<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1998
1933 ACT REGISTRATION NO. 33-34819
1940 ACT REGISTRATION NO. 811-6108
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------
FORM N-1A
<TABLE>
<S> <C>
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]
</TABLE>
(Check appropriate box or boxes)
------------------
INVESTORS MUNICIPAL CASH FUND
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C>
222 South Riverside Plaza, Chicago, Illinois 60606
(Address of Principal Executive Office) (Zip Code)
</TABLE>
Registrant's Telephone Number, including Area Code: (312) 537-7000
<TABLE>
<S> <C>
Philip J. Collora, Vice President and Secretary With a copy to:
Investors Municipal Cash Fund Cathy G. O'Kelly
222 South Riverside Plaza David A. Sturms
Chicago, Illinois 60606 Vedder, Price, Kaufman & Kammholz
(Name and Address of Agent for Service) 222 North LaSalle Street
Chicago, Illinois 60601
</TABLE>
It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on August 1, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INVESTORS MUNICIPAL CASH FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER
OF FORM N-1A LOCATION IN PROSPECTUS
------------ ----------------------
<S> <C> <C>
1. Cover Page............................... Cover Page
2. Synopsis................................. Summary; Summary of Expenses
3. Condensed Financial Information.......... Financial Highlights; Performance
4. General Description of Registrant........ Capital Structure; Investment Objectives,
Policies and Risk Factors; Municipal Securities and
Investment Techniques
5. Management of the Fund................... Summary; Investment Manager and Shareholder Services
5A. Management's Discussion of
Fund Performance......................... Inapplicable
6. Capital Stock and Other Securities....... Summary; Investment Objectives, Policies and Risk
Factors; Dividends and Taxes; Purchase of Shares;
Capital Structure
7. Purchase of Securities Being Offered..... Summary; Purchase of Shares; Investment Manager and
Shareholder Services; Net Asset Value; Special
Features
8. Redemption or Repurchase................. Summary; Redemption of Shares
9. Pending Legal Proceedings................ Inapplicable
</TABLE>
<PAGE> 3
INVESTORS MUNICIPAL CASH FUND
222 South Riverside Plaza
Chicago, Illinois 60606
TABLE OF CONTENTS
- ---------------------------------------------------------
<TABLE>
<S> <C>
Summary 1
- ------------------------------------------------
Summary of Expenses 2
- ------------------------------------------------
Financial Highlights 4
- ------------------------------------------------
Investment Objectives, Policies and Risk
Factors 6
- ------------------------------------------------
Municipal Securities and Investment
Techniques 10
- ------------------------------------------------
Net Asset Value 12
- ------------------------------------------------
Purchase of Shares 12
- ------------------------------------------------
Redemption of Shares 14
- ------------------------------------------------
Special Features 16
- ------------------------------------------------
Dividends and Taxes 16
- ------------------------------------------------
Investment Manager and Shareholder Services 19
- ------------------------------------------------
Performance 21
- ------------------------------------------------
Capital Structure 21
- ------------------------------------------------
</TABLE>
This Prospectus contains information about each Fund that a prospective investor
should know before investing and should be retained for future reference. A
Statement of Additional Information dated August 1, 1998, has been filed with
the Securities and Exchange Commission and is incorporated herein by reference.
It is available upon request without charge from the Trust at the address or
telephone number on this cover or the firm from which this prospectus was
received.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTORS
MUNICIPAL
CASH FUND
PROSPECTUS August 1, 1998
INVESTORS MUNICIPAL CASH FUND
222 South Riverside Plaza, Chicago, Illinois 60606 1-800-231-8568.
Investors Municipal Cash Fund is an open-end, non-diversified management
investment company ("Trust") that offers a choice of five investment portfolios
("Funds") to investors seeking, to the extent consistent with stability of
capital, maximum current income that is exempt from federal income taxes and, in
the case of certain Funds, the income taxes of a particular state:
Investors Florida Municipal Cash Fund
Investors Michigan Municipal Cash Fund
Investors New Jersey Municipal Cash Fund
Investors Pennsylvania Municipal Cash Fund
Tax-Exempt New York Money Market Fund
Each Fund is available in the named state and selected other states specified
under "Purchase of Shares -- Other Information."
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY AND IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. A FUND MAY INVEST A
SIGNIFICANT PERCENTAGE OF ITS ASSETS IN THE SECURITIES OF A SINGLE ISSUER, AND
THEREFORE, AN INVESTMENT IN A FUND MAY BE SUBJECT TO MORE RISK THAN AN
INVESTMENT IN OTHER TYPES OF MONEY MARKET FUNDS.
<PAGE> 4
INVESTORS MUNICIPAL CASH FUND
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606, TELEPHONE 1-800-231-8568
SUMMARY
INVESTMENT OBJECTIVES. Investors Municipal Cash Fund (the "Trust") is
registered as an open-end, non-diversified management investment company that
offers a choice of five investment portfolios ("Funds"). However, each Fund must
meet the diversification requirements of Rule 2a-7 under the Investment Company
Act of 1940.
Each Fund seeks to provide, to the extent consistent with stability of capital,
maximum current income that is exempt from federal income taxes and, in the case
of certain Funds, the income taxes of a particular state.
INVESTORS FLORIDA MUNICIPAL CASH FUND ("Florida Fund") seeks maximum current
income that is exempt from federal income taxes to the extent consistent with
stability of capital.
INVESTORS MICHIGAN MUNICIPAL CASH FUND ("Michigan Fund") seeks maximum current
income that is exempt from federal and Michigan income taxes to the extent
consistent with stability of capital.
INVESTORS NEW JERSEY MUNICIPAL CASH FUND ("New Jersey Fund") seeks maximum
current income that is exempt from federal and New Jersey income taxes to the
extent consistent with stability of capital.
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND ("Pennsylvania Fund") seeks maximum
current income that is exempt from federal and Pennsylvania income taxes to the
extent consistent with stability of capital.
TAX-EXEMPT NEW YORK MONEY MARKET FUND ("New York Fund") seeks maximum current
income that is exempt from federal, New York State and New York City income
taxes to the extent consistent with stability of capital.
Since each Fund is concentrated in securities issued by a state or entities
within a state and may invest a significant percentage of its assets in the
securities of a single issuer, an investment in a Fund may be subject to more
risk than an investment in other types of money market funds. Each Fund seeks to
maintain a net asset value of $1.00 per share. There is no assurance that the
objective of a Fund will be achieved or that a Fund will be able to maintain a
net asset value of $1.00 per share. See "Investment Objectives, Policies and
Risk Factors."
INVESTMENT MANAGER AND SHAREHOLDER SERVICES. Scudder Kemper Investments, Inc.
("Scudder Kemper") is the investment manager for each Fund and provides the
Funds with continuous professional investment supervision. Scudder Kemper is
paid a monthly investment management fee, on a graduated basis of 1/12 of the
following annual rates.
<TABLE>
<CAPTION>
COMBINED AVERAGE ALL
DAILY NET ASSETS FUNDS
---------------- -----
<S> <C>
$0 - $500 million........................................... .22 %
$500 - $1 billion........................................... .20 %
$1 billion - $2 billion..................................... .175%
$2 billion - $3 billion..................................... .16 %
Over $3 billion............................................. .15 %
</TABLE>
Kemper Distributors, Inc. ("KDI"), an affiliate of Scudder Kemper, is the
primary administrator, distributor and principal underwriter of the Funds and,
as such, provides information and services for existing and potential
shareholders and acts as agent of each Fund in the sale of its shares. KDI
receives a distribution services fee,
1
<PAGE> 5
payable monthly, at an annual rate of .50% of average daily net assets of each
Fund. As distributor, KDI normally pays financial services firms that provide
cash management and other services for their customers at a maximum annual rate
of .50% of average daily net assets of those accounts that they maintain and
service. See "Investment Manager and Shareholder Services."
INVESTORS IN A FUND. Each Fund is designed for persons who are seeking, to the
extent consistent with stability of capital, maximum current income exempt from
federal income taxes and, in the case of certain Funds, from income taxes of a
particular state. Through a single investment in shares of a Fund, investors
receive the benefits of professional management and liquidity. Additionally,
each Fund offers the economic advantages of block purchases of securities and
relief from administrative details such as accounting for distributions and the
safekeeping of securities. The tax exemption of Fund dividends for federal
income tax and, if applicable, particular state or local tax purposes does not
necessarily result in exemption under the income or other tax laws of any other
state or local taxing authority. The laws of the several states and local taxing
authorities vary with respect to the taxation of interest income and
investments, and shareholders are advised to consult their own tax advisers as
to the status of their accounts under state and local tax laws. See "Dividends
and Taxes."
PURCHASES AND REDEMPTIONS. Shares of a Fund are available at net asset value
through selected financial services firms. The minimum initial investment is
$1,000 and the minimum subsequent investment is $100. See "Purchase of Shares."
Shares may be redeemed at the net asset value next determined after receipt by
the Trust's Shareholder Service Agent of a request to redeem in proper form.
Shares may be redeemed by written request or by using the Trust's expedited
redemption procedures. See "Redemption of Shares."
DIVIDENDS. Dividends are declared daily and paid monthly. Dividends are
automatically reinvested in additional shares, unless the shareholder makes a
different election. See "Dividends and Taxes."
GENERAL INFORMATION AND CAPITAL. The Trust is organized as a business trust
under the laws of Massachusetts and may issue an unlimited number of shares of
beneficial interest in one or more series or funds, all having no par value,
which may be divided by the Board of Trustees into classes of shares. 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 shareholder meetings; but will hold special meetings as required or
deemed desirable for such purposes as electing trustees, changing fundamental
policies or approving an investment management agreement. See "Capital
Structure."
SUMMARY OF EXPENSES
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES(1)......................... None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
</TABLE>
<TABLE>
<CAPTION>
FLORIDA MICHIGAN NEW JERSEY NEW YORK PENNSYLVANIA
FUND FUND FUND FUND FUND
------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Management Fees (after fee waiver)................... .13% .10% 0% .04% .01%
12b-1 Fees(2)........................................ .50% .35% .50% .50% .50%
Other Expenses(3).................................... .27% .30% .40% .26% .39%
--- --- --- --- ---
Total Operating Expenses (after fee waiver and
expense absorption)................................ .90% .75% .90% .80% .90%
=== === === === ===
</TABLE>
- ---------------
(1) Investment dealers and other firms may independently charge shareholders
additional fees; please see their materials for details.
(2) As a result of the accrual of 12b-1 fees, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers.
(3) "Other Expenses" for the Michigan Fund has been estimated for the current
fiscal year.
2
<PAGE> 6
EXAMPLE
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
You would pay the following expenses Florida $9 $29 $50 $111
on a $1,000 investment, assuming Michigan $8 $24 -- --
(1) 5% annual return and New Jersey $9 $29 $50 $111
(2) redemption at the end of each time New York $8 $26 $44 $ 99
period: Pennsylvania $9 $29 $50 $111
</TABLE>
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in a Fund will bear directly or
indirectly. The Example assumes a 5% annual rate of return pursuant to
requirements of the Securities and Exchange Commission. This hypothetical rate
of return is not intended to be representative of past or future performance of
a Fund.
As discussed more fully under "Investment Manager and Shareholder Services,"
Scudder Kemper has agreed to temporarily waive its management fee and reimburse
or pay operating expenses for the current fiscal year to the extent, if any,
that "Total Operating Expenses" exceed .80% of average daily net assets of the
New York Fund, .75% of average daily net assets of the Michigan Fund and .90% of
average daily net assets of each of the Florida, New Jersey and Pennsylvania
Funds. Without such waiver and expense reimbursement, "Management Fees" would
have been .22%, "12b-1 Fees" would have been .50%, "Other Expenses" would have
been .26% and "Total Operating Expenses" would have been .98% for the New York
Fund. Without such waiver and expense reimbursement, "Management Fees," would
have been .22%, "12b-1 Fees" would have been .35%, "Other Expenses" would have
been .30% and "Total Operating Expenses" would have been .87% for the Michigan
Fund. For the Florida, New Jersey and Pennsylvania Funds, without such waiver
and expense reimbursement, "Management Fees" would be .22% and "12b-1 Fees"
would be .50% for each Fund, "Other expenses" would be .27%, .40% and .39%,
respectively, and "Total Operating Expenses" would be .99%, 1.12% and 1.11%,
respectively. The Michigan Fund commenced operations on April 6, 1998, thus
expenses are shown for only the one and three year periods, and "Other Expenses"
are estimated for the current fiscal year.
THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
3
<PAGE> 7
FINANCIAL HIGHLIGHTS
The table below shows financial information for the Funds, except the Michigan
Fund, expressed in terms of one share outstanding throughout the period. The
information in the tables for the periods through March 31, 1998 is covered by
the report of the Trust's independent auditors. The report is contained in the
Trust's Registration Statement and is available from the Trust. The financial
statements contained in the Trust's 1998 Annual Report to Shareholders are
incorporated herein by reference and may be obtained by writing or calling the
Trust.
FLORIDA FUND
<TABLE>
<CAPTION>
MAY 22, 1997
TO
MARCH 31, 1998
--------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00
- -------------------------------------------------------------------------------
Net investment income .02
- -------------------------------------------------------------------------------
Less dividends declared .02
- -------------------------------------------------------------------------------
Net asset value, end of period $ 1.00
- -------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.41%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .90%
- -------------------------------------------------------------------------------
Net investment income 2.74%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .99%
- -------------------------------------------------------------------------------
Net investment income 2.65%
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $7,611
- -------------------------------------------------------------------------------
</TABLE>
NEW JERSEY FUND
<TABLE>
<CAPTION>
MAY 23, 1997
TO
MARCH 31, 1998
--------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00
- -------------------------------------------------------------------------------
Net investment income .02
- -------------------------------------------------------------------------------
Less dividends declared .02
- -------------------------------------------------------------------------------
Net asset value, end of period $ 1.00
- -------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.22%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .90%
- -------------------------------------------------------------------------------
Net investment income 2.55%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses 1.12%
- -------------------------------------------------------------------------------
Net investment income 2.33%
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $4,665
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 8
NEW YORK FUND
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, DECEMBER 13, 1990
-------------------- TO
1998 1997 1996 1995 1994 1993 1992 MARCH 31, 1991
---- ---- ---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
Net investment income .03 .03 .03 .02 .02 .02 .04 .01
- --------------------------------------------------------------------------------------------------------------------
Less dividends declared .03 .03 .03 .02 .02 .02 .04 .01
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.90% 3.03 3.03 2.40 1.63 1.90 3.77 .97
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER
EXPENSE ABSORPTION (ANNUALIZED):
Expenses .80% .44 .80 .80 .80 .80 .42 .54
- --------------------------------------------------------------------------------------------------------------------
Net investment income 2.83% 2.96 2.95 2.44 1.61 1.88 3.52 3.77
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE
EXPENSE ABSORPTION (ANNUALIZED):
Expenses .98% .96 1.14 1.15 1.25 1.53 1.45 1.00
- --------------------------------------------------------------------------------------------------------------------
Net investment income 2.65% 2.44 2.61 2.09 1.16 1.15 2.49 3.31
- --------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in
thousands) $104,198 60,575 18,527 14,090 10,762 8,424 8,243 2,108
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
PENNSYLVANIA FUND
<TABLE>
<CAPTION>
MAY 21, 1997
TO
MARCH 31, 1998
--------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00
- -------------------------------------------------------------------------------
Net investment income .02
- -------------------------------------------------------------------------------
Less dividends declared .02
- -------------------------------------------------------------------------------
Net asset value, end of period $ 1.00
- -------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.42%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE ABSORPTION
(ANNUALIZED):
Expenses .90%
- -------------------------------------------------------------------------------
Net investment income 2.76%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE ABSORPTION
(ANNUALIZED):
Expenses 1.11%
- -------------------------------------------------------------------------------
Net investment income 2.55%
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $3,195
- -------------------------------------------------------------------------------
</TABLE>
NOTE: Scudder Kemper has agreed to temporarily absorb certain expenses of the
Funds.
The Michigan Fund (not shown above) commenced operations on April 6, 1998.
5
<PAGE> 9
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
Investors Municipal Cash Fund (the "Trust") is a registered open-end,
non-diversified management investment company that offers a choice of five
investment portfolios ("Funds"). Each Fund seeks to provide, to the extent
consistent with stability of capital, maximum current income that is exempt from
federal income taxes and, in the case of certain Funds, the income taxes of a
particular state. The Trust may offer additional Funds in the future.
Each Fund is a money market mutual fund that has been designed to provide
investors with professional management of short-term investment dollars. Each
Fund pools individual and institutional investors' money which it uses to buy
tax-exempt money market instruments. Because the Funds combine their respective
shareholders' money, they can buy and sell large blocks of securities, which
reduces transaction costs and increases yields. The Funds are managed by
investment professionals who analyze market trends to take advantage of changing
conditions. 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. Because of their short maturities,
liquidity and high quality ratings, high quality money market instruments, such
as those in which the Funds invest, are generally considered among the safest
available. There can be no assurance that a Fund will achieve its objective or
that it will maintain a net asset value of $1.00 per share.
As a fundamental investment policy, each Fund will under normal market
conditions maintain at least 80% of its investments 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 taxes
("Municipal Securities"). As indicated under "Dividends and Taxes," the Funds
may invest in "private activity bonds." In compliance with the position of the
staff of the Securities and Exchange Commission ("SEC"), the New York Fund does
not consider "private activity" bonds as Municipal Securities for purposes of
the 80% limitation. This is a fundamental policy for the New York Fund so long
as the SEC staff maintains its position, after which it would become
non-fundamental. Each Fund's assets will consist of Municipal Securities and
temporary investments as described below and cash.
The New York Fund will invest only in Municipal Securities that at the time of
purchase: (a) are rated within the two highest ratings of municipal securities
(Aaa or Aa) assigned by Moody's Investors Service, Inc. ("Moody's"), or (AAA or
AA) assigned by Standard & Poor's Corporation ("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; (d) have at
the time of purchase a 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 by the Board of Trustees or
its delegate to be at least equal in quality to one or more of the above
categories.
The Florida, Michigan, New Jersey and Pennsylvania Funds will invest only in
Municipal Securities that at the time of purchase: (a) are rated high quality by
Moody's, S&P, Duff Phelps, Inc., Fitch Investor's Services, Inc. or any other
nationally recognized statistical rating organization ("NRSRO") as determined by
the SEC; (b) are unrated, if in the discretion of the Board of Trustees or its
delegate the Municipal Securities are determined to be at least equal in quality
to one or more of the ratings in subparagraph (a) immediately above; or (c) are
fully collateralized by an escrow of U.S. Government securities.
Rather than invest in securities directly, each Fund may in the future seek to
achieve its investment objective by pooling its assets with assets of other
mutual funds managed by Scudder Kemper or its affiliates for investment in
another investment company having the same investment objective and
substantially the same investment policies and restrictions. The purpose of such
an arrangement is to achieve greater operational efficiencies and to reduce
costs. It is expected that any such investment company will be managed by
Scudder Kemper in substantially the same manner as the Fund pooling its assets.
Shareholders of a Fund will be given at least 30
6
<PAGE> 10
days prior notice of any such investment, although they will not be entitled to
vote on the action. Such investment would be made only if the trustees determine
it to be in the best interests of a Fund and its shareholders.
The Funds limit their portfolio investments to securities that meet the
diversification and quality requirements of Rule 2a-7 under the Investment
Company Act of 1940 (the "1940 Act"). See "Net Asset Value." From time to time,
a significant portion of a Fund's securities is supported by credit and
liquidity enhancements from third party banks and other financial institutions,
and as a result, changes in the credit quality of these institutions could cause
losses to a Fund and affect its share price.
From time to time, as a defensive measure, including during periods when
acceptable short-term Municipal Securities are not available, each Fund 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 for the New York Fund; debt securities
rated high quality by any NRSRO for the Florida, Michigan, New Jersey and
Pennsylvania Funds; commercial paper rated in the two highest grades by either
Moody's or S&P for the New York Fund; commercial paper rated high quality by any
NRSRO for the Florida, Michigan, New Jersey and Pennsylvania Funds; certificates
of deposit of domestic banks with assets of $1 billion or more; and any of the
foregoing temporary investments subject to repurchase agreements. Under a
repurchase agreement a Fund 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 Fund's holding period. Repurchase
agreements with broker-dealer firms will be limited to obligations of the U.S.
Government, its agencies or instrumentalities. Maturity of the securities
subject to repurchase may exceed one year. Interest income from temporary
investments is taxable to shareholders as ordinary income. Although a Fund is
permitted to invest in taxable securities (limited under normal market
conditions to 20% of a Fund's total assets), it is each Fund's primary intention
to generate income dividends that are not subject to federal income taxes and,
in the case of certain Funds, the income taxes of a particular state. See
"Dividends and Taxes." For a description of the ratings, see "Appendix--Ratings
of Investments" in the Statement of Additional Information.
The Funds 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. A Fund will not borrow for leverage purposes. A Fund will
not purchase illiquid securities, including repurchase agreements maturing in
more than seven days, if, as a result thereof, more than 10% of a Fund's net
assets valued at the time of the transaction would be invested in such
securities. Up to 25% of the total assets of a Fund may be invested at any time
in debt obligations of a single issuer or of issuers in a single industry, and a
Fund may invest without limitation in Municipal Securities the income on which
may be derived from projects of a single type.
Although the Trust has registered as a "non-diversified" investment company,
each Fund must meet the diversification requirements of Rule 2a-7 under the 1940
Act. Rule 2a-7 generally provides that a single state money fund shall not, as
to 75% of its assets, invest more than 5% of its assets in the securities of an
individual issuer, provided that the fund may not invest more than 5% of its
assets in the securities of an individual issuer unless the securities are First
Tier Securities (as defined in Rule 2a-7). This allows each Fund, as to 25% of
its assets, to invest more than 5% of its assets in the securities of an
individual issuer. Since each Fund is concentrated in securities issued by a
particular state or entities within that state and may invest a significant
percentage of its assets in the securities of a single issuer, an investment in
a Fund may be subject to more risk than an investment in other types of money
market funds. See "Investment Restrictions" in the Statement of Additional
Information.
Each Fund has adopted certain investment restrictions that are presented in the
Statement of Additional Information, and that, together with the investment
objective and fundamental policies of each Fund, cannot be
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<PAGE> 11
changed without approval by holders of a majority of its outstanding voting
shares. As defined in the 1940 Act, this means the lesser of the vote of (a) 67%
of the shares of a Fund 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 a Fund.
FLORIDA FUND. The objective of the Florida Fund is to provide maximum current
income that is exempt from federal income tax to the extent consistent with
stability of capital. The Florida Fund pursues its objective, primarily through
a professionally managed, non-diversified portfolio of short-term high quality
municipal obligations issued by or on behalf of the State of Florida, its
political subdivisions, authorities and corporations, and territories and
possessions of the United States and their political subdivisions, agencies and
instrumentalities and other securities that are, in the opinion of bond counsel
to the issuer, exempt from the Florida intangibles tax and the interest from
which is exempt from federal income taxes ("Florida Municipal Securities").
Dividends representing interest income received by the Florida Fund on Florida
Municipal Securities will be exempt from federal income taxes. Dividend income
may be subject to state and local taxes. Florida currently has no income tax for
individuals. Since the investment manager believes that exemption from the
Florida intangibles tax is likely to be available, the Florida Fund generally
will seek investments enabling shares of the Florida Fund to be exempt from the
intangibles tax. However, there is no assurance that an exemption from the
Florida intangibles tax will be available. See "Dividends and Taxes." Florida
Municipal Securities may at times have lower yields than other tax-exempt
securities. As a temporary defensive position, to the extent Florida Municipal
Securities are at any time unavailable or unattractive for investment by the
Florida Fund, it will invest in other debt securities the interest from which is
exempt from federal income taxes. Under normal market conditions, as a
non-fundamental policy, the Florida Fund will maintain at least 65% of its total
assets in Florida Municipal Securities. See also "Dividends and Taxes."
Florida is characterized by rapid growth, substantial capital needs, a
manageable debt burden, a diversifying but still somewhat narrow economic base
and good financial operations. The State continues to experience rapid
population growth although not as great as in previous years. The slower
population growth rate should allow the State to catch up on its capital needs.
Technology-based manufacturing, business and financial services have joined
tourism and agriculture as leading elements of Florida's continued economic
growth. Florida's overall financial position remains healthy. The swings are
reflective of the State's reliance on the sales tax as the major revenue source.
Florida has increased its funding of capital projects through more frequent debt
issuance rather than the historical pay-as-you-go method.
MICHIGAN FUND. The objective of the Michigan Fund is to provide maximum current
income that is exempt from federal and Michigan income taxes to the extent
consistent with stability of capital. The Michigan Fund pursues its objective
primarily through a professionally managed, non-diversified portfolio of
short-term high quality municipal obligations issued by or on behalf of the
state of Michigan, its political subdivisions, authorities and corporations, and
territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from federal and Michigan income
taxes ("Michigan Municipal Securities"). Dividends representing interest income
received by the Michigan Fund on Michigan Municipal Securities will be exempt
from federal and Michigan income taxes. Such dividend income may be subject to
other state and local taxes. To the extent that Michigan Municipal Securities
are at any time unavailable or unattractive for investment by the Michigan Fund,
it will invest temporarily in other debt securities the interest from which is
exempt from federal income taxes. Under normal market conditions, as a
non-fundamental policy, the Michigan Fund will maintain at least 65% of its
total assets in Michigan Municipal Securities.
