Filed electronically with the Securities and Exchange Commission
on June 1, 1999
File No. 33-34819
File No. 811-6108
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 14
--- / X /
And/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 15
--- / X /
Investors Municipal Cash Fund
-----------------------------
(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, Illinois 60606
-------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 537-7000
--------------
Philip J. Collora, Vice President and Secretary
222 South Riverside Plaza
Chicago, Illinois 60606
-----------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a) (1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / On __________________ pursuant to paragraph (b)
/ X / On August 1, 1999 pursuant to paragraph (a) (1)
/ / On __________________ pursuant to paragraph (a) (2) of Rule 485.
If Appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
August 1, 1999
Prospectus
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
Investors Municipal Cash Fund
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
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
CONTENTS
Money Market Investing.........................................3
Investment approach............................................3
Principal risk factors.........................................4
ABOUT THE FUNDS.....................................................5
Investors Florida Municipal Cash Fund......................5
Investors Michigan Municipal Cash Fund....................11
Investors New Jersey Municipal Cash Fund..................17
Investors Pennsylvania Municipal Cash Fund................23
Tax-Exempt New York Money Market Fund.....................29
Investment Manager............................................40
ABOUT YOUR INVESTMENT..............................................42
Buying shares.................................................42
Selling and exchanging shares.................................42
Distributions and taxes.......................................43
Transaction information.......................................44
2
<PAGE>
- --------------------------------------------------------------------------------
MONEY MARKET INVESTING
- --------------------------------------------------------------------------------
INVESTMENT APPROACH
The funds described in this prospectus seek to provide, to the extent consistent
with the 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. Each fund has its own investment objective, investment strategy and risk
profile.
Under normal market conditions, each fund will maintain at least 80% of its
investments in obligations issued by or on behalf of states, territories or
possessions of the U.S. and the District of Columbia, and their political
subdivisions, agencies and instrumentalities, the income from which is exempt
from federal income taxes. These are generally referred to as "municipal
securities."
Municipal securities are 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,
schools, streets and water and sewer works. Other public purposes for which
municipal securities may be issued include:
o to refund outstanding obligations
o to obtain funds for general operating expenses
o to obtain funds to loan to other public institutions and facilities.
The two general classifications of municipal securities are "general obligation"
and "revenue" bonds. 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 or other specific revenue source.
Each fund limits its investments to securities that meet the quality, maturity
and diversification requirements of federal law pertaining to a money market
fund.
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.
3
<PAGE>
PRINCIPAL RISK FACTORS
An investment in the funds is not insured or guaranteed by the Federal Deposit
Insurance Company or any other government agency. Although each fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in a fund.
Because of their short maturities, liquidity and high quality, money market
instruments, such as those in which the funds invest, are generally considered
to be among the safest available.
As with most money market funds, the major factor affecting the funds'
performance is short-term interest rates. If short-term interest rates fall, the
funds' yields are also likely to fall. Moreover, the portfolio managers'
strategy or choice of specific investments may not perform as expected. These
funds may have lower returns than other funds that invest in lower-quality
securities. It is also possible that securities in the funds' investment
portfolio could be downgraded in credit rating or go into default.
Municipal Securities. The municipal securities market is narrower and less
liquid, with fewer investors, issuers and market makers, than the taxable
securities market. The more limited marketability of municipal securities may
make it more difficult in certain circumstances to dispose of large investments
advantageously. In addition, certain municipal securities might lose tax-exempt
status in the event of a change in the applicable tax laws.
State Investing Risk. Because each fund focuses its investments in the municipal
securities of a particular state, adverse economic, political or regulatory
occurrences in that state will have a greater impact on investment returns than
would be the case for a money market fund investing nationally. Specific issues
which may have an impact on the ability of local municipal securities issuers to
meet their obligations include:
o Natural disasters which the state has experienced in recent years.
o Legislation which limits taxing and spending authority.
o Proposed future limits to local taxing and spending authority.
Non-diversified. Because each fund is classified as "non-diversified", each fund
may invest a relatively high percentage of its assets in a limited number of
issuers. Accordingly, the fund's investment returns are more likely to be
impacted by changes in the market value and returns of any one portfolio
holding.
4
<PAGE>
ABOUT THE FUNDS
- ---------------
- --------------------------------------------------------------------------------
INVESTORS FLORIDA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Investment objective
The fund seeks to provide maximum current income that is exempt from federal
income tax to the extent consistent with stability of capital. The fund is
managed to maintain a net asset value of $1.00 per share. Except as otherwise
noted, the fund's investment objective and fundamental policies may not be
changed without a vote of shareholders.
Main investment strategies
The 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.
Though the fund generally seeks investments exempt from the Florida intangibles
tax, there is no assurance that an exemption from the Florida intangibles tax
will be available.
Under normal market conditions, the fund will maintain at least 65% of its total
assets in Florida municipal securities. The fund will invest only in municipal
securities that at the time of purchase meet at least one of the following
criteria:
o rated high quality by a nationally recognized statistical rating
organization;
o if unrated, are determined to be, in the discretion of the Board of
Trustees or its delegate, at least equal in quality to one or more of the
above ratings; or
o fully collateralized by an escrow of U.S. Government securities.
Securities are selected based on the investment manager's perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
5
<PAGE>
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
The fund may invest in floating and variable rate instruments (obligations that
do not bear interest at fixed rates). Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less than
for fixed-rate obligations.
Although the fund is permitted to invest in taxable securities (limited under
normal market conditions to 20% of the fund's total assets), it is the fund's
primary intention to generate income dividends that are not subject to federal
income taxes.
Risk management strategies
From time to time, as a temporary defensive measure, including during periods
when acceptable short-term municipal securities are not available, the fund may
invest in taxable "temporary investments" that include:
o obligations of the U.S. Government, its agencies or instrumentalities;
o debt securities rated high quality by any nationally recognized statistical
rating organization;
o commercial paper rated high quality by any nationally recognized
statistical rating organization;
o certificates of deposit of domestic banks with assets of $1 billion or
more; and
o any of the above temporary investments subject to repurchase agreements.
Interest income from temporary investments is taxable to shareholders as
ordinary income; therefore, the fund may not achieve its investment objective
when the fund takes temporary defensive measures
Main risks
The fund's principal risks are associated with fluctuations in short-term
interest rates, state investing risk, non-diversification and portfolio
management. You will find a discussion of these risks under "Money Market
Investing" at the front of this prospectus.
Florida specific risk. 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 which places an increasing burden on the
public services provided by the State. Technology-based manufacturing, business
and financial services have joined tourism and agriculture as leading elements
of Florida's continued economic
6
<PAGE>
growth. Florida's overall financial position remains healthy. Florida relies 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.
7
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS FLORIDA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed from year to year. Of
course, past performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
The fund's year-to-date total return as of June 30, 1999 was ____%.
Average Annual Total Returns
For periods ended Investors Florida
December 31, 1998 Municipal Cash Fund
----------------- -------------------
One Year __.__%
Since Fund Inception* __.__%
*Inception date for the fund is May 22, 1997.
7-Day Yield
On December 31, 1998 __.__%
8
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS FLORIDA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual fund operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%*
-------------------------------------------------------------------------------
Net expenses 0.xx%*
-------------------------------------------------------------------------------
By contract, total fund expenses will be capped at 0.xx% through July 31, 2000.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "Total annual fund operating expenses" remaining the same each year except
the first year. The first year of your investment will take into account the
fund's "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
fund expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Investment objective
The fund seeks to provide maximum current income that is exempt from federal and
Michigan income taxes to the extent consistent with stability of capital. The
fund is managed to maintain a net asset value of $1.00 per share. Except as
otherwise noted, the fund's investment objective and fundamental policies may
not be changed without a vote of shareholders.
Main investment strategies
The 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.
Under normal market conditions, the fund will maintain at least 65% of its total
assets in Michigan municipal securities. The fund will invest only in municipal
securities that at the time of purchase meet at least one of the following
criteria:
o rated high quality by a nationally recognized statistical rating
organization;
o if unrated, are determined to be, in the discretion of the Board of
Trustees or its delegate, at least equal in quality to one or more of the
above ratings; or
o fully collateralized by an escrow of U.S. Government securities.
Securities are selected based on the investment manager's perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
The fund may invest in floating and variable rate instruments (obligations that
do not bear interest at fixed rates). Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less than
for fixed-rate obligations.
11
<PAGE>
Although the fund is permitted to invest in taxable securities (limited under
normal market conditions to 20% of the fund's total assets), it is the fund's
primary intention to generate income dividends that are not subject to federal
income taxes.
Risk management strategies
From time to time, as a temporary defensive measure, including during periods
when acceptable short-term municipal securities are not available, the fund may
invest in taxable "temporary investments" that include:
o obligations of the U.S. Government, its agencies or instrumentalities;
o debt securities rated high quality by any nationally recognized statistical
rating organization;
o commercial paper rated high quality by any nationally recognized
statistical rating organization;
o certificates of deposit of domestic banks with assets of $1 billion or
more; and
o any of the above temporary investments subject to repurchase agreements.
Interest income from temporary investments is taxable to shareholders as
ordinary income; therefore, the fund may not achieve its investment objective
when the fund takes temporary defensive measures.
Main risks
The fund's principal risks are associated with fluctuations in short-term
interest rates, state investing risk, non-diversification and portfolio
management. You will find a discussion of these risks under "Money Market
Investing" at the front of this prospectus.
Michigan specific risk. 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 states with more
diversified industries, 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 1980s. The
restructuring of the State's manufacturing industry following the recession of
the 1980s improved the industry's overall competitive position. In addition, the
rebound in the automotive industry during 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.
12
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Past performance
The fund's year to date total return as of June 30, 1999 was %. Inception date
for the fund is April 6, 1998.
7-Day Yield
December 31, 1998 __.__%
Of course, past performance is not necessarily an indication of future
performance.
13
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual fund operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%*
-------------------------------------------------------------------------------
Net expenses 0.xx%*
-------------------------------------------------------------------------------
By contract, total fund expenses will be capped at 0.xx% through July 31, 2000.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "Total annual fund operating expenses" remaining the same each year except
the first year. The first year of your investment will take into account the
fund's "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
fund expenses and return vary from year to year, and may be higher or lower than
those shown.
14
<PAGE>
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS NEW JERSEY MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Investment objective
The fund seeks to provide maximum current income that is exempt from federal and
New Jersey income taxes to the extent consistent with stability of capital. The
fund is managed to maintain a net asset value of $1.00 per share. Except as
otherwise noted, the fund's investment objective and fundamental policies may
not be changed without a vote of shareholders.
Main investment strategies
The 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 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.
Under normal market conditions, the fund will maintain at least 65% of its total
assets in New Jersey municipal securities. The fund will invest only in
municipal securities that at the time of purchase meet at least one of the
following criteria:
o rated high quality by a nationally recognized statistical rating
organization;
o if unrated, are determined to be, in the discretion of the Board of
Trustees or its delegate, at least equal in quality to one or more of the
above ratings; or
o fully collateralized by an escrow of U.S. Government securities.
Securities are selected based on the investment manager's perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
The fund may invest in floating and variable rate instruments (obligations that
do not bear interest at fixed rates). Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less than
for fixed-rate obligations.
16
<PAGE>
Although the fund is permitted to invest in taxable securities (limited under
normal market conditions to 20% of the fund's total assets), it is the fund's
primary intention to generate income dividends that are not subject to federal
income taxes.
