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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KEMPER MONEY MARKET FUND
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(Name of Registrant as Specified in Its Charter)
KEMPER MONEY MARKET FUND
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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PRELIMINARY COPY --
IMPORTANT NEWS
FOR KEMPER MONEY MARKET FUND SHAREHOLDERS
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
HERE'S A BRIEF OVERVIEW OF MAJOR MATTERS TO BE VOTED UPON.
Q & A ABOUT THE ENCLOSED PROXY MATERIALS
Q. WHAT IS HAPPENING?
A. Kemper Corporation -- not your fund -- has agreed to be acquired
by an investor group led by Zurich Insurance Company through a
merger. Zurich is an internationally recognized market leader in
life and non-life insurance, financial services and reinsurance.
As part of the merger, your fund's investment manager, Kemper
Financial Services, Inc. (KFS), will be sold to a subsidiary of
Zurich. In order for KFS to serve as investment manager of your
fund after the merger, it is necessary for your fund to approve a
new investment management agreement.
The following pages elaborate on Zurich, the proposed new
investment management agreement and the fund board's evaluation
of Zurich's plans for KFS. A vote is also being sought on the
election of trustees to the Board of Trustees and the selection
of independent auditors.
Q. WHY AM I BEING ASKED TO VOTE ON THE PROPOSED NEW INVESTMENT
MANAGEMENT AGREEMENT?
A. The Investment Company Act of 1940 requires a vote whenever there
is a change in control of an investment manager. Kemper
Corporation's merger with Zurich is such a change of control and
requires fund shareholder approval of a new investment management
agreement with your fund.
Q. WHAT HAPPENED WITH KEMPER CORPORATION'S INTENTION LAST YEAR TO
MERGE WITH CONSECO, INC.?
A. The agreement was terminated by mutual consent of Kemper and
Conseco.
Q. HOW WILL THE KEMPER/ZURICH MERGER AFFECT ME AS A FUND
SHAREHOLDER?
A. Your fund and your fund investment will not change. You will
still own the same shares in the same fund.
All terms of the new management agreement are the same as the
current management agreement. If the new investment management
agreement is approved, your fund shares will not change and the
advisory fees charged to your fund will not change.
Zurich has committed to provide all resources necessary to
provide your fund with top quality investment management and
shareholder services.
Q. WILL THE INVESTMENT ADVISORY FEES BE THE SAME?
A. Yes, the investment advisory fees paid by your fund will remain
the same.
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Q. HOW DO THE BOARD MEMBERS OF MY FUND SUGGEST THAT I VOTE?
A. After careful consideration, the board members of your fund,
including the independent members, recommend that you vote "For"
all the items on the enclosed ballot.
Q. WHO IS PAYING THE COST OF THE SHAREHOLDER MEETING AND THIS PROXY
SOLICITATION?
A. Kemper Corporation and Zurich Insurance Company -- not your fund
-- are paying all costs of the fund's shareholder meeting and
proxy solicitation.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Kemper Shareholder Services at 1-800-621-1048.
ABOUT THE BALLOT
[FUND NAME]
[ACCOUNT NUMBER]
[SHARE COUNT]
[ADDRESSEE AND ADDRESS]
For Withhold For All
1. To elect the following as trustees: All All Except
[ ] [ ] [ ]
01) David W. Belin, 02) Lewis A. Burnham, 03) Donald L. Dunaway,
04) Robert B. Hoffman, 05) Donald R. Jones, 06) David B. Mathis,
07) Shirley D. Peterson, 08) Stephen B. Timbers, 09) William F. Sommers
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To withhold authority to vote on any individual nominee(s) please
print the number(s) on the line above.
2. Ratify or reject the selection of For Against Abstain
Ernst & Young LLP as the Fund's [ ] [ ] [ ]
independent auditors for the
current fiscal year.
3. Approve or disapprove a new investment [ ] [ ] [ ]
management agreement with Kemper
Financial Services, Inc. or its
successor on the same terms as the
current agreement.
Signature(s) (All registered owners of accounts shown to the left must
sign. If signing for a corporation, estate or trust, please indicate
your capacity or title.)
X
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Signature Date
X
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Signature Date
PLEASE VOTE TODAY!
Because each portfolio must vote separately, you are being sent a ballot for
each account that you have. Please vote all issues shown on each ballot that you
receive.
Please vote on each issue using blue or black ink to mark an X in one of the
three boxes provided on each ballot. On Item 1 (election of trustees) mark --
For All, Withhold All or For All Except. If you mark an X in the For All Except
box, you should print the number(s) relating to the individual(s) for whom you
wish to withhold authority. On all other Items, mark -- For, Against or Abstain.
Then sign, date and return each of your ballots in the accompanying postage-paid
envelope. All registered owners of an account, as shown in the address on the
ballot, must sign the ballot. If you are signing for a corporation, trust or
estate, please indicate your title or position.
THANK YOU FOR MAILING YOUR BALLOT PROMPTLY!
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KEMPER MONEY MARKET FUND
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
TELEPHONE 1-800-621-1048
July 7, 1995
Dear Kemper Money Market Fund Shareholder:
As you read in the Questions and Answers (Q & A) on page 1, Kemper
Corporation has agreed to be acquired by an investor group led by Zurich
Insurance Company through a merger. Zurich is an internationally recognized
market leader in life and non-life insurance, financial services and
reinsurance. (More information about Zurich can be found inside the proxy
statement.)
We're sending this proxy statement to you because your vote is important to
the planned Kemper merger. Your fund's investment manager, Kemper Financial
Services, Inc. (KFS), is a subsidiary of Kemper Corporation. Because of the
Zurich/Kemper merger, it is necessary for your Fund to approve a new investment
management agreement.
As you review these materials, please keep in mind that Kemper Corporation
and KFS -- NOT YOUR FUND -- are being acquired by Zurich. If the new investment
management agreement is approved, YOUR FUND SHARES WILL NOT CHANGE AND THE
ADVISORY FEES CHARGED TO YOUR FUND WILL NOT CHANGE. Further, you should continue
to receive the high quality investment management and shareholder services that
you have come to expect over the years.
Your Fund Board has approved the proposals and recommends them for your
approval. I encourage you to vote in favor of the proposals. PLEASE VOTE NOW TO
HELP SAVE THE COST OF ADDITIONAL SOLICITATIONS.