Michigan's economic performance relies heavily on national economic trends. Its
economy is highly industrialized with an economic base concentrated in the
manufacturing sector. This concentration has generally caused the State's
economy to be more volatile than that of more diversified states, although its
long term growth has kept pace with the nation due to gains in other sectors.
The most recent economic recession had a milder effect on the State compared to
the recession of the 1980's. The restructuring of the State's manufacturing
industry
8
<PAGE> 12
following the recession of the 1980's improved the industry's overall
competitive position. In addition, the rebound in the automotive industry of the
past several years has improved the State's current economic and financial
position, which are currently at record levels of achievement. Michigan's future
economic growth will likely come from growth in its service sector.
NEW JERSEY FUND. The objective of the New Jersey Fund is to provide maximum
current income that is exempt from federal and New Jersey income taxes to the
extent consistent with stability of capital. The New Jersey Fund pursues its
objective primarily through a professionally managed, non-diversified portfolio
of short-term high quality municipal obligations issued by or on behalf of New
Jersey, its political subdivisions, authorities and corporations, and
territories and possessions of the United States and their political
subdivisions, agencies and instrumentalities the interest from which is, in the
opinion of bond counsel to the issuer, exempt from federal and New Jersey income
taxes ("New Jersey Municipal Securities"). Dividends representing interest
income received by the New Jersey Fund on New Jersey Municipal Securities will
be exempt from federal and New Jersey income taxes. Such dividend income may be
subject to other state and local taxes. To the extent that New Jersey Municipal
Securities are at any time unavailable or unattractive for investment by the New
Jersey Fund, it will invest temporarily in other debt securities the interest
from which is exempt from federal income taxes. Under normal market conditions,
as a non-fundamental policy, the New Jersey Fund will maintain at least 65% of
its total assets in New Jersey Municipal Securities.
New Jersey is the ninth most populous state in the nation. Per capita income in
1997 was $32,654, the second highest of the states and about 128% of the
national average. The distribution of employment in New Jersey mirrors that of
the nation. Along with the rest of the Northeast, New Jersey climbed out of the
recession more slowly than the rest of the nation. Since 1992, the unemployment
rate in New Jersey has exceeded the national average; the average unemployment
rate for New Jersey during 1997 was 6.1%, slightly higher than that of the U.S.
NEW YORK FUND. The objective of the New York Fund is to provide maximum current
income that is exempt from federal, New York State and New York City income
taxes to the extent consistent with stability of capital. The New York Fund
pursues its objective primarily through a professionally managed,
non-diversified portfolio of short-term high quality municipal obligations
issued by or on behalf of New York State, its political subdivisions,
authorities and corporations, and territories and possessions of the United
States and their political subdivisions, agencies and instrumentalities the
interest from which is, in the opinion of bond counsel to the issuer, exempt
from federal, New York State and New York City income taxes ("New York Municipal
Securities"). Dividends representing net interest income received by the New
York Fund on New York Municipal Securities will be exempt from federal, New York
State and New York City personal income taxes. Such dividend income may be
subject to other state and local taxes. To the extent New York Municipal
Securities are at any time unavailable or unattractive for investment by the New
York Fund, it will invest in other debt securities the interest from which is
exempt from Federal income taxes. Under normal market conditions, as a
non-fundamental policy, the New York Fund will maintain at least 65% of its
total assets in New York Municipal Securities.
New York is the third most populous state in the nation; New York City accounts
for about 40% of the State's population. After a boom in the mid-1980's, New
York and the rest of the Northeast fell into a recession a year before the
national recession officially began. Along with the rest of the Northeast, New
York climbed out of the recession more slowly than the rest of the nation. New
York ranks fourth in the nation in personal income. In 1997, New York's per
capita personal income was $30,752, 120% of the national average. Employment
distribution is similar to that of the nation except for a higher concentration
in the finance, insurance and real estate sector and a lower concentration in
manufacturing. Historically, unemployment is more cyclical than for the United
States as a whole. Since 1991, New York unemployment has exceeded the U.S.
average.
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<PAGE> 13
PENNSYLVANIA FUND. The objective of the Pennsylvania Fund is to provide maximum
current income that is exempt from federal and Pennsylvania income taxes to the
extent consistent with stability of capital. The Pennsylvania Fund pursues its
objective primarily through a professionally managed, non-diversified portfolio
of short-term high quality municipal obligations issued by or on behalf of the
Commonwealth of Pennsylvania, its political subdivisions, authorities and
corporations, and territories and possessions of the United States and their
political subdivisions, agencies and instrumentalities the interest from which
is in the opinion of bond counsel to the issuer, exempt from federal and
Pennsylvania income taxes ("Pennsylvania Municipal Securities"). Dividends
representing interest income received by the Pennsylvania Fund on Pennsylvania
Municipal Securities will be exempt from federal and Pennsylvania income taxes
and (for residents of Philadelphia) from Philadelphia School District Income Tax
and (for residents of Pittsburgh) from the intangibles tax for the City and
School District of Pittsburgh. Such dividend income may be subject to other
state and local taxes. To the extent that Pennsylvania Municipal Securities are
at any time unavailable or unattractive for investment by the Pennsylvania Fund,
it will invest temporarily in other debt securities the interest from which is
exempt from federal income taxes. Under normal market conditions, as a
non-fundamental policy, the Pennsylvania Fund will maintain at least 65% of its
total assets in Pennsylvania Municipal Securities.
While Pennsylvania is among the leading states in manufacturing and mining, it
is transforming into more of a services and high-tech economy evidenced by its
growing reputation as a health and education center. Following the recession of
the early 1990's, Pennsylvania's economy had become more reflective of the
nation's. Service industries became a larger portion of total employment. The
steel industry had undergone a successful restructuring. The economy, while
continuing to experience some growth, has not seen the levels of growth that
most states have experienced during this recent expansion. The replacement of
highly paid manufacturing jobs for those in the services and trade sectors will
impede income growth. Relative cost advantages which are available to businesses
in the Commonwealth compared to its neighboring states, as well as the
restructuring and modernization of manufacturing plans, should aid in boosting
the economy.
Additional information concerning the risks associated with the Florida,
Michigan, New Jersey, New York and Pennsylvania Municipal Securities is set
forth in the Statement of Additional Information under "Municipal Securities".
MUNICIPAL SECURITIES AND INVESTMENT TECHNIQUES
The two principal classifications of Municipal Securities consist of "general
obligation" and "revenue" issues. General obligation bonds are secured by the
issuer's pledge of its full faith, 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 a Fund
are in most cases revenue bonds and are not payable from the unrestricted
revenues of the issuer. Among other types of instruments, a Fund 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, warrants and other forms of short-term loans. Such
notes are issued with a short-term maturity in anticipation of the receipt of
tax payments, the proceeds of bond placements or other revenues. A more detailed
discussion of Municipal Securities and NRSRO ratings outlined above under
"Investment Objective and Policies" is contained in the Statement of Additional
Information.
Each Fund may purchase securities which provide for the right to resell them to
an issuer, bank or dealer at an agreed upon price or yield within a specified
period prior to the maturity date of such securities. Such a right to resell is
referred to as a "Standby Commitment." Securities may cost more with Standby
Commitments than without them. Standby Commitments will be entered into solely
to facilitate portfolio liquidity. A Standby Commitment may be exercised before
the maturity date of the related Municipal Security if the Fund's investment
manager revises its evaluation of the creditworthiness of the underlying
security or of the entity issuing the Standby Commitment. Each Fund's policy is
to enter into Standby Commitments only with issuers,
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<PAGE> 14
banks or dealers which are determined by the investment manager to present
minimal credit risks. If an issuer, bank or dealer should default on its
obligation to repurchase an underlying security, a Fund might be unable to
recover all or a portion of any loss sustained from having to sell the security
elsewhere.
Each Fund may invest in certain Municipal Securities having rates of interest
that are adjusted periodically or that "float" continuously according to
formulae intended to minimize fluctuations in values of the instruments
("Variable Rate Notes"). The interest rate on Variable Rate Notes ordinarily is
determined by reference to or is a percentage of a bank's prime rate, the 90 day
U.S. Treasury bill rate, the rate of return on commercial paper or bank
certificates of deposit, or some similar objective standard. Generally, the
changes in the interest rate on Variable Rate Notes reduce the fluctuation in
the market value of such notes. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or capital depreciation is less
than for fixed rate obligations. Each Fund currently intends to invest a
substantial portion of its assets in Variable Rate Notes. Variable Rate Demand
Notes have a demand feature which entitles the purchaser to resell the
securities at amortized cost. The rate of return on Variable Rate Demand Notes
also varies according to some objective standard, such as an index of short-term
tax-exempt rates. Variable rate instruments with a demand feature enable a Fund
to purchase instruments with a stated maturity in excess of one year. Each Fund
determines the maturity of variable rate instruments in accordance with Rule
2a-7, which allows a Fund to consider certain of such instruments as having
maturities shorter than the maturity date on the face of the instrument.
Each Fund may purchase high quality Certificates of Participation in trusts that
hold Municipal Securities. A Certificate of Participation gives a Fund an
undivided interest in the Municipal Security in the proportion that the Fund'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 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 a
Fund. It is anticipated by the investment manager that, for most publicly
offered Certificates of Participation, there will be a liquid secondary market
or there may be demand features enabling a Fund to readily sell its Certificates
of Participation prior to maturity to the issuer or a third party. As to those
instruments with demand features, a Fund 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. While a Fund
may invest without limit in Certificates of Participation, it is currently
anticipated that such investments will not exceed 25% of a Fund's assets.
Each Fund 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 a Fund at the time it enters
into the transaction. In determining the maturity of portfolio securities
purchased on a when-issued or delayed delivery basis, a Fund will consider them
purchased on the date when it commits itself to the purchase.
A security purchased on a when-issued basis, like all securities held in a
Fund's 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 depreciate in value when interest rates rise. Therefore if, in
order to achieve higher interest income, a Fund remains substantially fully
invested at the same time that it has purchased securities on a when-issued
basis, there will be
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<PAGE> 15
a greater possibility that the net asset value of a Fund's shares will vary from
$1.00 per share, since the value of a when-issued security is subject to market
fluctuation and no interest accrues to the purchaser prior to settlement of the
transaction. See "Net Asset Value."
Each Fund 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 each Fund reserves the right to sell these securities before
the settlement date if deemed advisable. The sale of securities may result in
the realization of gains that are not exempt from federal income taxes, and in
the case of certain Funds, income taxes of a state.
Yields on Municipal Securities are dependent on a variety of factors, including
the general conditions of the money market and the municipal bond market, and
the size, maturity and rating of the particular offering. The ratings of NRSROs
represent their opinions as to the quality of the Municipal Securities which
they undertake to rate. It should be emphasized, however, that ratings are
general and are not absolute standards of quality. Consequently, Municipal
Securities with the same maturity, coupon and rating may have different yields.
In seeking to achieve its investment objective, a Fund may invest all or any
part of its assets in Municipal Securities that are industrial development
bonds. Moreover, although a Fund does not currently intend to do so on a regular
basis, it may invest more than 25% of its assets in Municipal Securities which
are repayable out of revenue streams generated from economically related
projects or facilities, if such investment is deemed necessary or appropriate by
the investment manager. To the extent that a Fund's assets are concentrated in
Municipal Securities payable from revenues on economically related projects and
facilities, a Fund will be subject to the peculiar risks presented by such
projects to a greater extent than it would be if the Fund's assets were not so
concentrated.
NET ASSET VALUE
Fund shares are sold at their net asset value next determined after an order and
payment are received in the form described under "Purchase of Shares." The net
asset value of a Fund share is calculated by dividing the total assets of the
Fund less its liabilities by the total number of shares outstanding. The net
asset value per share of a Fund is determined on each day the New York Stock
Exchange ("Exchange") is open for trading, at 11:00 a.m. and 3:00 p.m. Chicago
time. Each Fund seeks to maintain a net asset value of $1.00 per share.
Each Fund values its portfolio instruments at amortized cost in accordance with
Rule 2a-7 under the 1940 Act, which means that they are valued at their
acquisition cost, as adjusted for amortization of premium or accretion of
discount, rather than at current market value. Calculations are made to compare
the value of a Fund's investments, valued at amortized cost, with market-based
values. Market-based valuations are obtained by using actual quotations provided
by market makers, estimates of market value, or values obtained from yield data
relating to classes of money market instruments published by reputable sources
at the mean between the bid and asked prices for the instruments. If a deviation
of 1/2 of 1% or more were to occur between the net asset value per share
calculated by reference to market-based values and a Fund'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. In order to value its investments at amortized cost, a Fund
purchases only securities with a maturity of 397 days or less and maintains a
dollar-weighted average portfolio maturity of 90 days or less. In addition, each
Fund limits its portfolio investments to securities that meet the
diversification and quality requirements of Rule 2a-7.
PURCHASE OF SHARES
Shares are sold at net asset value with no sales charge through selected
financial services firms, such as broker-dealers and banks ("firms"). The
minimum initial investment is $1,000 and the minimum subsequent investment is
$100 but such minimum amounts may be changed at any time in management's
discretion. Under an
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<PAGE> 16
automatic investment plan, the minimum initial and subsequent investment is $50.
Firms offering a Fund's shares may set higher minimums for accounts they service
and may change such minimums at their discretion.
Each Fund seeks to be as fully invested as possible at all times in order to
achieve maximum income. Since the Funds 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 Fund has adopted
procedures for the convenience of its shareholders and to ensure that it
receives investable funds. Orders for purchase of shares received by wire
transfer in the form of Federal Funds will be effected at the next determined
net asset value. Shares purchased by wire will receive that day's dividend if
effected at or prior to the 11:00 a.m. Chicago time net asset value
determination, otherwise such shares will receive the dividend for the next
calendar day if effected at 3:00 p.m. Chicago time. Orders for purchase
accompanied by a check or other negotiable bank draft will be accepted and
effected as of 3:00 p.m. Chicago time on the next business day following receipt
and such shares will receive the dividend for the next calendar day following
the day when 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 to be wired, call the firm from which you received this prospectus
for proper instructions.
CLIENTS OF FIRMS. Firms provide varying arrangements for their clients with
respect to the purchase and redemption of Fund shares and the confirmation
thereof. Such firms are responsible for the prompt transmission of purchase and
redemption orders. Some firms may establish higher minimum investment
requirements than set forth above. A firm may arrange with its clients for other
investment or administrative services. Such firms may independently establish
and charge additional amounts to their clients for such services, which charges
would reduce the clients' yield or return. Firms may also hold Fund shares in
nominee or street name as agent for and on behalf of their clients. In such
instances, the Trust's transfer agent will have no information with respect to
or control over the accounts of specific shareholders. Such shareholders may
obtain access to their accounts and information about their accounts only from
their firm. Certain of these firms may receive compensation from the Trust's
Shareholder Service Agent for recordkeeping and other expenses relating to these
nominee accounts. In addition, certain privileges with respect to the purchase
and redemption of shares (such as check writing redemptions) or the reinvestment
of dividends may not be available through such firms or may only be available
subject to conditions and limitations. Some firms may participate in a program
allowing them access to their clients' accounts for servicing including, without
limitation, transfers of registration and dividend payee changes; and may
perform functions such as generation of confirmation statements and disbursement
of cash dividends. The prospectus should be read in connection with such firm's
material regarding its fees and services.
OTHER INFORMATION. The Trust reserves the right to withdraw all or any part of
the offering made by this prospectus or to reject purchase orders without prior
notice. All orders to purchase shares are subject to acceptance by the Trust 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 Trust. Share certificates are issued
only on request to the Trust and may not be available for certain types of
accounts. A $10 service fee will be charged when a check for purchase of Fund
shares is returned because of insufficient or uncollected funds or a stop
payment order.
Shareholders should direct their inquiries to the firm from which this
prospectus was obtained or to Kemper Service Company ("KSvC"), the Trust's
"Shareholder Service Agent," 811 Main Street, Kansas City, Missouri 64105-2005.
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<PAGE> 17
The Funds of Investors Municipal Cash Fund are available for sale only in the
following states and federal district:
<TABLE>
<CAPTION>
FLORIDA FUND MICHIGAN FUND NEW JERSEY FUND NEW YORK FUND PENNSYLVANIA FUND
- ------------ ------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Alabama California California California California
California District of Columbia Connecticut Connecticut Connecticut
District of Columbia Florida Delaware District of Columbia Delaware
Florida Georgia District of Columbia Florida District of Columbia
Georgia Illinois Florida Georgia Florida
Illinois Indiana Georgia Indiana Georgia
Indiana Michigan Illinois Illinois Illinois
Missouri Missouri Indiana Missouri Indiana
New Jersey New Jersey Maryland New Jersey Maryland
Ohio Ohio Massachusetts New York Michigan
Pennsylvania Pennsylvania Missouri Ohio Missouri
Virginia Virginia New Jersey Pennsylvania New Jersey
New York Texas Ohio
Ohio Virginia Pennsylvania
Pennsylvania Vermont
Virginia Virginia
West Virginia West Virginia
</TABLE>
REDEMPTION OF SHARES
GENERAL. Upon receipt by the Shareholder Service Agent of a request in the form
described below, shares will be redeemed by the Trust at the next determined net
asset value. If processed at 3:00 p.m. Chicago time, the shareholder will
receive that day's dividend. A shareholder may use either the regular or
expedited redemption procedures. Shareholders who redeem all their shares of a
Fund will receive the net asset value of such shares and all declared but unpaid
dividends on such shares.
If shares of the Fund to be redeemed were purchased by check or through certain
Automated Clearing House ("ACH") transactions, the Trust 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 Trust of the purchase amount. Shareholders may not use expedited
redemption procedures (wire transfer or Redemption Check) until the shares being
redeemed have been owned for at least 10 days and shareholders may not use such
procedures to redeem shares held in certificated form. There is no delay when
shares being redeemed were purchased by wiring Federal Funds.
If shares being redeemed were acquired from an exchange of shares of a mutual
fund that were offered subject to a contingent deferred sales charge as
described in the prospectus for that other fund, the redemption of such shares
by the Trust may be subject to a contingent deferred sales charge as explained
in such prospectus.
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions, ACH transactions and exchange transactions for individual
and institutional accounts and pre-authorized telephone redemption transactions
for certain institutional accounts. Shareholders may choose these privileges on
the account application or by contacting the Shareholder Service Agent for
appropriate instructions. Please note that the telephone exchange privilege is
automatic unless the shareholder refuses it on the account application. The
Trust or its agents may be liable for any losses, expenses or costs arising out
of fraudulent or unauthorized telephone requests pursuant to these privileges,
unless the 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, including loss resulting from fraudulent
or unauthorized transactions, as long as the reasonable
14
<PAGE> 18
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 Trust reserves the
right to redeem an account that falls below the minimum investment level,
currently $1,000. 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 Trust redeems the shareholder account.
Firms provide varying arrangements for their clients to redeem Fund 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 KSvC, 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 and guardian account holders
(excluding custodial accounts for gifts and transfers to minors) provided the
trustee, executor or guardian is named in the account registration. Other
institutional account holders and guardian account holders of custodial accounts
for gifts and transfers to minors may exercise this special privilege of
redeeming shares by telephone request or written request without signature
guarantee subject to the same conditions as individual account holders and
subject to the limitations on liability described under "General" above,
provided that this privilege has been pre-authorized by the institutional
account holder or guardian account holder by written instruction to the
Shareholder Service Agent with signatures guaranteed. Telephone requests may be
made by calling 1-800-231-8568. Shares purchased by check or through certain ACH
transactions may not be redeemed under this privilege of redeeming shares by
telephone request until such shares have been owned for at least 10 days. This
privilege of redeeming shares by telephone request or by written request without
a signature guarantee may not be used to redeem shares held in certificated form
and may not be used if the shareholder's account has had an address change
within 30 days of the redemption request. During periods when it is difficult to
contact the Shareholder Service Agent by telephone, it may be difficult to use
the telephone redemption privilege, although investors can still redeem by mail.
The Trust reserves the right to terminate or modify this privilege at any time.
EXPEDITED WIRE TRANSFER REDEMPTIONS. If the account holder has given
authorization for expedited wire redemption to the account holder's brokerage or
bank account, shares can be redeemed and proceeds sent by a federal wire
transfer to a single previously designated account. Requests received by the
Shareholder Service Agent prior to 11:00 a.m. Chicago time will result in shares
being redeemed that day and normally the proceeds will be sent to the designated
account that day. Once authorization is on file, the Shareholder Service Agent
will honor requests by telephone at 1-800-231-8568 or in writing, subject to the
limitations on liability described under "General" above. The Trust is not
responsible for the efficiency of the federal wire system or the account
holder's financial services firm or bank. The Trust 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
15
<PAGE> 19
above, or contact the firm through which shares of the Fund were purchased.
Shares purchased by check or through certain ACH transactions may not be
redeemed by wire transfer until the shares have been owned for at least 10 days.
Account holders may not use this procedure to redeem shares held in certificated
form. During periods when it is difficult to contact the Shareholder Service
Agent by telephone, it may be difficult to use the expedited wire transfer
redemption privilege. The Trust reserves the right to terminate or modify this
privilege at any time.
EXPEDITED REDEMPTIONS BY DRAFT. Upon request, shareholders will be provided
with drafts to be drawn on the Fund ("Redemption Checks"). These Redemption
Checks may be made payable to the order of any person for not more than $5
million. Shareholders should not write Redemption Checks in an amount less than
$100 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 Trust
receives the Redemption Check. A shareholder wishing to use this method of
redemption must complete and file an Account Information Form which is available
from the Trust 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 Trust reserves the right to terminate or
modify this privilege at any time. This privilege may not be available through
some firms that distribute Fund shares. In addition, firms may impose minimum
balance requirements in order to obtain this feature. Firms may also impose fees
to investors for this privilege or establish variations of minimum check amounts
if approved by the Trust.
Unless one signer is authorized on the Account Information Form, Redemption
Checks must be signed by all account holders. Any change in the signature
authorization must be made by written notice to the Shareholder 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 Trust's books for
at least 10 days. Shareholders may not use this procedure to redeem shares held
in certificated form. The Trust reserves the right to terminate or modify this
privilege at any time.
The Trust 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
Trust shares in excess of the value of a Fund account or in an amount less than
$100; 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 Funds also provide special redemption
features through charge or debit cards and checks that redeem Fund shares.
Various firms have different charges for their services. Shareholders should
obtain information from their firm with respect to any special redemption
features, applicable charges, minimum balance requirements and any special rules
of the cash management program being offered.
Information about the following special features is contained in the Statement
of Additional Information; and further information may be obtained without
charge from KDI: Exchange Privilege; Systematic Withdrawal Program and Automated
Clearing House Programs.
DIVIDENDS AND TAXES
DIVIDENDS. Dividends are declared daily and paid monthly. Shareholders may
select one of the following ways to receive dividends:
1. REINVEST DIVIDENDS at net asset value into additional shares of a Fund.
Dividends are normally reinvested on the next to last business day of the month.
Dividends will be reinvested unless the shareholder elects to receive them in
cash.
16
<PAGE> 20
2. RECEIVE DIVIDENDS IN CASH if so requested. Checks will be mailed monthly,
within five business days of the reinvestment date, to the shareholder or any
person designated by the shareholder.
A Fund reinvests dividend checks (and future dividends) in shares of the Fund if
checks are returned as undeliverable. Dividends and other distributions of a
Fund in the aggregate amount of $10 or less are automatically reinvested in
shares of the Fund unless the shareholder requests that such policy not be
applied to the shareholder's account.
TAXES. The Funds intend to qualify as regulated investment companies 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. Each Fund also intends to meet the requirements of the Code
applicable to regulated investment companies distributing tax-exempt interest
dividends and, therefore, dividends representing net interest received on
Municipal Securities will not be includable by shareholders in their gross
income for federal income tax purposes, except to the extent such interest is
subject to the alternative minimum tax as discussed hereinafter. 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.
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. Each Fund may adjust its schedule for dividend
reinvestment for the month of December to assist it in complying with reporting
and minimum distribution requirements contained in the Code.
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 a Fund are to be treated as interest on private
activity bonds in proportion to the interest a Fund receives from private
activity bonds, reduced by allowable deductions. For the 1997 calendar year 13%,
39%, 17% and 20% of the net interest income for the Florida, New Jersey, New
York and Pennsylvania Funds, respectively, 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 a Fund.
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 a Fund, and 50% of Social Security benefits.
FLORIDA FUND. Dividends paid by the Florida Fund to individual shareholders will
not be subject to the Florida income tax since Florida does not impose a
personal income tax. Dividends paid by the Florida Fund will be taxable to
corporate shareholders that are subject to the Florida corporate income tax.
Additionally, Florida imposes an "intangibles tax" at the rate of $2.00 per
$1,000 of taxable value of certain securities and other intangible assets owned
by Florida residents. U.S. Government securities and Florida Municipal
Securities are exempt from this intangibles tax. If, on December 31 of any year,
the Florida Fund's portfolio consists of both exempt and non-exempt assets, then
only the portion of the value of the Florida Fund's shares attributable to U.S.
Government securities will be exempt from the Florida intangibles tax payable in
the following year. Thus, in order to take full advantage of the exemption from
the intangibles tax in any year, the Florida Fund would be required to sell all
non-exempt assets held in its portfolio and reinvest the proceeds in exempt
assets prior to December 31. Transaction costs involved in restructuring the
portfolio in this fashion would likely reduce the
17
<PAGE> 21
Florida Fund's investment return and might exceed any increased investment
return the Florida Fund achieved by investing in non-exempt assets during the
year.