Risk management strategies
From time to time, as a temporary defensive measure, including during periods
when acceptable short-term municipal securities are not available, the fund may
invest in taxable "temporary investments" that include:
o obligations of the U.S. Government, its agencies or instrumentalities;
o debt securities rated high quality by any nationally recognized statistical
rating organization;
o commercial paper rated high quality by any nationally recognized
statistical rating organization;
o certificates of deposit of domestic banks with assets of $1 billion or
more; and
o any of the above temporary investments subject to repurchase agreements.
Interest income from temporary investments is taxable to shareholders as
ordinary income; therefore, the fund may not achieve its investment objective
when the fund takes temporary defensive measures
Main risks
The fund's principal risks are associated with fluctuations in short-term
interest rates, state investing risk, non-diversification and portfolio
management. You will find a discussion of these risks under "Money Market
Investing" at the front of this prospectus.
New Jersey specific risk. New Jersey is the ninth most populous state in the
nation. Per capita income in 1997 was $32,654, the second highest of the United
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 unemployment rate for New Jersey for April, 1999, was 4.5%,
slightly higher than that of the U.S. as a whole of 4.3%.
17
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS NEW JERSEY MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed from year to year. Of
course, past performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
The fund's year-to-date total return as of June 30, 1999 was %.
Average Annual Total Returns
Investors New
Jersey Municipal
For periods ended Cash Fund
December 31, 1998
One Year __.__%
Since Inception __.__%
* Inception date for the fund is May 23, 1997.
7-Day Yield
On December 31, 1998 __.__%
18
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS NEW JERSEY MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund.
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual fund operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%*
-------------------------------------------------------------------------------
Net expenses 0.xx%*
-------------------------------------------------------------------------------
By contract, total fund expenses will be capped at 0.xx% through July 31, 2000.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "Total annual fund operating expenses" remaining the same each year except
the first year. The first year of your investment will take into account the
fund's "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
fund expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Investment objective
The fund seeks to provide maximum current income that is exempt from federal and
Pennsylvania income taxes to the extent consistent with stability of capital.
The fund is managed to maintain a net asset value of $1.00 per share. Except as
otherwise noted, the fund's investment objective and other policies may be
changed by the fund's Board of Trustees, without a vote of shareholders.
Main investment strategies
The 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.
Under normal market conditions, the fund will maintain at least 65% of its total
assets in Pennsylvania municipal securities. The fund will invest only in
municipal securities that at the time of purchase meet at least one of the
following criteria:
o rated high quality by a nationally recognized statistical rating
organization;
o if unrated, are determined to be, in the discretion of the Board of
Trustees or its delegate, at least equal in quality to one or more of the
above ratings; or
o fully collateralized by an escrow of U.S. Government securities.
Securities are selected based on the investment manager's perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
21
<PAGE>
Other investments
The fund may invest in floating and variable rate instruments (obligations that
do not bear interest at fixed rates). Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less than
for fixed-rate obligations.
Although the fund is permitted to invest in taxable securities (limited under
normal market conditions to 20% of the fund's total assets), it is the fund's
primary intention to generate income dividends that are not subject to federal
income taxes.
Risk management strategies
From time to time, as a temporary defensive measure, including during periods
when acceptable short-term municipal securities are not available, the fund may
invest in taxable "temporary investments" that include:
o obligations of the U.S. Government, its agencies or instrumentalities;
o debt securities rated high quality by any nationally recognized statistical
rating organization;
o commercial paper rated high quality by any nationally recognized
statistical rating organization;
o certificates of deposit of domestic banks with assets of $1 billion or
more; and
o any of the above temporary investments subject to repurchase agreements.
Interest income from temporary investments is taxable to shareholders as
ordinary income; therefore, the fund may not achieve its investment objective
when the fund takes temporary defensive measures Income based on federal
obligations is non-taxable for Pennsylvania income tax purposes.
Main risks
The fund's principal risks are associated with fluctuations in short-term
interest rates, state investing risk, non-diversification and portfolio
management. You will find a discussion of these risks under "Money Market
Investing" at the front of this prospectus.
Pennsylvania specific risk. 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
22
<PAGE>
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 plants, should
aid in boosting the economy.
23
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed from year to year. Of
course, past performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
The year-to-date total return as of June 30, 1999 was %.
Average Annual Total Returns
Investors
Pennsylvania
For periods ended Municipal Cash Fund
December 31, 1998
One Year __.__%
Since Inception* __.__%
* Inception date for the fund is May 21, 1997.
7-Day Yield
On December 31, 1998 __.__%
24
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Fee and expense information
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual fund operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%*
-------------------------------------------------------------------------------
Net expenses 0.xx%*
-------------------------------------------------------------------------------
By contract, total fund expenses will be capped at 0.xx% through July 31, 2000.
Example This example is to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "Total annual fund operating expenses" remaining the same each year except
the first year. The first year of your investment will take into account the
fund's "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
fund expenses and return vary from year to year, and may be higher or lower than
those shown.
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
25
<PAGE>
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT NEW YORK MONEY MARKET FUND
- --------------------------------------------------------------------------------
Investment objective
The fund seeks 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 fund is managed to maintain a net asset value of $1.00
per share. Except as otherwise noted, the fund's investment objective and
fundamental policies may not be changed without a vote of shareholders.
Main investment strategies
The 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 New York, 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.
Under normal market conditions, the fund will maintain at least 65% of its total
assets in New York municipal securities. The fund will invest only in municipal
securities that at the time of purchase meet at least one of the following
criteria:
o are rated within the two highest ratings of municipal securities by either
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P");
o are guaranteed or insured by the U.S. government as to the payment of
principal and interest;
o are fully collateralized by an escrow of U.S. Government securities;
o 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;
o 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
o are determined to be, in the discretion of the Board of Trustees or its
delegate, at least equal in quality to one or more of the above categories.
Securities are selected based on the investment manager's perception of monetary
conditions, the available supply of appropriate investments, and the managers'
projections for short-term interest rate movements.
27
<PAGE>
A security is typically sold if it ceases to be rated or its rating is reduced
below the minimum required for purchase by the fund, unless the fund's Board
determines that selling the security would not be in the best interests of the
fund.
Of course, there can be no guarantee that by following these investment
strategies, the fund will achieve its objective.
Other investments
The fund may invest in floating and variable rate instruments (obligations that
do not bear interest at fixed rates). Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less than
for fixed-rate obligations.
Although the fund is permitted to invest in taxable securities (limited under
normal market conditions to 20% of the fund's total assets), it is the fund's
primary intention to generate income dividends that are not subject to federal
income taxes.
Risk management strategies
From time to time, as a temporary defensive measure, including during periods
when acceptable short-term municipal securities are not available, the fund may
invest in taxable "temporary investments" that include:
o obligations of the U.S. Government, its agencies or instrumentalities;
o debt securities rated within the two highest grades by either Moody's or
S&P;
o commercial paper within the two highest grades by either Moody's or S&P;
o certificates of deposit of domestic banks with assets of $1 billion or
more; and
o any of the above temporary investments subject to repurchase agreements.
Interest income from temporary investments is taxable to shareholders as
ordinary income; therefore, the fund may not achieve its investment objective
when the fund takes temporary defensive measures.
Main risks
The fund's principal risks are associated with fluctuations in short-term
interest rates, state investing risk, non-diversification and portfolio
management. You will find a discussion of these risks under "Money Market
Investing" at the front of this prospectus.
New York specific risk. 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
28
<PAGE>
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, which is about 120% of the national average.
Employment distribution throughout industry sectors is similar to that of the
nation except for a higher concentration in the finance, insurance and real
estate sectors and a lower concentration in the manufacturing sector.
Historically, unemployment is more cyclical in New York than for the United
States as a whole. Since 1991, New York's unemployment rate has exceeded the
U.S. average.
29
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT NEW YORK MONEY MARKET FUND
- --------------------------------------------------------------------------------
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed from year to year. Of
course, past performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
The fund's year-to-date total return as of June 30, 1999 was %.
Average Annual Total Returns
Tax-Exempt New York
Money Market Fund
For periods ended
December 31, 1998
One Year __.__%
Five Years __.__%
Since Inception* __.__%
* Inception date for the fund is December 13, 1990.
7-Day Yield
On December 31, 1998 __.__%
30
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT NEW YORK MONEY MARKET FUND
- --------------------------------------------------------------------------------
Fee and expense information
The following information is designed to help you understand the fees and
expenses that you may pay if you buy and hold shares of the fund
-------------------------------------------------------------------------------
Shareholder Fees (fees paid directly from your investment):
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as % of NONE
offering price)
-------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as % of redemption NONE
proceeds)
-------------------------------------------------------------------------------
Maximum sales charge (load) imposed on reinvested NONE
dividends/distribution
-------------------------------------------------------------------------------
Redemption fee (as % of amount redeemed, if applicable) NONE
-------------------------------------------------------------------------------
Exchange fee NONE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Annual fund operating expenses (expenses that are deducted from fund assets):
-------------------------------------------------------------------------------
Management fee 0.xx%
-------------------------------------------------------------------------------
Distribution (12b-1) fees 0.xx%
-------------------------------------------------------------------------------
Other expenses 0.xx%
-------------------------------------------------------------------------------
Total annual fund operating expenses 0.xx%
-------------------------------------------------------------------------------
Expense reimbursement 0.xx%*
-------------------------------------------------------------------------------
Net expenses 0.xx%*
-------------------------------------------------------------------------------
By contract, total fund expenses will be capped at 0.xx% through July 31, 2000.
Example
This example is to help you compare the cost of investing in the fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "Total annual fund operating expenses" remaining the same each year except
the first year. The first year of your investment will take into account the
fund's "Net expenses" as shown above. The expenses would be the same whether you
sold your shares at the end of each period or continued to hold them. Actual
fund expenses and return vary from year to year, and may be higher or lower than
those shown.
31
<PAGE>
- --------------------------------------------------------------------------------
One Year $
- --------------------------------------------------------------------------------
Three Years $
- --------------------------------------------------------------------------------
Five Years $
- --------------------------------------------------------------------------------
Ten Years $
- --------------------------------------------------------------------------------
32
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS FLORIDA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Financial highlights
The following tables are intended to help you understand the funds' financial
performance for the past several years. The total return figures show what an
investor in a fund would have earned assuming reinvestment of all dividends and
distributions. This information has been audited by Ernst & Young LLP, whose
report, along with the funds' financial statements, is included in the annual
report, which is available upon request (see back cover).
To Be Updated
33
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Financial highlights
To Be Updated
34
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS NEW JERSEY MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Financial highlights
To Be Updated
35
<PAGE>
- --------------------------------------------------------------------------------
INVESTORS PENNSYLVANIA MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
Financial highlights
To Be Updated
36
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT NEW YORK MONEY MARKET FUND
- --------------------------------------------------------------------------------
Financial highlights
To Be Updated
37
<PAGE>
Investment adviser
Each fund retains the investment management firm of Scudder Kemper Investments,
Inc., the ("Adviser"), Two International Place, Boston, MA, to manage each
fund's daily investment and business affairs subject to the policies established
by each fund's Board. The Adviser actively manages each fund's investments.
Professional management can be an important advantage for investors who do not
have the time or expertise to invest directly in individual securities. Scudder
Kemper Investments, Inc. is one of the largest and most experienced investment
management organizations worldwide managing more than $280 billion in assets
globally for mutual fund investors, retirement and pension plans, institutional
and corporate clients, and private family and individual accounts.
