfolios.
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Minimum balances
The minimum initial investment for each portfolio is $1,000 but such minimum
amount may be changed at any time in management's discretion. Minimum subsequent
investments are $100. Firms offering portfolio shares may set higher minimums
for accounts they service and may change such minimums at their discretion.
Because of the high cost of maintaining small accounts, each 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 that shareholder account.
Third party transactions
If you buy and sell shares of a portfolio through a financial services firm,
such as a broker-dealer or bank, that firm may charge a fee for that service.
This prospectus should be read in connection with such firms' material regarding
their fees and services.
Rule 12b-1 plan
The portfolios have adopted a plan in accordance with Rule 12b-1 of the 1940 Act
(the "12b-1 plan") for each portfolio (applicable to the Service Shares only in
the case of the Money Market Portfolio). This rule regulates the manner in which
an investment company may, directly or indirectly, bear the expenses of
distributing its shares. Because these fees are paid out of the portfolios'
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Capital structure
Cash Account Trust (the "Trust") may issue an unlimited number of shares of
beneficial interest in one or more series, all having no par value, which may be
divided by the Board of Trustees into classes of shares, subject to compliance
with the Securities and Exchange Commission (the "SEC") regulations permitting
the creation of separate classes of shares. Currently, the Trust offers only one
class of shares of the Government Securities Portfolio and Tax-Exempt portfolio
and four classes of shares of the Money Market Portfolio. In addition to the
Service Shares, these other classes of the Money Market Portfolio are the
Premier Shares, Retail Shares and Institutional Shares.
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Additional information about the portfolios 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 portfolio
investments and operations. The semiannual and annual shareholder reports
contain a discussion of the market conditions and the investment strategies that
significantly affected the portfolios' performance during the last fiscal year,
as well as a listing of portfolio holdings and financial statements. These and
other portfolio documents may be obtained without charge from your financial
adviser, from the Distributor at 1-800-231-8568, from the Shareholder Service
Agent, or from the Securities and Exchange Commission, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549 (1-800-SEC-0330).
The Statement of Additional Information dated September 1, 1999 is incorporated
by reference into this prospectus (is legally a part of this prospectus).
Investment Company Act file numbers:
Cash Account Trust 811-5970
Printed with SOYINK Printed on recycled paper
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STATEMENT OF ADDITIONAL INFORMATION
September 1, 1999
CASH ACCOUNT TRUST
222 South Riverside Plaza, Chicago, Illinois 60606
1-800-231-8568
This combined Statement of Additional Information contains information about the
Service Shares of the Money Market Portfolio and shares of the Government
Portfolio and shares of the Tax-Exempt Portfolio (each a "Portfolio",
collectively the "Portfolios") offered by Cash Account Trust (the "Trust"). Cash
Account Trust is an open-end diversified management investment company. This
combined Statement of Additional Information is not a prospectus and should be
read in conjunction with the prospectus of Cash Account Trust dated September 1,
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
Portfolios' 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........................................4
INVESTMENT MANAGER AND SHAREHOLDER SERVICES..............................10
PORTFOLIO TRANSACTIONS...................................................13
PURCHASE AND REDEMPTION OF SHARES........................................14
DIVIDENDS, NET ASSET VALUE AND TAXES.....................................17
PERFORMANCE..............................................................20
OFFICERS AND TRUSTEES....................................................22
SPECIAL FEATURES.........................................................24
SHAREHOLDER RIGHTS.......................................................26
APPENDIX -- RATINGS OF INVESTMENTS.......................................28
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INVESTMENT RESTRICTIONS
The Trust has adopted for the Portfolios certain investment restrictions which,
together with the investment objective and policies of each Portfolio (except
for policies designated as non-fundamental and limited in regard to the
Tax-Exempt Portfolio to the policies in the first and fifth paragraphs under
Investment Policies and Techniques- "Tax-Exempt Portfolio" below), cannot be
changed for a Portfolio without approval by holders of a majority of its
outstanding voting shares. As defined in the Investment Company Act of 1940 (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.
The Money Market Portfolio and the Government Securities Portfolio
individually may not:
(1) Purchase securities of any issuer (other than obligations of,
or guaranteed by, the United States Government, its agencies
or instrumentalities) if, as a result, more than 5% of the
value of the Portfolio's assets would be invested in
securities of that issuer.
(2) Purchase more than 10% of any class of securities of any
issuer. All debt securities and all preferred stocks are each
considered as one class.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its
investment objective and policies).
(4) Borrow money except as a temporary measure for extraordinary
or emergency purposes and then only in an amount up to
one-third of the value of its total assets, in order to meet
redemption requests without immediately selling any money
market instruments (any such borrowings under this section
will not be collateralized). If, for any reason, the current
value of the Portfolio's total assets falls below an amount
equal to three times the amount of its indebtedness from money
borrowed, the Portfolio will, within three days (not including
Sundays and holidays), reduce its indebtedness to the extent
necessary. The Portfolio will not borrow for leverage
purposes.
(5) Make short sales of securities, or purchase any securities on
margin except to obtain such short-term credits as may be
necessary for the clearance of transactions.
(6) Write, purchase or sell puts, calls or combinations thereof.
(7) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment
adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer and together own more than 5% of the
securities of such issuer.
(8) Invest for the purpose of exercising control or management of
another issuer.
(9) Invest in commodities or commodity futures contracts or in
real estate (or real estate limited partnerships), although it
may invest in securities which are secured by real estate and
securities of issuers which invest or deal in real estate.
(10) Invest in interests in oil, gas or other mineral exploration
or development programs or leases, although it may invest in
the securities of issuers which invest in or sponsor such
programs.
(11) Underwrite securities issued by others except to the extent
the Portfolio may be deemed to be an underwriter, under the
federal securities laws, in connection with the disposition of
portfolio securities.
(12) Issue senior securities as defined in the 1940 Act.
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Additionally, the Money Market Portfolio may not:
(13) Concentrate 25% or more of the value of the Portfolio's assets
in any one industry; provided, however, that (a) the Portfolio
reserves freedom of action to invest up to 100% of its assets
in obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities in accordance
with its investment objective and policies and (b) the
Portfolio will invest at least 25% of its assets in
obligations issued by banks in accordance with its investment
objective and policies. However, the Portfolio may, in the
discretion of its investment adviser, invest less than 25% of
its assets in obligations issued by banks whenever the
Portfolio assumes a temporary defensive posture.
With regard to restriction #13, for purposes of determining the percentage of
the Portfolio's total assets invested in securities of issuers having their
principal business activities in a particular industry, asset backed securities
will be classified separately, based on the nature of the underlying assets.
Currently, the following categories are used: captive auto, diversified, retail
and consumer loans, captive equipment and business, business trade receivables,
nuclear fuel and capital and mortgage lending.
The Tax-Exempt Portfolio may not:
(1) Purchase securities if as a result of such purchase more than
25% of the Portfolio's total assets would be invested in any
industry or in any one state. Municipal Securities and
obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities are not considered an industry
for purposes of this restriction.
(2) Purchase securities of any issuer (other than obligations of,
or guaranteed by, the U.S. Government, its agencies or
instrumentalities) if as a result more than 5% of the value of
the Portfolio's assets would be invested in the securities of
such issuer. For purposes of this limitation, the Portfolio
will regard the entity that has the primary responsibility for
the payment of interest and principal as the issuer.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its
investment objective and policies).
(4) Borrow money except as a temporary measure for extraordinary
or emergency purposes and then only in an amount up to
one-third of the value of its total assets, in order to meet
redemption requests without immediately selling any money
market instruments (any such borrowings under this section
will not be collateralized). If, for any reason, the current
value of the Portfolio's total assets falls below an amount
equal to three times the amount of its indebtedness from money
borrowed, the Portfolio will, within three days (not including
Sundays and holidays), reduce its indebtedness to the extent
necessary. The Portfolio will not borrow for leverage
purposes.
(5) Make short sales of securities or purchase securities on
margin, except to obtain such short-term credits as may be
necessary for the clearance of transactions.
(6) Write, purchase or sell puts, calls or combinations thereof,
although the Portfolio may purchase Municipal Securities
subject to Standby Commitments in accordance with its
investment objective and policies.
(7) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment
adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer and together own more than 5% of the
securities of such issuer.
(8) Invest for the purpose of exercising control or management of
another issuer.
(9) Invest in commodities or commodity futures contracts or in
real estate (or real estate limited partnerships) except that
the Portfolio may invest in Municipal Securities secured by
real estate or interests therein.
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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
Portfolios did not borrow in the latest fiscal period and have no present
intention of borrowing during the coming year as permitted for each Portfolio by
investment restriction number 4. In any event, borrowings would only be made as
permitted by such restrictions. The Tax-Exempt Portfolio may invest more than
25% of its total assets in industrial development bonds. The Money Market
Portfolio and the Government Securities Portfolio of the Trust, as a
non-fundamental policy that may be changed without shareholder vote,
individually may not:
(i) Purchase securities of other investment companies,
except in connection with a merger, consolidation,
reorganization or acquisition of assets.
In addition, the Tax-Exempt Portfolio of the Trust, 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 a particular
investment practice or technique in which a Portfolio may engage or a financial
instrument which a 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 a 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
a Portfolio, but, to the extent employed, could, from time to time, have a
material impact on a Portfolio's performance.
The Portfolios described in this Statement of Additional Information seek to
provide maximum current income consistent with the stability of capital. Each
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. Because each 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 each Portfolio's investments. A Portfolio's investments are
subject to price fluctuations resulting from rising or declining interest rates
and are subject to the ability of the issuers of such investments to make
payment at maturity. However, because of their short maturities, liquidity and
high quality ratings, high quality money market instruments, such as those in
which the Portfolios invest, are generally considered to be among the safest
available. Thus, each Portfolio is designed for investors who want to avoid the
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fluctuations of principal commonly associated with equity or long-term bond
investments. There can be no guarantee that a Portfolio will achieve its
objective or that it will maintain a net asset value of $1.00 per share.
Money Market Portfolio. The Portfolio seeks maximum current income consistent
with stability of capital. The Portfolio pursues its objective by investing
exclusively in the following types of U.S. Dollar-denominated money market
instruments that mature in 12 months or less:
1. Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2. Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
banks (including their foreign branches) and Canadian chartered banks having
total assets in excess of $1 billion.
3. Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets
in excess of $10 billion.
4. Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) are rated high quality by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
Phelps, Inc. ("Duff"); or (ii) if unrated, are determined to be at least
equal in quality to one or more of the above ratings in the discretion of the
Portfolio's investment manager. Currently, only obligations in the top two
categories are considered to be rated high quality. The two highest rating
categories of Moody's, S&P and Duff for commercial paper are Prime-1 and
Prime-2, A-1 and A-2 and Duff 1 and Duff 2, respectively. For other debt
obligations, the two highest rating categories for such services are Aaa and
Aa, AAA and AA and AAA and AA, respectively. For a description of these
ratings, see "Appendix -- Ratings of Investments" in this Statement of
Additional Information.
5. Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. Repurchase agreements are discussed below.
In addition, the Portfolio limits its investments to securities that meet the
quality and diversification requirements of Rule 2a-7 under the 1940 Act.
The Portfolio will normally invest at least 25% of its assets in obligations
issued by banks; provided, however, the Portfolio may in the discretion of the
Portfolio's investment manager temporarily invest less than 25% of its assets in
such obligations whenever the Portfolio assumes a defensive posture. Investments
by the Portfolio in Eurodollar certificates of deposit issued by London branches
of U.S. banks, or obligations issued by foreign entities, including foreign
banks, involve risks that are different from investments in securities of
domestic branches of U.S. banks. These risks may include future unfavorable
political and economic developments, possible withholding taxes on interest
payments, seizure of foreign deposits, currency controls, interest limitations
or other governmental restrictions that might affect payment of principal or
interest. The market for such obligations may be less liquid and, at times, more
volatile than for securities of domestic branches of U.S. banks. Additionally,
there may be less public information available about foreign banks and their
branches. The profitability of the banking industry is dependent largely upon
the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic conditions
as well as exposure to credit losses arising from possible financial
difficulties of borrowers play an important part in banking operations. As a
result of Federal and state laws and regulations, domestic banks are, among
other things, required to maintain specified levels of reserves, limited in the
amounts they can loan to a single borrower and subject to other regulations
designed to promote financial soundness. However, not all such laws and
regulations apply to the foreign branches of domestic banks. Foreign branches of
foreign banks are not regulated by U.S. banking authorities, and generally are
not bound by accounting, auditing and financial reporting standards comparable
to U.S. banks. Bank obligations held by the Portfolio do not benefit materially
from insurance from the Federal Deposit Insurance Corporation.
The Portfolio may invest in commercial paper issued by major corporations under
the Securities Act of 1933 in reliance on the exemption from registration
afforded by Section 3(a)(3) thereof. Such commercial paper may be issued only to
finance current transactions and must mature in nine months or less. Trading of
such commercial paper is conducted primarily by institutional investors through
investment dealers and individual investor participation in the commercial paper
market is very limited. The Portfolio also may invest in commercial paper issued
in reliance on the so-called "private placement" exemption from registration
that is afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Portfolio who agree that they are purchasing the paper for investment and not
with a view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper normally is resold to other institutional
investors
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like the Portfolio through or with the assistance of the issuer or investment
dealers who make a market in Section 4(2) paper, thus providing liquidity. The
Portfolio's investment manager considers the legally restricted but readily
saleable Section 4(2) paper to be liquid; however, pursuant to procedures
approved by the Board of Trustees of the Trust, if a particular investment in
Section 4(2) paper is not determined to be liquid, that investment will be
included within the 10% limitation on illiquid securities discussed below. The
Portfolio's investment manager monitors the liquidity of the Portfolio's
investments in Section 4(2) paper on a continuous basis.
The Portfolio may invest in high quality participation certificates
("certificates") representing undivided interests in trusts that hold a
portfolio of receivables from consumer and commercial credit transactions, such
as transactions involving consumer revolving credit card accounts or commercial
revolving credit loan facilities. The receivables would include amounts charged
for goods and services, finance charges, late charges and other related fees and
charges. Interest payable on the certificates may be fixed or may be adjusted
periodically or "float" continuously according to a formula based upon an
objective standard such as the 30-day commercial paper rate ("Variable Rate
Securities"). A trust may have the benefit of a letter of credit from a bank at
a level established to satisfy rating agencies as to the credit quality of the
assets supporting the payment of principal and interest on the certificates.
Payments of principal and interest on the certificates would be dependent upon
the underlying receivables in the trust and may be guaranteed under a letter of
credit to the extent of such credit. The quality rating by a rating service of
an issue of certificates is based primarily upon the value of the receivables
held by the trust and the credit rating of the issuer of any letter of credit
and of any other guarantor providing credit support to the trust. The
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 and in determining whether
the certificate is appropriate for investment by the Portfolio. Collection of
receivables in the trust may be affected by various social, legal and economic
factors affecting the use of credit and repayment patterns, such as changes in
consumer protection laws, the rate of inflation, unemployment levels and
relative interest rates. It is anticipated that for most publicly offered
certificates there will be a liquid secondary market or there may be demand
features enabling the Portfolio to readily sell its certificates prior to
maturity to the issuer or a third party. While the Portfolio may invest without
limit in certificates, it is currently anticipated that such investments will
not exceed 25% of the Portfolio's assets.