As always, we thank you for your confidence and support.
Sincerely,
[SIG]
Stephen B. Timbers
President
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KEMPER MONEY MARKET FUND
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
TELEPHONE 1-800-621-1048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 19, 1995 AND PROXY STATEMENT
July 7, 1995
To the Shareholders:
You are invited to attend a special meeting of shareholders of Kemper Money
Market Fund (the "Fund").
The meeting will be held in Room 17L on the 17th Floor at the offices of the
Fund, 120 South LaSalle Street, Chicago, Illinois on Tuesday, September 19, 1995
at 2:30 p.m., Chicago time, for the following purposes and to transact such
other business as may properly come before the meeting or any adjournment of the
meeting:
1. To elect nine (9) Trustees to the Board of Trustees.
2. To ratify or reject the selection of Ernst & Young LLP as independent
auditors for the current fiscal year.
3. To approve or disapprove a new investment management agreement with
Kemper Financial Services, Inc. or its successor on the same terms as
the current agreement.
The Board of Trustees of the Fund has selected the close of business on June 23,
1995 as the record date for the determination of shareholders of the Fund
entitled to notice of and to vote at the meeting. Shareholders are entitled to
one vote for each share held.
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD. SIGN, DATE
AND RETURN IT IN THE ENVELOPE PROVIDED. TO SAVE THE COST OF ADDITIONAL
SOLICITATIONS, PLEASE MAIL YOUR PROXY PROMPTLY.
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The accompanying proxy is solicited by the Board of Trustees (the "Board") of
the Fund for voting at the special meeting of shareholders of the Fund to be
held on Tuesday, September 19, 1995, and at any and all adjournments thereof
(the "Meeting"). This proxy statement was first mailed to shareholders on or
about July 7, 1995.
The Fund is a "series company" that issues various series of shares. (Each
series also is sometimes described herein as a "Fund".) Each series has its own
investment objective and policies and operates independently for purposes of
investments, dividends and redemptions. The series of the Fund are: Money Market
Portfolio ("MMP"); Government Securities Portfolio ("GSP") and Tax-Exempt
Portfolio ("TEP").
The shareholders of the Fund are being asked to vote on three items. On Item 1
(election of trustees) and Item 2 (ratification of selection of auditors), the
Fund will vote in the aggregate and not by series. On Item 3 (approval of new
investment management agreement), each series of the Fund will vote separately.
The Board recommends an affirmative vote on all items. The vote required to
approve each item is described under the section of this proxy statement
entitled "Miscellaneous."
The Board has fixed the close of business on June 23, 1995 as the record date
for the determination of shareholders of the Fund entitled to notice of and to
vote at the Meeting. As of May 31, 1995, shares of the Fund were issued and
outstanding as follows:
SERIES SHARES
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MMP................................ 3,999,319,914
GSP................................ 589,139,802
TEP................................ 739,659,371
ITEM 1. ELECTION OF BOARD OF TRUSTEES
At the Meeting, nine (9) trustees are to be elected to constitute the Board of
the Fund. Currently, the size of the Board is fixed at nine trustees, with seven
positions filled and two vacancies. Mr. Mathis and Ms. Peterson have been
nominated to fill the vacancies. Messrs. Belin, Burnham, Dunaway, Hoffman and
Sommers were last elected to the Board by shareholders at a special meeting held
on , 1985. Mr. Jones was appointed to the Board on July 26, 1988 to
fill a vacancy and Mr. Timbers was appointed to the Board on January 23, 1992 to
fill a vacancy created by an expansion of the size of the Board. Messrs. Jones,
Mathis and Timbers and Ms. Peterson are standing for election by shareholders
for the first time at the Meeting.
It is intended that the proxies will be voted for the election of the nominees
described below. Each trustee so elected will serve as a trustee of the
respective Fund until the next meeting of shareholders, if any, called for the
purpose of electing trustees and until the election and qualification of a
successor or until such trustee sooner dies, resigns or is removed as provided
in the Agreement and
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Declaration of Trust of the Fund ("Declaration of Trust"). Since the Fund does
not hold annual meetings, trustees will hold office for an indeterminate period.
All the nominees listed below have consented to serve as trustees of the Fund,
if elected. In case any nominee shall be unable or shall fail to act as a
trustee by virtue of an unexpected occurrence, the proxies may be voted for such
other person(s) as shall be determined by the persons acting under the proxies
in their discretion.
NAME (DATE OF BIRTH), YEAR FIRST
PRINCIPAL OCCUPATION AND AFFILIATIONS BECAME A TRUSTEE
- ----------------------------------------------------- ----------------
David W. Belin (6/20/28)............................. 1985
Member, Belin Harris Lamson McCormick, P.C.,
Attorneys
Lewis A. Burnham (1/8/33)............................ 1985
Partner, Business Resources Group; formerly,
Executive Vice President, Anchor Glass Container
Corporation
Donald L. Dunaway (3/8/37)........................... 1985
Retired; formerly, Executive Vice President, A. O.
Smith Corporation
Robert B. Hoffman (12/11/36)......................... 1985
Senior Vice President and Chief Financial Officer,
Monsanto Company; formerly Vice President, FMC
Corporation; prior thereto, Director, Executive
Vice President and Chief Financial Officer, Staley
Continental, Inc.
Donald R. Jones (1/17/30)............................ 1988
Retired; Director, Motorola, Inc.; formerly,
Executive Vice President and Chief Financial
Officer, Motorola, Inc.
David B. Mathis* (4/13/38)........................... Nominee
Chairman, Chief Executive Officer and Director,
Kemper Corporation; Director, Kemper Financial
Services, Inc. ("KFS"), Kemper Financial Companies,
Inc. ("KFC"), several other Kemper Corporation
subsidiaries and IMC Global Inc.
Shirley D. Peterson (9/13/41)........................ Nominee
President, Hood College; formerly, Partner, Steptoe
& Johnson (Attorneys) January, 1993-December, 1994;
prior thereto, Commissioner, Internal Revenue
Service, February, 1992-January, 1993; prior
thereto, Assistant Attorney General, U.S.
Department of Justice.