Each fund pays the Adviser a graduated monthly investment management fee. Fees
paid for each fund's most recently completed fiscal year are shown below:
Investors Florida Municipal Cash Fund. The Adviser has contractually agreed to
maintain the total annualized expenses of the fund at no more than 0.xx% of the
average daily net assets of the fund through July 31, 2000. As a result, the
Adviser received an investment management fee of 0.xx% of the fund's average
daily net assets on an annual basis for the fiscal year ended March 31, 1999.
Investors Michigan Municipal Cash Fund. The Adviser has contractually agreed to
maintain the total annualized expenses of the fund at no more than 0.xx% of the
average daily net assets of the fund through July 31, 2000. As a result, the
Adviser received an investment management fee of 0.xx% of the fund's average
daily net assets on an annual basis for the fiscal year ended March 31, 1999.
Investors New Jersey Municipal Cash Fund. The Adviser has contractually agreed
to maintain the total annualized expenses of the fund at no more than 0.xx% of
the average daily net assets of the fund through July 31, 2000. As a result, the
Adviser received an investment management fee of 0.xx% of the fund's average
daily net assets on an annual basis for the fiscal year ended March 31, 1999.
Investors Pennsylvania Municipal Cash Fund. The Adviser has contractually agreed
to maintain the total annualized expenses of the fund at no more than 0.xx% of
the average daily net assets of the fund through July 31, 2000. As a result, the
Adviser received an investment management fee of 0.xx% of the fund's average
daily net assets on an annual basis for the fiscal year ended March 31, 1999.
Tax-Exempt New York Money Market Fund. The Adviser has contractually agreed to
maintain the total annualized expenses of the fund at no more than 0.xx% of the
average daily net assets of the fund through July 31, 2000. As a result, the
Adviser received an
38
<PAGE>
investment management fee of 0.xx% of the fund's average daily net assets on an
annual basis for the fiscal year ended March 31, 1999.
Fund management
The following investment professionals are associated with each fund as
indicated:
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Frank J. Rachwalski, Jr. Mr. Rachwalski joined the Adviser in
Lead Manager 1973 as a money market specialist and
began his investment career at that
time. He has been responsible for the
trading and portfolio management of
money market portfolios since 1974.
- --------------------------------------------------------------------------------
Jerri I. Cohen Ms. Cohen joined the Adviser in 1981
Manager as an accountant and began her
investment career in 1992 as a money
market trader.
- --------------------------------------------------------------------------------
Elizabeth Meyer Ms. Meyer joined the Adviser in 1986
Manager in the investment trust department.
She began her investment career in
1992 as a performance analyst and
became a money market trader in 1994.
Year 2000 readiness
Like other mutual funds and financial and business organizations worldwide, the
funds could be adversely affected if computer systems on which a fund relies,
which primarily include those used by the investment manager, its affiliates or
other service providers, are unable to correctly process date-related
information on and after January 1, 2000. This risk is commonly called the Year
2000 Issue. Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the funds' business and
operations. The investment manager has commenced a review of the Year 2000 Issue
as it may affect the funds 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.
39
<PAGE>
ABOUT YOUR INVESTMENT
Buying shares
Shares of a fund may be purchased at net asset value, with no sales charge
through selected financial services firms, such as broker-dealers and banks.
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. Central Standard time net asset value determination, otherwise such shares
will receive the dividend for the next calendar day if effected at 3:00 p.m.
Central Standard time. Orders for purchase accompanied by a check or other
negotiable bank draft will be accepted and effected as of 3:00 p.m. Central
Standard 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.
If payment is to be wired, call the firm from which you received this prospectus
for proper instructions.
Selling and exchanging shares
Upon receipt by the shareholder service agent, Kemper Service Company, of a
request in the form described below, shares will be redeemed at the next
determined net asset value. If processed at 3:00 p.m. Central Standard time, the
shareholder will receive that day's dividend. Requests received by the
shareholder service agent for expedited wire redemptions prior to 11:00 a.m.
Central Standard time will result in shares being redeemed that day and normally
proceeds will be sent to the designated account that day. 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.
40
<PAGE>
Shareholders should contact the financial services firm through which shares
were purchased for redemption instructions. Any shareholder may request that a
fund redeem his or her shares. When shares are held for the account of a
shareholder by the funds' transfer agent, the shareholder may redeem them by
sending a written request with signatures guaranteed to Kemper Mutual Funds,
Attention: Redemption Department, P.O. Box 419557, Kansas City, Missouri
64141-6557.
An exchange of shares entails the sale of fund shares and subsequent purchase of
shares of a Kemper Fund.
Shareholders may obtain additional information about other ways to redeem
shares, such as telephone redemptions, expedited wire transfer redemptions and
redemptions by draft, by contacting their financial services firm or the
shareholder service agent at 1-800-231-8568.
Share certificates
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. 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.
Distributions
The funds' dividends are declared daily and distributed monthly to shareholders.
Any dividends or capital gains distributions declared in October, November or
December with a record date in such month and paid during the following January
will be treated by shareholders for federal income tax purposes as if received
on December 31 of the calendar year declared.
A shareholder may choose to receive distributions in cash or have them
reinvested in additional shares of a fund. If an investment is in the form of a
retirement plan, all dividends and capital gains distributions must be
reinvested into the shareholders' account.
Dividends will be reinvested unless the shareholder elects to receive them in
cash. The tax status of dividends is the same whether they are reinvested or
paid in cash.
41
<PAGE>
Taxes
Generally, income dividends which represent interest received from municipal
securities are not taxable to shareholders. Dividends representing taxable net
investment income, if any, and net short-term capital gains, if any, are taxable
to shareholders as ordinary income. Long-term capital gains distributions, if
any, are taxable to shareholders as long-term capital gains, regardless of the
length of time shareholders have owned shares. Net interest from portfolio
holdings in "private activity bonds" may be subject to taxes. The tax exemption
of fund dividends for federal income tax and 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 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. The
funds may not be an appropriate investment for qualified retirement plans and
Individual Retirement Accounts.
Each fund sends detailed tax information about the amount and type of its
distributions by January 31 of the following year.
Each fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Any such withheld amounts may be credited against the
shareholder's U.S. federal income tax liability.
To qualify as an investment exempt from the Florida state intangibles tax,
Investors Florida Municipal Cash Fund must consist entirely of investments
exempt from the Florida state intangibles tax on the last business day of the
calendar year.
Transaction information
Share price
Scudder Fund Accounting Corporation determines the net asset value per share of
the funds on each day the NYSE is open for trading, at 11:00 a.m. and 3:00 p.m.
Central Standard time.
Each fund seeks to maintain a net asset value of $1.00 per share and values its
portfolio instruments at amortized cost. Calculations are made to compare the
value of the fund's investments, valued at amortized cost, with market-based
values. In order to value its investments at amortized cost, the fund purchases
only securities with a
42
<PAGE>
maturity of 397 days or less and maintains a dollar-weighted average portfolio
maturity of 90 days or less. In addition, the fund limits its portfolio
investments to securities that meet the quality and diversification requirements
of federal law.
The net asset value per share is the value of one shares and is determined by
dividing the value of the fund's total assets, less liabilities, by the number
of shares outstanding.
Processing time
Payment for shares you sell will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly executed request.
If you have share certificates, these must accompany your order in proper form
for transfer. When you place an order to sell shares for which a fund may not
yet have received good payment (i.e., purchases by check or certain Automated
Clearing House Transactions), a fund may delay transmittal of the proceeds until
it has determined that collected funds have been received for the purchase of
such shares. This may be up to 10 days from receipt by a fund of the purchase
amount. If shares being redeemed were acquired from an exchange of shares of a
mutual fund that were offered subject to a contingent deferred sales charge the
redemption of such shares by the fund may be subject to a contingent deferred
sales charge as explained in the prospectus for the other fund.
Signature guarantees
A signature guarantee is required unless you sell $50,000 or less worth of
shares and the proceeds are payable to the shareholder of record at the address
of record. You can obtain a guarantee from most brokerage houses and financial
institutions, although not from a notary public. The funds will normally send
you the proceeds within one business day following your request, but may take up
to seven business days (or longer in the case of shares recently purchased by
check).
Purchase restrictions
The funds and their transfer agent reserve the right to withdraw all or any part
of the offering made by this prospectus and to reject purchase orders. Also,
from time to time, each fund may temporarily suspend the offering of its shares
or a class of its shares to new investors. During the period of such suspension,
persons who are already shareholders normally are permitted to continue to
purchase additional shares and to have dividends reinvested.
43
<PAGE>
Any purchases that would result in total account balances for a single
shareholder in excess of $3 million is subject to prior approval by the funds.
Minimum balances
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 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. Because of the high cost of maintaining small accounts, the funds
reserve the right to redeem an account with a balance below $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 fund redeems that
shareholder account.
Third party transactions
If you buy and sell shares of a fund through a member of the National
Association of Securities Dealers, Inc. (other than the funds' transfer agent),
that member may charge a fee for that service. This prospectus should be read in
connection with such firms' material regarding their fees and services.
Redemption-in-kind
The funds reserve the right to honor any request for redemption or repurchase
order by making payment in whole or in part in readily marketable securities
("redemption in kind"). These securities will be chosen by the fund and valued
as they are for purposes of computing the fund's net asset value. A shareholder
may incur transaction expenses in converting these securities to cash.
Rule 12b-1 plan
Each fund has adopted a plan under Rule 12b-1 that provides for fees payable as
an expense of fund shares that are used by the principal underwriter to pay for
distribution and services for those classes. Because 12b-1 fees are paid out of
fund assets on an ongoing basis, they will, over time, increase the cost of
investment and may cost more than other types of sales charges.
44
<PAGE>
Additional information about the funds may be found in the Statement of
Additional Information and in shareholder reports. Shareholder inquiries may be
made by calling the toll-free telephone number listed below. The Statement of
Additional Information contains more detailed information on each fund's
investments and operations. The semiannual and annual shareholder reports
contain a discussion of the market conditions and the investment strategies that
significantly affected the funds' performance during the last fiscal year, as
well as a listing of portfolio holdings and financial statements. These and
other fund documents may be obtained without charge from your financial advisor,
from the Distributor at 1-800-231-8568, from the Shareholder Service Agent, or
from the Securities and Exchange Commission website (http://www.sec.gov). You
can also visit or write the SEC and obtain copies for a fee: Public Reference
Section, Securities and Exchange Commission, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, DC 20549 (1-800-SEC-0330).
The Statement of Additional Information dated August 1, 1999 is incorporated by
reference into this prospectus (is legally a part of this prospectus).
Investment Company Act file numbers:
Investors Municipal Cash Fund 811-6108
Printed with SOYINK Printed on recycled paper
xx-xx-xx
(codes)
45
<PAGE>
INVESTORS MUNICIPAL CASH FUND
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")
Collectively (the "Funds")
222 South Riverside Plaza, Chicago, Illinois 60606
1-800-231-8568
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1999
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, 1999. The prospectus may be obtained without charge
from the Trust, and is also available along with other related materials on the
SEC's Internet web site (http://www.sec.gov).