Government Securities Portfolio. The Portfolio seeks maximum current income
consistent with stability of capital. The Portfolio pursues its objective by
investing exclusively in U.S. Treasury bills, notes, bonds and other obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements of such obligations. All such securities purchased
mature in 12 months or less. Some securities issued by U.S. Government agencies
or instrumentalities are supported only by the credit of the agency or
instrumentality, such as those issued by the Federal Home Loan Bank, and others
have an additional line of credit with the U.S. Treasury, such as those issued
by Fannie Mae, the Farm Credit System and the Student Loan Marketing
Association. Short-term U.S. Government obligations generally are considered to
be the safest short-term investment. The U.S. Government guarantee of the
securities owned by the Portfolio, however, does not guarantee the net asset
value of its shares, which the Portfolio seeks to maintain at $1.00 per share.
Also, with respect to securities supported only by the credit of the issuing
agency or instrumentality or by an additional line of credit with the U.S.
Treasury, there is no guarantee that the U.S. Government will provide support to
such agencies or instrumentalities and such securities may involve risk of loss
of principal and interest.
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"). 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
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include lease arrangements, are included within the term Municipal Securities if
the interest paid thereon qualifies as exempt from federal income tax. Other
types of industrial development bonds, the proceeds of which are used for the
construction, equipment, repair or improvement of privately operated industrial
or commercial facilities, may constitute Municipal Securities, although current
Federal tax laws place substantial limitations on the size of such issues.
Municipal Securities 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.
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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 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
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on economically related projects and facilities, the Portfolio will be subject
to the risks presented by such projects to a greater extent than it would be if
the Portfolio's assets were not so concentrated.
From time to time, as a defensive measure or when acceptable short-term
Municipal Securities are not available, the Tax-Exempt Portfolio may invest in
taxable "temporary investments" that include: obligations of the U.S.
Government, its agencies or instrumentalities; debt securities rated within the
two highest grades by Moody's or S&P; commercial paper rated in the two highest
grades by either of such rating services; certificates of deposit of domestic
banks with assets of $1 billion or more; and any of the foregoing temporary
investments subject to repurchase agreements. Repurchase agreements are
discussed below. Interest income from temporary investments is taxable to
shareholders as ordinary income. Although the Portfolio is permitted to invest
in taxable securities (limited under normal market conditions to 20% of the
Portfolio's total assets), it is the Portfolio's primary intention to generate
income dividends that are not subject to federal income taxes.
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 Trust. Each Portfolio may invest in repurchase agreements, which are
instruments under which a Portfolio acquires ownership of a security from a
broker-dealer or bank that agrees to repurchase the security at a mutually
agreed upon time and price (which price is higher than the purchase price),
thereby determining the yield during the Portfolio's holding period. Maturity of
the securities subject to repurchase may exceed one year. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, a Portfolio
might have expenses in enforcing its rights, and could experience losses,
including a decline in the value of the underlying securities and loss of
income. A Portfolio will not purchase illiquid securities, including time
deposits and repurchase agreements maturing in more than seven days if, as a
result thereof, more than 10% of such Portfolio's net assets valued at the time
of the transaction would be invested in such securities.
Each Portfolio may invest in 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. Each Portfolio determines the maturity of Variable
Rate Securities in accordance with Rule 2a-7, which allows each Portfolio to
consider certain of such instruments as having maturities shorter than the
maturity date on the face of the instrument .
A Portfolio may not borrow money except as a temporary measure for extraordinary
or emergency purposes, and then only in an amount up to one-third of the value
of its total assets, in order to meet redemption requests without immediately
selling any portfolio securities. Any such borrowings under this provision will
not be collateralized. No Portfolio will borrow for leverage purposes.
Repurchase Agreements. The Portfolios 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
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obligations the Portfolios 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.
A repurchase agreement provides a means for a 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 a 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
a Portfolio to the seller of the Obligation subject to the repurchase agreement
and is therefore subject to that Portfolio's investment restriction applicable
to loans. It is not clear whether a court would consider the Obligation
purchased by a 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, a 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 a Portfolio has not perfected an interest in the Obligation, that
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, a
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 each
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), each
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 a
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 each 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 management agreement, the
Adviser acts as each 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 on the basis of relative
net assets at the time of allocation, except that expenses directly attributable
to a particular Portfolio are charged to that Portfolio.
The investment management agreement provides that 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.
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The investment management agreement continues in effect from year to year for
each Portfolio subject thereto so long as its continuation is approved at least
annually by (a) a majority vote of the trustees who are not parties to such
agreement or interested persons of any such party except in their capacity as
trustees of the Trust, cast in person at a meeting called for such purpose, and
(b) the shareholders of each Portfolio subject thereto or the Board of Trustees.
If continuation is not approved for a Portfolio, the investment management
agreement nevertheless may continue in effect for any Portfolio for which it is
approved and 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 a
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.
Upon consummation of this transaction, each 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 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
$xxx,xxx, $xxx,xxx and $xx,xxx, 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 expense limits had not been in effect the
Adviser would have received investment management fees from the Money Market,
Government Securities and Tax-Exempt Portfolios of $xxx,xxx, $xxx,xxx and
$xxx,xxx, 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 $xxx,xxx, $xxx,xxx and
$xxx,xxx, 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 each 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 administration, shareholder
services and distribution agreement ("distribution agreement"), Kemper
Distributors, Inc. ("KDI") serves as primary administrator and principal
underwriter for the Portfolios 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 Portfolios. The firms are to provide such office space and
equipment, telephone facilities, personnel and literature distribution as is
necessary or appropriate for providing information and services to the firms'
clients. Each Portfolio has adopted a plan in accordance with Rule 12b-1 of the
1940 Act (the "12b-1 Plan"). This rule regulates the manner in which an
investment company may, directly or indirectly, bear the expenses of
distributing shares. For its services under the distribution agreement and
pursuant to the 12b-1 Plan, each Portfolio pays KDI a distribution services fee,
payable monthly, at the annual rate of 0.60% of average daily net assets with
respect to the shares of the Money Market and Government Securities Portfolios
and 0.50% of average daily net assets with respect to the shares of the
Tax-Exempt Portfolio. Expenditures by KDI on behalf of the Portfolios need not
be made on the same basis that such fees are allocated. The fees are accrued
daily as an expense of the Portfolios.
As principal underwriter for the Portfolios, KDI acts as agent of each Portfolio
in the sale of that Portfolio's shares. KDI pays all its expenses under the
distribution agreement including, without limitation, services fees to firms.
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 administration services and selling group agreements ("services
agreements") with various firms to provide cash management and other services
for a Portfolio's shareholders. Such services and assistance may include, but
may not be limited to, establishing and maintaining shareholder accounts and
records, processing purchase and redemption transactions, providing automatic
investment in Portfolio shares of client account balances, answering routine
inquiries regarding a Portfolio, assisting clients in changing account options,
designations and addresses, and such other services as may be agreed upon from
time to time and as may be permitted by applicable statute, rule or regulation.
KDI also may provide some of the above services for the Portfolio. KDI normally
pays such firms for services at a maximum annual rate of 0.60% of average daily
net assets of those accounts in the shares of the Money Market Service Shares
and Government Securities Portfolios that they maintain and service and 0.50% of
average daily net assets of those accounts in the shares of the Tax-Exempt
Portfolio that they maintain and service. KDI in its discretion may pay certain
firms additional amounts. During the fiscal year ended April 30, 1998, the
shares of the Money Market, Government Securities and Tax-Exempt Portfolios paid
distribution services fees of $7,193,000, $4,158,000 and $1,678,000,
respectively. Of such amounts, KDI remitted pursuant to related services
agreements $13,739,000 as service fees to firms. During the fiscal year ended
April 30, 1998, KDI incurred underwriting, distribution and administrative
expenses in the approximate amounts noted: service fees to firms ($13,739,000);
advertising and literature ($0); prospectus printing ($0); marketing and sales
expenses ($650,000) and other expenses ($0); for a total of $14,389,000. A
portion of the aforesaid marketing, sales and operating expenses could be
considered overhead expense.
The distribution agreement and the 12b-1 Plan continue 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. The 12b-1 Plan may not be amended to increase the fee to be paid by a
Portfolio without approval by a majority of the outstanding voting securities of
the Portfolio and all material amendments must in any event be approved by the
Board of Trustees in the manner described above with respect to the continuation
of the 12b-1 Plan. The 12b-1 Plan may be terminated at any time without penalty
by a vote of the majority of the Trustees who are not interested persons of the
Trust and who have no direct or indirect financial interest in the Plan, or by a
vote of the majority of the outstanding voting securities of the Trust. The
Portfolios of the Trust will vote separately with respect to the 12b-1 Plan.
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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 $x,xxx,xxx to KSvC
as Shareholder Service Agent.
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 a 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 Distributor with commissions charged on comparable transactions, as well as
by comparing commissions paid by A Portfolio to reported commissions paid by
others. The Adviser routinely reviews commission rates, execution and settlement
services performed and makes internal and external comparisons.
A 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 a 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 a
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 a
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 a 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 a 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.
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To the maximum extent feasible, it is expected that the Adviser will place
orders for portfolio transactions through the Distributor, which is a
corporation registered as a broker/dealer and a subsidiary of the Adviser; the
Distributor will place orders on behalf of a Portfolio with issuers,
underwriters or other brokers and dealers. The Distributor will not receive any
commission, fee or other remuneration from a Portfolio for this service.
Although certain research services from broker/dealers may be useful to a
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 a Portfolio, and not all such information is used by the
Adviser in connection with a 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 a
Portfolio.
The Trustees review, from time to time, whether the recapture for the benefit of
a Portfolio of some portion of the brokerage commissions or similar fees paid by
a 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 a Portfolio for such purchases. During the
last three fiscal years each 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 each 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. Each Portfolio has
established a minimum initial investment for Shares of each Portfolio of
$1,000and $100 for subsequent investments, but 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.
Each Portfolio seeks to have their portfolios as fully invested as possible at
all times in order to achieve maximum income. Since each Portfolio will be
investing in instruments that normally require immediate payment in Federal
Funds (monies credited to a bank's account with its regional Federal Reserve
Bank), each Portfolio has adopted procedures for the convenience of its
shareholders and to ensure that each 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 a 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 Shares of a Portfolio received by wire transfer in the
form of Federal Portfolios will be effected at the next determined net asset
value. Shares purchased by wire will receive (i) that day's dividend if effected
at or prior to the 1:00 p.m. Central time net asset value determination for the
Money Market Portfolio and the Government Securities Portfolio and at or prior
to the 11:00 a.m. Central time net asset value determination for the Tax-Exempt
Portfolio; (ii) the dividend for the next calendar day if effected at the
3:00p.m. or 8:00 p.m. Central time net asset value determination provided such
payment is received by 3:00 p.m. Central time; or (iii) the dividend for the
next business day if effected at the 8:00 p.m. Central time net asset value
determination and payment is received after 3:00 p.m. Central time on such date
for the Government Securities Portfolio. Confirmed share purchases that are
effective at the 8:00 p.m. Central time net asset value determination for the
Government Securities Portfolio will receive dividends upon receipt of payment
for such transactions in the form of Federal Funds in accordance with the time
provisions immediately above.
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Orders for purchase accompanied by a check or other negotiable bank draft will
be accepted and effected as of 3:00 p.m. Central time on the next business day
following receipt and such Shares will receive the dividend for the next
calendar day following the day the purchase is effected. If an order is
accompanied by a check drawn on a foreign bank, funds must normally be collected
on such check before Shares will be purchased. See "Purchase and Redemption of
Shares" in the Statement of Additional Information.
If payment is wired in Federal Funds, the payment should be directed to United
Missouri Bank of Kansas City, N.A. (ABA #101-000-695), 10th and Grand Avenue,
Kansas City, MO 64106 for credit to appropriate Fund bank account (CAT Money
Market Fund 46: 98-0119-980-3; CAT Government Securities Fund 47: 98-0119-983-8;
CAT Tax-Exempt Fund 48: 98-0119-985-4) 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 a Portfolio will be redeemed by a Portfolio at the
next determined net asset value. If processed at 3:00 p.m. (or 8:00 p.m. for the
Money Market Portfolio and the Government Securities Portfolio) Central time,
the shareholder will receive that day's dividend. A shareholder may use either
the regular or expedited redemption procedures. Shareholders who redeem all
their shares of a Portfolio will receive the net asset value of such shares and
all declared but unpaid dividends on such shares.
Each 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 a Portfolio's investments
is not reasonably practicable, or (ii) it is not reasonably practicable for a
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 each 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, a Portfolio will
pay the redemption price in whole or in part by a distribution of portfolio
securities in lieu of cash, in conformity with the applicable rules of the
Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees 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 a
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 a 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 a 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
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arising out of fraudulent or unauthorized telephone requests pursuant to these
privileges, unless the 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, each 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 a 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.
Each 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 11:00 a.m. Central time will result in shares
being redeemed that day and normally the proceeds will be sent to the designated
account that day. Once authorization is on file, the Shareholder Service Agent
will honor requests by telephone at 1-800-231-8568 or in writing, subject to the
limitations on liability. A Portfolio is not responsible for the efficiency of
the federal wire system or the account holder's financial services firm or bank.
Each 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 a Portfolio were purchased. Shares
purchased by check or through certain ACH transactions may not be redeemed by
wire
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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 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. Each Portfolio reserves the right to terminate or modify this
privilege at any time.
Redemptions By Draft. Upon request, shareholders will be provided with drafts to
be drawn on a 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 $250
since a $10 service fee will be charged as described below. When a Redemption
Check is presented for payment, a sufficient number of full and fractional
shares in the shareholder's account will be redeemed as of the next determined
net asset value to cover the amount of the Redemption Check. This will enable
the shareholder to continue earning dividends until a 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 each 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. Each 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 each 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 each 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 a Portfolio's books for at least
10 days. Shareholders may not use this procedure to redeem shares held in
certificate form. Each Portfolio reserves the right to terminate or modify this
privilege at any time.
A 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 a Portfolio account or in
an amount less than $250; when a Redemption Check is presented that would
require redemption of shares that were purchased by check or certain ACH
transactions within 10 days; or when "stop payment" of a Redemption Check is
requested.
Special Features. Certain firms that offer Shares of a 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.
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 a Portfolio at the net asset
value normally on the 21st day of each month if a business day, otherwise on the
next business day. A 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 shares of another Kemper Mutual Fund,
shareholders must maintain a minimum account value of $1,000 in this Portfolio
and must maintain a minimum account value of $1,000 in the fund in which
dividends are reinvested.
Each Portfolio calculates its dividends based on its daily net investment
income. For this purpose, the net investment income of the Portfolio consists of
(a) accrued interest income plus or minus amortized discount or premium
(excluding market discount for the Tax-Exempt Portfolio), (b) plus or minus all
short-term realized gains and losses on investments and (c) minus accrued
expenses allocated to the Portfolio. Expenses of each Portfolio are accrued each
day. While each Portfolio's investments are valued at amortized cost, there will
be no unrealized gains or losses on such investments. However, should
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the net asset value of a Portfolio deviate significantly from market value, the
Board of Trustees could decide to value the investments at market value and then
unrealized gains and losses would be included in net investment income above.
Dividends are reinvested monthly and shareholders will receive monthly
confirmations of dividends and of purchase and redemption transactions except
that confirmations of dividend reinvestment for Individual Retirement Accounts
and other fiduciary accounts for which Investors Fiduciary Trust Company acts as
trustee will be sent quarterly.