MICHIGAN FUND. Dividends paid by the Michigan Fund derived from interest income
from obligations of Michigan, its political or governmental subdivisions or
obligations of the U.S., its agencies, instrumentalities or possessions will be
exempt from the Michigan personal income tax and Michigan Single Business Tax
provided that at least 50% of the total assets of the Michigan Fund are invested
in such issues at the end of each quarter. Michigan also exempts from its
intangible personal property tax obligations of Michigan, its political and
governmental subdivisions and obligations of the U.S. and its possessions,
agencies and instrumentalities. To the extent that the Michigan Fund's portfolio
includes such exempt assets, the value of the Michigan Fund shares will also be
exempt.
NEW JERSEY FUND. Dividends paid by the New Jersey Fund will be exempt from New
Jersey Gross Income Tax to the extent that the dividends are derived from
interest on obligations of the state or its political subdivisions or
authorities or on obligations issued by certain other government authorities or
from capital gains from the disposition of such obligations, as long as the New
Jersey Fund meets certain investment and filing requirements necessary to
establish and maintain its status as a "Qualified Investment Fund" in New
Jersey. It is the New Jersey Fund's intention to satisfy these requirements and
maintain Qualified Investment Fund status. Dividends paid by the New Jersey Fund
derived from interest on non-exempt assets will be subject to New Jersey Gross
Income Tax. Dividends paid by the New Jersey Fund will be taxable to corporate
shareholders subject to the New Jersey corporation business (franchise) tax.
NEW YORK FUND. Dividends paid by the New York Fund representing net interest
received on New York Municipal Securities will be exempt from New York State and
New York City income taxes. Dividends paid by the New York Fund will be taxable
to corporate shareholders that are subject to New York State and New York City
corporate franchise tax.
PENNSYLVANIA FUND. Dividends paid by the Pennsylvania Fund will be exempt from
Pennsylvania income tax to the extent that the dividends are derived from
interest on obligations of Pennsylvania, any public authority, commissions,
board or other state agency, any political subdivision of the state or its
public authority, and certain obligations of the U.S. or its territories
(including Puerto Rico, Guam and the Virgin Islands). Dividends paid by the
Pennsylvania Fund representing interest income on Pennsylvania Municipal
Securities are also generally exempt from the Philadelphia School District
Income Tax for residents of Philadelphia and from the intangibles tax for the
City and School District of Pittsburgh for residents of Pittsburgh. Shareholders
of the Pennsylvania Fund who are subject to the Pennsylvania property tax in
their county of residence will be exempt from county personal property tax to
the extent that the portfolio of the Pennsylvania Fund consists of such exempt
obligations on the annual assessment date of January 1.
GENERAL. The tax exemption for federal income tax purposes of dividends from a
Fund 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 a Fund are advised to consult their own tax advisers in that
regard and as to the status of their accounts under state and local tax laws.
Each Fund 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.
Shareholders normally will receive monthly confirmations of dividends and of
purchase and redemption transactions. 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.
18
<PAGE> 22
INVESTMENT MANAGER AND SHAREHOLDER SERVICES
INVESTMENT MANAGER. Scudder Kemper Investments, Inc. ("Scudder Kemper"), 345
Park Avenue, New York, New York, is the investment manager of each Fund and
provides the Funds with continuous professional investment supervision. Scudder
Kemper is one of the largest investment managers in the country with more than
$210 billion in assets under management and has been engaged in the management
of investment funds for more than seventy years. Zurich Insurance Company, a
leading internationally recognized provider of insurance and financial services
in property/casualty and life insurance, reinsurance and structured financial
solutions as well as asset management, owns approximately 70% of Scudder Kemper,
with the balance owned by Scudder Kemper's officers and employees.
Responsibility for overall management of the Trust rests with its Board of
Trustees and officers. Professional investment supervision is provided by
Scudder Kemper. The investment management agreement provides that Scudder Kemper
shall act as each Fund's investment adviser, manage its investments and provide
it with various services and facilities. For the services and facilities
furnished, the Funds pays a monthly investment management fee, on a graduated
basis of 1/12 of the following annual rates.
<TABLE>
<CAPTION>
COMBINED AVERAGE ALL
DAILY NET ASSETS FUNDS
---------------- -----
<S> <C>
$0 - $500 million........................................... .22 %
$500 - $1 billion........................................... .20 %
$1 billion - $2 billion..................................... .175%
$2 billion - $3 billion..................................... .16 %
Over $3 billion............................................. .15 %
</TABLE>
Scudder Kemper has agreed to temporarily waive its management fee and absorb
operating expenses to the extent, if any, that such expenses, as defined below,
exceed .80% of average daily net assets of the New York Fund, .75% of average
daily net assets of the Michigan Fund and .90% of the average daily net assets
of each of the Florida, New Jersey and Pennsylvania Funds. For this purpose,
"operating expenses" of a Fund does not include taxes, interest, extraordinary
expenses, brokerage commissions or transaction costs. Upon notice to the Trust,
Scudder, Kemper may at any time terminate any waiver or absorption of operating
expenses. In addition, from time to time, Scudder Kemper may voluntarily absorb
certain additional operating expenses of a Fund. The level of this voluntary
expense absorption shall be in Scudder Kemper's discretion and is in addition to
Scudder Kemper's agreement to absorb certain operating expenses of the Funds
described above.
FUND ACCOUNTING AGENT. Scudder Fund Accounting Corporation ("SFAC") a subsidiary
of Scudder Kemper is responsible for determining the daily net asset value per
share of the Funds and maintaining all accounting records related hereto.
Currently, SFAC receives no fee for its services to the Funds; however, subject
to Board approval, at some time in the future SFAC may seek payment for its
services under its agreement with the Funds.
YEAR 2000 COMPLIANCE. Like other mutual funds and financial and business
organizations worldwide, a Fund could be adversely affected if computer systems
on which a Fund relies, which primarily include those used by Scudder Kemper,
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 a Fund's
business and operations. Scudder Kemper has commenced a review of the Year 2000
Issue as it may affect a Fund 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 Fund or on global markets or economies generally.
19
<PAGE> 23
DISTRIBUTOR AND ADMINISTRATOR. Pursuant to an administration, shareholder
services and distribution agreement ("distribution agreement"), Kemper
Distributors, Inc. ("KDI"), 222 South Riverside Plaza, Chicago, Illinois 60606,
an affiliate of Scudder Kemper, serves as distributor, administrator and
principal underwriter of each Fund to provide information and administrative and
distribution services for existing and potential shareholders. The distribution
agreement provides that KDI shall act as agent for each Fund for the sale of
Fund shares and shall appoint various financial services firms ("firms"), such
as broker-dealers and banks, to provide a cash management service for their
customers or clients through a Fund. The firms are to provide such office space
and equipment, telephone facilities, personnel and sales literature distribution
as is necessary or appropriate for providing information and services to the
firms' clients. For its services under the distribution agreement, the Trust
pays KDI an annual distribution services fee, payable monthly, of .50% of
average daily net assets of each Fund except the Michigan Fund, which pays .35%
of its average daily net assets. The fee is accrued daily as an expense of each
Fund.
KDI has related administrative services and selling group agreements with
various broker-dealer firms to provide cash management and other services for
Fund shareholders. KDI also has services agreements with banking firms to
provide such services, except for certain underwriting or distribution services
which the banks may be prohibited from providing under the Glass-Steagall Act,
for their clients who wish to invest in a Fund. If the Glass-Steagall Act should
prevent banking firms from acting in any capacity or providing any of the
described services, management will consider what action, if any, is
appropriate. Management does not believe that termination of a relationship with
a bank would result in any material adverse consequences to the Trust. Banks or
other financial services firms may be subject to various state laws regarding
the services described above and may be required to register as dealers pursuant
to state law. KDI normally pays the firms at a maximum annual rate of 50% (.35%
for Michigan Fund) of average daily net assets of those accounts that they
maintain and service. In addition, KDI may, from time to time, from its own
resources pay certain firms additional amounts for such services including,
without limitation, fixed dollar amounts and amounts based upon a percentage of
net assets or increased net assets in those portfolio accounts that said firms
maintain and service. KDI may elect to keep a portion of the total distribution
services fee to compensate itself for functions performed for a Fund or to pay
for sales materials or other promotional activities. Since the distribution
agreement provides for fees that are used by KDI to pay for distribution and
administration services, the agreement along with the related administration
services and selling group agreements and the plan contained therein are
approved and reviewed in accordance with Rule 12b-1 under the 1940 Act, which
regulates the manner in which an investment company may, directly or indirectly,
bear the expenses of distributing its shares. As of August 1, 1998, the Rule
12b-1 Plan has been separated from the distribution agreement.
Since the fee payable to KDI under the distribution agreement is based upon a
percentage of the average daily net assets of each Fund and not upon the actual
expenditures of KDI, the expenses of KDI (which may include overhead expense)
may be more or less than the fees received by it under the distribution
agreement. For example, during the fiscal year ended March 31, 1998 for the
Florida, New Jersey, New York and Pennsylvania Funds, KDI incurred expenses
under the distribution agreement of approximately $17,000, $16,000, $448,000 and
$5,000, respectively, while it received an aggregate fee under the distribution
agreement of $21,000, $18,000, $411,000 and $12,000, respectively. If the
distribution agreement is terminated in accordance with its terms, the
obligation of the Trust to make payments to KDI pursuant to the distribution
agreement will cease and the Funds will not be required to make any payments
past the termination date. Thus, there is no legal obligation for a Fund to pay
any excess expenses incurred by KDI over its fees under the distribution
agreement if, for any reason, the distribution agreement is terminated in
accordance with its terms. Any cumulative expenses incurred by KDI in excess of
fees received may or may not be recovered through future fees under the
distribution agreement.
CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary
Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri 64105, as
custodian, and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodian, have custody of all securities
20
<PAGE> 24
and cash of the Trust. They attend to the collection of principal and income,
and payment for and collection of proceeds of securities bought and sold by the
Trust. IFTC also is the Trust's transfer and dividend-paying agent. Pursuant to
a services agreement with IFTC, KSvC, 811 Main Street, Kansas City, Missouri
64105, an affiliate of Scudder Kemper, serves as Shareholder Service Agent of
the Trust.
PERFORMANCE
From time to time, a Fund may advertise several types of performance information
including "yield," "effective yield," and "tax equivalent yield." Each of these
figures is based upon historical earnings and is not representative of the
future performance of a Fund. The yield of a Fund refers to the net investment
income generated by a hypothetical investment in the Fund over a specific
seven-day period. This net investment income is then annualized, which means
that the net investment income generated during the seven-day period is assumed
to be generated each week over an annual period and is shown as a percentage of
the investment. The effective yield is calculated similarly, but the net
investment income earned by the investment is assumed to be compounded weekly
when annualized. The effective yield will be slightly higher than the yield due
to this compounding effect. Tax equivalent yield is the yield that a taxable
investment must generate in order to equal the Fund's yield for an investor in a
stated federal and, if applicable, state and local income tax bracket (normally
assumed to be the maximum tax rate). Tax equivalent yield is based upon, and
will be higher than, the portion of a Fund's yield that is tax-exempt.
The performance of a Fund may be compared to that of other money market mutual
funds or mutual fund indexes as reported by independent mutual fund reporting
services such as Lipper Analytical Services, Inc. A Fund's performance and its
relative size may be compared to other money market mutual funds as reported by
IBC/Financial Data, Inc.'s or Money Market Insight(R), reporting services on
money market funds. Investors may want to compare a Fund's performance on an
after-tax basis to that of various bank products as reported by BANK RATE
MONITOR(TM), a financial reporting service that weekly publishes average rates
of bank and thrift institution money market deposit accounts and interest
bearing checking accounts or various certificate of deposit indexes. The
performance of a Fund also may be compared to that of U.S. Treasury bills and
notes. Certain of these alternative investments may offer fixed rates of return
and guaranteed principal and may be insured. In addition, investors may want to
compare a Fund's performance to the Consumer Price Index either directly or by
calculating its "real rate of return," which is adjusted for the effects of
inflation.
Information may be quoted from publications such as MORNINGSTAR, INC., THE WALL
STREET JOURNAL, MONEY MAGAZINE, FORBES, BARRON'S, FORTUNE, THE CHICAGO TRIBUNE,
USA TODAY, INSTITUTIONAL INVESTOR and REGISTERED REPRESENTATIVE. A Fund may
depict the historical performance of the securities in which it 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 Fund may also describe its portfolio
holdings and depict its size or relative size compared to other mutual funds,
the number and make-up of its shareholder base and other descriptive factors
concerning the Fund.
A Fund's yield will fluctuate. Shares of a Fund are not insured. Additional
information concerning a Fund's performance appears in the Statement of
Additional Information.
CAPITAL STRUCTURE
The Trust is an open-end, non-diversified management investment company, which
was organized under the name "Tax-Exempt New York Money Market Fund" as a
business trust under the laws of Massachusetts on March 2, 1990 with a single
investment portfolio. On May 21, 1997 the Trust changed its name from "Tax-
Exempt New York Money Market Fund" to "Investors Municipal Cash Fund."
The Trust may issue an unlimited number of shares of beneficial interest in one
or more series or "Funds," all having no par value, which may be divided by the
Board of Trustees into classes of shares, subject to compliance
21
<PAGE> 25
with the Securities and Exchange Commission regulations permitting the creation
of separate classes of shares. Currently, the Trust has five Funds. None of the
Funds' shares are divided into classes. The Board of Trustees may authorize the
issuance of additional Funds if deemed desirable, each with its own investment
objective, policies and restrictions. Since the Trust offers multiple Funds, it
is known as a "series company." Shares of a Fund have equal noncumulative voting
rights and equal rights with respect to dividends, assets and liquidation of
such Fund subject to any preferences, rights or privileges of any classes of
shares within the Fund. Generally each class of shares issued by a particular
Fund would differ as to the allocation of certain expenses of the Fund such as
distribution and administrative expenses, permitting, among other things,
different levels of services or methods of distribution among various classes.
Shares are fully paid and nonassessable when issued, are transferable without
restriction and have no preemptive or conversion rights. As of July 1, 1998,
Scudder Kemper owned more than 25% of the outstanding shares of the Pennsylvania
Fund and may be deemed a control person of the Fund. The Trust is not required
to hold annual shareholders' meetings, and does not intend to do so. However, it
will hold special meetings as required or deemed desirable for such purposes as
electing trustees, changing fundamental policies or approving an investment
management agreement. Subject to the Agreement and Declaration of Trust of the
Trust, shareholders may remove trustees. Shareholders will vote by Fund and not
in the aggregate or by class except when voting in the aggregate is required
under the 1940 Act, such as for the election of trustees, or when the Board of
Trustees determines that voting by class is appropriate.
The Florida, Michigan, New Jersey and Pennsylvania Funds each may in the future
seek to achieve its investment objective by pooling its assets with assets of
other mutual funds for investment in another investment company having the same
investment objective and substantially the same investment policies and
restrictions as such Fund. The purpose of such an arrangement is to achieve
greater operational efficiencies and to reduce costs. It is expected that any
such investment company would be managed by Scudder Kemper in substantially the
same manner as the corresponding Fund. Shareholders of a Fund will be given at
least 30 days' prior notice of any such investment, although they will not be
entitled to vote on the action. Such investment would be made only if the
Trustees determine it to be in the best interests of the respective Fund and its
shareholders.
22
<PAGE> 26
INVESTORS
MUNICIPAL
CASH FUND
PROSPECTUS
AUGUST 1, 1998
INVESTORS FLORIDA
MUNICIPAL CASH FUND
INVESTORS MICHIGAN
MUNICIPAL CASH FUND
INVESTORS NEW JERSEY
MUNICIPAL CASH FUND
INVESTORS PENNSYLVANIA
MUNICIPAL CASH FUND
TAX-EXEMPT NEW YORK
MONEY MARKET FUND
IMCF-1 8/98 [LOGO] printed on recycled paper
<PAGE> 27
INVESTORS MUNICIPAL CASH FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
LOCATION IN STATEMENT OF
ITEM NUMBER ADDITIONAL INFORMATION
OF FORM N-1A ------------------------
<S> <C> <C>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Inapplicable
13. Investment Objectives and Policies....... Municipal Securities; Investment Restrictions;
Appendix--Ratings of Investments
14. Management of the Fund................... Investment Manager and Shareholder Services;
Officers and Trustees
15. Control Persons and Principal Holders of
Securities............................... Officers and Trustees
16. Investment Advisory and Other Services... Investment Manager and Shareholder Services; Officers
and Trustees
17. Brokerage Allocation and Other
Practices................................ Portfolio Transactions
18. Capital Stock and Other Securities....... Dividends, Net Asset Value and Taxes;
Shareholder Rights
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Purchase and Redemption of Shares
20. Tax Status............................... Dividends, Net Asset Value and Taxes
21. Underwriters............................. Investment Manager and Shareholder Services
22. Calculations of Performance Data......... Performance
23. Financial Statements..................... Financial Statements
</TABLE>
<PAGE> 28
INVESTORS MUNICIPAL CASH FUND
STATEMENT OF ADDITIONAL INFORMATION
AUGUST 1, 1998
INVESTORS FLORIDA MUNICIPAL CASH FUND ("FLORIDA FUND")
INVESTORS MICHIGAN MUNICIPAL CASH FUND ("MICHIGAN FUND")
INVESTORS NEW JERSEY MUNICIPAL CASH FUND ("NEW JERSEY FUND")
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND ("PENNSYLVANIA FUND")
TAX-EXEMPT NEW YORK MONEY MARKET FUND ("NEW YORK FUND")
222 SOUTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
1-800-231-8568
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus of Investors Municipal Cash Fund (the
"Trust") dated August 1, 1998. The prospectus may be obtained without charge
from the Trust.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Municipal Securities........................................ B-1
Investment Restrictions..................................... B-6
Investment Manager and Shareholder Services................. B-8
Portfolio Transactions...................................... B-11
Purchase and Redemption of Shares........................... B-12
Dividends, Net Asset Value and Taxes........................ B-13
Performance................................................. B-14
Officers and Trustees....................................... B-20
Special Features............................................ B-22
Shareholder Rights.......................................... B-24
Report of Independent Auditors (February 13, 1998).......... B-26
Statement of Net Assets (February 13, 1998)................. B-27
Appendix--Ratings of Investments............................ B-28
</TABLE>
The financial statements appearing in the Trust's 1998 Annual Reports to
Shareholders are incorporated herein by reference. The Trust's Annual Reports
accompanies this Statement of Additional Information.
IMCF-13 8/98 [LOGO] printed on recycled paper
<PAGE> 29
MUNICIPAL SECURITIES
Municipal Securities that a Fund may purchase include, without limitation, debt
obligations issued to obtain funds for various public purposes, including the
construction of a wide range of public facilities such as airports, bridges,
highways, housing, hospitals, mass transportation, public utilities, schools,
streets, and water and sewer works. Other public purposes for which Municipal
Securities may be issued include refunding outstanding obligations, obtaining
funds for general operating expenses and obtaining funds to loan to other public
institutions and facilities.
Municipal Securities, such as industrial development bonds, are issued by or on
behalf of public authorities to obtain funds for purposes including privately
operated airports, housing, conventions, trade shows, ports, sports, parking or
pollution control facilities or for facilities for water, gas, electricity or
sewage and solid waste disposal. Such obligations, which may include lease
arrangements, are included within the term Municipal Securities if the interest
paid thereon qualifies as exempt from federal income taxes. 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 the
current federal tax laws place substantial limitations on the size of such
issues.
Municipal Securities generally are classified as "general obligation" or
"revenue." General obligation notes are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue notes are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source. Industrial development bonds
which are Municipal Securities are in most cases revenue bonds and generally do
not constitute the pledge of the credit of the issuer of such bonds.
Examples of Municipal Securities which 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.
Tax anticipation notes typically are sold to finance working capital needs of
municipalities in anticipation of receiving property taxes on a future date.
Bond anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under the Federal Revenue Sharing Program. Construction loan
notes are instruments insured by the Federal Housing Administration with
permanent financing by "Fannie Mae" (the Federal National Mortgage Association)
or "Ginnie Mae" (the Government National Mortgage Association) at the end of the
project construction period. Pre-refunded municipal bonds are bonds which are
not yet refundable, but for which securities have been placed in escrow to
refund an original municipal bond issue when it becomes refundable. Tax-free
commercial paper is an unsecured promissory obligation issued or guaranteed by a
municipal issuer. Each Fund may purchase other Municipal Securities similar to
the foregoing that are or may become available, including securities issued to
pre-refund other outstanding obligations of municipal issuers.
The Federal bankruptcy statutes relating to the adjustments of debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and 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 which litigation ultimately could
affect the validity of those Municipal Securities or the tax-free nature of the
interest thereon.
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The following information as to certain risk factors is given to investors
because each Fund concentrates its investments in either Florida, New Jersey,
New York or Pennsylvania Municipal Securities (as defined in the prospectus).
Such information constitutes only a summary, does not purport to be a complete
description and is based upon information from official statements relating to
securities offerings of Florida, New Jersey, New York and Pennsylvania issuers.
FLORIDA FUND. The State of Florida has been riding the national wave of strong
economic growth. The State experienced a boom in construction in the mid 1990's
due to above average growth in its population. While the population growth has
subsided and construction is slowing, the State is adding jobs in other areas,
bringing the State's unemployment rate to a record low. The economic growth has
lead to strong revenue collections. Florida expects to finish FY98 with another
operating surplus in its General Fund and will continue to bolster its reserves.
Florida is experiencing strong revenue growth over prior years but is only
slightly ahead of FY98's estimates. As of May 31, 1998, General Fund revenues
were ahead of year-to-date estimates by only $14 million, 0.1% of actual
receipts. However, FY98 receipts, as of May, 1998, exceeded actual year-to-date
collections for FY97 by $980 million, or 7.5%. The FY98 revenue growth is driven
by the State's sales tax collections. The six percent tax accounts for close to
80% of General Fund revenues. Year-to-date collections exceeded FY97 collections
by $660 million. Florida anticipates finishing FY98 with a surplus which will
increase its combined reserves to $1.4 billion, 8% of General Fund revenues.
This aggregate amount includes the portion allocated to the Budget Stabilization
Fund (BSF), $686 million, 4% of revenues. The State has a BSF target of 5% of
General Fund revenues which it should reach by the end of FY99. The remaining
reserve balance is split between the General Revenue Fund and the Working
Capital Fund, with balances of $314 million and $355 million, respectively.
The current expansion in Florida is seven years old and is continuing, albeit at
a slower pace. Preliminary reports state job growth in 1997 was up 4%, an
increase of 251,600 jobs. The service industry, particularly business-related
services, accounted for 45% of this growth, adding 114,400 jobs. The service
industry makes up 33% of the non-farm employment base; this figure is 117% of
the national average. The State is also experiencing growth in the F.I.R.E.
industry while construction and manufacturing have been experiencing some
weakness. The employment growth has brought the State's unemployment rate down
to levels Florida has not achieved since 1973. The annual average unemployment
rate in 1997 was 4.8%; the national average during this period was 4.9%. The
State's per capita income level averaged $25,255 in 1997, 99% of the national
average.
The State's population grew at rates two to three times the national average
through the 1980's. The growth has slowed but continues to exceed the national
average. The State's population in 1997 was 14.7 million, up 1.8 million, or
14%, since the 1990 census. During the same period the national average growth
rate was 7%. Although the population growth has fueled the economy in Florida,
especially the construction industry, the population growth has put strains on
the State's infrastructure. Specifically, schools are overcrowded and highways
and roadways are congested. These increasing infrastructure needs have lead to
significant bond issuance.
Florida has a moderate debt burden. Direct debt in FY97 totaled $7.9 billion.
Debt per capita was $536, 81% of the national average. Debt per capita as a
percent of per capita income was 2.1%, 76% of the national average. In FY97,
debt service as a percent of Governmental Fund expenditures was only 2.6%. In
recent years debt issuance for the State has been increasing. In FY98, Florida
issued $2.6 billion of new money debt and anticipates issuing $2.5 billion in
FY99. The largest component of the FY98 capital plan was an amount in excess of
$800 million for transportation related projects; the majority of issuance in
FY99 will fund education related projects. The State brought a new indenture to
the market in late FY98, the Florida Lottery Bonds. These bonds will finance
much needed capital improvements for Florida schools. The Division of Bond
Finance estimates issuing $800 million of Lottery Bonds as well as the standard
Florida Board of Education issuance of $500 million in FY99.
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Florida has maintained a history of strong financial performance and has
addressed its slim reserve levels. The pace of growth in the economy has slowed
but Florida continues to experience job growth, bringing the unemployment rate
to a 25 year low. Resulting infrastructure needs will require capital funding.
In future years, the magnitude of borrowing could have a significant impact on
the State's debt burden.
As of July 14, 1998, the State's general obligation debt was rated Aa2 by
Moody's Investors Service, Inc. ("Moody's") and AA+ by Standard & Poor's
Corporation ("S&P").
MICHIGAN FUND. The State entered its seventh fiscal year of economic expansion
last October. Job growth has been strong. Personal income tax receipts continue
to increase year over year, and the General Revenue Fund and School Aid Fund's
operating surpluses are bolstering the State's reserves. The Budget
Stabilization Fund has increased from $988 million in FY95 to a projected $1.2
billion at the end of FY98, 7% of the combined General Revenue Fund and School
Aid Fund.