------------
TABLE OF CONTENTS
Page
MUNICIPAL SECURITIES..........................................................2
INVESTMENT RESTRICTIONS......................................................12
INVESTMENT ADVISERAND SHAREHOLDER SERVICES...................................15
PORTFOLIO TRANSACTIONS.......................................................20
PURCHASE AND REDEMPTION OF SHARES............................................21
DIVIDENDS, TAXES AND NET ASSET VALUE.........................................25
PERFORMANCE..................................................................29
OFFICERS AND TRUSTEES........................................................37
SPECIAL FEATURES.............................................................40
SHAREHOLDER RIGHTS...........................................................42
The financial statements appearing in the Trust's 1999 Annual Reports to
Shareholders are incorporated herein by reference. The Trust's Annual Reports
accompanies this Statement of Additional Information and may be obtained without
charge by calling 1-800-231-8568.
IMCF-13 8/98 [LOGO] printed on recycled paper
<PAGE>
MUNICIPAL SECURITIES
Descriptions in this Statement of Additional Information of a particular
investment practice or technique in which a Fund may engage or a financial
instrument which a Fund may purchase are meant to describe the spectrum of
investments that Scudder Kemper Investments, Inc. (the "Adviser"), in its
discretion, might, but is not required to, use in managing a Fund's assets. The
Adviser may, in its discretion, at any time, employ such practice, technique or
instrument for one or more funds but not for all funds advised by it.
Furthermore, it is possible that certain types of financial instruments or
investment techniques described herein may not be available, permissible,
economically feasible or effective for their intended purposes in all markets.
Certain practices, techniques, or instruments may not be principal activities of
a Fund, but, to the extent employed, could, from time to time, have a material
impact on the Fund's performance.
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.
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
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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.
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.
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
Adviser 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, banks or dealers which are
determined by the investment Adviser 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
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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 Adviser
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 Adviser 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 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.
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
("Nationally Recognized Statistical Rating Organization") 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 Adviser. 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.
The following information as to certain risk factors is given to investors
because each Fund concentrates its investments in either Florida, Michigan, New
Jersey, New York or Pennsylvania Municipal Securities (as
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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, Michigan, New
Jersey, New York and Pennsylvania issuers.
Florida Fund. The State of Florida has grown dramatically since 1980 and as of
April 1, 1997 ranked fourth nationally with an estimated population of 14.7
million. Florida is experiencing strong revenue growth. For fiscal year 1998-99,
the estimated General Revenue plus Working Capital and Budget Stabilization
funds (see below) total $19,481.8 million, a 5.2% increase over 1997-98.
The $17,779.5 million in Estimated Revenues represents a 5.0% increase over the
analogous figure in 1997-98. Receipts, as of March 31, 1999, exceeded 1998's
collections through March 1998 by $598.7 million. The Fiscal Year 99 revenue
growth is driven by the State's sales tax collections. The six percent tax
accounts for close to 75% of Total revenues through March 31, 1999. A March 31
estimate shows an expected year-end surplus of $573.8 million. When this is
combined with the Budget Stabilization Fund balance of $786.9 million, Florida's
total reserves are $1,360.7 million, or 7.5% of current year appropriations.
Florida voters approved a constitutional amendment in November of 1994 which
places a limit on the rate of growth in state revenues, limiting such growth to
no more than the growth rate in Florida personal income. In any year, the
revenue limit is determined by multiplying the average annual growth rate in
Florida personal income over the previous five years by the maximum amount of
revenue permitted under the limitation in the previous year. State revenues
collected for any fiscal year in excess of the limitation are to be transferred
to the Budget Stabilization Fund until such time that the fund reaches its
maximum
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(10% of general revenue collections in the previous fiscal year) and then are to
be refunded to taxpayers as provided by general law. The Legislature, by a
two-thirds vote of the membership of each house, may increase the allowable
state revenue for any fiscal year. State revenue for this purpose, is defined,
with certain Constitutional limitations, as taxes, licenses, fees, and charges
for services imposed by the Legislature on individuals, businesses or agencies
outside of state government. The Florida Constitution requires that in the event
there is a transfer of responsibility for the funding of governmental functions
between the state and other levels of government, an adjustment to the revenue
limitation is to be made by general law to reflect the fiscal impact of this
shift.
Florida's job market continues to reflect strong performance. The state's March
1999 unemployment rate was 4.1 percent, 0.3 percentage points lower than the
year ago rate of 4.4 percent. Out of a civilian labor force of 7,411,000, there
were 307,000 jobless Floridians. Florida's unemployment rate was one of the
lowest since October 1973 when it was 3.4 percent. The U.S. unemployment rate
was 4.2 percent in March 1999, just above Florida's rate.
Florida's total nonagricultural employment rose in March 1999 to 6,900,800, an
increase of 259,900 jobs, or 3.9 percent from a year ago. All major
nonagricultural industries posted increases in employment from the prior year.
Based on the most recent comparative State data, Florida maintained its number
one ranking in year to year percentage job growth and ranked third in the nation
in the number of jobs added to nonagricultural payrolls, as compared to the 10
most populous states. Services industry employment, Florida's largest industry,
grew by 5.6 percent over the year and added the highest number of new jobs
(+132,900). Trade gained the second highest number of new jobs since a year ago
(+46,300). The State is gradually becoming less dependent on employment related
to construction, agriculture and manufacturing, and more dependent on employment
related to trade and services. Presently, services constitute 34.9% and trade
25.6% of the State's total non-farm jobs.
Fueled by low interest rates, construction had the fastest growth rate at 5.8
percent and added 20,000 jobs over the year. This is the first time that
construction has achieved the rank of the fastest growing industry over the year
in the last several years. Similarly, finance, insurance, and real estate and
government also experienced year to year increases of 19,100 jobs and 16,400
jobs, respectively. Eighty seven percent of the gains in government came from
local government and most of these gains were related to education. The apparel
and textiles industries lost 1,500 jobs due to tariffs and foreign competition.
With a strong national economy, Florida continues to experience economic growth.
This is primarily due to favorable conditions such as increases in personal
income and expenditures, low overall price levels, low interest rates, and high
consumer confidence. Florida currently remains as one of the nation's strongest
job markets.
Tourism is one of Florida's most important industries. According to Visit
Florida (formerly the Florida Tourism Commission), about 47 million people
visited the State in 1997. Tourists to Florida effectively represent additional
residents, spending their dollars predominantly at eating and drinking
establishments, hotels and motels, and amusement and recreation parks. Their
expenditures generate additional business activity and State tax revenues. The
State's tourist industry over the years has become more sophisticated,
attracting visitors year-round, thus to a degree, reducing its seasonality.
Florida has had substantial population increases over the past few years and
these are expected to continue. It is anticipated that corresponding increases
in State revenues will be necessary during the next decade to meet increased
burdens on the various public and social services provided by the State. Florida
has also experienced a diversifying economic base as technology related
industry, healthcare and financial services have grown into leading elements of
Florida's economy, complementing the State's previous reliance primarily on
agriculture and tourism. With the increasing costs and capital needs related to
its growing population, Florida's ability to meet its expenses will be dependent
in part upon the State's continued ability to foster business and economic
growth. Florida has also increased its funding of capital projects through more
frequent debt issuance rather than its historical pay-as-you go method.
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Florida has a moderate debt burden. As of June 30, 1998 full faith and credit
bonds totaled $8.7 billion and revenue bonds totaled $5 billion for a total debt
of $13.7 billion. Full faith and credit debt per capita was $577. In Fiscal Year
1998, debt service as a percent of Governmental Fund expenditures was only 2.0%.
In recent years debt issuance for the State has been increasing. The State
brought a new indenture to the market in late Fiscal Year 1998, the Florida
Lottery Bonds. These bonds will finance capital improvements for Florida
schools.
As of mid December 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 eighth 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 $1.0 billion at
the end of FY99, 5.7% 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 81% of the $17.6 billion FY98
budget. Particular strength in income tax collections led the State to finish
FY98 with an operating surplus of $55 million, 0.3% of the combined GRF and SAF.
Due to strong income tax collections, Michigan anticipates finishing FY99 with a
balanced operating fund. As of October, 1998, income tax collections were $263.6
million ahead of FY98 collections, an increase of 6%.
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 $1.0 billion, 5.7% 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, 1998 was $874 million. This figure represents a debt per
capita of $89. However, Michigan has a sizable amount of special obligation
(S.O.) debt. As of September 30, 1998, the State had $2.9 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 $380.3. Debt per capita as a percent of per capita
income is 1.45%, and annual debt service only accounted for 1.2% of FY98
Government Fund expenditures.
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Michigan finished its seventh year of economic expansion in 1998, adding over
82,000 jobs, a 1.7% increase in employment. Nonmanufacturing employment grew by
2.2% in 1998 with construction, services and wholesale trade leading the way,
Michigan continues to have a large manufacturing presence with 21.4% of its work
force in the manufacturing sector. The percentage of workers in the service
sector continues to increase. It currently represents 27.5% of the work force.
The State's average unemployment rate was 3.7% in 1998; the national average was
4.5%. The State's expanding economy and job growth have caused per capita income
to increase to $25,824 in 1998.
Michigan experienced strong economic growth in the past seven years, and is
continuing to achieve this growth in FY99. 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 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.
Year 2000 Compliance. On October 1, 1997, the State created the Year 2000
Project office to provide guidance, coordinate oversight for applications
software, manage Year 2000 funds, provide monitoring support, quality assurance
and other matters. As of March 31, 1999 the State had validated and tested 97%
of the critical computer applications. The State is currently on schedule to
meet its objectives for Year 2000 compliance. The State currently believes that
it will continue to meet the objectives and time frames set forth for the Year
2000 Project. There can, however, be no assurance that such completion will be
done in a timely manner.
As of April 26, 1999, the State's general obligation bonds are rated Aa1 by
Moody's, AA+ by S&P and AA+ by Fitch IBCA.
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 FY2000 with an operating surplus of $750 million, 4.0% of
revenues. The surplus will be split between the Rainy Day Fund, with a balance
of $634 million, and an unreserved General Fund balance of $113 million.
In its seventh year of expansion, the State has benefited and will continue to
benefit from national growth. Business investment expenditures and consumer
spending have increased substantially in the nation as well as in the State.
Capital and consumer spending may continue to rise due to the sustained
character of economic growth and the interest-sensitive homebuilding industry
may continue to provide stimulus both nationally and in New Jersey. It's
expected that the employment and income growth that has and is taking place will
lead to further growth in consumer outlays. Reasons for continued optimism in
New Jersey include increasing employment levels and a level of per capita
personal income that has been second highest in the country for many years.
Also, several expansions of existing hotel-casinos and plans for several new
casinos in Atlantic City will mean additional job creation.
New jobs in service industries are leading the growth in New Jersey's labor
force. The services sector accounts for approximately 30% of total
non-agricultural employment in the State.
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New Jersey also has an above average concentration of employment in the
transportation and public utilities sector. This sector accounts for
approximately 7% of the non-agricultural work force. 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 an April, 1999, rate of 4.5%. The
national rate for April, 1999, was 4.3%.
The direct debt burden in New Jersey is low. General obligation (G.O.) debt
outstanding as of June 30, 1998 was $3.57 billion. The recommended appropriation
for the debt service obligation on outstanding projected indebtedness is $518.70
million for fiscal year 2000.
The State has implemented a plan to address the Y2K problem. As of December 31,
1998, the testing, validation and implementation of 75% of all centrally
maintained State systems is complete. The total estimated cost to the State to
achieve year 2000 compliance is $120 million of which approximately $66 million
of expenditures has been incurred as of December 31, 1998.
As of February 9, 1999, the State's general obligation ratings were Aa1 by
Moody's and AA+ by S&P.
New Jersey's strong economic growth during the past seven 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.