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NAME (DATE OF BIRTH), YEAR FIRST
PRINCIPAL OCCUPATION AND AFFILIATIONS BECAME A TRUSTEE
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William P. Sommers (7/22/33)......................... 19
President and Chief Executive Officer, SRI
International; formerly, Executive Vice President,
Iameter; prior thereto, Senior Vice President and
Director, Booz, Allen & Hamilton, Inc. (Retired);
Director, Rohr, Inc., Director, Therapeutic
Discovery Corp., Director, Litton Industries.
Stephen B. Timbers* (8/8/44)......................... 1992
President, Chief Operating Officer, Chief
Investment Officer and Director, Kemper
Corporation; Chairman, Chief Executive Officer,
Chief Investment Officer and Director, KFS;
Director, KFC, several other Kemper Corporation
subsidiaries, Gillett Holdings, Inc. and LTV
Corporation
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* Interested persons of the Fund as defined in the Investment Company Act of
1940 ("1940 Act") because of their positions with KFS, the investment manager
of the Fund.
All the nominees, except Messrs. Mathis and Timbers and Ms. Peterson, serve as
board members of 21 Kemper Funds. Mr. Mathis serves as a board member of 28
Kemper Funds, Mr. Timbers serves as a board member and president of 31 Kemper
Funds and Ms. Peterson serves as a board member of 18 Kemper Funds. Mr. Mathis
has been nominated to serve as a board member of 31 Kemper Funds and Ms.
Peterson has been nominated to serve as a board member of 21 Kemper Funds. A
"Kemper Fund" is an investment company for which KFS serves as investment
manager.
The Board of Trustees of the Fund has a nominating committee, the members of
which are Messrs. Burnham, Jones and Sommers. It proposed the nominees for
election by the shareholders; and the Board of Trustees, including the non-
interested trustees, concurred. The nominating committee met two times during
the Fund's fiscal year ended July 31, 1994. Shareholders wishing to submit the
name of a candidate for consideration by the nominating committee should submit
their recommendations to the secretary of the Fund.
The Fund's audit committee is composed of Messrs. Dunaway, Hoffman and Jones.
The audit committee met two times during the Fund's fiscal year ended July 31,
1994. The audit committee of the Fund makes recommendations regarding the
selection of independent auditors for the Fund, confers with the independent
auditors regarding the Fund's financial statements, the results of audits and
related matters and performs such other tasks as the Board of Trustees of the
Fund assigns.
The Board of the Fund met eight times during the Fund's fiscal year ended July
31, 1994. Each then current trustee attended 75% or more of the meetings of the
Board and the committees of which he was a member that were held during that
period.
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The Fund pays trustees who are not interested persons of the Fund a monthly
retainer and an attendance fee for each Board meeting and committee meeting
attended, plus expense reimbursement. As reflected above, the trustees currently
serve as trustees of various investment companies for which KFS serves as
investment manager. Trustees or officers who are "interested persons" receive no
compensation from the Fund.
The tables below show, for each trustee entitled to receive compensation from
the Fund, the aggregate compensation paid or accrued by the Fund for its fiscal
year ended July 31, 1994 and the total compensation that Kemper Funds paid to
each trustee during the calendar year 1994.
TOTAL COMPENSATION
AGGREGATE COMPENSATION KEMPER FUNDS
NAME OF TRUSTEE PAID BY THE FUND PAID TO TRUSTEES (2)
- ---------------------------- ---------------------- --------------------
David W. Belin (1).......... 112,200
Lewis A. Burnham............ 90,110
Donald L. Dunaway (1)....... 115,400
Robert B. Hoffman........... 87,400
Donald R. Jones............. 94,300
William P. Sommers.......... 84,100
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(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with the Fund. Deferred amounts accrue interest
monthly at a rate equal to the yield of Kemper Money Market Fund -- Money
Market Portfolio.
(2) Includes compensation for service on the boards of 23 Kemper Funds
(including two Kemper Funds no longer in existence). Also includes amounts
for new portfolios estimated as if they had existed at the beginning of the
year.
FUND OFFICERS. Information about the executive officers of the Fund, with their
respective dates of birth and terms as Fund officers indicated, is set forth
below (other than information about Mr. Timbers, president of the Fund since
3/11/95, which is reflected above).
J. Patrick Beimford, Jr. (5/25/50), vice president of the Fund since 1/21/93, is
executive vice president and director of fixed income investments of KFS.
Phillip J. Collora (11/15/45), vice president of the Fund since / / and
secretary of the Fund since 1/25/95, is senior vice president and assistant
secretary of KFS.
Jerome L. Duffy (6/29/36), treasurer of the Fund since 1/20/77, is senior vice
president of KFS.
John E. Peters (11/4/47), vice president of the Fund since 1/21/93, is senior
executive vice president of KFS and president of KDI.
Frank J. Rachwalski (3/26/45), vice president of the Fund since 1/20/87, is
senior vice president of KFS.
Elizabeth C. Werth (10/1/47), assistant secretary of the Fund since 3/17/90, is
vice president and director of state registrations of KFS.
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The officers of the Fund are elected by the Board of the Fund on an annual basis
to serve until their successors are elected and qualified.
SHAREHOLDINGS
Listed below is the number of shares of the Fund owned beneficially by each
trustee or nominee as of May 31, 1995. Also shown is the number of shares owned
beneficially by the trustees and officers as a group. In each case, the amounts
shown are less than 1% of the outstanding shares of such series of the Fund.
TRUSTEES
AND
OFFICERS
SERIES BELIN BURNHAM DUNAWAY HOFFMAN JONES MATHIS PETERSON SOMMERS TIMBERS AS A GROUP
- ----------- ------- ------- --------- --------- ------- --------- -------- ------- ------- ----------
MMP........ 126,150 168,303 986 2,949,895 235,768 0 0 51,547 7,738
GSP........ 2,290 0 1,006,531 0 0 1,188,208 0 0 0
TEP........ 0 4,995 185 1,715 0 0 0 4,615 0
As of May 31, 1995, no person is known to the Fund to own beneficially more than
five percent of the shares of any series.