The State's principal operating funds are its General Revenue Fund (GRF) and its
School Aid Fund (SAF). These funds are funded by various State taxes. The income
tax, sales tax, and corporate tax accounted for 79% of the $16.7 billion FY97
budget. Particular strength in income tax collections led the State to finish
FY97 with an operating surplus of $282 million, 1.7% of the combined GRF and
SAF. Due to strong income tax collections, Michigan anticipates finishing FY98
with an operating surplus. As of May, 1998, income tax collections were $375
million ahead of FY97 collections, an increase of 9%.
The strong performance of the GRF and SAF over the last five years resulted in
an increasing balance in the Budget Stabilization Fund (BSF). Through a
combination of effective financial management and the strong economy, the BSF
has grown to its current level of $1.1 billion, 7.2% of the combined GRF and
SAF, after nearing depletion in FY92. The State maintains the BSF, which acts as
a Rainy Day Fund, for the General Fund and the School Aid Fund. The BSF is
funded during years of economic expansion. If personal income tax receipts
increase by more then 2% from one year to the next, the excess growth over 2% is
transferred to the BSF. The BSF may be used to contribute to operating cash flow
during times when personal income taxes decrease year over year by more than 2%.
The BSF can also be used during times when the State's unemployment rate is
greater than 8%.
Michigan's direct debt burden is low. General obligation (G.O.) debt outstanding
as of September 30, 1997 was $655 million. This figure represents a debt per
capita of $67, 10% of the national average. However, Michigan has a sizable
amount of special obligation (S.O.) debt. As of September 30, 1997, the State
had $2.5 billion in S.O. debt outstanding. When the G.O. debt and the S.O. debt
are added together, the State's debt burden increases but is still less than the
national averages. The combined debt per capita is $321, 49% of the national
average. Debt per capita as a percent of per capita income is 1.3%, 45% of the
national average, and annual debt service only accounted for 1.4% of FY97
Government Fund expenditures.
Michigan finished its sixth year of economic expansion in 1997, adding over
98,000 jobs, a 2.2% increase in employment. Nonmanufacturing employment grew by
2.6% in 1997 with construction, services and wholesale trade leading the way,
Michigan continues to have a large manufacturing presence with 22% of its work
force in the manufacturing sector, 141% of the national average. The percentage
of workers in the service sector continues to increase. It currently represents
27% of the work force, 95% of the national average. The State's average
unemployment rate was 4.2% in 1997; the national average was 4.9%. The State's
expanding economy and job growth have caused per capita income to increase to
$25,560 in 1997, equal to the national average.
Michigan experienced strong economic growth in the past six years, and is
continuing to achieve this growth in FY98. The State has transferred this
prosperity into positive financial results. Repeated operating surpluses have
increased the Budget Stabilization Fund to a level never before attained. The
State has a below average debt
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burden. Wealth levels have been at or above the national average over the last
four years, and the unemployment rate has fallen below the national average for
the first time in over seventeen years.
As of July 16, 1998, the State's general obligation bonds are rated Aa1 by
Moody's, AA+ by Standard & Poor's.
NEW JERSEY FUND. The State of New Jersey is experiencing strong economic growth
and increasing reserve balances. The services and construction sectors have been
adding jobs. Job creation has lead to strong personal income tax receipts which
have resulted in a series of operating surpluses and a growing Rainy Day Fund.
The favorable economy in New Jersey has been producing strong revenue growth.
Lead by growth in personal income taxes and sales tax receipts, New Jersey
estimates finishing FY98 with an operating surplus of $1.1 billion, 6.2% of
revenues. The State will incorporate $400 million of this balance into the FY99
budget and will maintain $700 million of reserves, 3.8% of FY99 appropriations.
The reserve will be split between the Rainy Day Fund, with a balance of $500
million, and an unreserved General Fund balance of $200 million. The State
continues to focus its expenditure increases on education. The Governor is
currently lobbying for a four cent increase of the gas tax to fund
transportation needs and open space purchases. The increase will be voted on by
the general public in the November 1998 election.
New jobs in service industries are leading the growth in New Jersey's labor
force. The services sector accounts for 30% of total non-agricultural employment
in the State; this figure is 106% of the national average. New Jersey also has
an above average concentration of employment in the transportation and public
utilities sector. This sector accounts for 7% of the non-agricultural work
force, and is 133% of the national average. The strong economy has lead to
growth in construction jobs, too. The State's unemployment rate has been
declining from its high of 8.4% in 1992 to the 1997 average of 6.1%. The
national average was 4.9% in 1997. New Jersey continues to be one of the
wealthiest states in the country. In 1997, the State's per capita income of
$32,654, ranked second highest in the country. This figure is 128% of the
national average.
The direct debt burden in New Jersey is low. General obligation (G.O.) debt
outstanding as of June 30, 1997 was $3.4 billion. This figure represents a debt
per capita of $430, 65% of the national average. Debt as a percent of per capita
income was 1.3%, 47% of the national average. New Jersey, however, does have a
sizable amount of appropriation backed debt. As of June 30, 1997, the State had
$9 billion of appropriation backed debt outstanding. When the G.O. debt and the
appropriation debt are added together, the State's debt burden increases but is
mitigated by the State's high wealth levels. The combined debt per capita is
$1,564, 236% of the national average, and debt per capita as a percent of per
capita income is 4.8%, 170% of the national average. In FY97 debt service as a
percent of expenditures was 2.3%.
New Jersey's strong economic growth during the past five years and its growing
reserves support its strong credit rating. The State's combined debt burden is
above average but is mitigated by New Jersey's high wealth levels.
As of July 17, 1998, the State's general obligation ratings were Aa1 by Moody's
and AA+ by S&P.
NEW YORK FUND. April 1(st) came and went this year without a budget from New
York State for the fourteenth consecutive year. Unlike in past years, there was
no major obstacle keeping the executive and legislative branches from agreeing
on a spending plan. The biggest issue was allocating the $2 billion FY98 General
Fund surplus. Despite this lack of fiscal responsibility, the State is improving
and continues to benefit from the strength of the economy, locally and
nationally.
As expected, the State finished FY98 with an operating surplus in its General
Fund. After many upward revisions, the final tally for the FY98 General Fund
surplus was $2 billion, 6% of General Fund revenues. Higher than expected income
tax revenues and lower than expected social service costs accounted for the
surplus. New York will use $800 million of the surplus to finance expenditures
in the FY99 budget. Of the remaining balance, $68 million was transferred to the
Tax Stabilization Fund, currently valued at an all-time high of $400 million,
1.2% of revenues. The State also transferred $30 million to the Contingency
Reserve
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Fund, bringing that balance to $100 million. The remaining $1.1 billion is
currently in a General Reserve which has yet to be allocated. The Budget Office
anticipates this reserve will be used to fund the Governor's plan to increase
the State's share of education expenses for local schools.
New York State's economy continues to grow, albeit slower than the national
economy. New York's 1997 private sector job growth of 2%, 115,300 jobs, was the
strongest annual growth in a decade. The services sector continues to lead the
growth in the State. The State's average unemployment rate was 6.4% in 1997, the
national average in 1997 was 4.9%. In February, 1998 the State's unemployment
rate was 6.8%, the national average in February was 4.6%. Currently the
underlying strength of New York's economy is the financial, insurance, and real
estate sector (FIRE). Although the FIRE sector only represents 9.1% of the job
market and is experiencing minimal job growth, it is an integral factor in the
State's strong financial position. Financial companies on Wall Street have been
reaping tremendous profits resulting in higher salaries and even higher year-end
bonuses for their employees. In 1997 the State's per capita income was $30,752,
120% of the national average.
The State's debt burden is high, but manageable, given the State's size. New
York currently has $55 billion in direct and appropriation debt outstanding. The
State's annual debt service obligation is $2.4 billion per year, 4% of
Government Fund expenditures. Debt per capita in the State is $3,020, 456% of
the Moody's average. For each of the next five years, the State anticipates that
new debt issuance will exceed scheduled debt retirement by over $1.5 billion.
Additionally, the Governor's proposed budget includes $1 billion in new debt
financing for various State projects; over half is for school construction. Due
to the size of the State's budget and the State's high wealth levels, the
growing debt burden and the Governor's proposed issuance will not lead to a
deterioration of New York's credit rating.
The trend continues to be improving given the positive economy and the resulting
growth in employment and continued improvements in the State's financial
position. New York State's credit rating is negatively impacted by its thin
reserves and the continual lack of consensus between its political parties.
As of July 20, 1998, general obligation bonds of the State of New York are rated
A2 and A by Moody's and S&P, respectively.
PENNSYLVANIA FUND. The Commonwealth of Pennsylvania experienced stronger
economic growth in 1997 after a slow down in growth in 1996. Pennsylvania is
expecting to finish FY98 with its sixth consecutive General Fund operating
surplus.
The Commonwealth is experiencing strong revenue growth. As of February, 1998,
General Fund revenues are ahead of year-to-date estimates by $216 million, 2.1%
of revenues. Personal income tax collections are contributing the majority of
the increase in revenues. As of February, 1998, personal income tax collections
exceeded estimates by 5%, or $180 million. Given the revenue collections, the
Governor's office is anticipating finishing FY98 with a $403 million General
Fund operating surplus, 2.3% of revenues. The Governor is undecided on how this
surplus will be spent. At least 15% of it will be transferred to the
Commonwealth's Rainy Day Fund. As of December, 1997, the Rainy Day Fund was
valued at $420 million, 2.4% of revenues. The Commonwealth has a target level of
3% of revenues for its Rainy Day Fund.
Job growth in the service and trade sectors led the Commonwealth from 44th in
the nation to 17th in terms of employment growth in 1997. Pennsylvania's average
unemployment rate in 1997 was 5.2%, the national average was 4.9% in 1997. The
unemployment rate at the end of January, 1998, was 4.6% versus the national
average of 4.7% in January. Pennsylvania's per capita income in 1997 was
$26,058, 102% of the national average.
Pennsylvania has a low debt burden. Per capita debt is $420, 63% of the Moody's
average. Total G.O. debt is 1.7% of per capita income, 61% of the Moody's
average. For FY99, the Commonwealth is projecting its normal issuance of
$500-600 million plus $185 million for the redevelopment of the Philadelphia
Naval Ship
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<PAGE> 34
Yard. Since the Commonwealth annually issues a comparable amount to its
scheduled amortization, the incremental increase of $185 million will have a
minor impact on the Commonwealth's $5 billion in outstanding debt.
Pennsylvania is still in the midst of various lawsuits challenging school
funding. The suits are challenging the issue of equitable funding for school
districts in rural and urban schools. According to the Commonwealth, this
lawsuit has been in the courts for some time and will not be resolved in the
near future.
The Commonwealth is benefiting from a favorable economy which has lead to
improved finances.
As of July 20, 1998, all outstanding general obligation bonds of the
Commonwealth of Pennsylvania were rated AA- by S&P and Aa3 by Moody's.
INVESTMENT RESTRICTIONS
Each Fund has adopted certain investment restrictions which cannot be changed
without approval by holders of a majority of its outstanding voting shares. As
defined in the Investment Company Act of 1940 ("1940 Act"), this means the
lesser of the vote of (a) 67% of a Fund's shares 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 a Fund's shares. In addition, each Fund limits its portfolio
investments to securities that meet the diversification and quality requirements
of Rule 2a-7 under the 1940 Act.
The New York Fund may not, as a fundamental policy:
(1) Purchase securities (other than securities of the United States Government,
its agencies or instrumentalities or of a state or its political subdivisions)
if as a result of such purchase more than 25% of the Fund's total assets would
be invested in any one industry.
(2) 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 Fund's total assets would be invested in securities
of that issuer; except that, as to 50% of the value of the Fund's total assets,
the Fund may invest up to 25% of its total assets in the securities of any one
issuer. For purposes of this limitation, the Fund will regard as the issuer the
entity that has the primary responsibility for the payment of interest and
principal.
(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 Fund's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Fund will, within three days (not including Sundays and
holidays), reduce its indebtedness to the extent necessary. The Fund will not
borrow for leverage purposes and will not purchase securities or make
investments while borrowings are outstanding.
(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
Fund may purchase Municipal Securities subject to Standby Commitments, Variable
Rate Demand Notes or Repurchase Agreements 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.
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<PAGE> 35
(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 Fund may invest in Municipal
Securities secured by real estate or interests therein and securities of issuers
that 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 Municipal Securities of issuers
that invest in or sponsor such programs or leases.
(11) Underwrite securities issued by others except to the extent the Fund 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 New York
Fund may invest more than 25% of its total assets in industrial development
bonds. The New York Fund did not borrow money as permitted by investment
restriction number 4 in the latest fiscal period, and it has no present
intention of borrowing during the coming year.
The Florida, Michigan, New Jersey and Pennsylvania Funds each may not, as a
fundamental policy:
(1) Purchase securities (other than securities of the United States Government,
its agencies or instrumentalities or of a state or its political subdivisions)
if as a result of such purchase more than 25% of the Fund's total assets would
be invested in any one industry, except that all or substantially all of the
assets of the Fund may be invested in another registered investment company
having the same investment objective and substantially similar investment
policies as the Fund.
(2) 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 Fund's total assets would be invested in securities
of that issuer; except that, as to 50% of the value of the Fund's total assets,
the Fund may invest up to 25% of its total assets in the securities of any one
issuer, and except that all or substantially all of the assets of the Fund may
be invested in another registered investment company having the same investment
objective and substantially similar investment policies as the Fund. For
purposes of this limitation, the Fund will regard as the issuer the entity that
has the primary responsibility for the payment of interest and principal.
(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 Fund's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Fund will, within three days (not including Sundays and
holidays), reduce its indebtedness to the extent necessary. The Fund will not
borrow for leverage purposes and will not purchase securities or make
investments while borrowings are outstanding.
(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) Invest in commodities or commodity futures contracts or in real estate (or
real estate limited partnerships) except that the Fund may invest in Municipal
Securities secured by real estate or interests therein and securities of issuers
that invest or deal in real estate.
(7) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities, and except that all or
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<PAGE> 36
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
(8) 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. A Fund may
invest more than 25% of its total assets in industrial development bonds. The
Florida, Michigan, New Jersey and Pennsylvania Funds each have adopted the
following non-fundamental restrictions, which may be changed by the Board of
Trustees without shareholder approval.
The Florida, Michigan, New Jersey and Pennsylvania Funds each may not:
(i) Write, purchase or sell puts, calls or combinations thereof, although the
Fund may purchase Municipal Securities subject to Standby Commitments, Variable
Rate Demand Notes or Repurchase Agreements in accordance with its investment
objective and policies.
(ii) Invest for the purpose of exercising control or management of another
issuer.
Although the Trust has registered as a "non-diversified" investment company,
each Fund must meet the diversification requirements of Rule 2a-7 under the 1940
Act. Rule 2a-7 generally provides that a single state money fund shall not, as
to 75% of its assets, invest more than 5% of its assets in the securities of an
individual issuer, provided that the fund may not invest more than 5% of its
assets in the securities of an individual issuer unless the securities are First
Tier Securities (as defined in Rule 2a-7).
INVESTMENT MANAGER AND SHAREHOLDER SERVICES
INVESTMENT MANAGER. Scudder Kemper Investments, Inc. ("Scudder Kemper") 345 Park
Avenue, New York, New York, is the investment manager for each Fund. Scudder
Kemper is approximately 70% owned by Zurich Insurance Company, a leading
internationally recognized provider of insurance and financial services in
property/casualty and life insurance, reinsurance and structured financial
solutions as well as asset management. The balance of Scudder Kemper is owned by
Scudder Kemper's officers and employees. Pursuant to an investment management
agreement, Scudder Kemper acts as each Fund's investment adviser, manages its
investments, administers its business affairs, furnishes office facilities and
equipment, provides clerical and administrative services, provides shareholder
and information services and permits any of its officers or employees to serve
without compensation as trustees or officers of the Trust if elected to such
positions. The Trust pays the expenses of its operations, including the fees and
expenses of independent auditors, counsel, custodian and transfer agent and the
cost of share certificates, reports and notices to shareholders, costs of
calculating net asset value and maintaining all accounting records related
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 agreement provides that Scudder Kemper 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 Scudder Kemper 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 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) by the shareholders of the Fund
subject thereto or the Board of Trustees. It may be terminated at any time upon
60 days' notice by either party, or by a majority vote of the outstanding shares
of the Fund subject thereto, and will terminate automatically upon assignment.
If additional Funds become subject to the investment management agreement, the
provisions concerning continuation, amendment and
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<PAGE> 37
termination shall be on a Fund by Fund basis and the management fee and the
expense limitation shall be computed based upon the average daily net assets of
all Funds subject to the agreement and shall be allocated among such Funds based
upon the relative net assets of such Funds. Additional Funds may be subject to a
different agreement.
For the services and facilities furnished, the Funds pay a monthly investment
management fee, on a graduated basis of 1/12 of the following annual rates.
<TABLE>
<CAPTION>
COMBINED AVERAGE ALL
DAILY NET ASSETS FUNDS
---------------- -----
<S> <C>
$0 - $500 million........................................... .22 %
$500 - $1 billion........................................... .20 %
$1 billion - $2 billion..................................... .175%
$2 billion - $3 billion..................................... .16 %
Over $3 billion............................................. .15 %
</TABLE>
The table below shows the total advisory fees paid by each Fund for the past
three years (after waivers noted below).
<TABLE>
<CAPTION>
FUND 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C>
Florida*.......................................... $ 5,000 N.A. N.A.
Michigan*......................................... $ N.A. N.A. N.A.
New Jersey*....................................... $ 0 N.A. N.A.
New York.......................................... $32,000 0 0
Pennsylvania*..................................... $ 0 N.A. N.A.
</TABLE>
Scudder Kemper has agreed to temporarily waive its management fee and absorb
certain operating expenses of the Funds to the extent described in the
prospectus. See "Investment Manager and Shareholder Services" in the prospectus.
The table below shows the total operating expenses of the Funds waived or
absorbed for the past three years.
<TABLE>
<CAPTION>
FUND 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C>
Florida*.................................... $ 4,000 N.A. N.A.
Michigan*................................... $ N.A. N.A. N.A.
New Jersey*................................. $ 8,000 N.A. N.A.
New York.................................... $149,000 191,000 57,000
Pennsylvania*............................... $ 5,000 N.A. N.A.
</TABLE>
- ---------------
* The Florida, New Jersey and Pennsylvania Funds commenced operations on May 22,
1997, May 23, 1997 and May 21, 1997, respectively, and the Michigan Fund
commenced operations on April 6, 1998.
Certain trustees or officers of the Trust are also directors or officers of
Scudder Kemper and KDI as indicated under "Officers and Trustees."
FUND ACCOUNTING AGENT. Scudder Fund Accounting Corporation ("SFAC"), a
subsidiary of Scudder Kemper, is responsible for determining the daily net asset
value per share of the Funds and maintaining all accounting records related
hereto. Currently, SFAC receives no fee for its services to the Fund; however,
subject to Board approval, some time in the future, SFAC may seek payment for
its services under this agreement.
DISTRIBUTOR AND ADMINISTRATOR. Pursuant to an administration, shareholder
services and distribution agreement ("distribution agreement"), Kemper
Distributors, Inc. ("KDI") serves as distributor, administrator and principal
underwriter to the Funds to provide information and services for existing and
potential shareholders. The distribution agreement provides that KDI shall act
as agent for each Fund in the sale of Fund shares and shall appoint various
firms to provide a cash management service for their customers or clients
through a Fund. The
B-9
<PAGE> 38
firms are to provide such office space and equipment, telephone facilities,
personnel and sales literature distribution as is necessary or appropriate for
providing information and services to the firms' clients and prospective
clients. The Trust pays 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 continuous offering
of shares to prospective investors. KDI pays for supplementary sales literature
and advertising. For its services as distributor, the Trust pays KDI an annual
distribution services fee, payable monthly, of .50% of average daily net assets
of each Fund (except Michigan Fund which pays .35%). The distribution agreement
continues in effect from year to year so long as its continuation is approved at
least annually by a majority of the trustees who are not parties to such
agreement or interested persons of the Trust and who have no direct or indirect
financial interest in the agreement or in any agreement related thereto. The
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 six months
notice. Termination 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 vote of the outstanding shares of the Fund subject thereto. The fee
payable pursuant to the distribution agreement for a Fund may not be increased
without approval of the shareholders of that Fund and all material amendments
must in any event be approved by the Board of Trustees in the manner described
above with respect to the continuation of the agreement. The provisions
concerning the continuation, amendment and termination of the distribution
services agreement are on a Fund by Fund basis. The distribution services fee is
charged to the Funds based upon their relative net assets, but the expenditures
by KDI under the agreement need not be made on that same basis.
KDI has related administration services and selling group agreements with
various broker-dealer firms to provide cash management and other services for
Fund shareholders. Such services and assistance may include, but are not limited
to, establishing and maintaining shareholder accounts and records, processing
purchase and redemption transactions, providing automatic investment in Fund
shares of client account balances, answering routine inquiries regarding a Fund,
assisting clients in changing account options, designations and addresses, and
such other services as may be agreed upon from time to time and as may be
permitted by applicable statute, rule or regulation. KDI also has services
agreements with banking firms to provide the above listed services, except for
certain distribution services that the banks may be prohibited from providing,
for their clients who wish to invest in a Fund. KDI also may provide some of the
above services for a Fund. KDI normally pays the firms at a maximum annual rate
of .50% of average net assets of those accounts that they maintain and service.
KDI may elect to keep a portion of the total administration fee to compensate
itself for functions performed for a Fund or to pay for sales materials or other
promotional activities.
Since the distribution agreement provides for fees which are used by KDI to pay
for distribution and administration services, the agreement along with the
related administrative services and selling group agreements are approved and
renewed in accordance with Rule 12b-1 under the 1940 Act which regulates the
manner in which an investment company may, directly or indirectly, bear expenses
of distributing its shares.
During the fiscal year ended March 31, 1998, the Florida, New Jersey, New York
and Pennsylvania Funds incurred a distribution services fee of $21,000, $18,000,
$411,000 and $12,000, respectively. Pursuant to the related services agreements
for Florida, New Jersey, New York and Pennsylvania, KDI remitted distribution
services fees of $15,000, $15,000, $411,000 and $4,000, respectively, to various
firms. During the fiscal year ended March 31, 1998, KDI incurred underwriting,
distribution and administrative expenses for Florida, New Jersey, New York and
Pennsylvania as follows: service fees to firms $15,000, $15,000, $411,000 and
$4,000, respectively, and marketing and sales expenses $2,000, $1,000, $30,000
and $1,000, respectively, for totals of $17,000, $16,000, $441,000 and $5,000,
respectively. A portion of the aforesaid marketing and sales expenses could be
considered overhead expense.
CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary
Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri 64105, as
custodian, and State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as sub-custodian, have custody of all securities and cash
of the Trust. They attend to the collection of principal and income, and payment
for and collection of
B-10
<PAGE> 39
proceeds of securities bought and sold by the Trust. IFTC is also the transfer
agent of the Trust (see "Purchase of Shares" in the prospectus). Pursuant to a
services agreement with IFTC, Kemper Service Company ("KSvC"), an affiliate of
Scudder Kemper, serves as "Shareholder Service Agent" of the Trust and, as such,
performs all of IFTC's duties as transfer agent and dividend paying agent. IFTC
receives, as transfer agent, and pays to KSvC annual account fees of a maximum
of $13 per year per account plus out-of-pocket expense reimbursement. During the
fiscal year ended March 31, 1998, IFTC remitted shareholder service fees in the
amount of $94,000 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 to the Fund.
PORTFOLIO TRANSACTIONS
BROKERAGE
Allocation of brokerage is supervised by Scudder Kemper.
The primary objective of Scudder Kemper in placing orders for the purchase and
sale of securities for a Fund's 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. Scudder Kemper seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through its familiarity
with commissions charged on comparable transactions, as well as by comparing
commissions paid by a Fund to reported commissions paid by others. Scudder
Kemper reviews on a routine basis commission rates, execution and settlement
services performed, making internal and external comparisons.
When it can be done consistently with the policy of obtaining the most favorable
net results, it is Scudder Kemper's practice to place such orders with
broker/dealers who supply research, market and statistical information to a
Fund. The term "research, market and statistical information" 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.
Scudder Kemper is authorized when placing portfolio transactions for a Fund to
pay a brokerage commission in excess of that which another broker might charge
for executing the same transaction solely on account of the receipt of research,
market or statistical information. 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.
In selecting among firms believed to meet the criteria for handling a particular
transaction, Scudder Kemper may give consideration to those firms that have sold
or are selling shares of a Fund managed by Scudder Kemper.
To the maximum extent feasible, it is expected that Scudder Kemper will place
orders for portfolio transactions through Scudder Investor Services, Inc.
("SIS"), a corporation registered as a broker-dealer and a subsidiary of Scudder
Kemper. SIS will place orders on behalf of the Funds with issuers, underwriters
or other brokers and dealers. SIS will not receive any commission, fee or other
remuneration from the Funds for this service.
Although certain research, market and statistical information from
broker/dealers may be useful to a Fund and to Scudder Kemper, it is the opinion
of Scudder Kemper that such information only supplements its own research effort
since the information must still be analyzed, weighed and reviewed by Scudder
Kemper's staff. Such information may be useful to Scudder Kemper in providing
services to clients other than the Funds and not
B-11
<PAGE> 40
all such information is used by Scudder Kemper in connection with the Funds.