New York Fund. This summary information is not intended to be a complete
description and is principally derived from the Annual Information Statement of
the State of New York as supplemented and contained in official statements
relating to issues of New York Municipal Securities that were available prior to
the date of this Statement of Additional Information. The accuracy and
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completeness of the information contained in those official statements have not
been independently verified.
In the calendar years 1987 through 1997, the State's rate of economic growth was
somewhat slower than that of the nation. In particular, during the 1990-91
recession and post-recession period, the economy of the State, and that of the
rest of the Northeast, was more heavily damaged than that of the nation as a
whole and has been slower to recover.
State per capita personal income has historically been significantly higher than
the national average, although the ratio has varied substantially. Because New
York City is a regional employment center for a multi-state region, State
personal income measured on a residence basis understates the relative
importance of the State to the national economy and the size of the base to
which State taxation applies.
The 1998-99 State Financial Plan projected a closing balance in the General Fund
of $1.42 billion comprised of a reserve of $761 million available for future
needs, a balance of $400 million in the Tax Stabilization Reserve Fund ("TSRF"),
a balance of $158 million in the Community Projects Fund ("CPF") and a balance
of $100 million in the Contingency Reserve Fund ("CRF"). The TSRF can be used in
the event of an unanticipated General Fund cash operating deficit, as provided
under the State Constitution and State Finance Law. The CPF is used to finance
various legislative and executive initiatives. The CRF provides resources to
help finance any extraordinary litigation costs during the fiscal year.
The Third Quarterly Update of the 1998-99 Financial Plan, released on January
27, 1999, projected a year-end available cash surplus of $1.79 billion in the
General Fund, an increase of $749 million over the surplus estimate in the
Mid-Year Update. Strong growth in receipts as well as lower-than expected
disbursements during the first nine months of the fiscal year account for the
higher surplus estimate. As of February 9, 1999, this amount was projected to be
reduced by the transfer of $1.04 billion to the tax refund reserve. The
projected remaining closing balance of $799 million in the General Fund is
comprised of $473 million in the TSRF, $226 million in the CPF, and $100 million
in the CRF.
The Governor presented his 1999-2000 Executive Budget to the Legislature on
January 27, 1999. The 1999-2000 Financial Plan projects General Fund
disbursements and transfers to other funds of $37.10 billion, an increase of
$482 million over projected spending for the current year. Grants to local
governments constitute approximately 67 percent of all General Fund spending,
and include payments to local governments, non-profit providers and individuals.
Disbursements in this category are projected to
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decrease $87 million (0.4 percent) to $24.81 billion in 1999-2000, in part due
to a $175 million decline in proposed spending for legislative initiatives.
The State is projected to close the 1999-2000 fiscal year with a General Fund
balance of $2.36 billion. The balance is comprised of $1.79 billion in tax
reduction reserves, $473 million in the TSRF and $100 million in the CFR. The
entire $226 million balance in the Community Projects Fund is expected to be
used in 1999-2000, with $80 million spent to pay for existing projects and the
remaining balance of $146 million, against which there are currently no
appropriations as a result of the Governor's 1998 vetoes, used to fund other
expenditures in 1999-2000.
The State currently projects spending to grow by $1.09 billion (2.9 percent) in
2000-01 and an additional $1.8 billion (4.7 percent) in 2001-02. General Fund
spending increases at a higher rate in 2001-02 than in 2000-01, driven primarily
by higher growth rates for Medicaid, welfare, Children and Families Services,
and Mental Retardation, as well as the loss of federal money that offsets
General Fund spending. Over the long-term, uncertainties with regard to the
economy present the largest potential risk to future budget balance in New York
State. For example, a downturn in the financial markets or the wider economy is
possible, a risk that is heightened by the lengthy expansion currently underway.
The securities industry is more important to the New York economy than the
national economy, potentially amplifying the impact of an economic downturn. A
large change in stock market performance during the forecast horizon could
result in wage and unemployment levels that are significantly different from
those embodied in the forecast. Merging and downsizing by firms, as a
consequence of deregulation or continued foreign competition, may also have more
significant adverse effects on employment than expected. Finally, a "forecast
error" of one percentage point in the estimated growth of receipts could
cumulatively raise or lower results by over $1 billion by 2002.
Many complex political, social and economic forces influence the State's economy
and finances, which may in turn affect the State's Financial Plan. These forces
may affect the State unpredictably from fiscal year to fiscal year and are
influenced by governments, institutions, and organizations that are not subject
to the State's control. The State Financial Plan is also necessarily based upon
forecasts of national and State economic activity. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes in
the national and the State economies. The Division of Budget believes that its
projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are based, are reasonable. The
projections assume no changes in federal tax law, which could substantially
alter the current receipts forecast. In addition, these projections do not
include funding for new collective bargaining agreements after the current
contracts expire on April 1, 1999. Actual results, however, could differ
materially and adversely from their projections, and those projections may be
changed materially and adversely from time to time.
The proposed 1998-99 through 2003-04 Capital Program and Financing Plan was
released with the Executive Budget on January 27, 1999. The recommended
five-year Capital Program and Financing Plan reflects debt reduction initiatives
that would reduce future State-supported debt issuances by significantly
increasing the share of the Plan financed with pay-as-you-go resources. Compared
to the last year of the July 1998 update to the Plan, outstanding
State-supported debt would be reduced by $4.7 billion (from $41.9 billion to
$37.2 billion).
As described therein, efforts to reduce debt, unanticipated delays in the
advancement of certain projects and revisions to estimated proceeds needs will
modestly reduce projected borrowings in 1998-99. The State's 1998-99 borrowing
plan now projects issuances of $331 million in general obligation bonds
(including $154 million for purposes of redeeming outstanding BANs) and $154
million in general obligation commercial paper. The State has issued $179
million in Certificates of Participation to finance equipment purchases
(including costs of issuance, reserve funds, and other costs) during the 1998-99
fiscal year. Of this amount, it is anticipated that approximately $83 million
will be used to finance agency equipment acquisitions, and $96 million to
address Statewide technology issues related to Year 2000 compliance.
Approximately $228 million for information technology related to welfare reform,
originally anticipated to be issued during the 1998-99 fiscal year, is now
expected to be delayed until 1999-2000.
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Borrowings by public authorities pursuant to lease-purchase and
contractual-obligation financings for capital programs of the State are
projected to total approximately $2.85 billion, including costs of issuance,
reserve funds, and other costs, net of anticipated refundings and other
adjustments in 1998-99. As of March 5, 1999, general obligation bonds of the
State of New York were rated A and A2 by S&P and Moody's, respectively.
Pennsylvania Fund. The Commonwealth of Pennsylvania experienced stronger
economic growth in 1997 and 1998 after a slow down in growth in 1996.
Pennsylvania is expecting to finish FY99 with its seventh consecutive General
Fund operating surplus.
The Commonwealth is experiencing strong revenue growth. As of April 1999,
General Fund revenues are ahead of year-to-date estimates by $547 million, 3.4%
of revenues. Sales and use tax collections are contributing the majority of the
increase in revenues. As of April 1999, sales and use tax collections exceeded
estimates by 4.6% or $239.3 million. Given the revenue collections, the
Governor's office is anticipating finishing FY99 with a $630 million General
Fund operating surplus. Nearly $245 million, 37.7%, of the surplus will be
transferred to the Commonwealth's Rainy Day Fund. By the end of FY99, the Rainy
Day Fund should be valued at $983 million.
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 1998 was 4.6%, the national average was 4.5% in 1998. The
seasonally adjusted unemployment rate at the end of March 1999, was 4.4% versus
the national average of 4.2% in March. Pennsylvania's per capita income in 1998
was $26,792, 101.4% of the national average.
Pennsylvania has a low debt burden. In 1997, per capita debt was $420, 63% of
the Moody's average. In 1997, total G.O. debt was 1.7% of per capita income, 61%
of the Moody's average.
Since the Commonwealth annually issues a comparable amount to its scheduled
amortization, any incremental increase will have a minor impact on the
Commonwealth's 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.
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.
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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.
(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.
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As a matter of fundamental policy the Pennsylvania Fund may not:
(1) borrow money, except as permitted under the 1940 Act, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time;
(2) issue senior securities, except as permitted under the 1940 Act, and as
interpreted or modified by regulatory authority having jurisdiction, from
time to time;
(3) concentrate its investments in a particular industry, as that term is used
in the 1940 Act, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time;
(4) engage in the business of underwriting securities issued by others, except
to the extent that a Fund may be deemed to be an underwriter in connection
with the disposition of portfolio securities;
(5) purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities;
(6) purchase physical commodities or contracts relating to physical commodities;
(7) make loans except as permitted under the 1940 Act, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
The following policies are non-fundamental, which may be changed by the Board of
Trustees without shareholder approval. As a matter of non-fundamental policy the
Pennsylvania Fund may not:
(1) purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States Government, its agencies or instrumentalities) if, as
a result, more than 5% of the 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;
(2) 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;
(3) invest in real estate limited partnerships.
The Florida, Michigan and New Jersey 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
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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
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 and New Jersey Funds each have adopted the following
non-fundamental restrictions, which may be changed by the Board of Trustees
without shareholder approval.
The Florida, Michigan and New Jersey 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 ADVISER AND SHAREHOLDER SERVICES
Investment Adviser. Scudder Kemper Investments, Inc. ("Scudder Kemper") 345 Park
Avenue, New York, New York, is the investment adviser for each Fund. Scudder
Kemper is approximately
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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. Responsibility for overall management of each Fund rests with the
Trust's Board of Trustees and officers. 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.
On December 31, 1997, pursuant to the terms of an agreement, Scudder, Stevens &
Clark, Inc. ("Scudder"), and Zurich Insurance Company ("Zurich"), formed a new
global investment organization by combining Scudder with Zurich Kemper
Investments, Inc. ("ZKI") and Zurich Kemper Value Advisors, Inc. ("ZKVA"),
former subsidiaries of Zurich and the former investment Adviser for each Fund.
Upon completion of the transaction, Scudder changed its name to Scudder Kemper
Investments, Inc. As a result of the transaction, Zurich owns approximately 70%
of Scudder Kemper, with the balance owned by Scudder Kemper's officers and
employees.
On September 7, 1998, the businesses of Zurich (including Zurich's 70% interest
in the Adviser) and the financial services businesses of B.A.T Industries p.l.c.
("B.A.T") were combined to form a new global insurance and financial services
company known as Zurich Financial Services Group. By way of a dual holding
company structure, former Zurich shareholders initially owned approximately 57%
of Zurich Financial Services Group, with the balance initially owned by former
B.A.T shareholders.
Upon consummation of this transaction, each Fund's then current investment
management agreement with the Adviser was deemed to have been assigned and,
therefore, terminated. The Board approved new investment management agreements
(the "Agreements") with the Adviser, which are substantially identical to the
prior investment management agreements, except for the dates of execution and
termination. The Agreements became effective on September 7, 1998, upon the
termination of the then current investment management agreements, and were
approved at a shareholder meeting held on December 17, 1998.
The Agreements, each dated September 7, 1998, were approved by the Trustees of
the Trust on August 11, 1998. The Agreements will continue in effect until
September 30, 1999 and from year to year thereafter only if their continuance is
approved annually by the vote of a majority of those Trustees who are not
parties to such Agreement or interested persons of the Adviser or the Trust,
cast in person at a meeting called for the purpose of voting on such approval,
and either by a vote of the Trust's Trustees or of a majority of the outstanding
voting securities of the Trust. The Agreements may be terminated at any time
without payment of penalty by either party on sixty days' written notice, and
automatically terminate in the event of its assignment.