ITEM 2. SELECTION OF INDEPENDENT AUDITORS
A majority of the members of the Board who are not "interested" persons of the
Fund has selected Ernst & Young LLP, independent auditors, to audit the books
and records of the Fund for the current fiscal year. This firm has served in
this capacity for the Fund since it was organized and has no direct or indirect
financial interest in the Fund except as independent auditors. The selection of
Ernst & Young LLP as independent auditors of the Fund is being submitted to the
shareholders for ratification. A representative of Ernst & Young LLP is expected
to be present at the Meeting and will be available to respond to any appropriate
questions raised at the Meeting and may make a statement.
BOARD OF TRUSTEES RECOMMENDATION
The Board recommends that shareholders vote FOR the ratification of the
selection of independent auditors.
ITEM 3. NEW INVESTMENT MANAGEMENT AGREEMENT
INTRODUCTION
Kemper Financial Services, Inc. ("KFS") is the investment adviser and manager
for the Fund. The indirect parent of KFS, which is Kemper Corporation
("Kemper"), has entered into an Agreement and Plan of Merger dated as of May 15,
1995 (the "Merger Agreement"), with Zurich Insurance Company ("Zurich"),
Insurance Partners, L.P. ("IP"), Insurance Partners Offshore (Bermuda), L.P.
("IP Bermuda" and, together with IP, "Insurance Partners") and ZIP Acquisition
Corp. ("ZIP"), whereby ZIP will be merged with and into Kemper
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and Kemper will continue as the surviving corporation (the "Kemper merger"). In
connection with the Kemper merger, Kemper has agreed to sell KFS to KFS
Acquisition Corp. ("New KFS"), a wholly-owned, indirect subsidiary of Zurich, by
merging KFS into New KFS, and with New KFS continuing as the surviving
corporation (the "KFS Sale"). Upon consummation of the KFS Sale, it is
anticipated that New KFS will change its name to "Kemper Financial Services,
Inc." The terms of the KFS Sale are set forth in a separate Agreement and Plan
of Merger among Kemper, KFS, KFC and New KFS dated May 15, 1995 (the "KFS Merger
Agreement"). It is currently contemplated that the KFS Sale will occur
immediately before or immediately after the Kemper merger, although it is
possible that the KFS Sale could be deferred until a later date. (The Kemper
merger and related KFS Sale are hereinafter referred to together as the
"Merger").
Consummation of the Merger would constitute an "assignment," as that term is
defined in the Investment Company Act of 1940 (the "1940 Act"), of the Fund's
current investment management agreement with KFS. As required by the 1940 Act,
the current investment management agreement provides for its automatic
termination in the event of its assignment. In anticipation of the Merger, a new
investment management agreement between the Fund and KFS or its successor
("management agreement") is being proposed for approval by shareholders of the
Fund. A copy of the form of the new management agreement is attached hereto as
Exhibit A. THE NEW MANAGEMENT AGREEMENT IS ON THE SAME TERMS AS THE CURRENT
MANAGEMENT AGREEMENT.
BOARD OF TRUSTEES RECOMMENDATION
The Board met on May 5, 1995, May 31, 1995 and June 15, 1995 to consider the
Merger and its anticipated effects upon KFS and the investment management and
other services provided to the Fund by KFS and its affiliates. On June 15, 1995,
the Board, including a majority of the trustees who are not parties to such
agreement or interested persons of any such party, voted to approve the new
management agreement and to recommend it to shareholders for their approval.
For information about the Board's deliberations and the reasons for its
recommendation, please see "Board of Trustees Evaluation" near the end of this
Item 3.
The Board recommends that shareholders vote FOR approval of the new management
agreement.
INVESTMENT MANAGEMENT AGREEMENT
The current and new management agreement (sometimes collectively referred to as
the "management agreement") each provides that the Fund's investment manager
will act as investment adviser, manage the Fund's investments, administer its
business affairs, furnish offices, necessary facilities and equipment, provide
clerical, bookkeeping and administrative services, provide shareholder and
information services and permit any of its officers or employees to serve
without compensation as trustees or officers of the Fund if duly elected to such
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positions. Under the management agreement, the Fund agrees to assume and pay the
charges and expenses of its operations including, by way of example, the
compensation of the trustees other than those affiliated with the investment
manager, charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, of any registrar of the Fund and the
custodian (including fees for safekeeping of securities), costs of calculating
net asset value, all costs of acquiring and disposing of portfolio securities,
interest, if any, on obligations incurred by the Fund, costs of share
certificates, membership dues in the Investment Company Institute or any similar
organization, reports and notices to shareholders, other like miscellaneous
expenses and all taxes and fees to federal, state or other governmental
agencies.
For the services and facilities furnished, the Fund pays KFS an investment
management fee, payable monthly, at an annual rate of .50 of 1% of the first
$215 million of average daily net assets of the Fund, .375 of 1% of the next
$335 million, .30 of 1% of the next $250 million and .25 of 1% of average daily
net assets thereafter. Exhibit C reflects the management fees paid by the Fund
to KFS for the fiscal year ended July 31, 1994.
The management agreement provides that the Fund's investment manager will
reimburse the Fund should the operating expenses of the Fund, including the
investment management fee, but excluding taxes, interest, extraordinary expenses
and brokerage commissions or transaction costs, exceed 1.5% of the first $30
million of average net assets and 1% of average net assets over $30 million on
an annual basis. The investment management fee and the expense limitation are
computed based on average daily net assets of all series of the Fund and are
allocated among the series based upon the relative net assets of each series.
The management agreement provides that the Fund's investment manager shall not
be liable for any error of judgment or of law, or for any loss suffered by the
Fund in connection with the matters to which the management agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Fund's investment manager in the performance of its
obligations and duties or by reason of its reckless disregard of its obligations
and duties under the management agreement.
The management agreement may be terminated for the Fund or series thereof
without penalty upon sixty (60) days written notice by either party, or by a
majority vote of the outstanding shares of the Fund or series thereof, and
automatically terminates in the event of its assignment.
The new management agreement will be dated as of the date of the consummation of
the Kemper merger. The Kemper merger is expected to occur in the fourth quarter
of 1995, but in no event later than February 28, 1996. The new management
agreement will continue in effect for an initial term ending on the date that
the current management agreement had previously been continued to prior to the
Kemper merger, and may continue thereafter from year to year if specifically
approved at least annually by vote of "a majority of the outstanding voting
securities" of such Fund, as defined under the 1940 Act, or by the Board, and,
in either event, the vote of a majority of the trustees who are not parties to
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the agreement or interested persons of any such party, cast in person at a
meeting called for such purpose.