Conversely, such information provided to Scudder Kemper by broker/dealers
through whom other clients of Scudder Kemper effect securities transactions may
be useful to Scudder Kemper in providing services to a Fund.
The Board members for a Fund review from time to time whether the recapture for
the benefit of a Fund of some portion of the brokerage commissions or similar
fees paid by a Fund on portfolio transactions is legally permissible and
advisable.
Each Fund's average portfolio turnover rate is the ratio of the lesser of sales
or purchases to the monthly average value of the portfolio securities owned
during the year, excluding all securities with maturities or expiration dates at
the time of acquisition of one year or less. A higher rate involves greater
brokerage transaction expenses to a Fund and may result in the realization of
net capital gains, which would be taxable to shareholders when distributed.
Purchases and sales are made for a Fund's portfolio whenever necessary, in
management's opinion, to meet a Fund's objective.
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 Trust for such purchases. During the
last three fiscal years the Trust 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
Fund shares are sold at their net asset value next determined after an order and
payment are received in the form described in the prospectus. The minimum
initial investment is $1,000 and the minimum subsequent investment is $100 but
such minimum amounts may be changed at any time. The Trust may waive the minimum
for purchases by trustees, directors, officers or employees of a Fund or Scudder
Kemper and its affiliates. An investor wishing to open an account should use the
Account Information Form available from the Trust or financial services firms.
Orders for the purchase of shares that are accompanied by a check drawn on a
foreign bank (other than a check drawn on a Canadian bank in U.S. Dollars) will
not be considered in proper form and will not be processed unless and until the
Trust determines that it has received payment of the proceeds of the check. The
time required for such a determination will vary and cannot be determined in
advance.
The Trust 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 Fund's investments is
not reasonably practicable, or (ii) it is not reasonably practicable for a Fund
to determine the value of its net assets, or (c) for such other periods as the
Securities and Exchange Commission may by order permit for the protection of
each Fund's shareholders.
Although it is the Trust'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 Trust 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 each Fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net assets of a Fund during any
90-day period for any one shareholder of record.
B-12
<PAGE> 41
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 additional shares of a Fund normally on
the next to last business day of the month. The Trust will pay shareholders who
redeem their entire accounts all unpaid dividends at the time of redemption not
later than the next dividend payment date. Upon written request to the
Shareholder Service Agent, a shareholder may elect to have Fund dividends
invested without sales charge in shares of another Kemper Fund offering this
privilege at the net asset value of such other fund on the reinvestment date.
See "Special Features--Exchange Privilege" for a list of such other Kemper
Funds. To use this privilege of investing Fund dividends in shares of another
Kemper Fund, shareholders must maintain a minimum account value of $1,000 in
this Fund.
Each Fund calculates its dividends based on its daily net investment income. For
this purpose, net investment income consists of (a) accrued interest income plus
or minus amortized original issue discount or premium, (b) plus or minus all
short-term realized gains and losses on investments and (c) minus accrued
expenses. Expenses of a Fund are accrued each day. Since a Fund's investments
are valued at amortized cost, there will be no unrealized gains or losses on
such investments. However, should the net asset value so computed 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
confirmation of dividends and of purchase and redemption transactions.
NET ASSET VALUE. As described in the prospectus, each Fund 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 effect 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 a Fund would receive if it sold the instrument.
Calculations are made to compare the value of a Fund'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 Fund'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 Fund'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 Fund'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. 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, a Fund may not be an
appropriate investment for persons who are "substantial users" of facilities
financed by industrial development bonds held by a Fund or are "related persons"
to such users; such persons should consult their tax advisers before investing
in a Fund.
B-13
<PAGE> 42
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 a Fund, may be
includible in modified alternative minimum taxable income. Corporate
shareholders are advised to consult their tax advisers with respect to the
consequences of the Superfund Act.
PERFORMANCE
As reflected in the prospectus, historical performance calculations for the
Funds may be shown in the form of "yield," "effective yield," and "tax
equivalent yield." These various measures of performance are described below.
Scudder Kemper has agreed to absorb certain operating expenses of each Fund to
the extent described in the prospectus. Without this expense absorption, the
performance results noted herein would have been lower.
Each Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. Under that
method, the yield quotation is based on a seven-day period and is computed as
follows. The first calculation is net investment income per share, which is
accrued interest on portfolio securities, plus or minus amortized original issue
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 calculation. For the seven
day period ended March 31, 1998, the Florida Fund's yield was 2.94%, the New
Jersey Fund's yield was 2.56%, the New York Fund's yield was 2.85% and the
Pennsylvania Fund's yield was 2.72%.
Each Fund's effective yield is determined by taking the base period return
(computed as described above) and calculating the effect of assumed compounding.
The formula for the effective yield is: (base period return +1)365/7- 1. For the
seven day period ended March 31, 1998, the Florida Fund's effective yield was
2.98%, the New Jersey Fund's effective yield was 2.59%, the New York Fund's
effective yield was 2.90% and the Pennsylvania Fund's effective yield was 2.76%.
The tax equivalent yield of a Fund is computed by dividing that portion of a
Fund's yield (computed as described above) which is tax-exempt by (one minus the
stated federal and, if applicable, state and local income tax rate) and adding
the result to that portion, if any, of the yield of a Fund that is not
tax-exempt. Based upon a marginal federal income tax rate of 37.1% for the
Florida Fund, a combined federal and Michigan State marginal income tax rate of
39.9% for the Michigan Fund, a combined federal and New Jersey State marginal
income tax rate of 41.1% for the New Jersey Fund, a combined federal, New York
State and New York City marginal income tax rate of 44.2% for the New York Fund,
and a combined federal and Pennsylvania State marginal income tax rate of 38.9%
for the Pennsylvania Fund, and a yield computed as described above for the seven
day period ended March 31, 1998, the Florida Fund's tax equivalent yield was
4.67%, the New Jersey Fund's tax equivalent yield was 4.27%, the New York Fund's
tax equivalent yield was 5.11% and the Pennsylvania Fund's tax equivalent yield
was 4.45%. Based upon a marginal federal income tax rate of 37.1% for the seven
day period ended March 31, 1998, the New Jersey Fund's tax equivalent yield was
4.07%, the New York Fund's tax equivalent yield was 4.53% and the Pennsylvania
Fund's tax-equivalent yield was 4.32%. For additional information concerning
tax-exempt yields, see "Tax-Exempt versus Taxable Yield" below.
Each Fund's yield fluctuates, and the publication of an annualized yield
quotation is not a representation as to what an investment in a Fund 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 Fund is held, but also on such matters as Fund
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 Fund with that of its competitors. Past
performance cannot be a guarantee of future results.
B-14
<PAGE> 43
As indicated in the prospectus (see "Performance"), a Fund's performance may be
compared to that of other mutual funds tracked by Lipper Analytical Services,
Inc. ("Lipper"). Lipper performance calculations include the reinvestment of all
capital gain and income dividends for the periods covered by the calculations. A
Fund's performance also may be compared to other money market funds as reported
by IBC/Financial Data, Inc.'s ("IBC") or Money Market Insight(R), reporting
services on money market funds. As reported by IBC, all investment results
represent total return (annualized results for the period net of management fees
and expenses) and one-year investment results would be effective annual yields
assuming reinvestment of dividends.
The following investment comparisons are based upon information reported by
Lipper and IBC. In the comparison of performance to IBC Money Fund Averages(TM)
All Taxable and to Lipper Money Market Instrument Funds Average, the performance
of each Fund has been adjusted on a taxable equivalent basis assuming the
applicable marginal income tax rates noted immediately above (see "Tax-Exempt
versus Taxable Yield" below for more information concerning taxable equivalent
performance).
B-15
<PAGE> 44
IBC FINANCIAL DATA, INC.
<TABLE>
<CAPTION>
IBC FINANCIAL
DATA, INC.
MONEY FUND
AVERAGESTM ALL
FLORIDA MICHIGAN NEW JERSEY NEW YORK PENNSYLVANIA TAX-FREE MONEY
PERIOD FUND FUND FUND FUND FUND MARKET FUNDS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7 Days Ended 3/30/98........ 2.93% NA% 2.59% 2.87% 2.70% 3.05%
1 Month Ended 3/31/98....... 2.53 NA 2.23 2.44 2.42 2.80
</TABLE>
<TABLE>
<CAPTION>
FLORIDA MICHIGAN NEW JERSEY NEW YORK PENNSYLVANIA IBC FINANCIAL
FUND FUND FUND FUND FUND DATA, INC.
TAXABLE TAXABLE TAXABLE TAXABLE TAXABLE MONEY FUND
EQUIVALENT EQUIVALENT EQUIVALENT EQUIVALENT EQUIVALENT AVERAGESTM ALL
PERIOD BASIS* BASIS* BASIS* BASIS* BASIS* TAXABLE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7 Days Ended 3/30/98....... 4.66% NA% 4.33% 5.14% 4.41% 5.05%
1 Month Ended 3/31/98...... 4.02 NA 3.79 4.37 3.95 5.03
</TABLE>
LIPPER ANALYTICAL SERVICES, INC.
<TABLE>
<CAPTION>
LIPPER ALL
TAX-EXEMPT
FLORIDA MICHIGAN NEW JERSEY NEW YORK PENNSYLVANIA MONEY MARKET
PERIOD FUND FUND FUND FUND FUND FUNDS AVERAGE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Month Ended 3/31/98....... .21% NA% .19% .21% .21% .24%
3 Months Ended 3/31/98...... .63 NA .57 .63 .63 .70
</TABLE>
<TABLE>
<CAPTION>
LIPPER
FLORIDA MICHIGAN NEW JERSEY NEW YORK PENNSYLVANIA MONEY
FUND FUND FUND FUND FUND MARKET
TAXABLE TAXABLE TAXABLE TAXABLE TAXABLE INSTRUMENT
EQUIVALENT EQUIVALENT EQUIVALENT EQUIVALENT EQUIVALENT FUNDS
PERIOD BASIS* BASIS* BASIS* BASIS* BASIS* AVERAGE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Month Ended 3/31/98...... .33% NA% .32% .38% .34% .41%
3 Months Ended 3/31/98..... 1.00 NA .97 1.13 1.03 1.20
</TABLE>
- --------------------------------------------------------------------------------
* Source: Scudder Kemper (not reported in IBC or Lipper).
NA Not applicable.
A Fund's performance also may be compared on an after-tax basis to various bank
products, including the average rate of bank and thrift institution money market
deposit accounts or interest bearing checking accounts as reported in the BANK
RATE MONITOR National Index(TM) of 100 leading bank and thrift institutions as
published by BANK RATE MONITOR(TM), N. Palm Beach, Florida 33408. 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 Standard Metropolitan Statistical Areas. Account minimums range
upward from $2,000 in each institution and compounding methods vary. Interest
bearing checking accounts generally offer unlimited check writing 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.
Bank products represent a taxable alternative income producing product. Bank and
thrift institution deposit accounts may be insured. Shareholder accounts in a
Fund 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 check writing. Bank
passbook savings accounts
B-16
<PAGE> 45
normally offer a fixed rate of interest while the yield of a Fund fluctuates.
Bank checking accounts normally do not pay interest but share some liquidity
features with money market mutual fund accounts (e.g., the ability to write
checks against the account). Bank certificates of deposit may offer fixed or
variable rates for a set term. (Normally, a variety of terms are available.)
Withdrawal of these deposits prior to maturity normally will be subject to a
penalty. In contrast, shares of a Fund are redeemable at the net asset value
(normally $1.00 per share) next determined after a request is received, without
charge.
Investors also may want to compare a Fund's performance on an after-tax basis 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 value of obligations with shorter
maturities will fluctuate less than those with longer maturities. A Fund's yield
will fluctuate. Also, while each Fund seeks to maintain a net asset value per
share of $1.00, there is no assurance that it will be able to do so. Any such
comparisons may be useful to investors who wish to compare a Fund's past
performance with that of its competitors. Of course, past performance cannot be
a guarantee of future results.
A Fund's performance also may be compared to the Consumer Price Index, as
published by the U.S. Bureau of Labor Statistics, which is an established
measure of change over time in the prices of goods and services in major
expenditure groups.
TAX-EXEMPT VERSUS TAXABLE YIELD. You may want to determine which
investment--tax-exempt or taxable--will provide you with a higher after-tax
return. To determine the taxable equivalent yield, simply divide the yield from
the tax-exempt investment by the sum of [1 minus your marginal tax rate]. The
tables below are provided for your convenience in making this calculation for
selected tax-exempt yields and taxable income levels. These yields are presented
for purposes of illustration only and are not representative of any yield that a
Fund may generate. Both tables are based upon current law as to the 1998 federal
and 1997 state tax rates and brackets.
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS UNDER
$124,500
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE
JOINT YOUR
MARGINAL A TAX-EXEMPT YIELD OF:
FEDERAL TAX
TAXABLE INCOME RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$25,350 - $61,400 $42,350 - $102,300 28.0% 2.78 4.17 5.56
- ---------------------------------------------------------------------------------------------------
Over $61,400 Over $102,300 31.0 2.90 4.35 5.80
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
- ----------------------------------------------------
<S> <C> <C> <C>
$25,350 - $61,400 6.94 8.33 9.72
- ----------------------------------------------------
Over $61,400 7.25 8.70 10.14
====================================================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE
JOINT COMBINED
MICHIGAN A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
$25,350 - $61,400 $42,350 - $102,300 31.2% 2.91 4.36 5.81
- ---------------------------------------------------------------------------------------------------
Over $61,400 Over $102,300 34.0 3.03 4.55 6.06
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
- ---------------------------------------------------
<S> <C> <C> <C>
$25,350 - $61,400 7.26 8.72 10.17
- ---------------------------------------------------
Over $61,400 7.58 9.10 10.61
===================================================
</TABLE>
B-17
<PAGE> 46
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE
JOINT COMBINED
NEW JERSEY A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
$25,350 - $35,000 $42,350 - $50,000 29.3% 2.83 4.24 5.65
- ---------------------------------------------------------------------------------------------------
$50,000 - $70,000 29.8 2.85 4.27 5.70
- ---------------------------------------------------------------------------------------------------
$35,000 - $40,000 $70,000 - $80,000 30.5 2.88 4.32 5.76
- ---------------------------------------------------------------------------------------------------
$40,000 - $61,400 $80,000 - $102,300 32.0 2.94 4.41 5.88
- ---------------------------------------------------------------------------------------------------
$61,400 - $75,000 $102,300 - $150,000 34.8 3.07 4.60 6.14
- ---------------------------------------------------------------------------------------------------
Over $75,000 Over $150,000 35.4 3.10 4.64 6.19
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
<S> <C> <C> <C>
- -------------------
$25,350 - $35,000 7.07 8.48 9.90
- -------------------
7.12 8.54 9.97
- -------------------
$35,000 - $40,000 7.20 8.64 10.07
- -------------------
$40,000 - $61,400 7.35 8.82 10.29
- -------------------
$61,400 - $75,000 7.67 9.20 10.74
- -------------------
Over $75,000 7.74 9.29 10.84
===================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE
JOINT COMBINED
N.Y. CITY,
N.Y. STATE A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE** 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
$25,350 - $61,400 $42,350 - $102,300 36.1% 3.13 4.69 6.26
- ---------------------------------------------------------------------------------------------------
Over $61,400 Over $102,300 38.8 3.27 4.90 6.54
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
<S> <C> <C> <C>
- -------------------
$25,350 - $61,400 7.82 9.39 10.95
- -------------------
Over $61,400 8.17 9.80 11.44
===================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE
JOINT COMBINED
PENNSYLVANIA A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
$25,350 - $61,400 $42,350 - $102,300 30.0% 2.86 4.29 5.72
- ----------------------------------------------------------------------------------------------------
Over $61,400 Over $102,300 32.9 2.98 4.47 5.96
====================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
<S> <C> <C> <C>
- -------------------
$25,350 - $61,400 7.14 8.57 10.00
- -------------------
Over $61,400 7.46 8.95 10.44
===================
</TABLE>
TAXABLE EQUIVALENT YIELD TABLE FOR PERSONS WHOSE ADJUSTED GROSS INCOME IS OVER
$124,500
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE
JOINT YOUR
MARGINAL A TAX-EXEMPT YIELD OF:
FEDERAL TAX
TAXABLE INCOME RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
$61,400 - $128,100 $102,300 - $155,950 31.9% 2.94 4.41 5.87
- ---------------------------------------------------------------------------------------------------
$128,100 - $278,450 $155,950 - $278,450 37.1 3.18 4.77 6.36
- ---------------------------------------------------------------------------------------------------
Over $278,450 Over $278,450 40.8 3.38 5.07 6.76
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
<S> <C> <C> <C>
- -------------------
$61,400 - $128,100 7.34 8.81 10.28
- -------------------
$128,100 - $278,450 7.95 9.54 11.13
- -------------------
Over $278,450 8.45 10.14 11.82
===================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE JOINT COMBINED
MICHIGAN A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
$61,400 - $128,100 $102,300 - $155,950 34.9% 3.07 4.61 6.14
- ---------------------------------------------------------------------------------------------------
$128,100 - $278,450 $155,950 - $278,450 39.9 3.33 4.99 6.66
- ---------------------------------------------------------------------------------------------------
Over $278,450 Over $278,450 43.4 3.53 5.30 7.07
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
<S> <C> <C> <C>
- -------------------
$61,400 - $128,100 7.68 9.22 10.75
- -------------------
$128,100 - $278,450 8.32 9.98 11.65
- -------------------
Over $278,450 8.83 10.60 12.37
===================
</TABLE>
B-18
<PAGE> 47
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE JOINT COMBINED
NEW JERSEY A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$61,400 - $75,000 $102,300 - $150,000 35.7% 3.11 4.67 6.22
- ---------------------------------------------------------------------------------------------------
$75,000 - $128,100 $150,000 - $155,950 36.2 3.13 4.70 6.27
- ---------------------------------------------------------------------------------------------------
$128,100 - $278,450 $155,950 - $278,450 41.1 3.40 5.09 6.79
- ---------------------------------------------------------------------------------------------------
Over $278,450 Over $278,450 44.6 3.61 5.42 7.22
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C>
- ------------------------------------------------------
$61,400 - $75,000 7.78 9.33 10.89
- ------------------------------------------------------
$75,000 - $128,100 7.84 9.40 10.97
- ------------------------------------------------------
$128,100 - $278,450 8.49 10.19 11.88
- ------------------------------------------------------
Over $278,450 9.03 10.83 12.64
======================================================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE JOINT COMBINED
N.Y. CITY,
N.Y. STATE A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE** 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$61,400 - $128,100 $102,300 - $155,950 39.6% 3.31 4.97 6.62
- ---------------------------------------------------------------------------------------------------
$128,100 - $278,450 $155,950 - $278,450 44.2 3.58 5.38 7.17
- ---------------------------------------------------------------------------------------------------
Over $278,450 Over $278,450 47.5 3.81 5.71 7.62
===================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C>
- ---------------------------------------------------
$61,400 - $128,100 8.28 9.93 11.59
- ---------------------------------------------------
$128,100 - $278,450 8.96 10.75 12.54
- ---------------------------------------------------
Over $278,450 9.52 11.43 13.33
===================================================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE JOINT COMBINED
PENNSYLVANIA A TAX-EXEMPT YIELD OF:
AND FEDERAL
TAXABLE INCOME TAX RATE 2% 3% 4%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$61,400 - 128,100 $102,300 - $155,950 33.8% 3.02 4.53 6.04
- ----------------------------------------------------------------------------------------------------
$128,100 - $278,450 $155,950 - $278,450 38.9 3.27 4.91 6.55
- ----------------------------------------------------------------------------------------------------
Over $278,450 Over $278,450 42.5 3.48 5.22 6.96
====================================================================================================
<CAPTION>
SINGLE
A TAX-EXEMPT YIELD OF:
TAXABLE INCOME 5% 6% 7%
IS EQUIVALENT TO A TAXABLE
YIELD OF:
<S> <C> <C> <C>
- ----------------------------------------------------
$61,400 - 128,100 7.55 9.06 10.57
- ----------------------------------------------------
$128,100 - $278,450 8.18 9.82 11.46
- ----------------------------------------------------
Over $278,450 8.70 10.43 12.17
====================================================
</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%)).
** The tables do not reflect the impact of the New York State Tax Table Benefit
Recapture that is intended to eliminate the benefit of the graduated rate
structure and applies to taxable income between $100,000 and $150,000.
B-19
<PAGE> 48
OFFICERS AND TRUSTEES
The officers and trustees of the Funds, their birthdates, their principal
occupations and their affiliations, if any, with Scudder Kemper and KDI, are
listed below. All persons named as trustees also serve in similar capacities for
other funds advised by Scudder Kemper.
DAVID W. BELIN (6/20/28), Trustee, 2000 Financial Center, 7th and Walnut, Des
Moines, Iowa; Member, Belin Lamson McCormick Zumbach Flynn, P.C. (attorneys).
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 (7/3/41), 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), Chairman and Trustee*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper; Director, Fiduciary Trust
Company and Fiduciary Company Incorporated.
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.
EDMOND D. VILLANI (3/4/47), Trustee*, 345 Park Avenue, New York, New York;
President, Chief Executive Officer and Managing Director, Scudder Kemper.
MARK S. CASADY (9/21/60), President*, 345 Park Avenue, New York, New York;
Managing Director, Scudder Kemper.
PHILIP J. COLLORA (11/15/45), Vice President and Secretary*, 222 South Riverside
Plaza, Chicago, Illinois; Attorney, Senior Vice President, Scudder Kemper.
THOMAS W. LITTAUER (4/26/55), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper; 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, Scudder Kemper.
ROBERT C. PECK, JR. (10/1/46), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper; 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, Scudder Kemper.
B-20
<PAGE> 49
FRANK J. RACHWALSKI, JR. (3/26/45), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper.
LINDA J. WONDRACK (9/12/64), Vice President*, Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.
JOHN R. HEBBLE (6/27/58), Treasurer*, Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.
CAROLINE PEARSON (4/1/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Senior Vice President, Scudder Kemper.
MAUREEN E. KANE (2/14/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Vice President, Scudder Kemper.
ELIZABETH C. WERTH (10/1/47), Assistant Secretary*, 222 South Riverside Plaza,
Chicago, Illinois; Vice President, Scudder Kemper; and Vice President, KDI.
*Interested persons as defined in the Investment Company Act of 1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds. The table below shows estimated amounts
to be paid or accrued to those trustees who are not designated "interested
persons" during the Trust's current fiscal year based upon a new fee schedule,
except that the information in the last column is actual amounts paid or accrued
for the calendar year 1997.
<TABLE>
<CAPTION>
TOTAL
ESTIMATED COMPENSATION
COMPENSATION KEMPER FUNDS
NAME OF TRUSTEE FROM TRUST PAID TO TRUSTEES(2)
--------------- ------------ -------------------
<S> <C> <C>
David W. Belin(1)........................................... $1,740 $168,100
Lewis A. Burnham............................................ 1,740 117,800
Donald L. Dunaway(1)........................................ 1,740 162,700
Robert B. Hoffman........................................... 1,740 109,400
Donald R. Jones............................................. 1,740 114,200
Shirley D. Peterson......................................... 1,740 114,000
William P. Sommers.......................................... 1,740 109,400
</TABLE>
- ---------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Kemper Funds. 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 for the New York Fund are $4,400 for
Mr. Belin and $4,400 for Mr. Dunaway.
(2) Includes compensation for service on the Boards of 25 Kemper funds with 43
fund portfolios. Each trustee currently serves as a trustee of 26 Kemper
Funds and 48 fund portfolios. Total compensation does not reflect amounts
paid by Scudder Kemper to the trustees for meetings regarding the
combination of Scudder and ZKI. Such amounts totaled $21,900, $25,400,
$21,900, $17,300, $20,800, $24,200 and $21,900 for Messrs. Belin, Burnham,
Dunaway, Hoffman, Jones, Peterson and Sommers.
B-21
<PAGE> 50
On July 1, 1998, the trustees and officers as a group owned less than 1% of the
then outstanding shares of each Fund. As of July 1, 1998, no shareholder owned
of record more than 5% of the outstanding shares of the Funds except as shown
below:
<TABLE>
<CAPTION>
FUND NAME AND ADDRESS PERCENTAGE
---- ---------------- ----------
<S> <C> <C> <C>
Florida........................................... ** J.B. Hanauer & Company 98.48
Gatehall Corporation Center
4 Gatehall Drive
Parsippany, NJ 07054
Michigan.......................................... ** Roney & Co 99.69
1 Griswold
Detroit, MI 48226
New Jersey........................................ ** J.B. Hanauer & Company 95.63
Gatehall Corporation Center
4 Gatehall Drive
Parsippany, NJ 07054
New York.......................................... ** NISC 38.17
55 Water Street
New York, NY 10041
** J.B. Hanauer & Company 16.04
Gatehall Corporation Center
4 Gatehall Drive
Parsippany, NJ 07054
** Southwest Securities, Inc. 10.24
1201 Elm Street
Suite 4300
Dallas, TX 75270
** ABN AMRO Chicago Corporation 14.15
208 S LaSalle Street
Chicago, IL 60604
** E Trade 18.48
4 Embarcadero Place
2400 Geng Road
Palo Alto, CA 94303
Pennsylvania...................................... * Scudder Kemper Investments, 56.94
Inc.
222 S. Riverside Plaza
Chicago, IL 60606
</TABLE>
- ---------------
* Record and beneficial owner.