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
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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 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.
To be updated
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.
Combined Average
Daily Net Assets All Funds
- ---------------- ---------
$0-$500 million .22 %
$500-$1 billion .20 %
$1 billion-$2 billion .175%
$2 billion-$3 billion .16 %
Over $3 billion .15 %
The table below shows the total advisory fees paid by each Fund for the past
three years (after waivers noted below).
Fund 1999 1998 1997
- ---- ---- ---- ----
Florida* $ 9,000 N.A.
Michigan* N.A. N.A.
New Jersey* $ 8,000 N.A.
New York $ 181,000 0
Pennsylvania* $ 5,000 N.A.
Scudder Kemper has agreed to waive temporarily its management fee and absorb
certain operating expenses of the Funds to the extent described in the
prospectus.
The table below shows the total operating expenses of the Funds waived or
absorbed for the past three years.
Fund 1999 1998 1997
- ---- ---- ---- ----
Florida* $ 4,000 N.A.
Michigan* N.A. N.A.
New Jersey* $ 8,000 N.A.
New York $ 149,000 0
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Pennsylvania* $ 5,000 N.A.
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"), Two
International Place, Boston, Massachusetts 02110, 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"), 222 South Riverside Plaza, Chicago, Illinois 60606,
and affiliate of the Adviser, 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 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 fee is accrued daily as an expense of each Fund.
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
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administration fee to compensate itself for functions performed for a Fund or to
pay for sales materials or other promotional activities.
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 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. As of August 1, 1998, the Rule 12b-1 Plan has been
separated from the distribution agreement.
To be updated
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. State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, as custodian,
has custody of all securities and cash of the Trust. State Street attends to the
collection of principal and income, and payment for and collection of proceeds
of securities bought and sold by the Trust. Investors Fiduciary Trust Company
("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri 64105, is the transfer
agent of the Trust. 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, 1999
and 1998, IFTC remitted shareholder service fees in the amount of $ and $94,000,
respectively, 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.
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Legal Counsel. Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601, serves as legal counsel to the Fund.
PORTFOLIO TRANSACTIONS
Brokerage Commissions
Allocation of brokerage is supervised by the Adviser.
The primary objective of the Adviser in placing orders for the purchase and sale
of securities for a Fund is to obtain the most favorable net results, taking
into account such factors as price, commission where applicable, size of order,
difficulty of execution and skill required of the executing broker/dealer. The
Adviser seeks to evaluate the overall reasonableness of brokerage commissions
paid (to the extent applicable) through the familiarity of the Distributor with
commissions charged on comparable transactions, as well as by comparing
commissions paid by a Fund to reported commissions paid by others. The Adviser
routinely reviews commission rates, execution and settlement services performed
and makes internal and external comparisons.
The Funds' purchases and sales of fixed-income securities are generally placed
by the Adviser with primary market makers for these securities on a net basis,
without any brokerage commission being paid by a Fund. Trading does, however,
involve transaction costs. Transactions with dealers serving as primary market
makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made, which will include an underwriting fee paid to
the underwriter.
When it can be done consistently with the policy of obtaining the most favorable
net results, it is the Adviser's practice to place such orders with
broker/dealers who supply brokerage and research services to the Adviser or a
Fund. The term "research services" includes advice as to the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or purchasers or sellers of securities; and
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts. The
Adviser is authorized when placing portfolio transactions, if applicable, for a
Fund to pay a brokerage commission in excess of that which another broker might
charge for executing the same transaction on account of execution services and
the receipt of research services. The Adviser has negotiated arrangements, which
are not applicable to most fixed-income transactions, with certain
broker/dealers pursuant to which a broker/dealer will provide research services,
to the Adviser or a Fund in exchange for the direction by the Adviser of
brokerage transactions to the broker/dealer. These arrangements regarding
receipt of research services generally apply to equity security transactions.
The Adviser may place orders with a broker/dealer on the basis that the
broker/dealer has or has not sold shares of a Fund. In effecting transactions in
over-the-counter securities, orders are placed with the principal market makers
for the security being traded unless, after exercising care, it appears that
more favorable results are available elsewhere.
To the maximum extent feasible, it is expected that the Adviser will place
orders for portfolio transactions through the Distributor, which is a
corporation registered as a broker/dealer and a subsidiary of the Adviser; the
Distributor will place orders on behalf of the Funds with issuers, underwriters
or other brokers
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and dealers. The Distributor will not receive any commission, fee or other
remuneration from the Funds for this service.
Although certain research services from broker/dealers may be useful to a Fund
and to the Adviser, it is the opinion of the Adviser that such information only
supplements the Adviser's own research effort since the information must still
be analyzed, weighed, and reviewed by the Adviser's staff. Such information may
be useful to the Adviser in providing services to clients other than a Fund, and
not all such information is used by the Adviser in connection with a Fund.
Conversely, such information provided to the Adviser by broker/dealers through
whom other clients of the Adviser effect securities transactions may be useful
to the Adviser in providing services to a Fund.
The Trustees review, from time to time, whether the recapture for the benefit of
the Funds of some portion of the brokerage commissions or similar fees paid by
the Funds 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
Purchase 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. Shares are sold
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. 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.
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Under an 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. Central Standard time net asset value
determination, otherwise such shares will receive the dividend for the next
calendar day if effected at 3:00 p.m. Central Standard time. Orders for purchase
accompanied by a check or other negotiable bank draft will be accepted and
effected as of 3:00 p.m. Central Standard 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 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.
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Shareholders should direct their inquiries to Kemper Service Company ("KSvC"),
the Trust's "Shareholder Service Agent," 811 Main Street, Kansas City, Missouri
64105-2005.
Redemption of Shares
General. Upon receipt by the Shareholder Service Agent of a request in the form
described below, shares of a Fund will be redeemed by the Trust at the next
determined net asset value. If processed at 3:00 p.m. Central Standard time, the
shareholder will receive that day's dividend. A shareholder may use either the
regular or expedited redemption procedures. Shareholders who redeem all their
shares of a Fund will receive the net asset value of such shares and all
declared but unpaid dividends on such shares.
If shares of a Fund to be redeemed were purchased by check or through certain
Automated Clearing House ("ACH") transactions, the Fund may delay transmittal of
redemption proceeds until it has determined that collected funds have been
received for the purchase of such shares, which will be up to 10 days from
receipt by the Fund of the purchase amount. Shareholders may not use ACH or
Redemption Checks until the shares being redeemed have been owned for at least
10 days and shareholders may not use such procedures to redeem shares held in
certificated form. There is no delay when shares being redeemed were purchased
by wiring Federal Funds.
If shares being redeemed were acquired from an exchange of shares of a mutual
fund that were offered subject to a contingent deferred sales charge, the
redemption of such shares by the Trust may be subject to a contingent deferred
sales charge as described in the prospectus for that other fund.
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, resulting from fraudulent or
unauthorized transactions, as long as the reasonable verification procedures are
followed. The verification procedures include recording instructions, requiring
certain identifying information before acting upon instructions and sending
written confirmations.
Because of the high cost of maintaining small accounts, the Trust reserves the
right to redeem an account that falls below the minimum investment level. Thus,
a shareholder who makes only the minimum initial investment and then redeems any
portion thereof might have the account redeemed. A shareholder will be notified
in writing and will be allowed 60 days to make additional purchases to bring the
account value up to the minimum investment level before the Trust redeems the
shareholder account.
Financial services 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 Shareholder Service Agent, the shareholder may redeem them by
sending a written request with signatures guaranteed to Kemper Service Company,
P.O. Box 419153, Kansas City, Missouri 64141-6153. When certificates for shares
have been issued, they must be mailed to or deposited with the Shareholder
Service Agent, along with a duly endorsed stock power and accompanied by a
written request for redemption. Redemption requests and a stock power must be
endorsed by the account holder with signatures guaranteed by a commercial bank,
trust company, savings and loan association, federal savings bank, member firm
of a national securities exchange or other eligible financial institution. The
redemption request and stock power must be signed exactly as the account is
registered including any special capacity of the registered owner. Additional
documentation may be requested, and a signature guarantee is normally required,
from institutional and fiduciary account holders, such as corporations,
custodians (e.g., under the Uniform Transfers to Minors Act), executors,
administrators, trustees or guardians.
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Telephone Redemptions. If the proceeds of the redemption are $50,000 or less and
the proceeds are payable to the shareholder of record at the address of record,
normally a telephone request or a written request by any one account holder
without a signature guarantee is sufficient for redemptions by individual or
joint account holders, and trust, executor, guardian and custodian account
holders, provided the trustee, executor guardian or custodian is named in the
account registration. Other institutional account holders may exercise this
special privilege of redeeming shares by telephone request or written request
without signature guarantee subject to the same conditions as individual account
holders and subject to the limitations on liability 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. Central Standard 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 above, or contact the firm through which
shares of the Trust 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.
Redemptions By Draft. Upon request, shareholders will be provided with drafts to
be drawn on the Trust ("Redemption Checks"). These Redemption Checks may be made
payable to the order of any person for not more than $5 million. Shareholders
should not write Redemption Checks in an amount less than $250 since a $10
service fee will be charged as described below. When a Redemption Check is
presented for payment, a sufficient number of full and fractional shares in the
shareholder's account will be redeemed as of the next determined net asset value
to cover the amount of the Redemption Check. This will enable the shareholder to
continue earning dividends until the Trust receives the Redemption Check. A
shareholder wishing to use this method of redemption must complete and file an
Account Application which is available from the 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 shares of the
Trust. In addition, firms may impose minimum balance requirements in order to
offer this feature. Firms may also impose fees to investors for this privilege
or establish variations of minimum check amounts if approved by the Trust.
Unless one signer is authorized on the Account Application, Redemption Checks
must be signed by all account holders. Any change in the signature authorization
must be made by written notice to the Shareholder Service Agent. Shares
purchased by check or through certain ACH transactions may not be redeemed by
Redemption Check until the shares have been on the Trust's books for at least 10
days. Shareholders may not use this
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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
Fund shares in excess of the value of a Fund account or in an amount less than
$250; when a Redemption Check is presented that would require redemption of
shares that were purchased by check or certain ACH transactions within 10 days;
or when "stop payment" of a Redemption Check is requested.
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.
DIVIDENDS, TAXES AND NET ASSET VALUE
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". 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.
Shareholders may select one of the following ways to receive dividends:
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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.
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. At the option of shareholders, dividends
may be sent of federal funds wire.
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.
If for any taxable year a Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions, would be taxable to shareholders to the extent of current
accumulated earnings and profits, and would be eligible for the dividends
received deduction for corporations in the case of corporate shareholders.
Dividends declared in October, November or December to shareholders of record as
of a date in one of those months and paid during the following January are
treated as paid on December 31 of the calendar year in which declared for
federal income tax purposes. 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.
To Be Updated
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 1998 calendar year %,
%, % and % of the net interest income for the Florida, Michigan, 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.