KFS has acted as investment adviser and manager for each series since it
commenced public offering of its shares as shown below. Also shown is the date
of each current management agreement, the date when the current management
agreement was last approved by the trustees and the shareholders of each series,
the purpose of the last submission to shareholders of the current management
agreement and the date to which the current management agreement continues.
COMMENCEMENT APPROVAL OF CURRENT CURRENT
OF DATE OF AGREEMENT BY AGREEMENT
INVESTMENT CURRENT ------------------------------ CONTINUED BY
SERIES OPERATIONS AGREEMENT TRUSTEES SHAREHOLDERS (C)(D) TRUSTEES TO
- -------- ------------ --------- -------- ------------------- ------------
MMP..... 11/20/74 11/29/85 09/09/94 11/05/85 12/01/95
GSP..... 11/05/81(a) 11/14/86(b) 09/09/94 11/07/86 12/01/95
TEP..... 09/10/87 09/09/87(b) 09/09/94 06/21/88 12/01/95
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(a) As successor to Kemper Government Money Market Fund.
(b) Date the series became subject to the Agreement.
(c) The purpose of the last submission to shareholders was to continue the
current management agreement.
(d) On September 9, 1994, the Board approved a new investment management
agreement with KFS in anticipation of the termination of the current
agreement because of a proposed merger involving Kemper and Conseco, Inc.
(the "Conseco/Kemper Merger"). As with the Merger, consummation of the
Conseco/Kemper Merger would have constituted an "assignment" and, therefore,
a termination of the management agreement. In anticipation of the
Conseco/Kemper Merger and in order to assure that KFS could continue to
serve as investment manager to the Fund, a new agreement was approved by the
Board and submitted to shareholders for approval. By agreement of Kemper and
Conseco, Inc., the Conseco/Kemper Merger did not occur and, therefore, the
new agreement was not voted upon by shareholders.
INFORMATION CONCERNING ZURICH AND THE MERGER
The following information concerning Zurich and the Merger has been provided to
the Fund by Zurich.
Founded in 1872, Zurich is a multinational, public corporation organized under
the laws of Switzerland. Its home office is located at Mythenquai 2, 8002
Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of the Zurich Insurance
Group. Zurich and the Zurich Insurance Group provide an extensive range of
insurance products and services, while having branch offices and subsidiaries in
more than 40 countries throughout the world. Zurich Insurance Group is
particularly strong in the insurance of international companies and
organizations. Over the past few years, Zurich's global presence, particularly
in the United States, has been strengthened by means of selective acquisitions.
IP and IP Bermuda are parallel investment partnerships established to
participate jointly in acquisitions, recapitalizations, demutualizations and
other structured transactions in the insurance industry. (IP and IP Bermuda are
together referred to as "Insurance Partners").
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Insurance Partners was formed by Centre Reinsurance Holdings Limited (a
subsidiary of Zurich), Keystone, Inc. (formerly the Robert M. Bass Group, Inc.)
and The Chase Manhattan Corporation. IP is located at 201 Main Street, Fort
Worth, TX 76102 and IP Bermuda is located at 41 Cedar Avenue, Hamilton HM-EX,
Bermuda. ZIP is a newly-formed majority-owned subsidiary of Zurich. ZIP is
approximately 80% owned by Zurich Holding Company of America, Inc. (which, in
turn, is a wholly-owned subsidiary of Zurich) and 13.274% and 6.726% owned by IP
and IP Bermuda, respectively. ZIP is located at 1400 American Lane, Schaumburg,
IL 60196. New KFS is a newly-formed wholly-owned subsidiary of Zurich Holding
Company of America, Inc. Prior to consummation of the Merger, New KFS will be
registered as an investment adviser under the Investment Advisers Act of 1940.
New KFS, a Delaware corporation, and Zurich Holding Company of America, Inc., a
Delaware corporation, are both located at 1400 American Lane, Schaumburg, IL
60196.
Under the Merger Agreement, ZIP will merge with and into Kemper, with Kemper as
the surviving corporation. Each share of Kemper common stock will be converted
in the Kemper merger into the right to receive $49.50 cash, for an aggregate
acquisition price of approximately $2.1 billion. The closing of the Kemper
merger will take place on the third business day after all the closing
conditions are satisfied. It is expected that the Kemper merger will close in
the fourth quarter of 1995. However, ZIP may elect to delay the closing of the
Kemper merger to a later date (not later than January 4, 1996). It is currently
contemplated that contemporaneously with the Kemper merger closing (either
immediately before or immediately after) Kemper will sell KFS to Zurich by
merging KFS with and into New KFS. It is possible, however, that the Kemper
merger could be consummated, but that the KFS Sale could be deferred until a
later date (not later than January 4, 1996). Immediately prior to the KFS Sale,
KFS will cause those of its wholly-owned subsidiaries designated by Zurich to be
merged with and into, direct or indirect, wholly-owned subsidiaries of New KFS.
Upon consummation of the KFS Sale, it is anticipated that New KFS will change
its name to "Kemper Financial Services, Inc." The consideration for the KFS Sale
is $900 million although, at the election of Zurich, it may be increased to $1
billion.
It is further contemplated that prior to the Merger: (1) an employee stock
ownership plan will acquire from KFC approximately 55% of the voting common
stock of a new corporation ("Newco") formed to acquire Kemper's securities
brokerage segment, principally Kemper Securities, Inc. ("KSI"); (2) non-voting
common stock representing an approximately 1% equity interest in Newco will be
distributed to the management of KSI and; (3) the balance of Newco's voting
common stock will be distributed to the holders of Kemper common stock (the "KSI
ESOP Sale").
It is further contemplated that prior to the Merger: (1) KFS will attempt to
sell State Street Boston Corporation stock owned by KFS (estimated value of $97
million as of , 1995) and that the net cash proceeds from such
sale will be transferred from KFS to Kemper (if, upon consummation of the
Merger, KFS has not sold all such State Street Boston Corporation stock, KFS
will transfer
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any remaining such stock to Kemper); (2) KFS will transfer $50 million in cash
to Kemper; (3) KFS will transfer to Kemper the proceeds of its sale of
Supervised Services Company (approximately $23 million); and (4) at the written
request of ZIP, KFS or any of its subsidiaries will dividend or otherwise
transfer cash to Kemper in such amounts as ZIP may reasonably request.