** Record owner only.
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
B-22
<PAGE> 51
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+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 U.S. Growth and Income Fund, Kemper-Dreman Financial Services Fund,
Kemper Value Fund, Kemper Classic Growth Fund and Kemper Global Discovery Fund
("Kemper Mutual Funds") and certain "Money Market Funds" (Zurich Money Funds,
Zurich Yieldwise Money Fund, Cash Equivalent Fund, Tax-Exempt California Money
Market Fund, Cash Account Trust, Investors Municipal Cash Fund and Investors
Cash Trust). Shares of Money Market Funds and Kemper Cash Reserves Fund that
were acquired by purchase (not including shares acquired by dividend
reinvestment) are subject to the applicable sales charge on exchange. In
addition, shares of a Kemper Mutual Fund with a value in excess of $1,000,000,
other than Kemper Cash Reserves Fund, acquired by exchange from another Fund may
not be exchanged thereafter until they have been owned for 15 days (the "15 Day
Hold Policy"). For purposes of determining whether the 15 Day Hold Policy
applies to a particular exchange, the value of the shares to be exchanged shall
be computed by aggregating the value of shares being exchanged for all accounts
under common control, direction 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 Funds of Investors
Municipal Cash Fund are available for sale only in the following states and
federal district:
<TABLE>
<CAPTION>
FLORIDA FUND MICHIGAN FUND NEW JERSEY FUND NEW YORK FUND PENNSYLVANIA FUND
------------ ------------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
Alabama California California California California
California District of Columbia Connecticut Connecticut Connecticut
District of Columbia Florida Delaware District of Columbia Delaware
Florida Georgia District of Columbia Florida District of Columbia
Georgia Illinois Florida Georgia Florida
Illinois Indiana Georgia Indiana Georgia
Indiana Michigan Illinois Illinois Illinois
Missouri Missouri Indiana Missouri Indiana
New Jersey New Jersey Maryland New Jersey Maryland
Ohio Ohio Massachusetts New York Michigan
Pennsylvania Pennsylvania Missouri Ohio Missouri
Virginia Virginia New Jersey Pennsylvania New Jersey
New York Texas Ohio
Ohio Virginia Pennsylvania
Pennsylvania Vermont
Virginia Virginia
West Virginia West Virginia
</TABLE>
The total value of shares being exchanged must at least equal the minimum
investment requirement of the Kemper Fund into which they are being exchanged.
Exchanges are made based on relative dollar values of the
B-23
<PAGE> 52
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 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 use 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. The owner of $5,000 or more of a Fund'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 minimum periodic payment is
$100. Shares are redeemed so that the payee will receive payment approximately
the first of the month. Dividend distributions will be automatically reinvested
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 right is reserved to amend the systematic
withdrawal program on 30 days' notice. The program may be terminated at any time
by the shareholder or the Trust. Firms provide varying arrangements for their
clients to redeem Fund shares on a periodic basis. Such firms may independently
establish minimums for such services.
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 Fund
account. Your bank's crediting policies of these transferred funds may vary.
These features may be amended or terminated at any time by the Trust.
Shareholders should contact KSvC at 1-800-621-1048 or the firm through which
their account was established for more information. These programs may not be
available through some firms that distribute Fund shares.
SHAREHOLDER RIGHTS
The Trust generally is not required to hold meetings of its shareholders. Under
the Agreement and Declaration of Trust of the Funds ("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 a Fund to the extent and as
provided in the Declaration of Trust; (d) any amendment of the Declaration of
Trust (other than amendments changing the name of the Trust, establishing a
fund, 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.
B-24
<PAGE> 53
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 on the Board of Trustees, less than two-thirds of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10% of the
outstanding shares. Upon the written request of ten or more shareholders who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of the Trust stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
The Declaration of Trust provides that the presence at a shareholder meeting in
person or by proxy of at least 30% of the shares entitled to vote on a matter
shall constitute a quorum. Thus, a meeting of shareholders of the 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 any Fund 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 Scudder Kemper 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.
B-25
<PAGE> 54
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholder
Investors Municipal Cash Fund--
Investors Michigan Municipal Cash Fund
We have audited the accompanying statement of net assets of Investors Municipal
Cash Fund--Investors Michigan Municipal Cash Fund as of February 13, 1998. This
statement of net assets is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this statement of net assets based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of net assets is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement of net assets. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall statement of net assets
presentation. We believe that our audit of the statement of net assets provides
a reasonable basis for our opinion.
In our opinion, the statement of net assets referred to above presents fairly,
in all material respects, the financial position of Investors Municipal Cash
Fund--Investors Michigan Municipal Cash Fund at February 13, 1998 in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
February 13, 1998
B-26
<PAGE> 55
INVESTORS MUNICIPAL CASH FUND--
INVESTORS MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF NET ASSETS--FEBRUARY 13, 1998
<TABLE>
<S> <C>
ASSETS
Cash........................................................ $100,000
========
NET ASSETS
Net assets, applicable to 100,000 shares of beneficial
interest (unlimited number of shares authorized, no par
value) outstanding........................................ $100,000
========
THE PRICING OF SHARES
Net asset value and redemption price per share ($100,000 /
100,000 shares outstanding)............................... $ 1.00
</TABLE>
- ---------------
NOTES:
Investors Municipal Cash Fund (the "Trust") was organized as a business trust
under the laws of The Commonwealth of Massachusetts on March 2, 1990. All shares
of beneficial interest of Investors Michigan Municipal Cash Fund of the Trust
were issued to Scudder Kemper Investments, Inc. ("Scudder Kemper"), the
investment manager on February 13, 1998 for $100,000 cash. The Trust may
establish multiple series; currently five series have been established.
The costs of organization of the Funds will be paid by Scudder Kemper.
B-27
<PAGE> 56
APPENDIX--RATINGS OF INVESTMENTS
The two highest ratings of Moody's Investors Service, Inc. ("Moody's") for
Municipal Securities are Aaa and Aa. Municipal Securities rated Aaa are judged
to be of the "best quality." The rating of Aa is assigned to Municipal
Securities which are of "high quality by all standards," but as to which margins
of protection or other elements make long-term risks appear somewhat larger than
Aaa rated Municipal Securities. The Aaa and Aa rated Municipal Securities
comprise what are generally known as "high grade."
The two highest ratings of Standard & Poor's Corporation ("S&P") for Municipal
Securities are AAA (Prime) and AA (High Grade). Municipal Securities rated AAA
are "obligations of the highest quality." The S&P rating of AA is accorded
issues with investment characteristics "only slightly less marked than those of
the prime quality issues."
The two highest ratings of Fitch Investors Service, Inc. ("Fitch") for Municipal
Securities are AAA and AA. Municipal Securities rated AAA are considered to be
investment grade and of the highest credit quality. The Fitch rating of AA is
considered to be investment grade and of very high credit quality.
The two highest ratings of Duff & Phelps, Inc. ("Duff") for Municipal Securities
are AAA and AA. Municipal Securities rated AAA are of the highest credit quality
and have the highest rating assigned by Duff for a debt obligation. The Duff
rating of AA is considered to be of high credit quality.
Moody'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.
An S&P municipal and corporate commercial paper rating is a current assessment
of the likelihood of timely payment of debt having an original maturity of no
more than 365 days. Ratings are graded into four categories, ranging from "A"
for the highest quality obligations to "D" for the lowest. Issues assigned this
highest rating are regarded as having the greatest capacity for timely payment.
The designation A-1 indicates that the degree of safety regarding timely payment
is very strong. The designation A-2 indicates the capacity for timely payment is
strong. However, the relative degree of safety is not as overwhelming as for
issues designated "A-1."
The "other debt securities" included in the definition of temporary investments
are corporate (as opposed to municipal) debt obligations rated AAA or AA by S&P
or Aaa or Aa by Moody's. Corporate debt obligations rated AAA by S&P are
"highest grade obligations." Obligations bearing the rating of AA also qualify
as "high grade obligations" and "in the majority of instances differ from AAA
issues only in small degree." The Moody's corporate debt ratings of Aaa and Aa
do not differ materially from those set forth above for Municipal Securities.
The ratings Prime-1 and Prime-2 are the two highest commercial paper ratings
assigned by Moody's. 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.
After its purchase by a Fund, an issue of Municipal Securities or a temporary
investment may cease to be rated or its rating may be reduced below the minimum
required for purchase by a Fund. Neither event requires the
B-28
<PAGE> 57
elimination of such obligation from the Fund's portfolio, but the Fund's
investment adviser will consider such an event in its determination of whether
the Fund should continue to hold such obligation in its portfolio. To the extent
that the ratings accorded by S&P, Moody's, Fitch or Duff for Municipal
Securities or temporary investments may change as a result of changes in such
organizations, or changes in their rating systems, a Fund will attempt to use
comparable ratings as standards for its investments in Municipal Securities or
temporary investments in accordance with the investment policies contained
herein.
B-29
<PAGE> 58
Investors Municipal Cash Fund 2
- --------------------------------------------------------------------------------
TAX-EXEMPT NEW YORK MONEY MARKET FUND
Investments at March 31, 1998
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
(A)VARIABLE RATE DEMAND SECURITIES
<S> <C>
New York State
Energy Research and Development Authority:
Brooklyn Union Gas Project
3.60% $ 4,480
Electric & Gas Corp. Project
3.65% 1,500
Niagara Mohawk Power Corp. Project
3.83% 19,750
Housing Finance Agency:
East 84th Street
3.60% 2,000
Hospital for Special Surgery
3.30% 960
Normandie Court I
3.50% 1,500
Trackside Homes Phase III
3.60% 195
250 West 50th Street
3.60% 1,500
Job Development Authority
3.94% 2,855
Local Government Assistance Corp.
3.45% 2,500
Medical Care Facilities Finance Agency:
Lenox Hill Hospital Project
3.60% 600
Pooled Equipment Loan Program
3.60% 300
- -----------------------------------------------------------
Babylon
Industrial Development Agency:
J. D'Addario & Co., Inc. Project
3.60% 2,100
OFS Equity of Babylon, Inc. Project
3.70% 2,000
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Franklin County
Industrial Development Agency
3.95% $ 300
- -----------------------------------------------------------
New York City
General Obligation
3.77% 12,800
Health and Hospitals Corp.
3.50% 2,000
Housing Development Corp.:
Columbus Gardens Project
3.45% 3,800
100 Jane Street
3.65% 3,700
West 43rd Street
3.65% 700
Municipal Water Finance Authority
4.00% 4,700
Trust for Cultural Resources
3.35% 1,500
- -----------------------------------------------------------
St. Lawrence County
Industrial Development Agency
3.70% 500
- -----------------------------------------------------------
TOTAL VARIABLE RATE DEMAND
SECURITIES--69.4%
(average maturity: 4 days) 72,240
- -----------------------------------------------------------
</TABLE>
<PAGE> 59
Investors Municipal Cash Fund 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
OTHER SECURITIES
<S> <C>
New York State
Dormitory Authority:
Columbia University
3.50%, 6/22/98 $ 1,845
Memorial Sloan-Kettering Cancer Center
3.05% - 3.60%, 4/3/98 - 5/11/98 3,800
Second Short-Term Revenue Notes
3.75% - 4.00%, 5/14/98 - 6/26/98 3,237
Environmental Facilities Corp.
3.00%, 4/3/98 2,000
General Obligation
3.65%, 6/25/98 5,000
Power Authority
3.30% - 3.65%, 5/1/98 4,850
- -----------------------------------------------------------
New York City
Municipal Water Finance Authority
3.45%, 5/8/98 3,500
- -----------------------------------------------------------
Buffalo
Revenue Anticipation Notes
3.82%, 8/5/98 3,006
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Monroe County
General Obligation
3.25% - 3.35%, 5/11/98 $ 3,000
- -----------------------------------------------------------
Nassau County
Bond Anticipation Notes
3.60%, 8/17/98 3,005
Revenue Anticipation Notes
3.85%, 4/10/98 2,000
- -----------------------------------------------------------
TOTAL OTHER SECURITIES--33.8%
(average maturity: 60 days) 35,243
- -----------------------------------------------------------
TOTAL INVESTMENTS--103.2%
(average maturity: 22 days) 107,483
- -----------------------------------------------------------
LIABILITIES, LESS OTHER ASSETS--(3.2%) (3,285)
- -----------------------------------------------------------
NET ASSETS--100% $104,198
- -----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 60
Investors Municipal Cash Fund 4
- --------------------------------------------------------------------------------
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND
Investments at March 31, 1998
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
(A)VARIABLE RATE DEMAND SECURITIES
<S> <C>
PENNSYLVANIA OBLIGATIONS
- -----------------------------------------------------------
Pennsylvania State
Higher Education Assistance Agency
3.80% $ 100
Higher Education Facilities Authority
3.70% 100
- -----------------------------------------------------------
Allegheny County
Industrial Development Authority
3.70% 100
- -----------------------------------------------------------
Chester County
Industrial Development Authority
3.90% 100
- -----------------------------------------------------------
Dauphin County
General Authority
3.75% 100
- -----------------------------------------------------------
Delaware County
Industrial Development Authority
3.80% 100
- -----------------------------------------------------------
Emmaus
General Authority
3.70% 100
- -----------------------------------------------------------
Erie County
Hospital Authority
3.80% 100
- -----------------------------------------------------------
Gettysburg
Industrial Development Authority
3.75% 100
- -----------------------------------------------------------
Indiana County
Industrial Development Authority
3.65% 100
- -----------------------------------------------------------
Lehigh County
Industrial Development Authority
3.40% 100
Lehigh Valley Hospital
3.70% 100
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Northumberland County
Foster Wheeler Mount Carmel Project
3.80% $ 95
- -----------------------------------------------------------
Philadelphia
Authority for Industrial Development
Fox Chase Cancer Center Project
3.75% 100
Harbor View Towers Project
4.15% 100
- -----------------------------------------------------------
Quakertown
Hospital Authority
3.75% 100
- -----------------------------------------------------------
Schuylkill County
Industrial Development Authority
3.70% 100
- -----------------------------------------------------------
Washington County
Higher Education Pooled Equipment Leasing Program
3.75% 100
- -----------------------------------------------------------
OTHER OBLIGATIONS
- -----------------------------------------------------------
Florida
Hillsborough County
Industrial Development Authority
3.80% 100
- -----------------------------------------------------------
Puerto Rico
Government Development Bank
3.38% 100
- -----------------------------------------------------------
TOTAL VARIABLE RATE DEMAND
SECURITIES--62.4%
(average maturity: 6 days) 1,995
- -----------------------------------------------------------
</TABLE>
<PAGE> 61
Investors Municipal Cash Fund 5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
OTHER SECURITIES
Allegheny County
Industrial Development Authority
3.35%, 6/12/98 $ 200
- -----------------------------------------------------------
Beaver County
Industrial Development Authority
3.60%, 7/20/98 100
- -----------------------------------------------------------
Carbon County
Industrial Development Authority
3.25%, 4/3/98 100
- -----------------------------------------------------------
Delaware County
Industrial Development Authority
3.50%, 4/28/98 100
- -----------------------------------------------------------
Montgomery County
Industrial Development Authority
3.30%, 5/12/98 100
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Philadelphia
Gas Works Revenue
3.40%, 4/15/98 $ 500
- -----------------------------------------------------------
Venango
Industrial Development Authority
3.55%, 6/25/98 100
- -----------------------------------------------------------
TOTAL OTHER SECURITIES--37.6%
(average maturity: 41 days) 1,200
- -----------------------------------------------------------
TOTAL INVESTMENTS AND NET ASSETS--100%
(average maturity: 19 days) $3,195
- -----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 62
Investors Municipal Cash Fund 6
- --------------------------------------------------------------------------------
INVESTORS FLORIDA MUNICIPAL CASH FUND
Investments at March 31, 1998
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
(A)VARIABLE RATE DEMAND SECURITIES
<S> <C>
FLORIDA OBLIGATIONS
- -----------------------------------------------------------
Dade County
Aviation Facilities
3.65% $ 360
Capital Asset Acquisition
4.35% 400
Industrial Development Authority
Dolphins Stadium Project
3.70% 300
Stephen Greene Project
3.75% 385
- -----------------------------------------------------------
Hillsborough County
Industrial Development Authority
3.80% 500
- -----------------------------------------------------------
Jacksonville
Industrial Development Authority
3.70% 300
Trailer Marine Transport Corp. Project
3.45% 300
- -----------------------------------------------------------
Lake Wales
Medical Centers Revenue
3.70% 300
- -----------------------------------------------------------
Orlando
Republic Drive Interchange Project
3.65% 200
- -----------------------------------------------------------
Pinellas County
Health Revenue
3.65% 300
- -----------------------------------------------------------
St. Lucie County
Pollution Control Revenue
3.85% 300
- -----------------------------------------------------------
OTHER OBLIGATIONS
- -----------------------------------------------------------
California
Los Angeles International Airport
3.75% 200
- -----------------------------------------------------------
District of Columbia
General Obligation
3.85% 200
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Montana
Forsyth
Pollution Control Revenue
3.70% $ 200
- -----------------------------------------------------------
New York
Babylon
Industrial Development Authority
3.70% 100
New York City
General Obligation
3.80% 225
- -----------------------------------------------------------
Oregon
Port of Morrow
Portland General Electric Co. Boardman Project
4.10% 300
- -----------------------------------------------------------
Texas
Brazos River Authority
Pollution Control Revenue
4.05% 100
- -----------------------------------------------------------
TOTAL VARIABLE RATE DEMAND
SECURITIES--65.3%
(average maturity: 4 days) 4,970
- -----------------------------------------------------------
OTHER SECURITIES
Hillsborough County
Aviation Authority
3.50%, 7/17/98 500
- -----------------------------------------------------------
Jacksonville
Electric Authority
3.35%, 6/12/98 200
- -----------------------------------------------------------
Orange County
Commercial Paper Notes
3.00% - 3.15%, 4/2/98 300
West Orange Memorial Hospital Tax District
3.35%, 4/27/98 200
- -----------------------------------------------------------
Orlando
Capital Improvement Revenue
3.60%, 6/11/98 200
- -----------------------------------------------------------
</TABLE>
<PAGE> 63
Investors Municipal Cash Fund 7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
<S> <C>
Pinellas County
Educational Facilities Authority
3.00%, 4/6/98 $ 100
- -----------------------------------------------------------
Sarasota County
Public Hospital District
3.20%, 4/3/98 200
- -----------------------------------------------------------
Sunshine State Governmental Financing Commission
3.15% - 3.55%, 4/13/98 - 6/23/98 800
- -----------------------------------------------------------
Puerto Rico
Government Development Bank
3.25%, 4/8/98 100
- -----------------------------------------------------------
TOTAL OTHER SECURITIES--34.2%
(average maturity: 58 days) 2,600
- -----------------------------------------------------------
TOTAL INVESTMENTS--99.5%
(average maturity: 23 days) 7,570
- -----------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--.5% 41
- -----------------------------------------------------------
NET ASSETS--100% $7,611
- -----------------------------------------------------------
</TABLE>
See accompanying Notes to Portfolios of Investments.
<PAGE> 64
Investors Municipal Cash Fund 8
- --------------------------------------------------------------------------------
INVESTORS NEW JERSEY MUNICIPAL CASH FUND
Investments at March 31, 1998
(Value in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
(A)VARIABLE RATE DEMAND SECURITIES
<S> <C>
NEW JERSEY OBLIGATIONS
- -----------------------------------------------------------
New Jersey State
Economic Development Authority:
400 International Drive Partners
3.55% $ 200
El Dorado Terminals Co.
3.70% 100
Epitaxx Inc. Project
4.28% 200
Hoffmann - La Roche Inc. Project
3.45% 200
National Utility Investors Corp. Project
3.60% 200
Natural Gas Co. Project
3.30% 200
Pollution Control Revenue
3.38% 200
TRU Urban Renewal Corp. Project
3.80% 200
Thermal Energy Facilities Revenue
3.40% 100
Sports and Exposition
3.45% 200
Turnpike Authority
3.15% 200
- -----------------------------------------------------------
Union County
Pollution Control Revenue
3.40% 200
- -----------------------------------------------------------
OTHER OBLIGATIONS
- -----------------------------------------------------------
Alabama
Phenix City
Industrial Development Board
3.80% 200
- -----------------------------------------------------------
District of Columbia
General Obligation
3.75% 200
- -----------------------------------------------------------
Florida
Hillsborough County
Industrial Development Authority
3.80% 200
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Oregon
Port of Morrow
Portland General Electric Co. Boardman Project
4.10% $ 200
- -----------------------------------------------------------
TOTAL VARIABLE RATE DEMAND
SECURITIES--64.3%
(average maturity: 3 days) 3,000
- -----------------------------------------------------------
OTHER SECURITIES
New Jersey State
Economic Development Authority
3.10%, 4/3/98 500
Education Facilities Authority
3.15%, 4/7/98 300
Port Authority
3.40%, 7/17/98 200
Tax and Revenue Anticipation Notes
3.60%, 5/13/98 100
- -----------------------------------------------------------
Salem County
Pollution Control Revenue
3.05% - 3.25% , 5/4/98 200
- -----------------------------------------------------------
Puerto Rico
Government Development Bank
3.25%, 4/8/98 100
- -----------------------------------------------------------
TOTAL OTHER SECURITIES--30.0%
(average maturity: 27 days) 1,400
- -----------------------------------------------------------
TOTAL INVESTMENTS--94.3%
(average maturity: 11 days) 4,400
- -----------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--5.7% 265
- -----------------------------------------------------------
NET ASSETS--100% $4,665
- -----------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIOS OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate demand securities described in Note (a). For each security, cost
(for financial reporting and federal income tax purposes) and carrying value are
the same. Likewise, carrying value approximates principal amount.
(a) Variable rate demand securities are payable within five business days and
are backed by credit support agreements from banks or insurance
institutions. The rates shown are the current rates at March 31, 1998.
See accompanying Notes to Financial Statements.
<PAGE> 65
Investors Municipal Cash Fund 9
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS
INVESTORS MUNICIPAL CASH FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Tax-Exempt New York Money Market Fund,
Investors Pennsylvania Municipal Cash Fund, Investors Florida Municipal Cash
Fund and Investors New Jersey Municipal Cash Fund, comprising Investors
Municipal Cash Fund, as of March 31, 1998, the related statements of operations
and changes in net assets for the periods indicated therein and the financial
highlights for each of the fiscal periods since 1994. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds comprising Investors Municipal Cash Fund at March 31, 1998, the
results of their operations, the changes in their net assets and the financial
highlights for the periods indicated therein in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 18, 1998
<PAGE> 66
Investors Municipal Cash Fund 10
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1998
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS NEW YORK PENNSYLVANIA FLORIDA NEW JERSEY
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Investments, at amortized cost $107,483 3,195 7,570 4,400
- -------------------------------------------------------------------------------------------------------------------------
Cash -- -- 27 276
- -------------------------------------------------------------------------------------------------------------------------
Receivable for:
Interest 330 9 28 13
- -------------------------------------------------------------------------------------------------------------------------
Fund shares sold 8 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Total assets 107,821 3,204 7,625 4,689
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
Cash overdraft 3,332 6 -- --
- -------------------------------------------------------------------------------------------------------------------------
Payable for:
Dividends 7 -- 1 --
- -------------------------------------------------------------------------------------------------------------------------
Fund shares redeemed 166 1 -- 19
- -------------------------------------------------------------------------------------------------------------------------
Management fee 3 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Distribution services fee 43 1 3 2
- -------------------------------------------------------------------------------------------------------------------------
Trustees' fees and other 72 1 10 3
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,623 9 14 24
- -------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $104,198 3,195 7,611 4,665
- -------------------------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 104,198 3,195 7,611 4,665
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $1.00 1.00 1.00 1.00
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 67
Investors Municipal Cash Fund 11
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Year ended March 31, 1998
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK PENNSYLVANIA(A) FLORIDA(B) NEW JERSEY(C)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME $2,983 88 155 123
- -------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Management fee 181 5 9 8
- -------------------------------------------------------------------------------------------------------------------------
Distribution services fee 411 12 21 18
- -------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related
expenses 136 2 4 4
- -------------------------------------------------------------------------------------------------------------------------
Reports to shareholders 32 -- 1 1
- -------------------------------------------------------------------------------------------------------------------------
Registration costs 14 6 6 8
- -------------------------------------------------------------------------------------------------------------------------
Professional fees 21 1 1 1
- -------------------------------------------------------------------------------------------------------------------------
Trustees' fees 9 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Total expenses before expense waiver 804 26 42 40
- -------------------------------------------------------------------------------------------------------------------------
Less expenses waived by the investment manager (149) (5) (4) (8)
- -------------------------------------------------------------------------------------------------------------------------
Total expenses absorbed by the Fund 655 21 38 32
- -------------------------------------------------------------------------------------------------------------------------
Net investment income $2,328 67 117 91
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) For the period from May 21, 1997 (commencement of operations) to March 31,
1998
(b) For the period from May 22, 1997 (commencement of operations) to March 31,
1998
(c) For the period from May 23, 1997 (commencement of operations) to March 31,
1998
<PAGE> 68
Investors Municipal Cash Fund 12
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW YORK
-----------------------
YEAR ENDED MARCH 31,
1998 1997
-----------------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND
CAPITAL SHARE ACTIVITY
Net investment income $ 2,328 1,077
- -------------------------------------------------------------------------------------
Dividends to shareholders from
net investment income (2,328) (1,077)
- -------------------------------------------------------------------------------------
Capital share transactions (dollar amounts and number of
shares are the same):
Shares sold 389,412 239,603
- -------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 2,361 1,034
- -------------------------------------------------------------------------------------
391,773 240,637
Shares redeemed (348,150) (198,589)
- -------------------------------------------------------------------------------------
Net increase from capital share transactions and total
increase in net assets 43,623 42,048
- -------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 60,575 18,527
- -------------------------------------------------------------------------------------
End of year $104,198 60,575
- -------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE> 69
Investors Municipal Cash Fund 13
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NEW
PENNSYLVANIA FLORIDA JERSEY
------------------------------------
MAY 21, MAY 22, MAY 23,
1997 TO 1997 TO 1997 TO
MARCH 31, MARCH 31, MARCH 31,
1998 1998 1998
------------------------------------
<S> <C> <C> <C>
OPERATIONS, DIVIDENDS AND
CAPITAL SHARE ACTIVITY
Net investment income $ 67 117 91
- --------------------------------------------------------------------------------------------------
Dividends to shareholders from
net investment income (67) (117) (91)
- --------------------------------------------------------------------------------------------------
Capital share transactions (dollar amounts and number of
shares are the same):
Shares sold 14,257 41,975 29,234
- --------------------------------------------------------------------------------------------------
Shares issued in reinvestment of dividends 66 111 89
- --------------------------------------------------------------------------------------------------
14,323 42,086 29,323
Shares redeemed (11,228) (34,575) (24,758)
- --------------------------------------------------------------------------------------------------
Net increase from capital share transactions and total
increase in net assets 3,095 7,511 4,565
- --------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 100 100 100
- --------------------------------------------------------------------------------------------------
End of period $ 3,195 7,611 4,665
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 70
Investors Municipal Cash Fund 14
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE FUND
Investors Municipal Cash Fund (the Trust) is an open-end management investment
company organized as a business trust under the laws of Massachusetts currently
offering four series of shares. The Tax-Exempt New York Money Market Fund,
Investors Pennsylvania Municipal Cash Fund, Investors Florida Municipal Cash
Fund and Investors New Jersey Municipal Cash Fund (the Funds) invest in
short-term high quality municipal securities.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at amortized cost, which approximates market value. In
the event that a deviation of 1/2 of 1% or more exists between a Fund's $1.00
per share net asset value, calculated at amortized cost, and the net asset value
calculated by reference to market-based values, or if there is any other
deviation that the Board of Trustees believes would result in a material
dilution to shareholders or purchasers, the Board of Trustees will promptly
consider what action should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Interest income is recorded on the accrual basis and
includes amortization of premium on investments.