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, each Portfolio values its
portfolio instruments at amortized cost, which does not take into account
unrealized capital gains or losses. This involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Portfolio
would receive if it sold the instrument. Calculations are made to compare the
value of a Portfolio's investments valued at amortized cost with market values.
Market valuations are obtained by using actual quotations provided by market
makers, estimates of market value, or values obtained from yield data relating
to classes of money market instruments published by reputable sources at the
mean between the bid and asked prices for the instruments. If a deviation of 1/2
of 1% or more were to occur between the net asset value per share calculated by
reference to market values and a Portfolio's $1.00 per share net asset value, or
if there were any other deviation that the Board of Trustees of the 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 a 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 a Portfolio's net asset
value per share (computed using market values) were to increase, or were
anticipated to increase above $1.00 (computed using amortized cost), the Board
of Trustees of the Trust might supplement dividends in an effort to maintain the
net asset value at $1.00 per share.
Taxes.
Taxable Portfolios. The Money Market Portfolio and the Government Securities
Portfolio each intend to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code (the "Code") and, if so
qualified, will not be subject to Federal income taxes to the extent its
earnings are distributed. Dividends derived from interest and short-term capital
gains are taxable as ordinary income whether received in cash or reinvested in
additional shares. Long-term capital gains distributions, if any, are taxable as
long-term capital gains regardless of the length of time shareholders have owned
their shares. Dividends from these Portfolios do not qualify for the dividends
received deduction available to corporate shareholders.
Dividends declared in October, November or December to shareholders of record as
of a date in one of those months and paid during the following January are
treated as paid on December 31 of the calendar year in which declared for
Federal income tax purposes. The Portfolio may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in the Code.
Tax-Exempt Portfolio. The Tax-Exempt Portfolio intends to continue to qualify
under the Code as a regulated investment company and, if so qualified, will not
be liable for Federal income taxes to the extent its earnings are distributed.
This
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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 Tax-Exempt
Portfolio are to be treated as interest on private activity bonds in proportion
to the interest income the Portfolio receives from private activity bonds,
reduced by allowable deductions. For the 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 Tax-Exempt Portfolio.
Individuals whose modified income exceeds a base amount will be subject to
Federal income tax on up to 85% of their Social Security benefits. Modified
income includes adjusted gross income, tax-exempt interest, including
exempt-interest dividends from the Tax-Exempt Portfolio, and 50% of Social
Security benefits.
The tax exemption of dividends from the Tax-Exempt Portfolio for Federal income
tax purposes does not necessarily result in exemption under the income or other
tax laws of any state or local taxing authority. The laws of the several states
and local taxing authorities vary with respect to the taxation of such income
and shareholders of the Portfolios are advised to consult their own tax advisers
as to the status of their accounts under state and local tax laws.
Each Portfolio is required by law to withhold 31% of taxable dividends paid to
certain shareholders who do not furnish a correct taxpayer identification number
(in the case of individuals, a social security number) and in certain other
circumstances. Trustees of qualified retirement plans and 403(b)(7) accounts are
required by law to withhold 20% of the taxable portion of any distribution that
is eligible to be "rolled over." The 20% withholding requirement does not apply
to distributions from IRAs or any part of a distribution that is transferred
directly to another qualified retirement plan, 403(b)(7) account, or IRA.
Shareholders should consult their tax advisers regarding the 20% withholding
requirement.
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 Tax-Exempt Portfolio
may not be an appropriate investment for persons who are "substantial users" of
facilities financed by industrial development bonds held by the Tax-Exempt
Portfolio or are "related persons" to such users; such persons should consult
their tax advisers before investing in the Tax-Exempt Portfolio.
The "Superfund Act of 1986" (the "Superfund Act") imposes a separate tax on
corporations at a rate of 0.12 percent of the excess of such corporation's
"modified alternative minimum taxable income" over $2 million. A portion of
tax-exempt interest, including exempt-interest dividends from the Tax-Exempt
Portfolio, may be 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
19
<PAGE>
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 a Portfolio, including "yield" and "effective yield" and, in the
case of the Tax-Exempt Portfolio, "tax equivalent yield". Each of these figures
is based upon historical earnings and is not representative of the future
performance of a Portfolio. The yield of a Portfolio refers to the net
investment income generated by a hypothetical investment in the Portfolio over a
specific seven-day period. This net investment income is then annualized, which
means that the net investment income generated during the seven-day period is
assumed to be generated each week over an annual period and is shown as a
percentage of the investment. The effective yield is calculated similarly, but
the net investment income earned by the investment is assumed to be compounded
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 each
Portfolio to the extent specified in the prospectus. Without this expense
absorption, the performance results noted herein for the Money Market,
Tax-Exempt and Government Securities Portfolios would have been lower.
Each 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
each Portfolio as follows. The first calculation is net investment income per
share, which is accrued interest on portfolio securities, plus or minus
amortized discount or premium, 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. For the period ended April 30, 1999, the Money Market Portfolio's
seven-day yield was ____%, the Tax-Exempt Portfolio's seven-day yield was ____%
and the Government Securities Portfolio's seven-day yield was ____%.
Each 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. Each Portfolio may also advertise a
thirty-day effective yield in which case the formula is (thirty-day base period
return +1)365/30 - 1. For the period ended April 30, 1999, the Money Market
Portfolio's effective seven-day yield was ____%, the Tax-Exempt Portfolio's
effective seven-day yield was ____% and the Government Securities Portfolio's
effective seven-day yield was ____%.
The tax equivalent yield of the Tax-Exempt Portfolio is computed by dividing
that portion of the Portfolio's yield (computed as described above) which is
tax-exempt by (one minus the stated Federal income tax rate) and adding the
product to that portion, if any, of the yield of the Portfolio that is not
tax-exempt. Based upon an assumed marginal Federal income tax rate of 37.1% and
the Tax-Exempt Portfolio's yield computed as described above for the seven-day
period ended April 30, 1999, the Tax-Exempt Portfolio's tax equivalent effective
yield for the period was x.xx%. For additional information concerning tax-exempt
yields, see "Tax-Exempt versus Taxable Yield" below.
Each Portfolio's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in a 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 a 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 a 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
20
<PAGE>
depict the historical performance of the securities in which a Portfolio may
invest over periods reflecting a variety of market or economic conditions either
alone or in comparison with alternative investments performance indexes of those
investments or economic indicators. A 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 a 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. A 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.
[To Be Updated]
<TABLE>
<CAPTION>
BANK RATE MONITOR
National Index(TM)
Money Market Deposit Interest Bearing Money Market Portfolio
Accounts (stated rate) Checking Accounts ---------
Date ------------ (stated rate)
---- -------------
<S> <C> <C> <C>
April 30, 1999
</TABLE>
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
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
21
<PAGE>
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
- ---------------------------------------------------------------------------------------------------------------------------
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:
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, 800 North Lindbergh Boulevard, St. Louis,
Missouri; 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.
22
<PAGE>
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.
DANIEL PIERCE (3/18/34), Trustee*, Two International Place, Boston,
Massachusetts; Managing Director, Adviser.
WILLIAM P. SOMMERS (7/22/33), Trustee, 333 Ravenswood Avenue, Menlo Park,
California; President and Chief Executive Officer, SRI International (research
and development); formerly, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton Inc. (management consulting
firm)(retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
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*, 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.
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 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.
23
<PAGE>
<TABLE>
<CAPTION>
Aggregate Total Compensation Kemper Managed Funds
Name of Trustee Compensation From Trust Paid to Trustees (2)
- --------------- ----------------------- --------------------
<S> <C> <C>
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 and interest thereon 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) 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.
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 July 31, 1999, the officers and trustees of the Trust, as a group, owned less
than 1% of the then outstanding shares of each Portfolio. No person owned of
record 5% or more of the outstanding shares of any class of any Portfolio,
except the persons indicated in the chart below:
Name and Address % Owned Portfolio
- ---------------- ---------
???? xx.xx Money Market
xx.xx Government Securities
xx.xx 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
24
<PAGE>
and Investors Cash Trust). Shares of Money Market Funds and Kemper Cash Reserves
Fund that were acquired by purchase (not including shares acquired by dividend
reinvestment) are subject to the applicable sales charge on exchange. In
addition, shares of a Kemper Mutual Fund in excess of $1,000,000 (except Zurich
Yieldwise Money Fund and Kemper Cash Reserves Fund) acquired by exchange from
another Fund may not be exchanged thereafter until they have been owned for 15
days (the "15-Day Hold Policy"). 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 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 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. An owner of $5,000 or more of a Portfolio's
shares may provide for the payment from the owner's account of any requested
dollar amount up to $50,000 to be paid to the owner or the owner's designated
payee monthly, quarterly, semi-annually or annually. The $5,000 minimum account
size is not applicable to Individual Retirement Accounts. Dividend distributions
will be reinvested automatically at net asset value. A sufficient number of full
and fractional shares will be redeemed to make the designated payment. Depending
upon the size of the payments requested, redemptions for the purpose of making
such payments may reduce or even exhaust the account. The program may be amended
on thirty days notice by a Portfolio and may be terminated at any time by the
shareholder or a Portfolio. Firms provide varying arrangements for their clients
to redeem shares of a 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.
25
<PAGE>
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 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 a
Portfolio, supplying any omission, curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision thereof); and (e) such
additional matters as may be required by law, the Declaration of Trust, the
By-laws of the 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 a 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 a 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.
26
<PAGE>
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.
27
<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.
28
<PAGE>
Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
DUFF & PHELP'S INC. BOND RATINGS
AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA -- High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
29
<PAGE>
September 1, 1999
Prospectus
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
Money Market Portfolio:
Retail Money Market 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
Retail Money Market Shares...............................................3
Investment adviser.......................................................7
ABOUT YOUR INVESTMENT...................................................10
Buying shares...........................................................10
Selling and exchanging shares...........................................11
Distributions...........................................................12
Taxes...................................................................12
Transaction information.................................................13
2
<PAGE>
ABOUT THE PORTFOLIO
- --------------------
- --------------------------------------------------------------------------------
RETAIL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Investment objective
The Money Market Portfolio (the "portfolio") seeks maximum current income
consistent with stability of capital.
Included in the "Investment restrictions" section is a listing of those
restrictions which cannot be changed without a vote of shareholders. Except as
otherwise noted, the portfolio's investment objective and other policies may not
be changed without a vote of shareholders.
Main investment strategies
The portfolio pursues its objective by investing exclusively in the following
types of U.S. dollar-denominated money market instruments that mature in 12
months or less:
1- Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2- Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
banks (including their foreign branches) and Canadian chartered banks having
total assets in excess of $1 billion.
3- Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets in
excess of $10 billion.
4- Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) are rated high quality by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
Phelps, Inc. ("Duff"); or (ii) if unrated, are determined to be at least equal
in quality to one or more of the above ratings in the discretion of the
portfolio's investment manager. Currently, only obligations in the top two
categories are considered to be rated high quality. The two highest rating
categories of Moody's, S&P and Duff for commercial paper are Prime-1 and
Prime-2, A-1 and A-2 and Duff 1 and Duff 2, respectively. For other debt
obligations, the two highest rating categories for such services are Aaa and Aa,
AAA and AA and AAA and AA, respectively.
5- Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. The maturities of the securities subject to
repurchase may be greater than 12 months.
In addition, the portfolio limits its investments to securities that meet the
quality, maturity and diversification requirements of federal law.
The portfolio will normally invest at least 25% of its assets in obligations
issued by banks.
3
<PAGE>
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the portfolio, unless the portfolio's
Board determines that selling the security would not be in the best interest of
the portfolio.
Of course, there can be no guarantee that by following these investment
strategies, the portfolio will achieve its objective.
Other investments
To a more limited extent, the portfolio may, but is not required to, utilize
other investments and investment techniques that may impact portfolio
performance including, but not limited to, floating and variable rate
instruments (obligations that do not bear interest at fixed rates).
Risk management strategies
The portfolio manages credit risk by investing primarily in high quality
securities, whose issuers are considered unlikely to default. The portfolio
manages interest rate risk by limiting the maturity of each of its individual
securities and the weighted average maturity of the portfolio overall.
For temporary defensive purposes, the portfolio may invest less than 25% of its
assets in obligations issued by banks. 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 short-term interest rates. If short-term interest
rates fall, the portfolio's yield is also likely to fall. 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, lower-quality securities. It is possible, however, that
securities in the portfolio could be downgraded in credit rating or go into
default.
Investments by the portfolio in Eurodollar certificates of deposit issued by
London branches of U.S. banks, and different obligations issued by foreign
entities, including foreign banks, involve additional risks than investments in
securities of domestic branches of U.S. banks. These risks include, but are not
limited to, potentially unfavorable currency exchange rates, potentially
inadequate reserves, political disturbances, and incomplete or inaccurate public
information.
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Company 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>
- --------------------------------------------------------------------------------
RETAIL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the Retail Money Market Shares of the portfolio by illustrating how the shares
of the portfolio have performed. Of course, past performance is not necessarily
an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the Retail Money Market Shares' of the
portfolio highest return for a calendar quarter was ___% (cite quarter), and the
shares' of the portfolio lowest return for a calendar quarter was -___% (cite
quarter).
The Retail Money Market Shares' of the portfolio year-to-date total return as of
June 30, 1999 was ____%.
Average Annual Total Returns
For periods ended Retail Money Market
December 31, 1998 Shares
-----------------
One Year __.__%
Five Years __.__%
Since inception* __.__%
* Inception date for the Retail Money Market Shares of the portfolio is
x/xx/xx.
7-Day Yield
On December 31, 1998 __.__%
5
<PAGE>
- --------------------------------------------------------------------------------
RETAIL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold Retail Money Market Shares of the
shares of the portfolio.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual portfolio operating expenses (expenses that are deducted from portfolio
assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual portfolio operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%
-------------------------------------------------------------------------------
Net expenses 0.xx%
-------------------------------------------------------------------------------
Example
This example is to help you compare the cost of investing in the Retail Money
Market 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 expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions,
and "Total annual portfolio operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
expenses and returns vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
6
<PAGE>
Investment adviser
The portfolio retains the investment management firm of Scudder Kemper
Investments, Inc., the ("Adviser"), 345 Park Avenue, New York, NY, to manage the
portfolio's 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. Scudder Kemper Investments, Inc. is one of the largest
and most experienced investment management organizations worldwide. It is one of
the ten largest mutual fund companies in the U.S., 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 and certain affiliated service providers have contractually agreed
to maintain the total annualized expenses of the portfolio at no more than 0.xx%
of the average daily net assets of the portfolio through _______, 2000.] The
Adviser received an investment management fee of 0.xx% of the portfolio's
average daily net assets on an annual basis for the fiscal year ended _______,
1999, after giving effect to an expense reimbursement arrangement in effect for
that period.
Portfolio management
The following investment professionals are associated with the portfolio as
indicated:
Name & Title Joined the Background
Portfolio
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. Joined the Adviser in 1973 and began
Lead Manager his investment career at that time.
He has been responsible for the
trading and portfolio management of
money market portfolios since 1974.
- --------------------------------------------------------------------------------
Geoffrey Gibbs Joined the Adviser in 1996 as a trader
Manager for money market portfolios and began
his investment career in 1994.