To confirm and clarify certain contractual relationships between Kemper and
Lumbermens Mutual Casualty Company ("Lumbermens") prior to, as a result of and
following the Merger, Lumbermens, Zurich, Insurance Partners, ZIP, Kemper and
KFS entered into a letter agreement dated May 15, 1995 (the "Lumbermens
Agreement"). The Lumbermens Agreement, among other things, (1) permits the
continued use of the "Kemper" name by Kemper and KFS (or its successors) and (2)
obligates New KFS to reimburse Lumbermens for certain amounts that may be due to
Lumbermens by Kemper, if Kemper has not paid such amounts. As of March 31, 1995,
the total potential liability was $35.2 million.
The Lumbermens Agreement provides, to the extent permitted by law, that
Lumbermens intends to continue to engage KFS (or its successor), or its
subsidiaries, for at least three years to provide investment management services
for not less than 80% of the investment assets of Lumbermens (excluding benefit
plan assets held in trust) managed by KFS or its subsidiaries as of May 15,
1995. In connection therewith, the Lumbermens Agreement permits Lumbermens, and
Lumbermens intends, contemporaneously with the KFS Sale to invest in New KFS an
aggregate amount of up to $100 million or such lesser amount as is necessary to
purchase (1) either 9.9% of the shares of common stock of New KFS or an amount
of convertible preferred stock of New KFS that is convertible into 9.9% of the
shares of New KFS and (2) pro rata with Zurich, all other equity and debt
securities purchased from New KFS by Zurich. In the event of such investment,
Lumbermens will receive representation on the Board of Directors of New KFS that
is proportionate to Lumbermens' equity interest in New KFS; but in any event, at
least one individual designated by Lumbermens will be elected to the Board of
Directors of New KFS. It is currently contemplated that Lumbermens would
designate Mr. David B. Mathis for election to the Board of Directors of New KFS
(see "Other Information -- KFS"). The address of Lumbermens is: One Kemper
Drive, Long Grove, Illinois 60049. If the percentage of Lumbermens' investment
assets managed by New KFS drops below 50% of Lumbermens' investment assets
(excluding benefit plan assets held in trust), then Zurich or New KFS may
purchase Lumbermens investment in New KFS at fair market value. On the seventh
anniversary of the closing of the KFS Sale, Lumbermens will have the right to
demand that all its shares of New KFS be registered under the Securities Act of
1933.
Zurich has informed the Fund that as of May 31, 1995, no stockholder of Zurich,
either individually or as a "group" (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended), is known to beneficially own more
than 10% of the outstanding shares of Zurich's voting securities. KFS informed
the Fund that, as of May 31, 1995, KFS shared power to vote and dispose of
shares of Zurich (approximately % of the shares outstanding), which
were held by various non-investment company clients of KFS.
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The common stockholders of Kemper will be voting on the Kemper merger. The
Merger is subject to various conditions such as governmental and insurance
regulatory approvals and filings and consummation of the KSI ESOP Sale. Neither
the Kemper merger nor the KFS Sale is subject to financing, although each may
involve financing. Zurich has guaranteed the obligations of ZIP and Insurance
Partners to consummate the Kemper merger and has guaranteed the obligations of
New KFS to consummate the KFS Sale.
It is a condition to the closing of the Merger that all directors and officers
of Kemper and its subsidiaries (including KFS), whose resignations have been
requested by ZIP, not less than ten days prior to the closing, shall have
resigned or been removed from office, effective as of the closing. No such
resignations have been requested nor are currently contemplated for KFS and its
subsidiaries.
The Merger Agreement also provides as a condition to the closing of the Merger
that the shareholders of registered investment companies for which Kemper or any
subsidiary acts as investment adviser or sub-adviser (the "KFS Advised Funds")
representing at least 90% of the total net assets of the KFS Advised Funds as of
April 30, 1995 shall have approved the new management agreements (the "90%
condition"). At that date, net assets of the KFS Advised Funds totalled
approximately $ billion. If, for example, a "majority" (as defined
under "Miscellaneous") of the shares of each of enough KFS Advised Funds to
total at least $ billion (90% of $ billion) were voted to
approve new management agreements, then the 90% condition would be satisfied. If
the shareholders of the Fund do not approve the new management agreement,
Kemper, Zurich and Insurance Partners nevertheless intend to proceed with the
Merger (assuming all conditions precedent have been satisfied or waived,
including the 90% condition). In that event, the Board would take such action as
it deemed to be in the best interests of the shareholders of the Fund,
including, if necessary, seeking exemptive relief from the SEC so that KFS (or
its successor) could provide investment management services to the Fund on an
interim basis. If the Merger is not consummated for any reason, then the current
management agreement with the Fund will continue.
BOARD OF TRUSTEES EVALUATION
On April 10, 1995, the Board was informed that Kemper had entered into an
agreement in principle with an investor group led by Zurich pursuant to which
Kemper would be acquired by the investor group in a merger transaction and KFS
would be sold. Thereafter, the Board was given Zurich financial reports and
other information regarding Zurich. In addition, counsel to the Fund and the
independent trustees prepared and distributed an analysis of the Board's
fiduciary obligations. At a special meeting on May 5, 1995, the trustees
discussed the initial information provided about Zurich and reviewed their
fiduciary obligations. Zurich senior management personnel, who were present by
invitation, presented a review of matters including Zurich's history, strategy
and general plans. There was extended discussion of, and questioning about,
Zurich's plans for KFS and the Fund, some of which were to be addressed in
definitive merger documents (which had not yet been executed). The Board agreed
at that time to
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hold another special meeting for further consideration of the Merger and its
effect on the Fund. Prior to that meeting, and from time to time thereafter, the
Board received a variety of materials concerning Zurich and the Merger. The
definitive merger documents were signed on May 15, 1995 and the special Board
meeting was held on May 31, 1995. There was further discussion of, and
questioning about, the terms of the Merger and Zurich's plans for New KFS and
the Fund, including the financial aspects of the Merger and proforma financial
statements of New KFS. As a result of their investigation and consideration of
the Merger and the new management agreement, at its meeting on June 15, 1995,
the Board voted to approve the new management agreement and to recommend it to
the shareholders of the Fund for their approval.