EXPENSES
Expenses arising in connection with a Fund are allocated to that Fund. Other
Trust expenses are allocated among the Funds in proportion to their relative net
assets.
FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund shares are sold and redeemed on a continuous basis at net asset value. On
each day that the New York Stock Exchange is open for trading, each Fund
determines its net asset value per share at 11:00 a.m. and 3:00 p.m. Chicago
time by dividing the total value of the Fund's investments and other assets,
less liabilities, by the number of Fund shares outstanding. Each Fund declares a
daily dividend, equal to its net investment income for that day, payable
monthly. Net investment income consists of all interest income, plus (minus) all
realized gains (losses) on portfolio securities, minus all expenses of the Fund.
FEDERAL INCOME TAXES
Each Fund has complied with the special provisions of the Internal Revenue Code
available to investment companies and therefore no federal income tax provision
is required.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGER COMBINATION
Effective December 31, 1997, Zurich Insurance Company, the parent of Zurich
Kemper Investments, Inc. (ZKI), acquired a majority interest in Scudder, Stevens
& Clark, Inc. (Scudder), another major investment manager. As a result of this
transaction, the operations of ZKI were combined with Scudder to form a new
global investment organization named Scudder Kemper Investments, Inc. (Scudder
Kemper). The transaction resulted in the termination of the Funds' investment
management agreement with ZKI, however, a new investment management agreement
between the Funds and Scudder Kemper was approved by the Funds' Board of
Trustees and by the Funds' shareholders. The new management agreement, which was
effective December 31, 1997, is the same in all material respects as the
previous management agreement, except that Scudder Kemper is the new investment
adviser to the Funds. In addition, the names of the Funds' principal underwriter
and shareholder service agent were changed to Kemper Distributors, Inc. (KDI)
and Kemper Service Company (KSvC), respectively.
<PAGE> 71
Investors Municipal Cash Fund 15
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
MANAGEMENT AGREEMENT
The Funds have a management agreement with Scudder Kemper and pay a management
fee at an annual rate of .22% of the first $500 million of average daily net
assets declining to .15% of average daily net assets in excess of $3 billion.
During the year ended March 31, 1998, the Funds incurred management fees of
$37,000 after an expense waiver by Scudder Kemper.
DISTRIBUTION AGREEMENT
The Funds have an administration, shareholder services and distribution
agreement with Kemper Distributors, Inc. For its services as primary
distributor, the Funds pay KDI an annual fee of .50% of average daily net assets
of each Fund. For the year ended March 31, 1998, the Funds incurred distribution
fees of $462,000. KDI has related service agreements with various firms to
provide cash management and other services for Fund shareholders. Under these
agreements, KDI pays such firms based on the average daily net assets of those
accounts they maintain and service at an annual rate of .50% for each Fund.
During the year ended March 31, 1998, KDI paid fees of $445,000 to various firms
pursuant to the related service agreements.
SHAREHOLDER SERVICES AGREEMENT
Pursuant to a services agreement with the Trust's transfer agent, KSvC is the
shareholder service agent of the Trust. Under the agreement, KSvC received
shareholder services fees of $94,000 for the year ended March 31, 1998.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Trust are also officers or directors of
Scudder Kemper. During the year ended March 31, 1998, the Trust made no payments
to its officers and incurred trustees' fees of $9,000 to independent trustees.
EXPENSE ABSORPTION
Scudder Kemper has agreed to temporarily waive a portion of its management fee
and absorb operating expenses to the extent that such expenses exceed .80% of
the average daily net assets of the New York Fund and .90% of the average daily
net assets of each of the Pennsylvania, Florida and New Jersey Funds. For the
year ended March 31, 1998, Scudder Kemper waived $166,000 of expenses.
<PAGE> 72
Investors Municipal Cash Fund 16
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
NEW YORK 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------
Net investment income .03 .03 .03 .02 .02
- --------------------------------------------------------------------------------------------------------------
Less dividends declared .03 .03 .03 .02 .02
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN 2.90% 3.03 3.03 2.40 1.63
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE WAIVER OR
ABSORPTION:
Expenses .80% .44 .80 .80 .80
- --------------------------------------------------------------------------------------------------------------
Net investment income 2.83% 2.96 2.95 2.44 1.61
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE WAIVER OR
ABSORPTION:
Expenses .98% .96 1.14 1.15 1.25
- --------------------------------------------------------------------------------------------------------------
Net investment income 2.65% 2.44 2.61 2.09 1.16
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of year (in thousands) $104,198 60,575 18,527 14,090 10,762
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA FLORIDA NEW JERSEY
--------------- --------------- ---------------
MAY 21, 1997 TO MAY 22, 1997 TO MAY 23, 1997 TO
MARCH 31, MARCH 31, MARCH 31,
1998 1998 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------
Net investment income .02 .02 .02
- -----------------------------------------------------------------------------------------------------------------
Less dividends declared .02 .02 .02
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 1.00 1.00
- -----------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 2.42% 2.41 2.22
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AFTER EXPENSE WAIVER
(ANNUALIZED):
Expenses .90% .90 .90
- -----------------------------------------------------------------------------------------------------------------
Net investment income 2.76% 2.74 2.55
- -----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS BEFORE EXPENSE WAIVER
(ANNUALIZED):
Expenses 1.11% .99 1.12
- -----------------------------------------------------------------------------------------------------------------
Net investment income 2.55% 2.65 2.33
- -----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets at end of period (in thousands) $3,195 7,611 4,665
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Scudder Kemper has agreed to temporarily waive a portion of its management
fee and absorb certain expenses of the Funds.
FEDERAL TAX STATUS OF 1998 DIVIDENDS
All of the dividends paid by the Funds constitute tax-exempt interest which is
not taxable for federal income tax purposes; however, a portion of the dividends
paid may be includable in the alternative minimum tax calculation.
<PAGE> 73
INVESTORS MUNICIPAL CASH FUND
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(i) Financial statements included in Part A of the Registration
Statement:
Tax-Exempt New York Money Market Fund--Financial Highlights.
Investors Florida Municipal Cash Fund, Investors New Jersey
Municipal Cash Fund and Investors Pennsylvania Municipal Cash
Fund--Financial Highlights.
(ii) Financial statements included in Part B of the Registration
Statement:
Tax-Exempt New York Money Market Fund.
Statement of assets and liabilities--March 31, 1998.
Statement of operations for the year ended March 31, 1998.
Statement of changes in net assets for each of the two years in
the period ended March 31, 1998.
Portfolio of investments--March 31, 1998.
Notes to financial statements.
Schedules II, III, IV and V have been omitted as the required
information is not present.
Schedule I has been omitted as the required information is presented in
the portfolio of investments at March 31, 1998.
Investors Florida Municipal Cash Fund, Investors New Jersey
Municipal Cash Fund and Investors Pennsylvania Municipal Cash Fund.
Statement of Assets and Liabilities--March 31, 1998.
Statement of Operations and Statement of Changes in Net Assets
for the period from May 21, 1997 (commencement of operations)
to March 31, 1998 for Investors Pennsylvania Municipal Cash
Fund; for the period from May 22, 1997 (commencement of
operations) to March 31, 1998 for Investors Florida Municipal
Cash Fund; and for the period from May 23, 1997 (commencement
of operations) to March 31, 1998 for the Investors New Jersey
Municipal Cash Fund.
Notes to Financial Statements.
Portfolio of Investments--March 31, 1998.
Investors Michigan Municipal Cash Fund
Statement of Net Assets--February 13, 1998
Schedule I has been omitted as the required information is presented in
the Portfolio of Investments at March 31, 1998.
C-1
<PAGE> 74
Schedules II, III, IV and V have been omitted as the required
information is not present.
<TABLE>
(b) Exhibits
<S> <C>
99.b1. Amended and Restated Agreement and Declaration of Trust.*
99.b2. By-Laws.*
99.b3. Inapplicable.
99.b4.(a) Text of Share Certificate.*
99.b4.(b) Written Instrument Establishing and Designating New Series.*
99.b4.(c) Written Instrument Establishing and Designating New Trust
Name.*
99.b4.(d) Written Instrument Establishing and Designating New Series
(Michigan Fund).*
99.b5. Investment Management Agreement.
99.b6. Form of Administration, Shareholder Services and
Distribution Agreement.
99.b7. Inapplicable.
99.b8. Custody Agreement.*
99.b9.(a) Agency Agreement.*
99.b9.(b) Supplement to Agency Agreement.*
99.b9.(c) Fund Accounting Agreements.*
99.b10. Inapplicable.
99.b11. Report and Consent of Independent Auditors.
99.b12. Inapplicable.
99.b13. Inapplicable.
99.b14. Inapplicable.
99.b15. Form of Rule 12b-1 Plan.
99.b16. Performance Calculations.*
99.b24. Power of Attorney.*
99.b485(b) Representation of Counsel (Rule 485).
27. Financial Data Schedule.
</TABLE>
- ---------------
* Incorporated herein by reference to the Amendment to Registrant's
Registration Statement on Form N-1A identified below:
<TABLE>
<CAPTION>
EXHIBIT NO. POST-EFFECTIVE AMENDMENT NO. DATE OF FILING
----------- ---------------------------- --------------
<S> <C> <C>
1, 2, 4(a), 8, 9(a) and 16 5 7/28/95
9(b) 6 7/26/96
4(b) and 4(c) 8 5/20/97
4(d), 9(c) and 24 11 2/20/98
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
As of July 1, 1998, Scudder Kemper Investments, Inc., a Delaware
corporation, owned 56.94% of the outstanding shares of the Pennsylvania Fund.
C-2
<PAGE> 75
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The number of record holders of each series of Registrant as of July 1,
1998 is as follows:
<TABLE>
<CAPTION>
NUMBER OF
RECORD
FUND HOLDERS
---- ---------
<S> <C>
Investors Florida Municipal Cash Fund....................... 8
Investors Michigan Municipal Cash Fund...................... 5
Investors New Jersey Municipal Cash Fund.................... 7
Investors Pennsylvania Municipal Cash Fund.................. 11
Tax-Exempt New York Money Market Fund....................... 90
</TABLE>
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding Corp.
("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens & Clark,
Inc. ("Scudder") and the representatives of the beneficial owners of the capital
stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich will become the
majority stockholder in Scudder with an approximately 70% interest, and ZKI will
become a wholly-owned subsidiary of, or be combined with, Scudder
("Transaction"). In connection with the trustees' evaluation of the Transaction,
Zurich agreed to indemnify the Registrant and the trustees who were not
interested persons of ZKI or Scudder (the "Independent Trustees") for and
against any liability and expenses based upon any action or omission by the
Independent Trustees in connection with their consideration of and action with
respect to the Transaction. In addition, Scudder has agreed to indemnify the
Registrant and the Independent Trustees for and against any liability and
expenses based upon any misstatements or omissions by Scudder to the Independent
Trustees in connection with their consideration of the Transaction.
C-3
<PAGE> 76
Item 28b(i) 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 28.
<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
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investment, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zunica Insurance Company of Switzerland
Director, ZKI Holding Corporation
Steven Gluckstern Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zurich Insurance Company of Switzerland
Director, Zurich Holding Company of America
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
Director, ZKI Holding Corporation
Kathryn L. Quirk Director, 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
</TABLE>
<PAGE> 77
<TABLE>
<S> <C>
Director, Vice President and Secretary, Scudder Capital Stock Corporation
Director, Vice President and Secretary, Scudder Capital Planning Corporation
Director, Vice President and Secretary, SS&C Investment Corporation
Director, Vice President and Secretary, SIS Investment Corporation
Director, Vice President and Secretary, SRV Investment Corporation
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.
Director, Korea Bond Fund Management Co., Ltd.
Markus Rohrbasser Director, Scudder Kemper Investments, Inc.**
Member Corporate Executive Board, Zurich Insurance Company of Switzerland
President, Director, Chairman of the Board, ZKI Holding Corporation
Cornelia M. Small Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President, Chief Executive Officer, Scudder Kemper Investments,
Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President & Director, Scudder, Stevens & Clark Overseas Corporationo oo
President & Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy
of Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Socjete 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
</TABLE>
<PAGE> 78
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and acts as principal underwriter of the Kemper Funds.
(b) Information on the officers and directors of Kemper
Distributors, Inc., principal underwriter for the Registrant is set forth
below. The principal business address is 222 South Riverside Plaza, Chicago,
Illinois 60606.
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES WITH
NAME WITH UNDERWRITER REGISTRANT
---- ---------------- ----------
<S> <C> <C>
James L. Greenawalt President None
Thomas W. Littauer Director, Chief Executive Officer Vice President
Kathryn L. Quirk Director, Secretary, Chief Legal
Officer & Vice President Vice President
James J. McGovern Chief Financial Officer
& Vice President None
Linda J. Wondrack Vice President & Chief
Compliance Officer None
Paula Gaccione Vice President None
Michael E. Harrington Vice President None
Robert A. Rudell Vice President None
William M. Thomas Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Todd N. Gierke Assistant Treasurer None
Philip J. Collora Assistant Secretary Vice President,
Secretary & Treasurer
Paul J. Elmlinger Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
Daniel Pierce Director, Chairman Director
Mark S. Casady Director, Vice Chairman President
Stephen R. Beckwith Director None
</TABLE>
(c) Not applicable.
<PAGE> 79
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents are maintained at the offices of the
Registrant, the branch offices of Registrant's investment adviser, Scudder
Kemper Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at
the offices of the Registrant's principal underwriter, Kemper Distributors,
Inc., 222 Riverside Plaza, Chicago, Illinois 60606 or, in the case of records
concerning custodial functions, at the offices of the custodian, Investors
Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri
64105 or, in the case of records concerning transfer agency functions, at the
offices of IFTC and of the shareholder service agent, Kemper Service Company,
811 Main Street, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-17
<PAGE> 80
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago and State of Illinois, on the
27th day of July, 1998.
INVESTORS MUNICIPAL CASH FUND
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 July 27, 1998 on behalf of the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ MARK S. CASADY President
- ---------------------------------------------------
Mark S. Casady
/s/ DANIEL PIERCE* Chairman and Trustee
- ---------------------------------------------------
Daniel Pierce
/s/ DAVID W. BELIN* Trustee
- ---------------------------------------------------
David W. Belin
/s/ LEWIS A. BURNHAM* Trustee
- ---------------------------------------------------
Lewis A. Burnham
/s/ DONALD L. DUNAWAY* Trustee
- ---------------------------------------------------
Donald L. Dunaway
/s/ ROBERT B. HOFFMAN* Trustee
- ---------------------------------------------------
Robert B. Hoffman
/s/ DONALD R. JONES* Trustee
- ---------------------------------------------------
Donald R. Jones
/s/ SHIRLEY D. PETERSON* Trustee
- ---------------------------------------------------
Shirley D. Peterson
/s/ WILLIAM P. SOMMERS* Trustee
- ---------------------------------------------------
William P. Sommers
/s/ EDMOND D. VILLANI* Trustee
- ---------------------------------------------------
Edmond D. Villani
/s/ JOHN R. HEBBLE Treasurer
- ---------------------------------------------------
John R. Hebble
</TABLE>
* Philip J. Collora signs this document pursuant to powers of attorney filed
with Post-Effective Amendment No. 11 to the Registration Statement of
Registrant on Form N-1A filed on February 20, 1998.
/s/ PHILIP J. COLLORA
- ---------------------------------------------------
Philip J. Collora
C-18
<PAGE> 81
INDEX TO EXHIBITS
Exhibits
<TABLE>
<S> <C>
99.b1. Amended and Restated Agreement and Declaration of Trust.*
99.b2. By-Laws.*
99.b3. Inapplicable.
99.b4.(a) Text of Share Certificate.*
99.b4.(b) Written Instrument Establishing and Designating New Series.*
99.b4.(c) Written Instrument Establishing and Designating New Trust
Name.*
99.b4.(d) Written Instrument Establishing and Designating New Series
(Michigan Fund).*
99.b5. Investment Management Agreement.
99.b6. Form of Administration, Shareholder Services and
Distribution Agreement.
99.b7. Inapplicable.
99.b8. Custody Agreement.*
99.b9.(a) Agency Agreement.*
99.b9.(b) Supplement to Agency Agreement.*
99.b9.(c) Fund Accounting Agreements.*
99.b10. Inapplicable.
99.b11. Report and Consent of Independent Auditors.
99.b12. Inapplicable.
99.b13. Inapplicable.
99.b14. Inapplicable.
99.b15. Form of Rule 12b-1 Plan.
99.b16. Performance Calculations.*
99.b24. Power of Attorney.*
99.b485(b) Representation of Counsel (Rule 485).
27. Financial Data Schedule.
</TABLE>
- ---------------
* Incorporated herein by reference to the Amendment to Registrant's
Registration Statement on Form N-1A identified below:
<TABLE>
<CAPTION>
EXHIBIT NO. POST-EFFECTIVE AMENDMENT NO. DATE OF FILING
----------- ---------------------------- --------------
<S> <C> <C>
1, 2, 4(a), 8, 9(a) and 16 5 7/28/95
9(b) 6 7/26/96
4(b) and 4(c) 8 5/20/97
4(d), 9(c) and 24 11 2/20/98
</TABLE>
<PAGE> 1
EX-99.B5(a)
INVESTMENT MANAGEMENT AGREEMENT
Investors Municipal Cash Fund
222 South Riverside Plaza
Chicago, Illinois 60606
April 6, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Investors Florida Municipal Cash Fund
Investors Michigan Municipal Cash Fund
Investors New Jersey Municipal Cash Fund
Investors Pennsylvania Municipal Cash Fund
Tax-Exempt New York Money Market Fund
Ladies and Gentlemen:
INVESTORS MUNICIPAL CASH FUND (the "Trust") has been established
as a Massachusetts business trust to engage in the business of an
investment company. Pursuant to the Trust's Declaration of
Trust, as amended from time-to-time (the "Declaration"), the
Board of Trustees is authorized to issue the Trust's shares of
beneficial interest (the "Shares"), in separate series, or funds.
The Board of Trustees has authorized the Investors Florida
Municipal Cash Fund, the Investors Michigan Municipal Cash Fund,
the Investors New Jersey Municipal Cash Fund, the Investors
Pennsylvania Municipal Cash Funds and the Tax-Exempt New York
Money Market Fund (each a "Fund" and collectively, the "Funds").
Series may be abolished and dissolved, and additional series
established, from time to time by action of the Trustees.
The Trust, on behalf of the Funds, has selected you to act as the
investment manager of the Funds and to provide certain other
services, as more fully set forth below, and you have indicated
that you are willing to act as such investment manager and to
perform such services under the terms and conditions hereinafter
set forth. In the event the Trust establishes one or more
additional series with respect to which it desires to retain you
to render the services described hereunder, it shall notify you
in writing. If you are willing to render such services, you
shall notify the Trust in writing, whereupon such series shall
become a fund hereunder. Accordingly, the Trust on behalf of the
Funds agrees with you as follows:
1. Delivery of Documents. The Trust engages in the business of
investing and reinvesting the assets of each Fund in the manner
<PAGE> 2
and in accordance with the investment objectives, policies and
restrictions specified in the currently effective Prospectus (the
"Prospectus") and Statement of Additional Information (the "SAI")
relating to each Fund included in the Trust's Registration
Statement on Form N-1A, as amended from time to time, (the
"Registration Statement") filed by the Trust under the Investment
Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you
by the Trust. The Trust has also furnished you with copies
properly certified or authenticated of each of the following
additional documents related to the Trust and the Funds:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof
(the "By-Laws").
(c) Resolutions of the Trustees of the Trust and the
shareholders of each Fund selecting you as investment manager and
approving the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Funds, as applicable.
The Trust will furnish you from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements, if any, to the foregoing, including the Prospectus,
the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of
the Funds, you shall provide continuing investment management of
the assets of the Funds in accordance with the investment
objectives, policies and restrictions set forth in the Prospectus
and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating
to regulated investment companies and all rules and regulations
thereunder; and all other applicable federal and state laws and
regulations of which you have knowledge; subject always to
policies and instructions adopted by the Trust's Board of
Trustees. In connection therewith, you shall use reasonable
efforts to manage each Fund so that it will qualify as a
regulated investment company under Subchapter M of the Code and
regulations issued thereunder. The Funds shall have the benefit
of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-
range investment policy generally available to your investment
advisory clients. In managing the Funds in accordance with the
requirements set forth in this section 2, you shall be entitled
to receive and act upon advice of counsel to the Trust. You
shall also make available to the Trust promptly upon request all
of the Funds' investment records and ledgers as are necessary to
2
<PAGE> 3
assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law,
you shall furnish to regulatory authorities having the requisite
authority any information or reports in connection with the
services provided pursuant to this Agreement which may be
requested in order to ascertain whether the operations of the
Trust are being conducted in a manner consistent with applicable
laws and regulations.
You shall determine the securities, instruments, investments,
currencies, repurchase agreements, futures, options and other
contracts relating to investments to be purchased, sold or
entered into by each Fund and place orders with broker-dealers,
foreign currency dealers, futures commission merchants or others
pursuant to your determinations and all in accordance with Fund
policies as expressed in the Registration Statement. You shall
determine what portion of each Fund's portfolio shall be invested
in securities and other assets and what portion, if any, should
be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic
reports on the investment performance of each Fund and on the
performance of your obligations pursuant to this Agreement, and
you shall supply such additional reports and information as the
Trust's officers or Board of Trustees shall reasonably request.
3. Administrative Services. In addition to the portfolio
management services specified above in section 2, you shall
furnish at your expense for the use of the Funds such office
space and facilities in the United States as the Funds may
require for its reasonable needs, and you (or one or more of your
affiliates designated by you) shall render to the Trust
administrative services on behalf of the Funds necessary for
operating as an open end investment company and not provided by
persons not parties to this Agreement including, but not limited
to, preparing reports to and meeting materials for the Trust's
Board of Trustees and reports and notices to Fund shareholders;
supervising, negotiating contractual arrangements with, to the
extent appropriate, and monitoring the performance of, accounting
agents, custodians, depositories, transfer agents and pricing
agents, accountants, attorneys, printers, underwriters, brokers
and dealers, insurers and other persons in any capacity deemed to
be necessary or desirable to Fund operations; preparing and
making filings with the Securities and Exchange Commission (the
"SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy
materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant
to Rule 24f-2 under the 1940 Act; overseeing the tabulation of
proxies by the Funds' transfer agent; assisting in the
preparation and filing of each Fund's federal, state and local
tax returns; preparing and filing each Fund's federal excise tax
3
<PAGE> 4
return pursuant to Section 4982 of the Code; providing assistance
with investor and public relations matters; monitoring the
valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of each Fund
under applicable federal and state securities laws; maintaining
or causing to be maintained for the Funds all books, records and
reports and any other information required under the 1940 Act, to
the extent that such books, records and reports and other
information are not maintained by the Funds' custodian or other
agents of the Funds; assisting in establishing the accounting
policies of the Funds; assisting in the resolution of accounting
issues that may arise with respect to the Funds' operations and
consulting with the Funds' independent accountants, legal counsel
and the Funds' other agents as necessary in connection therewith;
establishing and monitoring each Fund's operating expense
budgets; reviewing each Fund's bills; processing the payment of
bills that have been approved by an authorized person; assisting
the Funds in determining the amount of dividends and
distributions available to be paid by each Fund to its
shareholders, preparing and arranging for the printing of
dividend notices to shareholders, and providing the transfer and
dividend paying agent, the custodian, and the accounting agent
with such information as is required for such parties to effect
the payment of dividends and distributions; and otherwise
assisting the Trust as it may reasonably request in the conduct
of the Funds' business, subject to the direction and control of
the Trust's Board of Trustees. Nothing in this Agreement shall
be deemed to shift to you or to diminish the obligations of any
agent of the Funds or any other person not a party to this
Agreement which is obligated to provide services to the Funds.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the
compensation and expenses of all Trustees, officers and executive
employees of the Trust (including each Fund's share of payroll
taxes) who are affiliated persons of you, and you shall make
available, without expense to the Funds, the services of such of
your directors, officers and employees as may duly be elected
officers of the Trust, subject to their individual consent to
serve and to any limitations imposed by law. You shall provide
at your expense the portfolio management services described in
section 2 hereof and the administrative services described in
section 3 hereof.