Year 2000 Readiness
Like other mutual funds and financial and business organizations worldwide, the
portfolio could be adversely affected if computer systems on which the portfolio
relies, which primarily include those used by the investment manager, its
affiliates or other service providers, are unable to correctly process
date-related information on and after January 1, 2000. This risk is commonly
called the Year 2000 Issue. Failure to successfully address the Year 2000 Issue
could result in interruptions to and other material adverse effects on the
portfolio's business and operations. The investment
7
<PAGE>
manager has commenced a review of the Year 2000 Issue as it may affect the
portfolio and is taking steps it believes are reasonably designed to address the
Year 2000 Issue, although there can be no assurances that these steps will be
sufficient. In addition, there can be no assurances that the Year 2000 Issue
will not have an adverse effect on the companies whose securities are held by
the portfolio or on global markets or economies generally.
8
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand financial
performance for the periods indicated. The total return figures show what an
investor would have earned (or lost) on an investment in the portfolio assuming
reinvestment of all dividends and distributions. This information has been
audited by Ernst & Young LLP, whose report, along with the financial statements,
is included in the annual report, which is available upon request (see back
cover).
- --------------------------------------------------------------------------------
RETAIL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
To Be Updated
9
<PAGE>
ABOUT YOUR INVESTMENT
- ---------------------
Buying shares
Shares of the portfolio may be purchased at net asset value, with no sales
charge through selected financial services firms, such as broker-dealers and
banks.
The portfolio seeks to be 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 it
receives investable funds.
Orders for purchase of 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 (i) that day's dividend if effected at or
prior to the 1:00 p.m. Central time net asset value determination; or (ii) the
dividend for the next calendar day if effected at the 3:00 p.m. Central time net
asset value determination.
Orders for purchase accompanied by a check or other negotiable bank draft will
be accepted and effected as of 3:00 p.m. Central 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.
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 Retail Money Market Shares (97:
98-0119-980-3) and further credit to your money market account number.
Clients of Firms.
Firms provide varying arrangements for their clients with respect to the
purchase and redemption of portfolio shares and the confirmation thereof and may
arrange with their clients for other investment or administrative services. Such
firms are responsible for the prompt transmission of purchase and redemption
orders. Some firms may establish higher minimum investment requirements than the
Retail Money Market Shares as indicated on page 14. Such firms may independently
establish and charge additional amounts to their clients for their services,
which charges would reduce their clients' yield or return. Firms may also hold
portfolio shares in nominee or street name as agent for and on behalf of their
clients. In such instances, the portfolio's transfer agent will have no
information with respect to or control over the accounts of specific
shareholders. Such shareholders may obtain access to their accounts and
information about their accounts only from their firm. Certain of these firms
may receive compensation through the portfolio's Shareholder Service Agent for
record-keeping
10
<PAGE>
and other expenses relating to these nominee accounts. In addition, certain
privileges with respect to the purchase and redemption of shares (such as
checkwriting redemptions) or the reinvestment of dividends may not be available
through such firms or may only be available subject to certain conditions or
limitations. Some firms may participate in a program allowing them access to
their clients' accounts for servicing including, without limitation, transfers
of registration and dividend payee changes; and may perform functions such as
generation of confirmation statements and disbursement of cash dividends. The
prospectus should be read in connection with such firm's material regarding its
fees and services.
Other Information
The portfolio reserves the right to withdraw all or any part of the offering
made by this prospectus or to reject purchase orders, without prior notice. The
portfolio also reserves the right at any time to waive or increase the minimum
investment requirements. All orders to purchase shares of the portfolio are
subject to acceptance and are not binding until confirmed or accepted in
writing. Any purchase that would result in total account balances for a single
shareholder in excess of $3 million is subject to prior approval by the
portfolio. Share certificates are issued only on request. A $10 service fee will
be charged when a check for the purchase of shares is returned because of
insufficient or uncollected funds or a stop payment order.
Shareholders should direct their inquiries to the firm from which they received
this prospectus or to Kemper Service Company ("KSvC"), the portfolio's
"Shareholder Service Agent," 811 Main Street, Kansas City, Missouri 64105-2005.
Selling and exchanging shares
Upon receipt by the Shareholder Service Agent of a request, shares of the
portfolio will be redeemed by the portfolio at the next determined net asset
value. If processed at 3:00 p.m. or 8:00 p.m. Central 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.
Shareholders should contact the financial services firm through which shares
were purchased for redemption instructions. Any shareholder may request that the
portfolio redeem his or her shares. When shares are held for the account of a
shareholder by the portfolio'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.
An exchange of shares entails the sale of portfolio shares and subsequent
purchase of shares of another Kemper fund.
11
<PAGE>
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.
Distributions
The portfolio's dividends are declared daily and paid monthly. 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 shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. The portfolio may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in Subchapter M of the Internal
Revenue Code.
[Income dividends and capital gain dividends, if any, of the portfolio will be
credited to shareholder accounts in full and fractional shares of the portfolio
at net asset value, except that, upon written request to Kemper Services
Company, the Shareholder Service Agent, a shareholder may choose to receive
income and capital gain dividends in cash.]
A shareholder may choose to receive distributions in cash or have them
reinvested in additional shares of the portfolio. If an investment is in the
form of a retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholders' account. Distributions are generally taxable
whether received in cash or reinvested. Exchanges among other mutual funds may
also be taxable events.
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 the 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.
The portfolio sends detailed tax information about the amount and type of its
distributions by January 31 of the following year.
12
<PAGE>
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 the portfolio.
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
11:00 a.m., 1:00 p.m. and 3:00 p.m. Central 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 12 months or less and
maintains a dollar-weighted average portfolio maturity of 90 days or less. In
addition, the portfolio limits its portfolio investments to securities that meet
the quality and diversification requirements of 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, less all liabilities, by
the number of shares outstanding.
Processing time
Payment for shares you sell will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly executed request.
If you have share certificates, these 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), the 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 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 the prospectus.
13
<PAGE>
Signature guarantees
A signature guarantee is required unless you sell $50,000 or less worth of
shares 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).
Purchase restrictions
The portfolio and its transfer agent each reserves the right to withdraw all or
any part of the offering made by this prospectus and to reject purchase orders.
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.
Any purchases that would result in total account balances for a single
shareholder in excess of $3 million are subject to prior approval by the
portfolio.
Minimum balances
The minimum initial investment for the portfolio is $1,000 but such minimum
amount may be changed at any time in management's discretion. Minimum subsequent
investments are $100. Firms offering portfolio shares may set higher minimums
for accounts they service and may change such minimums at their discretion.
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 that shareholder account.
Third party transactions
If you buy and sell shares of the portfolio through a financial services firm,
such as a broker-dealer or bank (other than the portfolio's transfer agent),
that firm may charge a fee for that service. This prospectus should be read in
connection with such firms' material regarding their fees and services.
14
<PAGE>
Additional information about the portfolios 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 portfolio
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 portfolio documents may be obtained without charge from your financial
adviser, from the Distributor at 1-800-231-8568, from the Shareholder Service
Agent, or from the Securities and Exchange Commission, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549 (1-800-SEC-0330).
The Statement of Additional Information dated September 1, 1999 is incorporated
by reference into this prospectus (is legally a part of this prospectus).
Investment Company Act file numbers:
Cash Account Trust 811-5970
Printed with SOYINK Printed on recycled paper
15
<PAGE>
September 1, 1999
Prospectus
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
Money Market Portfolio:
Premier Money Market 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
Premier Money Market Shares.............................................3
Investment adviser......................................................7
ABOUT YOUR INVESTMENT..................................................10
Buying shares..........................................................10
Selling and exchanging shares..........................................11
Distributions..........................................................12
Taxes..................................................................12
Transaction information................................................13
2
<PAGE>
ABOUT THE PORTFOLIO
- -------------------
- --------------------------------------------------------------------------------
PREMIER MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Investment objective
The Money Market Portfolio (the "portfolio") seeks maximum current income
consistent with stability of capital.
Included in the "Investment restrictions" section is a listing of those
restrictions which cannot be changed without a vote of shareholders. Except as
otherwise noted, the portfolio's investment objective and other policies may not
be changed without a vote of shareholders.
Main investment strategies
The portfolio pursues its objective by investing exclusively in the following
types of U.S. dollar-denominated money market instruments that mature in 12
months or less:
1- Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2- Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
banks (including their foreign branches) and Canadian chartered banks having
total assets in excess of $1 billion.
3- Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets in
excess of $10 billion.
4- Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) are rated high quality by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
Phelps, Inc. ("Duff"); or (ii) if unrated, are determined to be at least equal
in quality to one or more of the above ratings in the discretion of the
portfolio's investment manager. Currently, only obligations in the top two
categories are considered to be rated high quality. The two highest rating
categories of Moody's, S&P and Duff for commercial paper are Prime-1 and
Prime-2, A-1 and A-2 and Duff 1 and Duff 2, respectively. For other debt
obligations, the two highest rating categories for such services are Aaa and Aa,
AAA and AA and AAA and AA, respectively.
5- Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. The maturities of the securities subject to
repurchase may be greater than 12 months.
In addition, the portfolio limits its investments to securities that meet the
quality, maturity and diversification requirements of federal law.
The portfolio will normally invest at least 25% of its assets in obligations
issued by banks.
3
<PAGE>
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the portfolio, unless the portfolio's
Board determines that selling the security would not be in the best interest of
the portfolio.
Of course, there can be no guarantee that by following these investment
strategies, the portfolio will achieve its objective.
Other investments
To a more limited extent, the portfolio may, but is not required to, utilize
other investments and investment techniques that may impact portfolio
performance including, but not limited to, floating and variable rate
instruments (obligations that do not bear interest at fixed rates).
Risk management strategies
The portfolio manages credit risk by investing primarily in high quality
securities, whose issuers are considered unlikely to default. The portfolio
manages interest rate risk by limiting the maturity of each of its individual
securities and the weighted average maturity of the portfolio overall.
For temporary defensive purposes, the portfolio may invest less than 25% of its
assets in obligations issued by banks. 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. 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, lower-quality securities. It is possible, however, that
securities in the portfolio could be downgraded in credit rating or go into
default.
Investments by the portfolio in Eurodollar certificates of deposit issued by
London branches of U.S. banks, and different obligations issued by foreign
entities, including foreign banks, involve additional risks than investments in
securities of domestic branches of U.S. banks. These risks include, but are not
limited to, potentially unfavorable currency exchange rates, potentially
inadequate reserves, political disturbances, and incomplete or inaccurate public
information.
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Company 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>
- --------------------------------------------------------------------------------
PREMIER MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the Premier Money Market Shares of the portfolio by illustrating how the shares
of the portfolio have performed. Of course, past performance is not necessarily
an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the Premier Money Market Shares' of
the portfolio highest return for a calendar quarter was ___% (cite quarter), and
the shares' of the portfolio lowest return for a calendar quarter was -___%
(cite quarter).
The Premier Money Market Shares' of the portfolio year-to-date total return as
of June 30, 1999 was ____%.
Average Annual Total Returns
For periods ended Premier Money
December 31, 1998 Market Shares
-----------------
One Year __.__%
Five Years __.__%
Since inception* __.__%
* Inception date for the Premier Money Market Shares of the portfolio is
x/xx/xx.
7-Day Yield
On December 31, 1998 __.__%
5
<PAGE>
- --------------------------------------------------------------------------------
PREMIER MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the Premier Money Market
Shares of the portfolio.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual portfolio operating expenses (expenses that are deducted from portfolio
assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual portfolio operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%
-------------------------------------------------------------------------------
Net expenses 0.xx%
-------------------------------------------------------------------------------
Example
This example is to help you compare the cost of investing in the Premier Money
Market 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 expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions,
and "Total annual portfolio operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
expenses and returns vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
6
<PAGE>
Investment adviser
The portfolio retains the investment management firm of Scudder Kemper
Investments, Inc., the ("Adviser"), 345 Park Avenue, New York, NY, to manage the
portfolio's 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. Scudder Kemper Investments, Inc. is one of the largest
and most experienced investment management organizations worldwide. It is one of
the ten largest mutual fund companies in the U.S., 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.
Money Market Portfolio
[The Adviser and certain affiliated service providers have contractually agreed
to maintain the total annualized expenses of the portfolio at no more than 0.xx%
of the average daily net assets of the portfolio through _______, 2000.] The
Adviser received an investment management fee of 0.xx% of the portfolio's
average daily net assets on an annual basis for the fiscal year ended _______,
1999, after giving effect to an expense reimbursement arrangement in effect for
that period.
Portfolio management
The following investment professionals are associated with the portfolio as
indicated:
Name & Title Joined the Background
Portfolio
- -------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. Joined the Adviser in 1973 and began
Lead Manager his investment career at that time.
He has been responsible for the trading
and portfolio management of money market
portfolios since 1974.
- -------------------------------------------------------------------------------
Geoffrey Gibbs Joined the Adviser in 1996 as a trader
Manager for money market portfolios and began
his investment career in 1994.
Year 2000 Readiness
Like other mutual funds and financial and business organizations worldwide, the
portfolio could be adversely affected if computer systems on which the portfolio
relies, which primarily include those used by the investment manager, its
affiliates or other service providers, are unable to correctly process
date-related information on and after January 1, 2000. This risk is commonly
called the Year 2000 Issue. Failure to
7
<PAGE>
successfully address the Year 2000 Issue could result in interruptions to and
other material adverse effects on the portfolio's business and operations. The
investment manager has commenced a review of the Year 2000 Issue as it may
affect the portfolio and is taking steps it believes are reasonably designed to
address the Year 2000 Issue, although there can be no assurances that these
steps will be sufficient. In addition, there can be no assurances that the Year
2000 Issue will not have an adverse effect on the companies whose securities are
held by the portfolio or on global markets or economies generally.
8
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand financial
performance for the periods indicated. The total return figures show what an
investor would have earned (or lost) on an investment in the portfolio assuming
reinvestment of all dividends and distributions. This information has been
audited by Ernst & Young LLP, whose report, along with the financial statements,
is included in the annual report, which is available upon request (see back
cover).
- --------------------------------------------------------------------------------
PREMIER MONEY MARKET SHARES
- --------------------------------------------------------------------------------
To Be Updated
9
<PAGE>
ABOUT YOUR INVESTMENT
- ---------------------
Buying shares
Shares of the portfolio may be purchased at net asset value, with no sales
charge through selected financial services firms, such as broker-dealers and
banks.
The portfolio seeks to be 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 it
receives investable funds.
Orders for purchase of 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 (i) that day's dividend if effected at or
prior to the 1:00 p.m. Central time net asset value determination; or (ii) the
dividend for the next calendar day if effected at the 3:00 p.m. Central time net
asset value determination.
Orders for purchase accompanied by a check or other negotiable bank draft will
be accepted and effected as of 3:00 p.m. Central 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.
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 Premier Money Market Shares (49:
98-0119-980-3) and further credit to your money market account number.
Clients of Firms.
Firms provide varying arrangements for their clients with respect to the
purchase and redemption of portfolio shares and the confirmation thereof and may
arrange with their clients for other investment or administrative services. Such
firms are responsible for the prompt transmission of purchase and redemption
orders. Some firms may establish higher minimum investment requirements than the
Premier Money Market Shares as indicated on page 14. Such firms may
independently establish and charge additional amounts to their clients for their
services, which charges would reduce their clients' yield or return. Firms may
also hold portfolio shares in nominee or street name as agent for and on behalf
of their clients. In such instances, the portfolio's transfer agent will have no
information with respect to or control over the accounts of specific
shareholders. Such shareholders may obtain access to their accounts and
information about their accounts only from their firm. Certain of these firms
may receive compensation through the portfolio's Shareholder Service Agent for
record-keeping
10
<PAGE>
and other expenses relating to these nominee accounts. In addition, certain
privileges with respect to the purchase and redemption of shares (such as check
writing redemptions) or the reinvestment of dividends may not be available
through such firms or may only be available subject to certain conditions or
limitations. Some firms may participate in a program allowing them access to
their clients' accounts for servicing including, without limitation, transfers
of registration and dividend payee changes; and may perform functions such as
generation of confirmation statements and disbursement of cash dividends. The
prospectus should be read in connection with such firm's material regarding its
fees and services.