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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. The State of Florida does not impose a personal income tax. Thus
dividends paid by the Florida Fund to individual shareholders who are Florida
residents will not be subject to state income tax. Florida does, however, impose
an annual intangibles tax on intangible assets (securities and other
intangibles) in excess of $20,000 ($40,000 if filing jointly) owned by Florida
residents on the first day of each calendar year. The intangible tax rate is
$1.00 per $1,000 of taxable value on the first day of each year on intangible
assets valued at between $20,000 and $100,000 ($40,000 and $200,000,
respectively, if filing jointly) and $2.00 per $1,000 of intangible assets over
$100,000 of value ($200,000 if filing jointly). U.S. Government securities and
Florida Municipal Securities are exempt from the intangibles tax. The value of
the shares of any mutual fund such as the Florida Fund are also exempt from the
intangibles tax if on December 31 of any year the mutual fund's portfolio
consists only of exempt securities. If the portfolio consists of any assets
which are not so exempt on the last business day of the calendar year, only the
value of that portion of the shares of the Florida Fund which relate to
securities issued by the U.S. and its possessions and territories will be exempt
from the Florida intangibles tax. The remaining value of such shares will be
fully subject to the intangible tax, even if the value relates, in part, to
Florida tax exempt securities.
If the Florida Fund were to have in its portfolio any non-exempt assets near the
end of any year, it would be required to sell those assets and reinvest the
proceeds in exempt assets prior to December 31 if it were to take full advantage
of the exemption from the intangibles tax. The funds managers have determined
that the transaction costs involved in restructuring the portfolio in this
fashion could reduce the Florida Fund's investment return and might exceed any
increased investment return the Florida Fund could achieve 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.
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
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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.
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.
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
includable in modified alternative minimum taxable income. Corporate
shareholders are advised to consult their tax advisers with respect to the
consequences of the Superfund Act.
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.
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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.
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
includable in modified alternative minimum taxable income. Corporate
shareholders are advised to consult their tax advisers with respect to the
consequences of the Superfund Act.
PERFORMANCE
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.
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, 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 a reporting service 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.
29
<PAGE>
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 fund 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, 1999, the Florida Fund's yield was %, the Michigan
Fund's yield was %, the New Jersey Fund's yield was %, the New York Fund's yield
was % and the Pennsylvania Fund's yield was %.
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, 1999, the Florida Fund's effective yield
was %, the Michigan Fund's effective yield was %, the New Jersey Fund's
effective yield was %, the New York Fund's effective yield was % and the
Pennsylvania Fund's effective yield was %.
TO BE UPDATED
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 % for the Florida
Fund, a combined federal and Michigan State marginal income tax rate of % for
the Michigan Fund, a combined federal and New Jersey State marginal income tax
rate of % for the New Jersey Fund, a combined federal, New York State and New
York City marginal income tax rate of % for the New York Fund, and a combined
federal and Pennsylvania State marginal income tax rate of % 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 %, the
New Jersey Fund's tax equivalent yield was %, the New York Fund's tax equivalent
yield was % and the Pennsylvania Fund's tax equivalent yield was %. Based upon a
marginal federal income tax rate of % for the seven day period ended March 31,
1999, the Florida Fund's taxable equivalent yield was %, the Michigan Fund's tax
equivalent yield was %, the New Jersey Fund's tax equivalent yield was %, the
New York Fund's tax equivalent yield was % and the Pennsylvania Fund's
tax-equivalent yield was %. 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.
A Fund's performance may be compared to that of other mutual funds tracked by
Lipper, Inc. ("Lipper"). Lipper performance calculations include the
reinvestment of all capital gain and income dividends for the periods covered by
the calculations. A Fund's performance also may be compared to other money
market funds as reported by IBC Financial Data, Inc.'s ("IBC") or 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.
30
<PAGE>
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).
TO BE UPDATED
31
<PAGE>
<TABLE>
<CAPTION>
IBC Financial Data, Inc.
IBC Financial
Data, Inc. Money
New Fund Averages(TM) All
Florida Michigan New Jersey York Pennsylvania Tax-Free Money
Period Fund Fund Fund Fund Fund Fund Market Funds
------ ---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C>
7 Days Ended
3/30/99 % N.A.% % % % %
1 Month Ended
3/30/99 N.A.
IBC
Michigan New Jersey New York Financial
Florida Fund Fund Fund Pennsylvania Data, Inc.
Fund Taxable Taxable Taxable Taxable Fund Taxable Money Fund
Equivalent Equivalent Equivalent Equivalent Equivalent Averages(TM)
Period Basis* Basis* Basis* Basis* Basis* All Taxable
- ------ ------ ------ ------ ------ ------ -----------
7 Days Ended
3/30/99 % % % % % %
1 Month Ended
3/30/99
Lipper, Inc.
Lipper All
New New Tax-Exempt Money
Florida Michigan Jersey York Pennsylvania Market Funds
Period Fund Fund Fund Fund Fund Average
- ------ ---- ---- ---- ---- ---- -------
1 Month Ended 3/31/99 % N.A.% % % % %
3 Months Ended 3/31/99 N.A. % % % %
Michigan New Jersey New York
Florida Fund Fund Fund Pennsylvania Lipper Money
Fund Taxable Taxable Taxable Taxable Fund Taxable Market
Equivalent Equivalent Equivalent Equivalent Equivalent Instrument
Period Basis* Basis* Basis* Basis* Basis* Funds Average
- ------ ------ ------ ------ ------ ------ -------------
1 Month Ended
3/31/99 .% N.A.% % % % .%
32
<PAGE>
3 Months Ended
3/31/99 1.00 N.A.
</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 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 1999 federal
and 1998 state tax rates and brackets.
33
<PAGE>
<TABLE>
<CAPTION>
Taxable Equivalent Yield Table For Persons Whose
Adjusted Gross Income Is Under $124,500
Single Joint Your A Tax-Exempt Yield of:
Marginal 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$25,350-$61,400 $42,350-$102,300 28.0%
Over $61,400 Over $102,300 31.0
Single Joint Combined A Tax-Exempt Yield of:
Michigan 2% 3% 4% 5% 6% 7%
Taxable Income and Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- -------------------- ------------------------------------
$25,350-$61,400 $42,350-$102,300 31.4% 2.96 4.44 5.92 7.40 8.88 10.36
Over $61,400 Over $102,300 35.4 3.10 4.64 6.19 7.74 9.29 16.84
Single Joint Combined A Tax-Exempt Yield of:
New Jersey and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
$25,350-$35,000 $42,350-$50,000 29.3%
$50,000-$70,000 29.8
$35,000-$40,000 $70,000-$80,000 30.5
$40,000-$61,400 $80,000-$102,300 32.0
$61,400-$75,000 $102,300-$150,000 34.8
Over $75,000 Over $150,000 35.4
Single Joint Combined N.Y. City, A Tax-Exempt Yield of:
N.Y. State and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate** Is Equivalent to a Taxable Yield of:
- -------------- ------------------ ------------------------------------
$25,350-$61,400 $42,350-$102,300 36.1%
Over $61,400 Over $102,300 38.8
Single Joint Combined A Tax-Exempt Yield of:
Pennsylvania and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
$25,350-$61,400 $42,350-$102,300 30.0%
Over $61,400 Over $102,300 32.9
34
<PAGE>
Taxable Equivalent Yield Table For Persons Whose Adjusted Gross Income Is Over $124,500
Single Joint Your A Tax-Exempt Yield of:
Marginal 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
$61,400-$128,100 $102,300-$155,950 31.9%
$128,100-$278,450 $155,950-$278,450 37.1
Over $278,450 Over $278,450 40.8
Single Joint Combined A Tax-Exempt Yield of:
Michigan and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
$61,400-$128,100 $102,300-$155,950 35.4% 3.10 4.64 6.19 7.74 9.29 10.84
$128,100-$278,450 $155,950-$278,450 40.4 3.36 5.03 6.71 8.39 10.07 11.74
Over $278,450 Over $278,450 44.0 3.57 5.36 7.14 8.93 10.71 12.50
Single Joint Combined A Tax-Exempt Yield of:
New Jersey and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
$61,400-$75,000 $102,300-$150,000 35.7%
$75,000-$128,100 $150,000-$155,950 36.2
$128,100-$278,450 $155,950-$278,450 41.1
Over $278,450 Over $278,450 44.6
Single Joint Combined N.Y. City, A Tax-Exempt Yield of:
N.Y. State and 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
$61,400-$128,100 $102,300-$155,950 39.6%
$128,100-$278,450 $155,950-$278,450 44.2
Over $278,450 Over $278,450 47.5
Single Joint Combined A Tax-Exempt Yield of:
Pennsylvania 2% 3% 4% 5% 6% 7%
Taxable Income Federal Tax Rate Is Equivalent to a Taxable Yield of:
- -------------- ---------------- ------------------------------------
$61,400-$128,100 $102,300-$155,950 33.8%
$128,100-$278,450 $155,950-$278,450 38.9
35
<PAGE>
Over $278,450 Over $278,450 42.5
</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.
36
<PAGE>
OFFICERS AND TRUSTEES
The officers and trustees of the Trust, 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.
To be updated
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; Retired; formerly, Vice Chairman and Chief Financial Officer, Monsanto
Company (agricultural, pharmaceutical and nutritional/food products); formerly,
Vice President, Head of International Operations, FMC Corporation (manufacturer
of machinery and chemicals).
DONALD R. JONES (1/17/30), Trustee, 182 Old Wick Lane, Inverness, Illinois;
Retired; Director, Motorola, Inc. (manufacturer of electronic equipment and
components); formerly, Executive Vice President and Chief Financial Officer,
Motorola, Inc.
SHIRLEY D. PETERSON (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, Adviser; Director, Fiduciary Trust Company and
Fiduciary Company Incorporated.
WILLIAM P. SOMMERS (7/22/33), Trustee, 24717 Harbour View Drive, Ponte Vedro
Beach, Florida; Consultant and Director, SRI International (research and
development); formerly; President and Chief Executive Officer, SRI
International; prior thereto, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton Inc. (management consulting
firm); Director, PSI, Inc., Evergreen Solar, Inc. and Litton Industries.
MARK S. CASADY (9/21/60), President*, 345 Park Avenue, New York, New York;
Managing Director, Adviser.
PHILIP J. COLLORA (11/15/45), Vice President and Secretary*, 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President, Adviser.
THOMAS W. LITTAUER (4/26/55), Vice President and Trustee*, Two International
Place, Boston, Massachusetts; Managing Director, Adviser; formerly, Head of
Broker Dealer Division of an unaffiliated investment management firm during
1997; prior thereto, President of Client Management Services of an unaffiliated
investment management firm from 1991 to 1996.
37
<PAGE>
ANN M. McCREARY (11/6/56), Vice President*, 345 Park Avenue, New York, New York;
Managing Director, Adviser.
ROBERT C. PECK, JR. (10/1/46), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Adviser; formerly, Executive Vice
President and Chief Investment Officer with an unaffiliated investment
management firm from 1988 to June 1997.
KATHRYN L. QUIRK (12/3/52), Vice President*, 345 Park Avenue, New York, New
York; Managing Director, Adviser.
FRANK J. RACHWALSKI, JR. (3/26/45), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Adviser.
LINDA J. WONDRACK (9/12/64), Vice President*, Two International Place, Boston,
Massachusetts; Senior Vice President, Adviser.
JOHN R. HEBBLE (6/27/58), Treasurer*, Two International Place, Boston,
Massachusetts; Senior Vice Adviser.
BRENDA LYONS ( ), Assistant Treasurer*, Two International Place, Boston,
Massachusetts Senior Vice President, Adviser.
CAROLINE PEARSON (4/1/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Senior Vice President, Adviser; formerly, Associate,
Dechert Price & Rhoads (law firm), from 1989 to 1997.