You shall not be required to pay any expenses of the Funds other
than those specifically allocated to you in this section 4. In
particular, but without limiting the generality of the foregoing,
you shall not be responsible, except to the extent of the
reasonable compensation of such of the Funds' Trustees and
officers as are directors, officers or employees of you whose
services may be involved, for the following expenses of each
Fund: organization expenses of each Fund (including out of-pocket
4
<PAGE> 5
expenses, but not including your overhead or employee costs);
fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses;
maintenance of books and records which are required to be
maintained by the Funds' custodian or other agents of the Trust;
telephone, telex, facsimile, postage and other communications
expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Funds in connection with membership in investment
company trade organizations; fees and expenses of the Funds'
accounting agent for which the Trust is responsible pursuant to
the terms of the Fund Accounting Services Agreement, custodians,
subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services
to pricing agents, accountants, bankers and other specialists, if
any; expenses of preparing share certificates and, except as
provided below in this section 4, other expenses in connection
with the issuance, offering, distribution, sale, redemption or
repurchase of securities issued by each Fund; expenses relating
to investor and public relations; expenses and fees of
registering or qualifying Shares of each Fund for sale; interest
charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of
each Fund's portfolio securities; the compensation and all
expenses (specifically including travel expenses relating to
Trust business) of Trustees, officers and employees of the Trust
who are not affiliated persons of you; brokerage commissions or
other costs of acquiring or disposing of any portfolio securities
of the Funds; expenses of printing and distributing reports,
notices and dividends to shareholders; expenses of printing and
mailing Prospectuses and SAIs of each Fund and supplements
thereto; costs of stationery; any litigation expenses;
indemnification of Trustees and officers of the Trust; and costs
of shareholders' and other meetings.
You shall not be required to pay expenses of any activity which
is primarily intended to result in sales of Shares of a Fund if
and to the extent that (i) such expenses are required to be borne
by a principal underwriter which acts as the distributor of a
Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such
expenses, or (ii) the Trust on behalf of a Fund shall have
adopted a plan in conformity with Rule 12b-1 under the 1940 Act
providing that a Fund (or some other party) shall assume some or
all of such expenses. You shall be required to pay such of the
foregoing sales expenses as are not required to be paid by the
principal underwriter pursuant to the underwriting agreement or
are not permitted to be paid by a Fund (or some other party)
pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments
to be made and costs to be assumed by you as provided in sections
2, 3, and 4 hereof, the Trust on behalf of the Funds shall pay
5
<PAGE> 6
you in United States Dollars on the last day of each month the
unpaid balance of a fee equal to the excess of (a) 1/12 of .22 of
1 percent of the combined average daily net assets as defined
below of the Funds for such month; provided that, for any
calendar month during which the average of such values exceeds
$500,000,000, the fee payable for that month based on the portion
of the average of such values in excess of $500,000,000 shall be
1/12 of .20 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds $1
billion, the fee payable for that month based on the portion of
the average of such values in excess of $1 billion shall be 1/12
of .175 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds $2
billion, the fee payable for that month based on the portion of
the average of such values in excess of $2 billion shall be 1/12
of .16 of 1 percent of such portion; and provided that, for any
calendar month during which the average of such values exceeds $3
billion, the fee payable for that month based on the portion of
the average of such values in excess of $3 billion shall be 1/12
of .15 of 1 percent of such portion; over (b) any compensation
waived by you from time to time (as more fully described below).
You shall be entitled to receive during any month such interim
payments of your fee hereunder as you shall request, provided
that no such payment shall exceed 75 percent of the amount of
your fee then accrued on the books of the Funds and unpaid.
The "average daily net assets" of a Fund shall mean the average
of the values placed on a Fund's net assets as of 4:00 p.m. (New
York time) on each day on which the net asset value of the Fund
is determined consistent with the provisions of Rule 22c-1 under
the 1940 Act or, if the Fund lawfully determines the value of its
net assets as of some other time on each business day, as of such
time. The value of the net assets of a Fund shall always be
determined pursuant to the applicable provisions of the
Declaration and the Registration Statement. If the determination
of net asset value does not take place for any particular day,
then for the purposes of this section 5, the value of the net
assets of such Fund as last determined shall be deemed to be the
value of its net assets as of 4:00 p.m. (New York time), or as of
such other time as the value of the net assets of the Fund's
portfolio may be lawfully determined on that day. If a Fund
determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that
day shall be deemed to be the sole determination thereof on that
day for the purposes of this section 5.
You may waive all or a portion of your fees provided for
hereunder and such waiver shall be treated as a reduction in
purchase price of your services. You shall be contractually bound
hereunder by the terms of any publicly announced waiver of your
fee, or any limitation of the Funds' expenses, as if such waiver
or limitation were fully set forth herein.
6
<PAGE> 7
6. Avoidance of Inconsistent Position; Services Not Exclusive.
In connection with purchases or sales of portfolio securities and
other investments for the account of the Funds, neither you nor
any of your directors, officers or employees shall act as a
principal or agent or receive any commission. You or your agent
shall arrange for the placing of all orders for the purchase and
sale of portfolio securities and other investments for each
Fund's account with brokers or dealers selected by you in
accordance with Fund policies as expressed in the Registration
Statement. If any occasion should arise in which you give any
advice to clients of yours concerning the Shares of a Fund, you
shall act solely as investment counsel for such clients and not
in any way on behalf of such Fund.
Your services to the Funds pursuant to this Agreement are not to
be deemed to be exclusive and it is understood that you may
render investment advice, management and services to others. In
acting under this Agreement, you shall be an independent
contractor and not an agent of the Trust. Whenever a Fund and
one or more other accounts or investment companies advised by you
have available funds for investment, investments suitable and
appropriate for each shall be allocated in accordance with
procedures believed by you to be equitable to each entity.
Similarly, opportunities to sell securities shall be allocated in
a manner believed by you to be equitable. The Funds recognize
that in some cases this procedure may adversely affect the size
of the position that may be acquired or disposed of for the
Funds.
7. Limitation of Liability of Manager. As an inducement to
your undertaking to render services pursuant to this Agreement,
the Trust agrees that you shall not be liable under this
Agreement for any error of judgment or mistake of law or for any
loss suffered by a Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any
liability to the Trust, the Funds or their shareholders to which
you would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of your duties,
or by reason of your reckless disregard of your obligations and
duties hereunder.
10. Duration and Termination of This Agreement. This Agreement
shall remain in force until December 1, 1998, and continue in
force from year to year thereafter with respect to each Fund, but
only so long as such continuance is specifically approved for
each Fund at least annually (a) by the vote of a majority of the
Trustees who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and
(b) by the Trustees of the Trust, or by the vote of a majority of
the outstanding voting securities of such Fund. The aforesaid
7
<PAGE> 8
requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations
thereunder and any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of such Fund or by
the Trust's Board of Trustees on 60 days' written notice to you,
or by you on 60 days' written notice to the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
This Agreement may be terminated with respect to a Fund at any
time without the payment of any penalty by the Board of Trustees
or by vote of a majority of the outstanding voting securities of
such Fund in the event that it shall have been established by a
court of competent jurisdiction that you or any of your officers
or directors has taken any action which results in a breach of
your covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules
and regulations thereunder and any applicable SEC exemptive order
therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy
of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "Investors Municipal Cash Fund" refers to
the Trustees under the Declaration collectively as Trustees and
not as individuals or personally, and that no shareholder of a
Fund, or Trustee, officer, employee or agent of the Trust, shall
be subject to claims against or obligations of the Trust or of a
Fund to any extent whatsoever, but that the Trust estate only
shall be liable.
You are hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and you agree that the
obligations assumed by the Trust on behalf of each Fund pursuant
to this Agreement shall be limited in all cases to each Fund and
its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of a Fund or
any other series of the Trust, or from any Trustee, officer,
employee or agent of the Trust. You understand that the rights
and obligations of each Fund, or series, under the Declaration
are separate and distinct from those of any and all other series.
8
<PAGE> 9
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or limit
any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the
definitions of "affiliated person," "assignment" and "majority of
the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions
as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, or
in a manner which would cause a Fund to fail to comply with the
requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or
management agreements entered into between you and the Trust on
behalf of the Funds.
9
<PAGE> 10
If you are in agreement with the foregoing, pleasse execute the
form of acceptance on the accompanying conterpart of this letter
and return such counterpart to the Trust, whereupon this letter
shall become a binding contract effective as of the date of this
Agreement.
Yours very truly,
INVESTORS MUNICIPAL CASH, on behalf
of Investors Florida Municipal Cash Fund
Investors Michigan Municipal Cash Fund
Investors New Jersey Municipal Cash Fund
Investors Pennsylvania Municipal Cash Fund
Tax-Exempt New York Money Market Fund
By: /s/ Thomas W. Littauer
---------------------------------------
Vice President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/ Stephen R. Beckwith
---------------------------------------
10
<PAGE> 1
EXHIBIT 99.b6
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
AGREEMENT made this _____ day of July, 1998, by and between [NAME
OF FUND], 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.
<PAGE> 2
KDI accepts such appointment and agrees during the term
hereof to render such services and to assume the obligations
herein set forth for the compensation herein provided. KDI
shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for
or represent the Fund in any way or otherwise be deemed an
agent of the Fund. It is understood and agreed that KDI, by
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 so long as its services hereunder are not impaired
thereby.
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
Fund's Agreement and Declaration of Trust. 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 and
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.
2
<PAGE> 3
Shares of any series 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 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 that 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 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.
3
<PAGE> 4
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 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 Fund s Agreement and Declaration of Trust
(and of any fundamental policies adopted by the Fund
pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), notice of which shall have been
given to KDI) which at the time in any way require, limit,
restrict prohibit or otherwise regulate any action on the
part of KDI hereunder.
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 or the Fund's
Amended and Restated 12b-1 Plan (the "Plan"). 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.
4
<PAGE> 5
\
8. This Agreement shall become effective on the date
hereof and shall continue until July _____, 1999 and shall
continue from year to year thereafter only so long as such
continuance is approved in the manner required by the
Investment Company Act.
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
(60) days' written notice to the other party. The Fund may
effect termination by a vote of (i) a majority of the
trustees who are not interested persons of the Fund and who
have no direct or indirect financial interest in the
operation of the Plan, this Agreement or in any other
agreement related to the Plan, or (ii) a majority of the
outstanding voting securities of the Fund.
All material amendments to this Agreement must be
approved by a vote of a majority of the Board of Trustees of
the Fund, including the trustees who are not interested
persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan, this
Agreement or in any other agreement related to the Plan,
cast in person at a meeting called for such purpose.
The terms "assignment," "interested person" and "vote
of a majority of the outstanding voting securities" shall
have the meanings set forth in the Investment Company Act
and the rules and regulations thereunder.
KDI shall receive such compensation for its
distribution services as set forth in the Plan. Termination
of this Agreement shall not affect the right of KDI to
receive payments on any unpaid balance of the compensation
earned prior to such termination, as set forth in the Plan.
9. KDI will not use or distribute or authorize the use,
distribution or dissemination by Firms or others in
connection with the sale of Fund 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. KDI will furnish the Fund with copies of all
such material.
10. 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.
11. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the
5
<PAGE> 6
other party at such address as such other party may
designate for the receipt of such notice.
12. 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 any liability of the Fund
arising hereunder allocated to a particular series, whether
in accordance with the express terms hereof or otherwise,
KDI shall have no recourse against the assets of any other
series for such purpose.
13. This Agreement shall be construed in accordance with
applicable federal law and with the laws of The Commonwealth
of Massachusetts.
14. 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.
[SIGNATURES APPEAR ON NEXT PAGE]
6
<PAGE> 7
IN WITNESS WHEREOF, the Fund and KDI have caused this Agreement
to be executed as of the day and year first above written.
[NAME OF FUND]
By:
---------------------------
Title:
-------------------------
ATTEST:
By:
--------------------------
Title:
------------------------
KEMPER DISTRIBUTORS, INC.
By:
---------------------------
Title:
------------------------
ATTEST:
By:
--------------------------
Title:
------------------------
7
<PAGE> 1
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Investors Municipal Cash Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Tax-Exempt New York Money Market Fund,
Investors Pennsylvania Municipal Cash Fund, Investors Florida Municipal Cash
Fund and Investors New Jersey Municipal Cash Fund, comprising Investors
Municipal Cash Fund, as of March 31, 1998, the related statements of operations
and changes in net assets for the periods indicated therein and the financial
highlights for each of the fiscal periods since 1991. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds comprising Investors Municipal Cash Fund at March 31, 1998, the
results of their operations, the changes in their net assets and the financial
highlights for the periods indicated therein in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 18, 1998
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors and Reports to Shareholders" and to the
use of our reports on the financial statements of the Investors Municipal Cash
Fund - Tax-Exempt New York Money Market Fund, - Investors Florida Municipal Cash
Fund, - Investors New Jersey Municipal Cash Fund, - Investors Pennsylvania
Municipal Cash Fund and the statement of net assets of the Investors Municipal
Cash Fund - Investors Michigan Municipal Cash Fund, dated May 18, 1998 and
February 13, 1998, respectively, in the Registration Statement (Form N-1A) and
their incorporation by reference in the related Prospectus of Investors
Municipal Cash Fund, filed with the Securities and Exchange Commission in this
Post-Effective Amendment No. 12 to the Registration Statement under the
Securities Act of 1933 (Registration No. 33-34819) and this Amendment No. 13 to
the Registration Statement under the Investment Company Act of 1940
(Registration No. 811-6108).
ERNST & YOUNG LLP
Chicago, Illinois
July 24, 1998
<PAGE> 1
EXHIBIT 99.B15
Fund: (the "Fund")
--------------------------
Series: (the "Series")
--------------------------
AMENDED AND RESTATED 12b-1 PLAN
Pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act"), this Amended and
Restated 12b-1 Plan (the "Plan") has been adopted for the Fund on
behalf of the Series (both as noted and defined above) by a
majority of the members of the Fund's Board of Trustees,
including a majority of the trustees who are not "interested
persons" of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreements
related to the Plan (the "Qualified Trustees") at a meeting
called for the purpose of voting on this Plan.
1. Compensation. The Fund will pay to Kemper
Distributors, Inc. ("KDI") at the end of each calendar month a
distribution services fee computed at the annual rate of [._____
of 1%] of the Fund's average daily net assets attributable to the
Series. KDI may compensate various financial services firms
appointed by KDI ("Firms") in accordance with the provisions of
the Fund's Administration, Shareholder Services and Distribution
Agreement (the "Distribution Agreement") for sales of shares at
the fee levels provided in the Fund's prospectus from time to
time. KDI may pay other commissions, fees or concessions to
Firms, and may pay them to others in its discretion, in such
amounts as KDI may determine from time to time. The distribution
services fee for the Series shall be based upon the average daily
net assets of the Series, and such fee shall be charged only to
the Series. For the month and year in which this Plan becomes
effective or terminates, there shall be an appropriate proration
of the distribution services fee set forth herein on the basis of
the number of days that the Plan, the Distribution Agreement, and
any other agreement related to the Plan, is in effect during the
month and year, respectively.
2. Periodic Reporting. KDI shall prepare reports for the
Board of Trustees of the Fund on a quarterly basis showing
amounts paid to the various Firms and such other information as
from time to time shall be reasonably requested by the Board of
Trustees.
3. Continuance. This Plan shall continue in effect
indefinitely, provided that such continuance is approved at least
annually by a vote of a majority of the trustees, and of the
Qualified Trustees, cast in person at a meeting called for such
<PAGE> 2
purpose or by vote of at least a majority of the outstanding
voting securities of the Series.
4. Termination. This Plan may be terminated at any time
without penalty with respect to the Series by vote of a majority
of the Qualified Trustees or by vote of the majority of the
outstanding voting securities of the Series.
5. Amendment. This Plan may not be amended to increase
materially the amount to be paid to KDI by the Fund for
distribution services with respect to the Series without the vote
of a majority of the outstanding voting securities of the Series.
All material amendments to this Plan must in any event be
approved by a vote of a majority of the trustees, and of the
Qualified Trustees, cast in person at a meeting called for such
purpose.
6. Selection of Non-Interested Trustees. So long as this
Plan is in effect, the selection and nomination of those trustees
who are not interested persons of the Fund will be committed to
the discretion of the trustees who are not themselves interested
persons.
7. Recordkeeping. The Fund will preserve copies of this
Plan, the Distribution Agreement, and all reports made pursuant
to Paragraph 2 above for a period of not less than six (6) years
from the date of this Plan, the Distribution Agreement, or any
such report, as the case may be, the first two (2) years in an
easily accessible place.
8. Limitation of Liability. Any obligation of the Fund
hereunder shall be binding only upon the assets of the Series and
shall not be binding on any trustee, officer, employee, agent, or
shareholder of the Fund. Neither the authorization of any action
by the trustees or shareholders of the Fund nor the adoption of
the Plan on behalf of the Fund shall impose any liability upon
any trustee or upon any shareholder.
9. Definitions. The terms "interested person" and "vote
of a majority of the outstanding voting securities" shall have
the meanings set forth in the Act and the rules and regulations
thereunder.
2
<PAGE> 3
10. Severability; Separate Action. If any provision of
this Plan shall be held or made invalid by a court decision, rule
or otherwise, the remainder of this Plan shall not be affected
thereby. Action shall be taken separately for the Series as the
Act or the rules thereunder so require.
Adopted (Amended and restated July , 1998)
------ --
3
<PAGE> 4
EXHIBIT 99.b6
ADMINISTRATION, SHAREHOLDER SERVICES AND
DISTRIBUTION AGREEMENT
AGREEMENT made this _____ day of July, 1998, by and between [NAME
OF FUND], 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.
<PAGE> 5
KDI accepts such appointment and agrees during the term
hereof to render such services and to assume the obligations
herein set forth for the compensation herein provided. KDI
shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly
provided or authorized, shall have no authority to act for
or represent the Fund in any way or otherwise be deemed an
agent of the Fund. It is understood and agreed that KDI, by
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 so long as its services hereunder are not impaired
thereby.
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
Fund's Agreement and Declaration of Trust. 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 and
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.
2
<PAGE> 6
Shares of any series 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 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 that 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 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.
3
<PAGE> 7
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 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 Fund s Agreement and Declaration of Trust
(and of any fundamental policies adopted by the Fund
pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), notice of which shall have been
given to KDI) which at the time in any way require, limit,
restrict prohibit or otherwise regulate any action on the
part of KDI hereunder.
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 or the Fund's
Amended and Restated 12b-1 Plan (the "Plan"). 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.
4
<PAGE> 8
\
8. This Agreement shall become effective on the date
hereof and shall continue until July _____, 1999 and shall
continue from year to year thereafter only so long as such
continuance is approved in the manner required by the
Investment Company Act.
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
(60) days' written notice to the other party. The Fund may
effect termination by a vote of (i) a majority of the
trustees who are not interested persons of the Fund and who
have no direct or indirect financial interest in the
operation of the Plan, this Agreement or in any other
agreement related to the Plan, or (ii) a majority of the
outstanding voting securities of the Fund.
All material amendments to this Agreement must be
approved by a vote of a majority of the Board of Trustees of
the Fund, including the trustees who are not interested
persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan, this
Agreement or in any other agreement related to the Plan,
cast in person at a meeting called for such purpose.
The terms "assignment," "interested person" and "vote
of a majority of the outstanding voting securities" shall
have the meanings set forth in the Investment Company Act
and the rules and regulations thereunder.
KDI shall receive such compensation for its
distribution services as set forth in the Plan. Termination
of this Agreement shall not affect the right of KDI to
receive payments on any unpaid balance of the compensation
earned prior to such termination, as set forth in the Plan.
9. KDI will not use or distribute or authorize the use,
distribution or dissemination by Firms or others in
connection with the sale of Fund 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. KDI will furnish the Fund with copies of all
such material.
10. 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.
11. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the
5
<PAGE> 9
other party at such address as such other party may
designate for the receipt of such notice.
12. 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 any liability of the Fund
arising hereunder allocated to a particular series, whether
in accordance with the express terms hereof or otherwise,
KDI shall have no recourse against the assets of any other
series for such purpose.
13. This Agreement shall be construed in accordance with
applicable federal law and with the laws of The Commonwealth
of Massachusetts.
14. 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.
[SIGNATURES APPEAR ON NEXT PAGE]
6
<PAGE> 10
IN WITNESS WHEREOF, the Fund and KDI have caused this Agreement
to be executed as of the day and year first above written.
[NAME OF FUND]
By:
---------------------------
Title:
-------------------------
ATTEST:
By:
--------------------------
Title:
------------------------
KEMPER DISTRIBUTORS, INC.
By:
---------------------------
Title:
------------------------
ATTEST:
By:
--------------------------
Title:
------------------------
7
<PAGE> 1
[VEDDER, PRICE, KAUFMAN & KAMMHOLZ LETTERHEAD]
July 24, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Investors Municipal Cash Fund
To The Commission:
We are counsel to the above-referenced investment company (the "Fund")
and as such have participated in the preparation and review of Post-Effective
Amendment No. 12 to the Fund's registration statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485, we hereby represent that such amendment does not contain
disclosures which would render it ineligible to become effective pursuant to
paragraph (b) thereof.
Very truly yours,
Vedder, Price, Kaufman & Kammholz
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
DAS/COK
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> TAX-EXEMPT NEW YORK MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 107,483
<INVESTMENTS-AT-VALUE> 107,483
<RECEIVABLES> 338
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 107,821
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,623
<TOTAL-LIABILITIES> 3,623
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 104,198
<SHARES-COMMON-STOCK> 104,198
<SHARES-COMMON-PRIOR> 60,575
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 104,198
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,983
<OTHER-INCOME> 0
<EXPENSES-NET> (655)
<NET-INVESTMENT-INCOME> 2,328
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,328
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,328)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 389,412
<NUMBER-OF-SHARES-REDEEMED> (348,150)
<SHARES-REINVESTED> 2,361
<NET-CHANGE-IN-ASSETS> 43,623
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 181
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 804
<AVERAGE-NET-ASSETS> 82,241
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> MAY-21-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 3,195
<INVESTMENTS-AT-VALUE> 3,195
<RECEIVABLES> 9
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,204
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9
<TOTAL-LIABILITIES> 9
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,195
<SHARES-COMMON-STOCK> 3,195
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,195
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 88
<OTHER-INCOME> 0
<EXPENSES-NET> (21)
<NET-INVESTMENT-INCOME> 67
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 67
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (67)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14,257
<NUMBER-OF-SHARES-REDEEMED> (11,228)
<SHARES-REINVESTED> 66
<NET-CHANGE-IN-ASSETS> 3,095
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26
<AVERAGE-NET-ASSETS> 2,790
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> INVESTORS FLORIDA MUNICIPAL CASH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> MAY-22-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 7,570
<INVESTMENTS-AT-VALUE> 7,570
<RECEIVABLES> 28
<ASSETS-OTHER> 27
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,62
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14
<TOTAL-LIABILITIES> 14
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,611
<SHARES-COMMON-STOCK> 7,611
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,611
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 155
<OTHER-INCOME> 0
<EXPENSES-NET> (38)
<NET-INVESTMENT-INCOME> 117
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 117
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (117)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41,975
<NUMBER-OF-SHARES-REDEEMED> (34,575)
<SHARES-REINVESTED> 111
<NET-CHANGE-IN-ASSETS> 7,511
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42
<AVERAGE-NET-ASSETS> 4,940
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> INVESTORS NEW JERSEY MUNICIPAL CASH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> MAY-23-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 4,400
<INVESTMENTS-AT-VALUE> 4,400
<RECEIVABLES> 13
<ASSETS-OTHER> 276
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,689
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 24
<TOTAL-LIABILITIES> 24
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,665
<SHARES-COMMON-STOCK> 4,665
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,665
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 123
<OTHER-INCOME> 0
<EXPENSES-NET> (32)
<NET-INVESTMENT-INCOME> 91
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 91
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (91)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 29,234
<NUMBER-OF-SHARES-REDEEMED> (24,758)
<SHARES-REINVESTED> 89
<NET-CHANGE-IN-ASSETS> 4,565
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8
<INTEREST-EXPENSE> 00
<GROSS-EXPENSE> 40
<AVERAGE-NET-ASSETS> 4,123
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