Other Information.
The portfolio reserves the right to withdraw all or any part of the offering
made by this prospectus or to reject purchase orders, without prior notice. The
portfolio also reserves the right at any time to waive or increase the minimum
investment requirements. All orders to purchase shares of the portfolio are
subject to acceptance and are not binding until confirmed or accepted in
writing. Any purchase that would result in total account balances for a single
shareholder in excess of $3 million is subject to prior approval by the
portfolio. Share certificates are issued only on request. A $10 service fee will
be charged when a check for the purchase of shares is returned because of
insufficient or uncollected funds or a stop payment order.
Shareholders should direct their inquiries to the firm from which they received
this prospectus or to Kemper Service Company ("KSvC"), the portfolio's
"Shareholder Service Agent," 811 Main Street, Kansas City, Missouri 64105-2005.
Selling and exchanging shares
Upon receipt by the Shareholder Service Agent of a request, shares of the
portfolio will be redeemed by the portfolio at the next determined net asset
value. If processed at 3:00 p.m. or 8:00 p.m. Central 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.
Shareholders should contact the financial services firm through which shares
were purchased for redemption instructions. Any shareholder may request that the
portfolio redeem his or her shares. When shares are held for the account of a
shareholder by the portfolio'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.
An exchange of shares entails the sale of portfolio shares and subsequent
purchase of shares of another Kemper fund.
11
<PAGE>
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.
Distributions
The portfolio's dividends are declared daily and paid monthly. 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 shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. The portfolio may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in Subchapter M of the Internal
Revenue Code.
[Income dividends and capital gain dividends, if any, of the portfolio will be
credited to shareholder accounts in full and fractional shares of the portfolio
at net asset value, except that, upon written request to Kemper Services
Company, the Shareholder Service Agent, a shareholder may choose to receive
income and capital gain dividends in cash.]
A shareholder may choose to receive distributions in cash or have them
reinvested in additional shares of the portfolio. If an investment is in the
form of a retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholders' account. Distributions are generally taxable
whether received in cash or reinvested. Exchanges among other mutual funds may
also be taxable events.
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 the 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.
The portfolio sends detailed tax information about the amount and type of its
distributions by January 31 of the following year.
12
<PAGE>
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 the portfolio.
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
11:00 a.m., 1:00 p.m. and 3:00 p.m. Central 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 12 months or less and
maintains a dollar-weighted average portfolio maturity of 90 days or less. In
addition, the portfolio limits its portfolio investments to securities that meet
the quality and diversification requirements of 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, less all liabilities, by
the number of shares outstanding.
Processing time
Payment for shares you sell will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly executed request.
If you have share certificates, these 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), the 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 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 the prospectus.
13
<PAGE>
Signature guarantees
A signature guarantee is required unless you sell $50,000 or less worth of
shares 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).
Purchase restrictions
The portfolio and its transfer agent each reserves the right to withdraw all or
any part of the offering made by this prospectus and to reject purchase orders.
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.
Any purchases that would result in total account balances for a single
shareholder in excess of $3 million are subject to prior approval by the
portfolio.
Minimum balances
The minimum initial investment for the portfolio is $25,000 but such minimum
amount may be changed at any time in management's discretion. Subsequent
investments may be made in any amount. Firms offering portfolio shares may set
higher minimums for accounts they service and may change such minimums at their
discretion.
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 that shareholder account.
Third party transactions
If you buy and sell shares of the portfolio through a financial services firm,
such as a broker-dealer or bank (other than the portfolio's transfer agent),
that firm may charge a fee for that service. This prospectus should be read in
connection with such firms' material regarding their fees and services.
14
<PAGE>
Additional information about the portfolios 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 portfolio
investments and operations. The semiannual and annual shareholder reports
contain a discussion of the market conditions and the investment strategies that
significantly affected the portfolios' performance during the last fiscal year,
as well as a listing of portfolio holdings and financial statements. These and
other portfolio documents may be obtained without charge from your financial
adviser, from the Distributor at 1-800-231-8568, from the Shareholder Service
Agent, or from the Securities and Exchange Commission, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549 (1-800-SEC-0330).
The Statement of Additional Information dated September 1, 1999 is incorporated
by reference into this prospectus (is legally a part of this prospectus).
Investment Company Act file numbers:
Cash Account Trust 811-5970
Printed with SOYINK Printed on recycled paper
15
<PAGE>
September 1, 1999
Prospectus
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
Money Market Portfolio:
Institutional Money Market 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
Institutional money market shares.........................................3
Investment adviser........................................................7
ABOUT YOUR INVESTMENT....................................................10
Buying shares............................................................10
Selling and exchanging shares............................................11
Distributions............................................................12
Taxes....................................................................12
Transaction information..................................................13
2
<PAGE>
ABOUT THE PORTFOLIO
- --------------------
- --------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Investment objective
The Money Market Portfolio (the "portfolio") seeks maximum current income
consistent with stability of capital.
Included in the "Investment restrictions" section is a listing of those
restrictions which cannot be changed without a vote of shareholders. Except as
otherwise noted, the portfolio's investment objective and other policies may not
be changed without a vote of shareholders.
Main investment strategies
The portfolio pursues its objective by investing exclusively in the following
types of U.S. dollar-denominated money market instruments that mature in 12
months or less:
1- Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2- Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
banks (including their foreign branches) and Canadian chartered banks having
total assets in excess of $1 billion.
3- Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets in
excess of $10 billion.
4- Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) are rated high quality by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
Phelps, Inc. ("Duff"); or (ii) if unrated, are determined to be at least equal
in quality to one or more of the above ratings in the discretion of the
portfolio's investment manager. Currently, only obligations in the top two
categories are considered to be rated high quality. The two highest rating
categories of Moody's, S&P and Duff for commercial paper are Prime-1 and
Prime-2, A-1 and A-2 and Duff 1 and Duff 2, respectively. For other debt
obligations, the two highest rating categories for such services are Aaa and Aa,
AAA and AA and AAA and AA, respectively.
5- Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. The maturities of the securities subject to
repurchase may be greater than 12 months.
In addition, the portfolio limits its investments to securities that meet the
quality, maturity and diversification requirements of federal law.
The portfolio will normally invest at least 25% of its assets in obligations
issued by banks.
3
<PAGE>
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the portfolio, unless the portfolio's
Board determines that selling the security would not be in the best interest of
the portfolio.
Of course, there can be no guarantee that by following these investment
strategies, the portfolio will achieve its objective.
Other investments
To a more limited extent, the portfolio may, but is not required to, utilize
other investments and investment techniques that may impact portfolio
performance including, but not limited to, floating and variable rate
instruments (obligations that do not bear interest at fixed rates).
Risk management strategies
The portfolio manages credit risk by investing primarily in high quality
securities, whose issuers are considered unlikely to default. The portfolio
manages interest rate risk by limiting the maturity of each of its individual
securities and the weighted average maturity of the portfolio overall.
For temporary defensive purposes, the portfolio may invest less than 25% of its
assets in obligations issued by banks. In such a case, the portfolio would not
be pursuing, and may not achieve, its investment objective.
Main risks
As with most money market portfolios, 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. Moreover, the
portfolio managers' strategy or choice of specific investments may not perform
as expected. This portfolio may have lower returns than other funds that invest
in longer-term, lower-quality securities. It is possible, however, that
securities in the portfolio could be downgraded in credit rating or go into
default.
Investments by the portfolio in Eurodollar certificates of deposit issued by
London branches of U.S. banks, and different obligations issued by foreign
entities, including foreign banks, involve additional risks than investments in
securities of domestic branches of U.S. banks. These risks include, but are not
limited to, potentially unfavorable currency exchange rates, potentially
inadequate reserves, political disturbances, and incomplete or inaccurate public
information.
An investment in the portfolio is not insured or guaranteed by the Federal
Deposit Insurance Company 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>
- --------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the Institutional Money Market Shares of the portfolio by illustrating how the
shares of the portfolio have performed. Of course, past performance is not
necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the Institutional Money Market Shares'
of the portfolio highest return for a calendar quarter was ___% (cite quarter),
and the shares' of the portfolio lowest return for a calendar quarter was -___%
(cite quarter).
The Institutional Money Market Shares' of the portfolio year-to-date total
return as of June 30, 1999 was ____%.
Average Annual Total Returns
For periods ended Institutional Money
December 31, 1998 Market Shares
----------------
One Year __.__%
Five Years __.__%
Since inception* __.__%
* Inception date for the Institutional Money Market Shares of the portfolio is
x/xx/xx.
7-Day Yield
On December 31, 1998 __.__%
5
<PAGE>
- --------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the Institutional Money
Market Shares of the portfolio.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual portfolio operating expenses (expenses that are deducted from portfolio
assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees NONE
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual portfolio operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%
-------------------------------------------------------------------------------
Net expenses 0.xx%
-------------------------------------------------------------------------------
Example
This example is to help you compare the cost of investing in the Institutional
Money Market 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 expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions,
and "Total annual portfolio operating expenses" remaining the same for each year
except the first year. The first year of your investment will take into account
the "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
expenses and returns vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
6
<PAGE>
Investment adviser
The portfolio retains the investment management firm of Scudder Kemper
Investments, Inc., the ("Adviser"), 345 Park Avenue, New York, NY, to manage the
portfolio's 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. Scudder Kemper Investments, Inc. is one of the largest
and most experienced investment management organizations worldwide. It is one of
the ten largest mutual fund companies in the U.S., 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 and certain affiliated service providers have have contractually
agreed to maintain the total annualized expenses of the portfolio at no more
than 0.26% of the average daily net assets of the portfolio through _______,
2000.] The Adviser received an investment management fee of 0.xx% of the
portfolio's average daily net assets on an annual basis for the fiscal year
ended _______, 1999, after giving effect to an expense reimbursement arrangement
in effect for that period.
Portfolio management
The following investment professionals are associated with the portfolio as
indicated:
Name & Title Joined the Background
Portfolio
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. Joined the Adviser in 1973 and began
Lead Manager his investment career at that time.
He has been responsible for the
trading and portfolio management
of money market portfolios since
1974.
- --------------------------------------------------------------------------------
Geoffrey Gibbs Joined the Adviser in 1996 as a trader
Manager for money market portfolios and began
his investment career in 1994.
Year 2000 Readiness
Like other mutual funds and financial and business organizations worldwide, the
portfolio could be adversely affected if computer systems on which the portfolio
relies, which primarily include those used by the investment manager, its
affiliates or other service providers, are unable to correctly process
date-related information on and after January 1, 2000. This risk is commonly
called the Year 2000 Issue. Failure to successfully address the Year 2000 Issue
could result in interruptions to and other material adverse effects on the
portfolio's business and operations. The investment
7
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manager has commenced a review of the Year 2000 Issue as it may affect the
portfolio and is taking steps it believes are reasonably designed to address the
Year 2000 Issue, although there can be no assurances that these steps will be
sufficient. In addition, there can be no assurances that the Year 2000 Issue
will not have an adverse effect on the companies whose securities are held by
the portfolio or on global markets or economies generally.
8
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Financial highlights
The financial highlights table is intended to help you understand financial
performance for the periods indicated. The total return figures show what an
investor would have earned (or lost) on an investment in the portfolio assuming
reinvestment of all dividends and distributions. This information has been
audited by Ernst & Young LLP, whose report, along with the financial statements,
is included in the annual report, which is available upon request (see back
cover).
- --------------------------------------------------------------------------------
INSTITUTIONAL MONEY MARKET SHARES
- --------------------------------------------------------------------------------
To Be Updated
9
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ABOUT YOUR INVESTMENT
- ---------------------
Buying shares
Shares of the portfolio may be purchased at net asset value, with no sales
charge through selected financial services firms, such as broker-dealers and
banks.
The portfolio seeks to be 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 it
receives investable funds.
Orders for purchase of shares of the portfolio will be accepted only by wire
transfer in the form of Federal Funds will be effected at the next determined
net asset value. Shares purchased by wire will receive (i) that day's dividend
if effected at or prior to the 2:00 p.m. Eastern time net asset value
determination; or (ii) the dividend for the next calendar day if effected at the
4:00 p.m. Eastern time net asset value determination.
Payment wired in Federal Funds, and 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 Institutional Money Market Shares (146: 98-0119-980-3) and further
credit to your money market account number.
Clients of Firms.
Firms provide varying arrangements for their clients with respect to the
purchase and redemption of portfolio shares and the confirmation thereof and may
arrange with their clients for other investment or administrative services. Such
firms are responsible for the prompt transmission of purchase and redemption
orders. Some firms may establish higher minimum investment requirements than the
Institutional Money Market Shares indicated on page 14. Such firms may
independently establish and charge additional amounts to their clients for their
services, which would reduce their 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 portfolio's transfer agent will have no
information with respect to or control over the accounts of specific
shareholders. Such shareholders may obtain access to their accounts and
information about their accounts only from their firm. Certain of these firms
may receive compensation through the portfolio's Shareholder Service Agent for
record-keeping and other expenses relating to these nominee accounts. In
addition, certain privileges with respect to the purchase and redemption of
shares (such as check writing redemptions) or the reinvestment of dividends may
not be available through such firms or may only be available subject to certain
conditions or limitations. Some firms may participate in a program allowing them
access to their clients' accounts for servicing including, without limitation,
transfers of registration and dividend payee
10
<PAGE>
changes; and may perform functions such as generation of confirmation statements
and disbursement of cash dividends. The prospectus should be read in connection
with such firm's material regarding its fees and services.
Other Information.
The portfolio reserves the right to withdraw all or any part of the offering
made by this prospectus or to reject purchase orders, without prior notice. The
portfolio also reserves the right at any time to waive or increase the minimum
investment requirements. All orders to purchase shares of the portfolio are
subject to acceptance and are not binding until confirmed or accepted in
writing. Any purchase that would result in total account balances for a single
shareholder in excess of $3 million is subject to prior approval by the
portfolio. Share certificates are issued only on request. A $10 service fee will
be charged when a check for the purchase of shares is returned because of
insufficient or uncollected funds or a stop payment order. Shareholders should
direct their inquiries to the firm from which they received this prospectus or
to Kemper Service Company ("KSvC"), the portfolio's "Shareholder Service Agent,"
811 Main Street, Kansas City, Missouri 64105-2005.
Selling and exchanging shares
Upon receipt by the Shareholder Service Agent of a request, shares of the
portfolio will be redeemed by the portfolio at the next determined net asset
value. If processed at 4:00 p.m. or 9:00 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.
Shareholders should contact the financial services firm through which shares
were purchased for redemption instructions. Any shareholder may request that the
portfolio redeem his or her shares. When shares are held for the account of a
shareholder by the portfolio'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.
An exchange of shares entails the sale of portfolio shares and subsequent
purchase of shares of another Kemper fund.
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.