MAUREEN E. KANE (2/14/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Vice President, Adviser; formerly, Assistant Vice
President of an unaffiliated investment management firm; prior thereto,
Associate Staff Attorney of an unaffiliated investment management firm;
Associate, Peabody & Arnold (law firm).
* Interested persons as defined in the Investment Company Act of 1940.
TO BE UPDATED
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 1998.
<TABLE>
<CAPTION>
Total Compensation
Estimated Compensation Kemper Funds Paid To
Name Of Trustee From Trust Trustees(2)
- --------------- ---------- -----------
<S> <C> <C>
Lewis A. Burnham
Donald L. Dunaway(1)
Robert B. Hoffman
38
<PAGE>
Donald R. Jones
Shirley D. Peterson
William P. Sommers
</TABLE>
(1) Includes deferred fees. 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 amounts (including interest thereon) payable from the Funds
for the latest and all prior fiscal years for the New York Fund are $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 the Adviser 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.
On July 1, 1999, the trustees and officers as a group owned less than 1% of the
then outstanding shares of each Fund. As of July 1, 1999, 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>
Florida J.B. Hanauer & Company Gatehall
Corporation Center
4 Gatehall Drive
Parsippany, NJ 07054
Michigan Roney & Co
1 Griswold
Detroit, MI 48226
New Jersey J.B. Hanauer & Company
Gatehall Corporation Center
Parsippany, NJ 07054
New York NISC
55 Water Street
New York, NY 10041
J.B. Hanauer & Company
Gatehall Corporation Center
Parsippany, NJ 07054
39
<PAGE>
Southwest Securities, Inc.
1201 Elm Street
Suite 4300
Dallas, TX 75270
ABN AMRO Chicago Corporation
208 S LaSalle Street
Chicago, IL 60604
E Trade
4 Embarcadero Place
2400 Geng Road
Palo Alto, CA 94303
Pennsylvania Scudder Kemper Investments, 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 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
Strategic Income Fund, Kemper High Yield Series, Kemper U.S. Government
Securities Fund, Kemper International Fund, Kemper State Tax-Free Income Series,
Kemper Short-Term 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 Value Series, Inc., Kemper Value+Growth 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 Funds, Cash Equivalent Fund, Tax-Exempt California Money Market Fund,
Cash Account Trust, Investors Municipal Cash Fund and Investors Cash Trust).
Shares of Money Market Funds and Kemper Cash Reserves Fund that were acquired by
purchase (not including shares acquired by dividend reinvestment) are subject to
the applicable sales charge on exchange. In addition, shares of a Kemper Mutual
Fund 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"). In addition, shares
of a Kemper fund with a value of $1,000,000 or less (except Kemper Cash Reserves
Fund) acquired by exchange from another Kemper fund, or from a money market
fund, may not be exchanged thereafter until they have been owned for 15 days,
if, in the investment Adviser's judgement, the exchange activity may have an
adverse effect on the fund. In particular, a pattern of exchanges that coincides
with a "market timing" strategy may be disruptive to the
40
<PAGE>
Kemper fund and therefore may be subject to the 15-Day Hold Policy. For purposes
of determining whether the 15 Day Hold Policy applies to a particular exchange,
the value of the shares to be exchanged shall be computed by aggregating the
value of shares being exchanged for all accounts under common control, 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 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
41
<PAGE>
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 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 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 [DATE], 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.
42
<PAGE>
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.
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.
43
<PAGE>
INVESTORS MUNICIPAL CASH FUND
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
Item 23. Exhibits.
-------- ---------
<S> <C> <C>
(a)(1) Amended and Restated Agreement and Declaration of Trust dated March 9, 1990.
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)
(b) By-laws
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)
(c)(1) Text of Share Certificate
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)
(c)(2) Written Instrument Establishing and Designating New Series
(Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registration Statement)
(c)(3) Written Instrument Establishing and Designating New Trust Name
(Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registration Statement)
(c)(4) Written Instrument Establishing and Designating New Series (Michigan Fund)
(Incorporated herein by reference to Post-Effective Amendment No. 11 to the
Registration Statement)
(d) Investment Management Agreement (IMA) between the Registrant, on behalf of
Investors Florida Municipal Cash Fund, Investors New Jersey Municipal Cash
Fund, Investors Michigan Municipal Cash Fund, Investors Pennsylvania
Municipal Cash Fund, and Tax-Exempt New York Money Market Fund, dated
September 7, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(e)(1) Underwriting Agreement between Investors Municipal Cash Fund and Kemper
Distributors, Inc., dated September 7, 1998
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(f) Inapplicable.
(g) Custody Agreement between the Registrant, on behalf of Investors Florida
Municipal Cash Fund, Investors New Jersey Municipal Cash Fund, Investors
Michigan Municipal Cash Fund, Investors Pennsylvania Municipal Cash Fund,
and Tax-Exempt New York Money Market Fund, and State Street Bank and Trust
Company, dated May 3, 1999.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(h)(1) Agency Agreement between Investors Municipal Cash Fund and Investors
1
<PAGE>
Fiduciary Trust Company dated October 18, 1990.
(Incorporated herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement)
(h)(2) Supplement to Agency Agreement between Investors Municipal Cash Fund and
Fiduciary Trust Company dated April 1, 1995.
(Incorporated herein by reference to Post-Effective Amendment No. 6 to the
Registration Statement)
(h)(3) Fund Accounting Agreement between the Registrant, on behalf of Investors
Florida Municipal Cash Fund, Investors New Jersey Municipal Cash Fund,
Investors Michigan Municipal Cash Fund, Investors Pennsylvania Municipal
Cash Fund, and Tax-Exempt New York Money Market Fund, and Scudder Fund
Accounting Corporation, dated December 31, 1997.
(Incorporated herein by reference to Post-Effective Amendment No. 11 to the
Registration Statement)
(i) Legal Opinion.
To be filed by amendment.
(j) Consent of Independent Accountants.
To be filed by amendment.
(k) Inapplicable.
(l) Inapplicable.
(m)(1) Rule 12b-1 Plan between Investors Florida Municipal Cash Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(m)(2) Rule 12b-1 Plan between Investors New Jersey Municipal Cash Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(m)(3) Rule 12b-1 Plan between Investors Michigan Municipal Cash Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(m)(4) Rule 12b-1 Plan between Investors Pennsylvania Municipal Cash Fund and
Kemper Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(m)(5) Rule 12b-1 Plan between Tax-Exempt New York Money Market Fund and Kemper
Distributors, Inc., dated August 1, 1998.
(Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement)
(n) Financial Data Schedule.
To be filed by amendment.
(o) Inapplicable.
</TABLE>
2
<PAGE>
Item 24. Persons Controlled by or under Common Control with Fund.
- -------- --------------------------------------------------------
None
Item 25. Indemnification.
- -------- ----------------
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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 became the majority
stockholder in Scudder with an approximately 70% interest, and ZKI was 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.
Item 26. Business or Other Connections of Investment Adviser
- -------- ---------------------------------------------------
Scudder Kemper Investments, Inc. has stockholders and
employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not
considered officers for the purpose of this Item 26.
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
3
<PAGE>
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
William H. Bolinder Director, Scudder Kemper Investments, Inc.**
Member Group Executive Board, Zurich Financial Services, Inc. ##
Chairman, Zurich-American Insurance Company o
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
Director, ZKI Holding Corporation xx
Gunther Gose Director, Scudder Kemper Investments, Inc.**
CFO, Member Group Executive Board, Zurich Financial Services, Inc. ##
CEO/Branch Offices, Zurich Life Insurance Company ##
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of America o
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Cornelia M. Small Director and Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President and Director, Scudder, Stevens & Clark Overseas Corporation oo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
4
<PAGE>
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
</TABLE>
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg,
R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
xxx Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman,
British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
Item 27. Principal Underwriters.
- -------- -----------------------
(a)
Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and 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>
(1) (2) (3)
Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
<S> <C> <C> <C>
James L. Greenawalt President None
Thomas W. Littauer Director, Chief Executive Officer Trustee and Vice President
Kathryn L. Quirk Director, Secretary, Chief Legal Vice President
Officer and Vice President
James J. McGovern Chief Financial Officer and Treasurer None
Linda J. Wondrack Vice President and Chief Compliance Vice President
Officer
Herbert A. Christiansen Vice President None
Paula Gaccione Vice President None
Michael Curran Managing Director None
Robert Froelic Managing Director None
Michael E. Harrington Managing Director None
5
<PAGE>
Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
C. Perry Moore Managing Director None
Lorie O'Malley Managing Director None
David Swanson Managing Director None
William M. Thomas Managing Director None
Robert A. Rudell Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Todd N. Gierke Assistant Treasurer None
Philip J. Collora Assistant Secretary Vice President and Secretary
Paul J. Elmlinger Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
Daniel Pierce Director, Chairman Trustee
Mark S. Casady Director, Vice Chairman President
Stephen R. Beckwith Director None
</TABLE>
(c) Not applicable
Item 28. Location of Accounts and Records
- -------- --------------------------------
Accounts, books and other documents are maintained at the offices of
the Registrant, the offices of Registrant's investment adviser, Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at the
offices of the Registrant's principal underwriter, Kemper Distributors, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606 or, in the case of records
concerning custodial functions, at the offices of the custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110 or, in
the case of records concerning transfer agency functions, at the offices of
Investors Fiduciary Trust Company, 801 Pennsylvania Avenue, Kansas City,
Missouri 64105 and of the shareholder service agent, Kemper Service Company, 811
Main Street, Kansas City, Missouri 64105.
Item 29. Management Services.
- -------- --------------------
Inapplicable.
Item 30. Undertakings.
- -------- -------------
Inapplicable.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(a) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, and Commonwealth of Massachusetts, on
the 28th day of May, 1999.
INVESTORS MUNICIPAL CASH FUND
By /s/Mark S. Casady
-----------------
Mark S. Casady
President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to its Registration Statement has been signed below on May 28, 1999,
on behalf of the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Daniel Pierce May 28, 1999
- --------------------------------------
Daniel Pierce* Chairman and Trustee
/s/ Lewis A. Burnham May 28, 1999
- --------------------------------------
Lewis A. Burnham* Trustee
/s/ Donald L. Dunaway May 28, 1999
- --------------------------------------
Donald L. Dunaway* Trustee
/s/ Robert B. Hoffman May 28, 1999
- --------------------------------------
Robert B. Hoffman* Trustee
/s/ Donald R. Jones May 28, 1999
- --------------------------------------
Donald R. Jones* Trustee
/s/Thomas W. Littauer May 28, 1999
- --------------------------------------
Thomas W. Littauer Trustee
/s/ Shirley D. Peterson May 28, 1999
- --------------------------------------
Shirley D. Peterson* Trustee
/s/ William P. Sommers May 28, 1999
- --------------------------------------
William P. Sommers* Trustee
<PAGE>
/s/John R. Hebble May 28, 1999
- --------------------------------------
John R. Hebble Treasurer (Principal Financial and
Accounting Officer)
</TABLE>
*By: /s/Philip J. Collora
--------------------
Philip J. Collora**
** Philip J. Collora signs this document
pursuant to powers of attorney contained in
Post-Effective Amendment No. 11 to the
Registration Statement, filed on February
20, 1998.
2
<PAGE>
File No. 33-34819
File No. 811-6108
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 14
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 15
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
INVESTORS MUNICIPAL CASH FUND
<PAGE>
INVESTORS MUNICIPAL CASH FUND
EXHIBIT INDEX