During its deliberations, the Board used outside assistance in its analysis of
financial and other aspects of the Merger to help evaluate the potential effects
upon KFS and the Fund. Throughout the review process the independent trustees of
the Board had the assistance of legal counsel.
The Board obtained from KFS and Zurich information regarding the respective
organizations, the Merger, and the future plans of the parties. Included in the
information furnished to and discussed with the Board were financial statements
and other representations of financial condition of Zurich and certain of its
subsidiaries, independent reports and analyses regarding Zurich and pro forma
financial statements of New KFS giving effect to the Merger. The New KFS pro
forma financial statements reflected anticipated borrowings by New KFS of $650
million, the sale of State Street Boston Corporation stock holdings and transfer
of the proceeds thereof, the $50 million dividend to Kemper and the sale of
Supervised Services Company and transfer of the proceeds thereof.
In connection with their deliberations, the Board obtained certain assurances
from Zurich, including the following:
- - Zurich looks upon New KFS as a core business in a core strategic market and
expects it to be an important part of Zurich's global asset management
strategy. With that focus, Zurich will devote to New KFS and its affairs all
attention and resources that are necessary to provide for the Fund top quality
investment management, shareholder, administrative and product distribution
services.
- - The Merger will not result in any change in the Fund's investment objectives
or policies.
- - The Merger is not expected to result in any adverse change in the investment
management or operations of the Fund, or the investment personnel managing the
Fund; Zurich neither plans nor proposes to make any material change in the
composition of senior management or personnel of KFS, except to fill certain
open positions; and Zurich neither plans nor proposes to make any adverse
change in the manner in which investment advisory services are rendered to the
Fund.
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- - Zurich is committed to the continuance, without interruption, of services of
the type and quality currently provided by KFS and its subsidiaries, or
superior thereto.
- - Zurich plans to maintain or enhance the KFS facilities and organization.
- - The KFS senior management and the Board will be involved in decisions
materially affecting the KFS organization as it relates to the Fund.
- - In order to retain and attract key personnel, Zurich intends for New KFS to
maintain overall compensation and performance incentive policies and practices
at market levels or better.
Zurich, Kemper and KFS assured the Board that they intend to comply with Section
15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an
investment adviser to an investment company or any of its affiliated persons to
receive any amount or benefit in connection with a change in control of the
investment adviser so long as two conditions are met. First, for a period of
three years after the transaction, at least 75% of the board members of the
investment company must not be interested persons of such investment adviser.
The Board presently consists of seven trustees, one of whom, Mr. Stephen B.
Timbers, is an interested person of KFS. As proposed (See Item 1 -- "Election of
Board of Trustees"), the Board would consist of nine trustees, two of whom,
Messrs. David B. Mathis and Stephen B. Timbers, are interested persons of KFS.
Accordingly, the composition of the Board, in either event, would be in
compliance with this provision of Section 15(f)*. Second, an "unfair burden"
must not be imposed upon the investment company as a result of such transaction
or any express or implied terms, conditions or understandings applicable
thereto. The term "unfair burden" is defined in Section 15(f) to include any
arrangement during the two-year period after the transaction whereby the
investment adviser, or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its shareholders (other than fees for bona fide investment
advisory or other services) or from any person in connection with the purchase
or sale of securities or other property to, from or on behalf of the investment
company (other than bona fide ordinary compensation as principal underwriter for
such investment company). Zurich, Kemper and KFS are not aware of any express or
implied term, condition, arrangement or understanding that would impose an
"unfair burden" on the Fund as a result of the Merger. Zurich, Kemper and KFS
have agreed that they, and their affiliates, will take no action that would have
the effect of imposing an "unfair burden" on the Fund as a result of the Merger.
Zurich and Kemper have undertaken to pay the costs of preparing and distributing
proxy materials to and of holding the meeting of the Fund's shareholders as well
as other fees and expenses in connection with the Merger, including the fees and
expenses of legal counsel to the Fund and the
- ---------------
*After consummation of the Merger and subject to compliance with Section 15(f),
it is expected that a senior executive of Zurich will be proposed to be
nominated to the Board.
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independent trustees and for other outside assistance to help analyze the Merger
from a financial perspective.
In connection with the Board's approval of the new management agreement, the
Board considered that the terms of the Merger Agreement and the KFS Merger
Agreement do not require any change in the Fund's investment objective or
policies, the investment management or operation of the Fund, or the investment
personnel managing the Fund. If, after the Merger, changes in New KFS are
proposed that might materially affect its services to the Fund, the Board will
consider the effect of those changes and take such action as it deems advisable
under the circumstances.
In evaluating the new management agreement, the Board took into account that the
new management agreement for the Fund, including the terms relating to the
services to be provided and the fees and expenses payable by the Fund, is on the
same terms as the current management agreement. The Board noted that, in
previously approving the continuation of the current management agreement, the
Board had considered a number of factors, including the nature and quality of
services provided by KFS; investment performance, both of the Fund itself and
relative to that of competitive investment companies; investment management fees
and expense ratios of the Fund and competitive investment companies; KFS
profitability from managing the Fund; fall-out benefits to KFS from its
relationship to the Fund, including revenues derived from services provided to
the Fund by affiliates of KFS; and the potential benefits to KFS and to the Fund
and their shareholders of receiving research services from broker/dealer firms
in connection with the allocation of portfolio transactions to such firms.
The Board discussed the Merger, the financial condition of Zurich and the pro
forma financial statements of New KFS with the senior management of KFS and
Zurich and among themselves. Zurich senior management personnel and
representatives advised the Board that Zurich expects the operating cash flows
from New KFS to be more than sufficient to service debt and pay for operating
and other expenses. The Board also considered that Zurich is a large, well-
established company with substantial resources and, as noted above, has
undertaken to devote such resources as are necessary to provide the Fund with
top quality services.
As a result of its investigation and consideration of the Merger and the new
management agreement, at its meeting on June 15, 1995, the Board voted to
approve the new management agreement and to recommend it to the shareholders of
the Fund for their approval.
The Board recommends that shareholders vote FOR approval of the new management
agreement.