11
<PAGE>
Distributions
The portfolio's dividends are declared daily and paid monthly. 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 shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. The portfolio may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in Subchapter M of the Internal
Revenue Code.
[Income dividends and capital gain dividends, if any, of the portfolio will be
credited to shareholder accounts in full and fractional shares of the portfolio
at net asset value, except that, upon written request to Kemper Services
Company, the Shareholder Service Agent, a shareholder may choose to receive
income and capital gain dividends in cash.]
A shareholder may choose to receive distributions in cash or have them
reinvested in additional shares of the portfolio. If an investment is in the
form of a retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholder's account. Distributions are generally taxable
whether received in cash or reinvested. Exchanges among other mutual funds may
also be taxable events.
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 the 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.
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 the portfolio.]
12
<PAGE>
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 p.m., 2:00 p.m. 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 12 months or less and
maintains a dollar-weighted average portfolio maturity of 90 days or less. In
addition, the portfolio limits its portfolio investments to securities that meet
the quality and diversification requirements of 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, less all liabilities, by
the number of shares outstanding.
Processing time
Payment for shares you sell will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly executed request.
If you have share certificates, these 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), the 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 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 the prospectus.
13
<PAGE>
Signature guarantees
A signature guarantee is required unless you sell $50,000 or less worth of
shares 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.
Purchase restrictions
The portfolio and its transfer agent each reserves the right to withdraw all or
any part of the offering made by this prospectus and to reject purchase orders.
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.
Any purchases that would result in total account balances for a single
shareholder in excess of $3 million are subject to prior approval by the
portfolio.
Minimum balances
The minimum initial investment for the portfolio is $250,000 but such minimum
amount may be changed at any time in management's discretion. Subsequent
investments may be made in any amount. Firms offering portfolio shares may set
higher minimums for accounts they service and may change such minimums at their
discretion.
Because of the high cost of maintaining small accounts, the portfolio reserves
the right to redeem an account that falls below $100,000. A shareholder will be
notified in writing and will be allowed 60 days to make additional purchases to
bring the account value up to the minimum investment level before the portfolio
redeems that shareholder account.
14
<PAGE>
Additional information about the portfolios 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 portfolio
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 portfolio documents may be obtained without charge from your financial
adviser, from the Distributor at 1-800-231-8568, from the Shareholder Service
Agent, or from the Securities and Exchange Commission, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549 (1-800-SEC-0330).
The Statement of Additional Information dated September 1, 1999 is incorporated
by reference into this prospectus (is legally a part of this prospectus).
Investment Company Act file numbers:
Cash Account Trust 811-5970
Printed with SOYINK Printed on recycled paper
15
<PAGE>
MONEY MARKET PORTFOLIO RETAIL SHARES
MONEY MARKET PORTFOLIO PREMIER SHARES
MONEY MARKET PORTFOLIO INSTITUTIONAL SHARES
STATEMENT OF ADDITIONAL INFORMATION
September 1, 1999
CASH ACCOUNT TRUST
222 South Riverside Plaza, Chicago, Illinois 60606
1-800-231-8568
This combined Statement of Additional Information contains information about the
Retail Shares ("Retail Shares"), Premier Shares ("Premier Shares") and
Institutional Shares ("Institutional Shares") (collectively, the "Shares"), each
a class of the Money Market Portfolio (the "Portfolio") offered by Cash Account
Trust (the "Trust"). Cash Account Trust is an open-end diversified management
investment company. The Trust currently offers three investment portfolios,
including the Money Market Portfolio. This combined Statement of Additional
Information is not a prospectus and should be read in conjunction with the
appropriate prospectus of the Shares of the Portfolio dated September 1, 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
Annual Report for the Shares of the Portfolio, 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 MANAGER AND SHAREHOLDER SERVICES...............................6
PORTFOLIO TRANSACTIONS....................................................9
PURCHASE AND REDEMPTION OF SHARES........................................10
DIVIDENDS, NET ASSET VALUE AND TAXES.....................................13
PERFORMANCE..............................................................15
OFFICERS AND TRUSTEES....................................................17
SPECIAL FEATURES.........................................................19
SHAREHOLDER RIGHTS.......................................................20
APPENDIX --RATINGS OF INVESTMENTS........................................22
<PAGE>
INVESTMENT RESTRICTIONS
The Trust has adopted for the Portfolio certain investment restrictions which
cannot be changed for a Portfolio without approval by holders of a majority of
its outstanding voting shares. As defined in the Investment Company Act of 1940
(the "1940 Act), this means the lesser of the vote of (a) 67% of the Portfolio's
shares present at a meeting where more than 50% of the outstanding shares of the
Portfolio are present in person or by proxy; or (b) more than 50% of the
Portfolio's outstanding shares. Except as otherwise noted, the portfolio's
investment objective and other policies may be changed by the portfolio's Board
of Trustees, without a vote of shareholders.
The Shares of the Portfolio may not:
(1) Purchase securities of any issuer (other than obligations of,
or guaranteed by, the United States Government, its agencies
or instrumentalities) if, as a result, more than 5% of the
value of the Portfolio's assets would be invested in
securities of that issuer.
(2) Purchase more than 10% of any class of securities of any
issuer. All debt securities and all preferred stocks are each
considered as one class.
(3) Make loans to others (except through the purchase of debt
obligations or repurchase agreements in accordance with its
investment objective and policies).
(4) Borrow money except as a temporary measure for extraordinary
or emergency purposes and then only in an amount up to
one-third of the value of its total assets, in order to meet
redemption requests without immediately selling any money
market instruments (any such borrowings under this section
will not be collateralized). If, for any reason, the current
value of the Portfolio's total assets falls below an amount
equal to three times the amount of its indebtedness from money
borrowed, the Portfolio will, within three days (not including
Sundays and holidays), reduce its indebtedness to the extent
necessary. The Portfolio will not borrow for leverage
purposes.
(5) Make short sales of securities, or purchase any securities on
margin except to obtain such short-term credits as may be
necessary for the clearance of transactions.
(6) Write, purchase or sell puts, calls or combinations thereof.
(7) Purchase or retain the securities of any issuer if any of the
officers, trustees or directors of the Fund or its investment
adviser owns beneficially more than 1/2 of 1% of the
securities of such issuer and together own more than 5% of the
securities of such issuer.
(8) Invest for the purpose of exercising control or management of
another issuer.
(9) Invest in commodities or commodity futures contracts or in
real estate (or real estate limited partnerships), although it
may invest in securities which are secured by real estate and
securities of issuers which invest or deal in real estate.
(10) Invest in interests in oil, gas or other mineral exploration
or development programs or leases, although it may invest in
the securities of issuers which invest in or sponsor such
programs.
(11) Underwrite securities issued by others except to the extent
the Portfolio may be deemed to be an underwriter, under the
federal securities laws, in connection with the disposition of
portfolio securities.
(12) Issue senior securities as defined in the 1940 Act.
2
<PAGE>
(13) Concentrate 25% or more of the value of the Portfolio's assets
in any one industry; provided, however, that (a) the Portfolio
reserves freedom of action to invest up to 100% of its assets
in obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities in accordance
with its investment objective and policies and (b) the
Portfolio will invest at least 25% of its assets in
obligations issued by banks in accordance with its investment
objective and policies. However, the Portfolio may, in the
discretion of its investment adviser, invest less than 25% of
its assets in obligations issued by banks whenever the
Portfolio assumes a temporary defensive posture.
With regard to restriction #13, for purposes of determining the percentage of
the Portfolio's total assets invested in securities of issuers having their
principal business activities in a particular industry, asset backed securities
will be classified separately, based on the nature of the underlying assets.
Currently, the following categories are used: captive auto, diversified, retail
and consumer loans, captive equipment and business, business trade receivables,
nuclear fuel and capital and mortgage lending.
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
has 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. In addition, the Portfolio may
not, as a non-fundamental policy that may be changed without shareholder vote:
(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 a 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 Trust is a money market mutual fund designed to provide its shareholders
with professional management of short-term investment dollars. It 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. It is designed for investors who seek maximum current income
consistent with stability of capital. It pools individual and institutional
investors' money that it uses to buy high quality money market instruments.
Because each Portfolio combines its shareholders' money, each portfolio can buy
and sell large blocks of securities, which reduces transaction costs and
maximizes yields.
Money Market Portfolio.
The Portfolio is managed to maintain a net asset value of $1.00 per share. The
Portfolio 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 are subject to the ability of the issuers of such investments to make
payment at maturity. However, because of their short maturities, liquidity and
high quality ratings, high quality money market instruments, such as those in
which the Portfolio invests, are generally considered to be among the safest
available. Thus, the Portfolio is designed for investors who want to avoid the
fluctuations of principal commonly associated with equity or long-term bond
investments. There can be no guarantee that the Portfolio will achieve its
objective or that it will maintain a net asset value of $1.00 per share.
3
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The
Portfolio pursues its objective by investing exclusively in the following types
of U.S. Dollar-denominated money market instruments that mature in 12 months or
less:
1. Obligations of, or guaranteed by, the U.S. or Canadian governments, their
agencies or instrumentalities.
2. Bank certificates of deposit, time deposits or bankers' acceptances of U.S.
banks (including their foreign branches) and Canadian chartered banks having
total assets in excess of $1 billion.
3. Bank certificates of deposit, time deposits or bankers' acceptances of
foreign banks (including their U.S. and foreign branches) having total assets
in excess of $10 billion.
4. Commercial paper, notes, bonds, debentures, participation certificates or
other debt obligations that (i) are rated high quality by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Duff &
Phelps, Inc. ("Duff"); or (ii) if unrated, are determined to be at least
equal in quality to one or more of the above ratings in the discretion of the
Portfolio's investment manager. Currently, only obligations in the top two
categories are considered to be rated high quality. The two highest rating
categories of Moody's, S&P and Duff for commercial paper are Prime-1 and
Prime-2, A-1 and A-2 and Duff 1 and Duff 2, respectively. For other debt
obligations, the two highest rating categories for such services are Aaa and
Aa, AAA and AA and AAA and AA, respectively. For a description of these
ratings, see "Appendix -- Ratings of Investments" in this Statement of
Additional Information.
5. Repurchase agreements of obligations that are suitable for investment under
the categories set forth above. Repurchase agreements are discussed below.
In addition, the Portfolio limits its investments to securities that meet the
quality and diversification requirements of Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act").
The Portfolio will normally invest at least 25% of its assets in obligations
issued by banks; provided, however, the Portfolio may in the discretion of the
Portfolio's investment manager temporarily invest less than 25% of its assets in
such obligations whenever the Portfolio assumes a defensive posture. Investments
by the Portfolio in Eurodollar certificates of deposit issued by London branches
of U.S. banks, or obligations issued by foreign entities, including foreign
banks, involve risks that are different from investments in securities of
domestic branches of U.S. banks. These risks may include future unfavorable
political and economic developments, possible withholding taxes on interest
payments, seizure of foreign deposits, currency controls, interest limitations
or other governmental restrictions that might affect payment of principal or
interest. The market for such obligations may be less liquid and, at times, more
volatile than for securities of domestic branches of U.S. banks. Additionally,
there may be less public information available about foreign banks and their
branches. The profitability of the banking industry is dependent largely upon
the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic conditions
as well as exposure to credit losses arising from possible financial
difficulties of borrowers play an important part in banking operations. As a
result of Federal and state laws and regulations, domestic banks are, among
other things, required to maintain specified levels of reserves, limited in the
amounts they can loan to a single borrower and subject to other regulations
designed to promote financial soundness. However, not all such laws and
regulations apply to the foreign branches of domestic banks. Foreign branches of
foreign banks are not regulated by U.S. banking authorities, and generally are
not bound by accounting, auditing and financial reporting standards comparable
to U.S. banks. Bank obligations held by the Portfolio do not benefit materially
from insurance from the Federal Deposit Insurance Corporation.
The Portfolio may invest in commercial paper issued by major corporations under
the Securities Act of 1933 in reliance on the exemption from registration
afforded by Section 3(a)(3) thereof. Such commercial paper may be issued only to
finance current transactions and must mature in nine months or less. Trading of
such commercial paper is conducted primarily by institutional investors through
investment dealers and individual investor participation in the commercial paper
market is very limited. The Portfolio also may invest in commercial paper issued
in reliance on the so-called "private placement" exemption from registration
that is afforded by Section 4(2) of the Securities Act of 1933 ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the federal
securities laws, and generally is sold to institutional investors such as the
Portfolio who agree that they are purchasing the paper for investment and not
with a view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper normally is resold to other institutional
investors like the Portfolio through or with the assistance of the issuer or
investment dealers who make a market in Section 4(2) paper, thus providing
liquidity. The Portfolio's investment manager considers the legally restricted
but readily saleable Section 4(2) paper to be liquid; however, pursuant to
procedures approved by the Board of Trustees of the Trust, if a particular
investment in Section 4(2) paper is not determined to be liquid, that investment
will be included within the 10% limitation on illiquid
4
<PAGE>
securities discussed below. The Portfolio's investment manager monitors the
liquidity of the Portfolio's investments in Section 4(2) paper on a continuous
basis.
The Portfolio may invest in high quality participation certificates
("certificates") representing undivided interests in trusts that hold a
portfolio of receivables from consumer and commercial credit transactions, such
as transactions involving consumer revolving credit card accounts or commercial
revolving credit loan facilities. The receivables would include amounts charged
for goods and services, finance charges, late charges and other related fees and
charges. Interest payable on the certificates may be fixed or may be adjusted
periodically or "float" continuously according to a formula based upon an
objective standard such as the 30-day commercial paper rate ("Variable Rate
Securities"). A trust may have the benefit of a letter of credit from a bank at
a level established to satisfy rating agencies as to the credit quality of the
assets supporting the payment of principal and interest on the certificates.
Payments of principal and interest on the certificates would be dependent upon
the underlying receivables in the trust and may be guaranteed under a letter of
credit to the extent of such credit. The quality rating by a rating service of
an issue of certificates is based primarily upon the value of the receivables
held by the trust and the credit rating of the issuer of any letter of credit
and of any other guarantor providing credit support to the trust. The
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 and in determining whether
the certificate is appropriate for investment by the Portfolio. Collection of
receivables in the trust may be affected by various social, legal and economic
factors affecting the use of credit and repayment patterns, such as changes in
consumer protection laws, the rate of inflation, unemployment levels and
relative interest rates. It is anticipated that for most publicly offered
certificates there will be a liquid secondary market or there may be demand
features enabling the Portfolio to readily sell its certificates prior to
maturity to the issuer or a third party. While the Portfolio may invest without
limit in certificates, it is currently anticipated that such investments will
not exceed 25% of the Portfolio's assets.
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.
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 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. The Trust has adopted for the Portfolio certain investment
restrictions that, together with the investment objective and policies of the
Portfolio (except for policies designated as non-fundamental), cannot be changed
without approval by holders of a majority of its outstanding voting shares as
defined in the 1940 Act.
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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.
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 the 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 an investment 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 Portfolio 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 on the basis of
relative net assets at the time of allocation, except that expenses directly
attributable to the Portfolio are charged to the 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
Portfolio in connection with the matters to which the agreement relates, except
a loss resulting
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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 the Portfolio and the Adviser
may continue to serve as investment manager for the Portfolio 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, and will terminate
automatically upon assignment.
On 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") and Zurich Kemper Value Advisors, Inc. ("ZKVA"), former subsidiaries of
Zurich and the former investment manager for the Portfolio. Upon completion of
the transaction, 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.
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 dates of
execution and termination. The 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.
The Agreement, dated September 7, 1998, was approved by the Trustees of the
Trust on [August 11, 1998]. The Agreement will continue in effect until
September 30, 1999 and from year to year thereafter only if their continuance is
approved a annually by the vote of a majority of those Trustees who are not
parties to such Agreement or interested persons of the Adviser or the Trust,
cast in person at a meeting called for the purpose of voting on such approval,
and either by a vote of the Trust's Trustees or of a majority of the outstanding
voting securities of the Trust. The Agreement may be terminated at any time
without payment of penalty by either party on sixty days' written notice, and
automatically terminates in the event of its assignment.
For the services and facilities furnished to the Portfolio, the Portfolio pays 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 the Portfolio, 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 the Portfolio over $3
billion. The Adviser has agreed to reimburse the Portfolio should all operating
expenses of the Portfolio, including the investment management fees of the
Adviser but excluding taxes, interest, distribution services fees, extraordinary
expenses, brokerage commissions or transaction costs and any other properly
excludable expenses, exceed the applicable state expense limitations.
[Currently, there are no stated expense limitations in effect.] The investment
management fee is computed based on average daily net assets of the Portfolios
and allocated among the Portfolios based upon the relative net assets of each.
Pursuant to the investment management agreement, the Portfolio paid the Adviser
a fee of $x,xxx,xxx for the fiscal year ended April 30, 1999; $1,888,000 for the
fiscal year ended April 30, 1998; and $975,000 for the fiscal year ended April
30, 1997. [The Adviser has agreed to waive temporarily its management fee and
absorb certain operating expenses of the Portfolio to the extent described in
the prospectus]. If the fee waiver had not been in effect the Adviser would have
received an investment management fee from the Portfolio of $x,xxx,xxx for the
fiscal year ended April 30, 1999; $2,463,000 for the fiscal year ended April 30,
1998; and $1,150,000 for the fiscal year ended April 30, 1997. The
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Adviser waived or absorbed operating expenses for the Portfolio of $x,xxx,xxx
for the year ended April 30, 1999; $1,253,000 for the fiscal year ended April
30, 1998; and $175,000 for the fiscal year ended April 30, 1997.
Certain officers or trustees of the Trust are also directors or officers of the
Adviser and its affiliates as indicated under "Officers and Trustees."
Fund Accounting Agent. Scudder Fund Accounting Corporation ("SFAC"), Two
International Place, Boston, Massachusetts 02110, 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 Portfolio; however, subject to
Board approval, at some time in the future, SFAC may seek payment for its
services under this agreement.
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 including, without limitation, services fees to firms.
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 Fund 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.
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.
Administrative services are provided to 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 Portfolio, including the payment of service fees. Retail Shares and
Premier Shares of the Portfolio each pay KDI an administrative services fee,
payable monthly, at an annual rate of up to 0.25% of average daily net assets of
the Portfolio. Institutional Shares of the Portfolio pays KDI an administrative
services fee, payable monthly, at an annual rate of up to 0.15% of average daily
net assets of the Portfolio.
KDI has entered into related arrangements with various broker-dealer firms and
other service or administrative firms ("firms") that provide services and
facilities for their customers or clients who are investors in 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. KDI pays each firm a service fee, normally payable quarterly, at an
annual rate of up to 0.25% of the net assets in the Portfolios' accounts that it
maintains and services, commencing with the month after investment. After the
first year, a firm becomes eligible for the quarterly service fee and the fee
continues until terminated by KDI or the Portfolio. Firms to which service fees
may be paid may include affiliates of KDI.
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KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for the 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, the transfer agent for the Trust, Kemper Service Company
("KSvC"), an affiliate of the Adviser, serves as "Shareholder Service Agent."
IFTC receives from the Retail Shares and Premier Shares, as transfer agent, and
pays to KSvC annual account fees of a maximum of $13 per account plus
out-of-pocket expense reimbursement. IFTC receives, as transfer agent, and pays
to KSvC annual account fees of a maximum of 0.03% of the Portfolio's
Institutional Shares average daily net assets.
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 Distributor 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
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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 the Distributor, which is a
corporation registered as a broker/dealer and a subsidiary of the Adviser; the
Distributor will place orders on behalf of the Portfolio with issuers,
underwriters or other brokers and dealers. The Distributor will not receive any
commission, fee or other remuneration from the Portfolio 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 their net asset value next determined after
an order and payment are received in the form described in the prospectus. For
Retail Shares, the minimum initial investment is $1,000 and the minimum
subsequent investment is $100. For Premier Shares, the minimum initial
investment is $25,000 and the minimum subsequent investment is $100. For
Institutional Shares, the minimum initial investment is $250,000. Such minimum
amounts may be changed at any time. The Portfolio may waive the minimum for
purchases by trustees, directors, officers or employees of the Trust or the
Adviser and its affiliates. An investor wishing to open an account should use
the Account Application available from the Portfolio 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 rocessed 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.
Clients of Firms. Firms provide varying arrangements for their clients with
respect to the purchase and redemption of Portfolio shares and the confirmation
thereof and may arrange with their clients for other investment or
administrative services. Such firms are responsible for the prompt transmission
of purchase and redemption orders. Some firms may establish higher minimum
investment requirements than set forth above. Such firms may independently
establish and charge additional amounts to their clients for their services,
which charges would reduce their clients' yield or return. Firms may also hold
Portfolio shares in nominee or street name as agent for and on behalf of their
clients. In such instances, the Portfolio's transfer agent will have no
information with respect to or control over the accounts of specific
shareholders. Such shareholders may obtain access to their accounts and
information about their accounts only from their firm. Certain of these firms
may receive compensation through the Portfolio's Shareholder Service Agent for
record-keeping and other expenses relating to these nominee accounts. In
addition, certain privileges with respect to the purchase and redemption of
shares (such as check writing redemptions) or the reinvestment of dividends may
not be available through such firms or may only be available subject to certain
conditions or limitations. Some firms may participate in a program allowing them
access to their
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clients' accounts for servicing including, without limitation, transfers of
registration and dividend payee changes; and may perform functions such as
generation of confirmation statements and disbursement of cash dividends. The
prospectus should be read in connection with such firm's material regarding its
fees and services.
Other Information. The Portfolio reserves the right to withdraw all or any part
of the offering made by this prospectus or to reject purchase orders, without
prior notice. The Portfolio also reserves the right at any time to waive or
increase the minimum investment requirements. All orders to purchase Shares of a
Portfolio are subject to acceptance by the Portfolio and are not binding until
confirmed or accepted in writing. Any purchase that would result in total
account balances for a single shareholder in excess of $3 million is subject to
prior approval by the Portfolio. Share certificates are issued only on request.
A $10 service fee will be charged when a check for the purchase of Shares is
returned because of insufficient or uncollected funds or a stop payment order.
Shareholders should direct their inquiries to the firm from which they received
this prospectus or to Kemper Service Company ("KSvC"), the Portfolio's
"Shareholder Service Agent," 811 Main Street, Kansas City, Missouri 64105-2005.
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 3:00 p.m. or 8:00 a.m.
Central standard 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 Portfolio'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 whole or in part by a distribution of portfolio
securities in lieu of cash, in conformity with the applicable rules of the
Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
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
the 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 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
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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 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 11:00 p.m. Central time will result in shares
being redeemed that day and normally the proceeds will be sent to the designated
account that day. Once authorization is on file, the Shareholder Service Agent
will honor requests by telephone at 1-800-231-8568 or in writing, subject to the
limitations on liability. 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
12
<PAGE>
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. Except for Institutional Shares, 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 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. This section does not apply to Institutional Shares. Upon
request, shareholders will be provided with drafts to be drawn on the 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 $250 since a $10 service fee will be
charged as described below. When a Redemption Check is presented for payment, a
sufficient number of full and fractional shares in the shareholder's account
will be redeemed as of the next determined net asset value to cover the amount
of the Redemption Check. This will enable the shareholder to continue earning
dividends until the 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 a Portfolio account or in
an amount less than $250; when a Redemption Check is presented that would
require redemption of shares that were purchased by check or certain ACH
transactions within 10 days; or when "stop payment" of a Redemption Check is
requested.
Special Features. Certain firms that offer Shares of the 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.
DIVIDENDS, NET ASSET VALUE AND TAXES
Dividends. Dividends are declared daily and paid monthly. Shareholders will
receive dividends in additional shares unless they elect to receive cash.
Dividends will be reinvested monthly in Shares of the Portfolio at the net asset
value normally on the 21st day of each month if a business day, otherwise on the
next business day. The Portfolio will pay shareholders that 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 shares of another Kemper Mutual Fund,
shareholders must maintain a minimum account value of $1,000 in Retail Shares,
$25,000 in Premier Shares and $250,000 in Institutional Shares, and must
maintain a minimum account value of $1,000 in the fund in which dividends are
reinvested.
13
<PAGE>
The Shares of the Portfolio calculates their dividends based on its daily net
investment income. For this purpose, the net investment income of the Shares of
the Portfolio consists of (a) accrued interest income plus or minus amortized
discount or premium, (b) plus or minus all short-term realized gains and losses
on investments and (c) minus accrued expenses allocated to the Shares of the
Portfolio. Expenses of the Portfolio are accrued each day. While the Shares of
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 Shares 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 Shares 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 Shares of 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 Shares of 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.
Taxes. The portfolio intends to continue to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code") and, if so
qualified, will not be subject to Federal income taxes to the extent its
earnings are distributed. Dividends derived from interest and short-term capital
gains are taxable as ordinary income whether received in cash or reinvested in
additional shares. Long-term capital gains distributions, if any, are taxable as
long-term capital gains regardless of the length of time shareholders have owned
their shares. Dividends from the portfolio do not qualify for the dividends
received deduction available to corporate shareholders.
14
<PAGE>
Dividends declared in October, November or December to shareholders of record as
of a date in one of those months and paid during the following January are
treated as paid on December 31 of the calendar year in which declared for
Federal income tax purposes. The Portfolio may adjust its schedule for dividend
reinvestment for the month of December to assist in complying with the reporting
and minimum distribution requirements contained in the Code.
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.
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, 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." 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 tax equivalent yield is similar to the effective
yield calculated on an after-tax basis.
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. For the period ended April 30, 1999, the Money Market Portfolio's
seven-day yield was ____%.
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. For the period ended April 30, 1999, the Portfolio's
effective seven-day yield was ____%.
15
<PAGE>
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 Trust may also describe the Portfolio's
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.
Shares of the Portfolio are not insured. Additional information concerning the
Portfolio's performance appears in this Statement of Additional Information.
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.
[To Be Updated]
<TABLE>
<CAPTION>
BANK RATE MONITOR
National Index(TM)
Money Market Deposit Interest Bearing Money Market Portfolio
Accounts (stated rate) Checking Accounts ---------
Date ----------- (stated rate)
---- -------------
<S> <C> <C> <C>
April 30, 1999
</TABLE>
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
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<PAGE>
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
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.
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:
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, 800 North Lindbergh Boulevard, St. Louis,
Missouri; 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.
DANIEL PIERCE (3/18/34), Trustee*, Two International Place, Boston,
Massachusetts; Managing Director, Adviser.
WILLIAM P. SOMMERS (7/22/33), Trustee, 333 Ravenswood Avenue, Menlo Park,
California; President and Chief Executive Officer, SRI International (research
and development); formerly, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton Inc. (management consulting
firm)(retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
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*, 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.
17
<PAGE>
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.
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 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>
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 and interest thereon 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 is $xx,xxx for Mr. Dunaway from Cash Account
Trust.
(2) Includes compensation for service on the Boards of 25 Kemper funds with 43
fund portfolios. Each trustee currently serves as trustee of 26 Kemper
Funds with 48 fund portfolios. Total compensation does not reflect amounts
paid by the Adviser to the trustees for meeting regarding the combination
of Scudder, Stevens & Clark, Inc. and Zurich Kemper Investments, Inc. Such
amounts totaled $xx,xxx, $xx,xxx, $xx,xxx, $xx,xxx, $xx,xxx and $xx,xxx for
Messrs. Burnham, Dunaway, Hoffman, Jones, Ms. Peterson and Mr. Sommers,
respectively.
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<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 July 31, 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 the Portfolio.
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 Retails
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 Retails Fund that were acquired by purchase (not including
shares acquired by dividend reinvestment) are subject to the applicable sales
charge on exchange. In addition, shares of a Kemper Mutual Fund in excess of
$1,000,000 (except Zurich Yieldwise Money Fund and Kemper Cash Retails 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 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 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.
19
<PAGE>
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. 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 Portfolio shares 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 Portfolio has
established several investment and redemption programs using electronic funds
transfer via the Automated Clearing House (ACH). There is currently no charge by
the Portfolio for these programs. To use these features, your financial
institution (your employer's financial institution in the case of payroll
deposit) must be affiliated with an Automated Clearing House (ACH). This ACH
affiliation permits the Shareholder Service Agent to electronically transfer
money between your bank account, or employer's payroll bank in the case of
Direct Deposit, and your Portfolio account. Your bank's crediting policies of
these transferred funds may vary. These features may be amended or terminated at
any time by the Portfolio. 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 Portfolio.
SHAREHOLDER RIGHTS
The Trust is an open-end, diversified management investment company, organized
as a business trust under the laws of Massachusetts on March 2, 1990. The Trust
may issue an unlimited number of shares of beneficial interest in one or more
series or "Portfolios," all having no par value, which may be divided by the
Board of Trustees into classes of shares,
20
<PAGE>
subject to compliance with the Securities and Exchange Commission regulations
permitting the creation of separate classes of shares. While only shares of the
"Money Market Portfolio", "Government Securities Portfolio" and "Treasury
Portfolio" are presently being offered, the Board of Trustees may authorize the
issuance of additional Portfolios if deemed desirable, each with its own
investment objective, policies and restrictions. Since the Trust offers multiple
Portfolios, it is known as a "series company." Furthermore, the Money Market
Portfolio is currently divided into four classes; the Retail Shares, Premier
Shares, Institutional Shares, and Service Shares. Shares of each Portfolio have
equal noncumulative voting rights and equal rights with respect to dividends,
assets and liquidation of such Portfolio subject to any preferences, rights or
privileges of any classes of shares within the Portfolio. Generally each class
of shares issued by a particular Portfolio would differ as to the allocation of
certain expenses of the Portfolio such as distribution and administrative
expenses, permitting, among other things, different levels of services or
methods of distribution among various classes. Shares are fully paid and
nonassessable when issued, are transferable without restriction and have no
preemptive or conversion rights. The Trust is not required to hold annual
shareholders' meetings and does not intend to do so. Under the Agreements and
Declaration of Trust of the Trust ("Declaration of Trust"), however, shareholder
meetings will be held in connection with the following matters: (a) the election
or removal of trustees if a meeting is called for such purpose; (b) the adoption
of any contract for which 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. Subject to the Agreements and
Declaration of Trust of the Trust, shareholders may remove trustees. 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.
Shareholders will vote by Portfolio and not in the aggregate or by class except
when voting in the aggregate is required under the Investment Company Act of
1940, such as for the election of trustees, or when the Board of Trustees
determines that voting by class is appropriate.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10% of the
outstanding shares. Upon the written request of ten or more shareholders who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of the Trust stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting in
person or by proxy of at least 30% of the shares entitled to vote on a matter
shall constitute a quorum. Thus, a meeting of shareholders of the Trust could
take place even if less than a majority of the shareholders were represented on
its scheduled date. Shareholders would in such a case be permitted to take
action which does not require a larger vote than a majority of a quorum, such as
the election of trustees and ratification of the selection of auditors. Some
matters requiring a larger vote under the Declaration of Trust, such as
termination or reorganization of the Trust and certain amendments of the
Declaration of Trust, would not be affected by this provision; nor would matters
which under the 1940 Act require the vote of a "majority of the outstanding
voting securities" as defined in the 1940 Act.
The Declaration of Trust specifically authorizes the Board of Trustees to
terminate the Trust (or Portfolio or Shares) 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
21
<PAGE>
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.
22
<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.
23
<PAGE>
Aa. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
DUFF & PHELP'S INC. BOND RATINGS
AAA -- Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA -- High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
24
<PAGE>
CASH ACCOUNT TRUST
PART C.
-------
OTHER INFORMATION
-----------------
<TABLE>
<CAPTION>
Item 23. Exhibits:
- -------- ---------
<S> <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) Inapplicable
(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, to
be filed by subsequent amendment.
(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.
(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.
<PAGE>
(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, is filed herein.
(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.
(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.
2
<PAGE>
(n) Financial Data Schedules to be filed by subsequent amendment.
(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
- -------- ---------------
As permitted by Sections 17(h) and 17(i) of the Investment
Company Act of 1940, as amended (the "1940 Act"), pursuant to
Article IV of the Registrant's By-Laws (filed as Exhibit No. 2
to the Registration Statement), officers, directors, employees
and representatives of the Funds may be indemnified against
certain liabilities in connection with the Funds, and pursuant
to Section 12 of the Underwriting Agreement dated May 6, 1998
(filed as Exhibit No. 6(c) to the Registration Statement),
Scudder Investor Services, Inc. (formerly "Scudder Fund
Distributors, Inc."), as principal underwriter of the
Registrant, may be indemnified against certain liabilities
that it may incur. Said Article IV of the By-Laws and Section
12 of the Underwriting Agreement are hereby incorporated by
reference in their entirety.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be
permitted to directors, officers and controlling persons of
the Registrant and the principal underwriter 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 director, officer, or
controlling person of the Registrant and the principal
underwriter in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant
by such director, officer or controlling person or the
principal underwriter in connection with the shares 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
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.**
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**
3
<PAGE>
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, 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 Financial Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Cornelia M. Small Director and Vice President, Scudder Kemper Investments, Inc.**
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 Corporationoo
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
4
<PAGE>
* 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
</TABLE>
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>
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
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
5
<PAGE>
Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
Diane E. Ratekin Assistant Secretary None
Daniel Pierce Director, Chairman Trustee
Mark S. Casady Director, Vice Chairman President
Stephen R. Beckwith Director None
(c) Not applicable.
</TABLE>
Item 28. Location of Accounts and Records.
- -------- ---------------------------------
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the Rules
promulgated thereunder are maintained by Scudder Kemper
Investments Inc., Two International Place, Boston, MA
02110-4103. Records relating to the duties of the Registrant's
custodian are maintained by State Street Bank and Trust
Company, Heritage Drive, North Quincy, Massachusetts. Records
relating to the duties of the Registrant's transfer agent are
maintained by Scudder Service Corporation, Two International
Place, Boston, Massachusetts.
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
14th day of June , 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 June 14, 1999 on behalf of the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Mark S. Casady June 14, 1999
- --------------------------------------
Mark S. Casady President
/s/ Daniel Pierce June 14, 1999
- --------------------------------------
Daniel Pierce* Chairman and Trustee
/s/ John W. Ballantine June 14, 1999
- --------------------------------------
John W. Ballantine* Trustee
/s/ Lewis A. Burnham June 14, 1999
- --------------------------------------
Lewis A. Burnham* Trustee
/s/ Donald L. Dunaway June 14, 1999
- --------------------------------------
Donald L. Dunaway* Trustee
/s/ Robert B. Hoffman June 14, 1999
- --------------------------------------
Robert B. Hoffman* Trustee
/s/ Donald R. Jones June 14, 1999
- --------------------------------------
Donald R. Jones* Trustee
/s/ Thomas W. Littauer June 14, 1999
- --------------------------------------
Thomas W. Littauer Trustee
/s/ Shirley D. Peterson June 14, 1999
- --------------------------------------
Shirley D. Peterson* Trustee
<PAGE>
/s/ William P. Sommers June 14, 1999
- --------------------------------------
William P. Sommers* Trustee
/s/ John R. Hebble June 14, 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 filed herewith.
2
<PAGE>
POWER OF ATTORNEY
-----------------
The person whose signature appears below hereby appoints Kathryn L.
Quirk, Caroline Pearson, and Philip J. Collora and each of them, any of whom may
act without the joinder of the others, as such person's attorney-in-fact to sign
and file on such person's behalf individually and in the capacity stated below
such registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Cash Account Trust.
Signature Title Date
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/s/ John W. Ballantine Trustee June 11, 1999
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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. 12
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 13
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
CASH ACCOUNT TRUST
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CASH ACCOUNT TRUST
EXHIBIT INDEX
(h)(9)
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Exhibit (h)(9)
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
AGREEMENT made this 31st day of December, 1997, by and between CASH ACCOUNT
TRUST, a Massachusetts business trust (the "Fund"), and KEMPER DISTRIBUTORS,
INC., a Delaware corporation ("KDI").
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KDI to act as administrator, distributor and
principal underwriter for the distribution of shares of beneficial interest
(hereinafter called "shares") of the Fund in jurisdictions wherein shares of the
Fund may legally be offered for sale; provided, however, that the Fund in its
absolute discretion may (a) issue or sell shares directly to holders of shares
of the Fund upon such terms and conditions and for such consideration, if any,
as it may determine, whether in connection with the distribution of subscription
or purchase rights, the payment or reinvestment of dividends or distributions,
or otherwise; or (b) issue or sell shares at net asset value to the shareholders
of any other investment company, for which KDI shall act as exclusive
distributor, who wish to exchange all or a portion of their investment in shares
of such other investment company for shares of the Fund.
KDI shall appoint various broker-dealers and other financial services firms
("Firms") to provide a cash management service for their clients through the
Fund. The Firms shall provide such office space and equipment, telephone
facilities, personnel, literature distribution, advertising and promotion as is
necessary or beneficial for providing information and services to potential and
existing shareholders of the Fund and to assist the Fund's shareholder service
agent in servicing accounts of the Firm's clients who own Fund shares
("clients"). Such services and assistance may include, but are not limited to,
establishment and maintenance of shareholder accounts and records, processing
purchase and redemption transactions, automatic investment in Fund shares of
client account cash balances, answering routine client inquiries regarding the
Fund, assistance to clients in changing dividend options, account designations
and addresses, and such other services as the Fund or KDI may reasonably
request. KDI may also provide some of the above services for the Fund directly.
KDI accepts such appointment and agrees during the term hereof to render such
services and to assume the obligations herein set forth for the compensation
herein provided. KDI shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the
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Fund in any way or otherwise be deemed an agent of the Fund. It is understood
and agreed that KDI, by separate agreement with the Fund, may also serve the
Fund in other capacities. The services of KDI to the Fund under this Agreement
are not to be deemed exclusive, and KDI shall be free to render similar services
or other services to others.
In carrying out its duties and responsibilities hereunder, KDI will, pursuant to
separate administration services and selling group agreements ("services
agreements"), appoint various Firms to provide administrative, distribution and
other services contemplated hereunder directly to or for the benefit of existing
and potential shareholders who may be clients of such Firms. Such Firms shall at
all times be deemed to be independent contractors retained by KDI and not the
Fund. KDI and not the Fund will be responsible for the payment of compensation
to such Firms for such services.
KDI will use its best efforts with reasonable promptness to sell such part of
the authorized shares of the Fund remaining unissued as from time to time shall
be effectively registered under the Securities Act of 1933 ("Securities Act"),
at prices determined as hereinafter provided and on terms hereinafter set forth,
all subject to applicable Federal and state laws and regulations and to the
Agreement and Declaration of Trust of the Fund. The price the Fund shall receive
for all shares purchased from the Fund shall be the net asset value used in
determining the public offering price applicable to the sale of such shares.
2. KDI shall sell shares of the Fund to or through qualified Firms in such
manner, not inconsistent with the provisions hereof and the then effective
registration statement of the Fund under the Securities Act (and related
prospectus), as KDI may determine from time to time, provided that no Firm or
other person shall be appointed or authorized to act as agent of the Fund
without the prior consent of the Fund. In addition to sales made by it as agent
of the Fund, KDI may, in its discretion, also sell shares of the Fund as
principal to persons with whom it does not have services agreements.
Shares of the Fund offered for sale or sold by KDI shall be so offered or sold
at a price per share determined in accordance with the then current prospectus
relating to the sale of such shares except as departure from such prices shall
be permitted by the rules and regulations of the Securities and Exchange
Commission; provided, however, that any public offering price for shares of the
Fund shall be the net asset value per share. The net asset value per share of
the Fund shall be determined in the manner and at the times set forth in the
then current prospectus of the Fund relating to such shares.
KDI will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the
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public offering price of the Fund's shares, and neither KDI nor any such Firms
shall withhold the placing of purchase orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered under the
Securities Act for sale as herein contemplated such shares as KDI shall
reasonably request and as the Securities and Exchange Commission shall permit to
be so registered. Notwithstanding any other provision hereof, the Fund may
terminate, suspend or withdraw the offering of shares whenever, in its sole
discretion, it deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as KDI may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to KDI from time to time such information
with respect to the Fund and its shares as KDI may reasonably request for use in
connection with the sale of shares of the Fund.
5. KDI shall issue and deliver or shall arrange for various Firms to issue and
deliver on behalf of the Fund such confirmations of sales made by it as agent
pursuant to this Agreement as may be required. At or prior to the time of
issuance of shares, KDI will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
KDI may specify.
6. KDI shall order shares of the Fund from the Fund only to the extent that it
shall have received purchase orders therefor. KDI will not make, or authorize
any Firms or others to make, any short sales of shares of the Fund. KDI, as
agent of and for the account of the Fund, may repurchase the shares of the Fund
at such prices and upon such terms and conditions as shall be specified in the
current prospectus of the Fund. In selling or reacquiring shares of the Fund for
the account of the Fund, KDI will in all respects conform to the requirements of
all state and Federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., relating to such sale or reacquisition,
as the case may be, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by KDI or any employee,
representative or agent of KDI. KDI will observe and be bound by all the
provisions of the Agreement and Declaration of Trust of the Fund (and of any
fundamental policies adopted by the Fund pursuant to the Investment Company Act
of 1940, notice of which shall have been given to KDI) which at the time in any
way require, limit, restrict or prohibit or otherwise regulate any action on the
part
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of KDI.
7. The Fund shall assume and pay all charges and expenses of its operations not
specifically assumed or otherwise to be provided by KDI under this Agreement.
The Fund will pay or cause to be paid expenses (including the fees and
disbursements of its own counsel) and all taxes and fees payable to the Federal,
state or other governmental agencies on account of the registration or
qualification of securities issued by the Fund or otherwise. The Fund will also
pay or cause to be paid expenses incident to the issuance of shares of
beneficial interest, such as the cost of share certificates, issue taxes, and
fees of the transfer agent. KDI will pay all expenses (other than expenses which
one or more Firms may bear pursuant to any agreement with KDI) incident to the
sale and distribution of the shares issued or sold hereunder including, without
limiting the generality of the foregoing, all expenses of printing and
distributing any prospectus and of preparing, printing and distributing or
disseminating any other literature, advertising and selling aids in connection
with the offering of the shares for sale (except that such expenses need not
include expenses incurred by the Fund in connection with the preparation,
typesetting, printing and distribution of any registration statement, prospectus
or report or other communication to shareholders in their capacity as such) and
expenses of advertising in connection with such offering.
8. For the services and facilities described herein, the Fund will pay to KDI at
the end of each calendar month a distribution services fee computed at an annual
rate of.60% of the average daily net assets of the Money Market Portfolio and
the Government Securities Portfolio and at an annual rate of .50% of the average
daily net assets of the Tax-Exempt Portfolio. The fees shall be charged to each
series of shares of the Fund ("Portfolio") subject to this Agreement based upon
the average daily net assets of such Portfolio and at the annual rate applicable
to such Portfolio as provided above.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively.
The net asset value of each Portfolio shall be calculated in accordance with the
provisions of the Fund's current prospectus. On each day when net asset value is
not calculated, the net asset value of a share of any Portfolio shall be deemed
to be the net asset value of such a share as of the close of business on the
last day on which such calculation was made for the purpose of the foregoing
computations.
9. KDI shall prepare reports for the Board of Trustees of the Fund on a
quarterly basis showing amounts paid to the various Firms, the basis for any
discretionary payments made to such Firms and such other information as from
time to time shall be
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reasonably requested by the Board of Trustees.
This Agreement shall become effective on the date hereof and shall continue
until December 1, 1998 and shall continue from year to year thereafter with
respect to each Portfolio, but only so long as such continuance is specifically
approved for each Portfolio at least annually by a vote of the Board of Trustees
of the Fund including the trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in this Agreement or in
any agreement related to this Agreement.
This Agreement may not be amended to increase the amount to be paid to KDI for
services hereunder without the vote of a majority of the outstanding voting
securities of each Portfolio of the Fund. All material amendments to this
Agreement must in any event be approved by a vote of the Board of Trustees of
the Fund including the trustees who are not interested persons of the Fund and
who have no direct or indirect financial interest in this Agreement or in any
agreement related to this Agreement, cast in person at a meeting called for such
purpose.
10. This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the Fund
or by KDI on sixty (60) days written notice to the other party. The Fund may
effect termination with respect to any Portfolio by a vote of (i) a majority of
the Board of Trustees, (ii) a majority of the trustees who are not interested
persons of the Fund and who have no direct or indirect financial interest in
this Agreement or in any agreement related to this Agreement, or (iii) a
majority of the outstanding voting securities of a Portfolio.
The terms "assignment", "interested" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the Investment Company
Act of 1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of KDI to receive
payments on any unpaid balance of the compensation described in Section 8 earned
prior to such termination.
11. KDI will not use or distribute or authorize the use, distribution or
dissemination by Firms or others in connection with the sale of the shares any
statements, other than those contained in the Fund's current prospectus, except
such supplemental literature or advertising as shall be lawful under Federal and
state securities laws and regulations, and will furnish the Fund with copies of
all such material.
12. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
13. Any notice under this Agreement shall be in writing,
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addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
14. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund. With
respect to any claim by KDI for recovery of that portion of the distribution
services fees (or any other liability of the Fund arising hereunder) allocated
to a particular Portfolio, whether in accordance with the express terms hereof
or otherwise, KDI shall have recourse solely against the assets of that
Portfolio to satisfy such claim and shall have no recourse against the assets of
any other Portfolio for such purpose.
15. This Agreement shall be construed in accordance with applicable federal law
and the laws of The Commonwealth of Massachusetts.
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16. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and KDI have caused this Agreement to be executed
as of the day and year first above written.
CASH ACCOUNT TRUST
By: _____________________
Title: __________________
ATTEST:
_________________________
Title: _________________
KEMPER DISTRIBUTORS, INC.
By: _____________________
Title:____________________
ATTEST:
_________________________
Title: _________________
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