OTHER INFORMATION
KFS
KFS is a wholly owned subsidiary of Kemper Financial Companies, Inc., ("KFC"), a
financial services holding company. Kemper, an insurance and
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financial services holding company, owns more than 99% of the voting securities
of KFC. The address of KFS is 120 South LaSalle Street, Chicago, Illinois 60603.
The address of KFC and Kemper is One Kemper Drive, Long Grove, Illinois 60049.
Since June 30, 1993, no trustee or nominee for election as a trustee of the Fund
purchased or sold securities, or as of May 31, 1995, beneficially owned in the
aggregate, more than 1% of the outstanding securities of KFC, Kemper or Zurich.
As of May 31, 1995, none of the non-interested trustees, or non-interested
nominees, beneficially owned any securities of KFC, Kemper or Zurich.
The investment companies to which KFS renders investment management services,
and the related management fees, are identified in Exhibit B.
The names, addresses and principal occupations of the principal executive
officer and the directors of KFS are as follows:
NAME AND ADDRESS PRINCIPAL OCCUPATION
- --------------------------------- ----------------------------------
James R. Boris, Director Chairman and Chief Executive
77 West Wacker Drive Officer, Kemper Securities, Inc.
Chicago, Illinois 60601 and Executive Vice President,
Kemper
David B. Mathis, Director Chairman and Chief Executive
One Kemper Drive Officer, Kemper
Long Grove, Illinois 60049
John E. Neal, Director President and Chief Operating
120 South LaSalle Street Officer, KFS
Chicago, Illinois 60603
John E. Peters, Director Senior Executive Vice President,
120 South LaSalle Street KFS
Chicago, Illinois 60603
Stephen B. Timbers, Chairman, President and Chief Operating
Chief Executive Officer and Officer, Kemper; Chairman, Chief
Director Executive Officer and Chief
120 South LaSalle Street Investment Officer, KFS
Chicago, Illinois 60603
Upon consummation of the KFS Sale, it is expected that Messrs, Mathis, Neal,
Peters and Timbers and one or more senior executive officers of Zurich will
become directors of New KFS.
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. Investors Fiduciary Trust Company
("IFTC"), 127 West 10th Street, Kansas City, Missouri 64105, as custodian, and
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02210, as sub-custodian, have custody of all securities and cash of the Fund.
They attend to the collection of principal and income, and payment for and
collection of proceeds of securities bought and sold by the Fund. IFTC is also
the Fund's transfer agent and dividend-paying agent. Prior to February 1, 1995,
IFTC was owned equally by KFS and DST Systems, Inc., a company that is not
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affiliated with KFS. On , 1995, KFS and DST Systems, Inc. sold IFTC to
State Street Boston Corporation. Pursuant to a services agreement with IFTC,
Kemper Service Company ("KSVC"), an affiliate of KFS, serves as "Shareholder
Service Agent."
IFTC receives an annual fee as custodian for the Fund, payable monthly, on a
graduated basis ranging from $.40 to $0.05 per $1,000 of average monthly net
assets of the Fund plus certain transaction charges and out-of-pocket expense
reimbursement. (The effective custodian fee rate is based upon the average net
assets of all Kemper Mutual Funds of the money market type for which IFTC serves
as custodian.) IFTC receives as transfer agent, and pays to KSVC, annual account
fees of a maximum of $8 per account plus account set up, maintenance and
transaction charges and an out-of-pocket expense reimbursement.
For the fiscal year ended July 31, 1994, the Fund incurred custodian and
transfer agent fees to IFTC and IFTC remitted shareholder service fees to KSVC
as set forth in Exhibit C. It is anticipated that KSVC (or its successor) will
continue to provide transfer agent services after consummation of the Merger.
UNDERWRITER. KDI is the principal underwriter for the Fund and acts as agent of
the Fund in the sale of its shares. The Fund pays the cost for the prospectus
and shareholder reports to be set in type and printed for existing shareholders,
and KDI pays for the printing and distribution of copies thereof used in
connection with the offering of shares to prospective investors. KDI also pays
for supplementary sales literature and advertising costs. Before February 1,
1995, KFS served as the Fund's principal underwriter. It is expected that KDI
(or its successor) will continue to serve as the Fund's underwriter after
consummation of the Merger.
ALLOCATION OF PORTFOLIO TRANSACTIONS. KFS is the investment manager for the Fund
and KFS and its affiliates also furnish investment management services to other
clients including the KFS Advised Funds, Kemper and the Kemper insurance
companies. KFS is the sole shareholder of Kemper Asset Management Company and
Kemper Investment Management Company Limited. These three entities share some
common research and trading facilities. At times investment decisions may be
made to purchase or sell the same investment securities for the Fund and for one
or more of the other clients advised by KFS. When two or more of such clients
are simultaneously engaged in the purchase or sale of the same security, the
transactions are allocated as to amount and price in a manner considered
equitable to each and so that each receives, to the extent practicable, the
average price of such transactions.
The above mentioned factors may have a detrimental effect on the quantities or
prices of securities available to the Fund. On the other hand, the ability of
the Fund to participate in volume transactions may produce better execution for
the Fund in some cases. The Board believes that the benefits of KFS'
organization outweigh any limitations that may arise from simultaneous
transactions.
KFS, in effecting purchases and sales of portfolio securities for the account of
the Fund, implements the Fund's policy of seeking best execution of orders,
which includes best net prices. Consistent with this policy, orders for
portfolio transactions are placed with broker-dealer firms giving consideration
to the quality,
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quantity and nature of each firm's professional services which include
execution, clearance procedures, wire service quotations and statistical and
other research information provided to the Fund and KFS. Any research benefits
derived are available for all clients, including clients of affiliated
companies. Since statistical and other research information is only
supplementary to research efforts of KFS and still must be analyzed and reviewed
by its staff, the receipt of research information is not expected to materially
reduce its expenses. In selecting among firms believed to meet the criteria for
handling a particular transaction, KFS may give consideration to those firms
that provide market, statistical and other research information to the Fund and
KFS. KFS is not authorized to pay higher commissions or in the case of principal
trades, higher prices, to firms that provide such services. The Fund may
purchase instruments issued by banks that are receiving service payments or
commissions; however, no preferences will be given in making such portfolio
purchases. Money market instruments are normally purchased in principal
transactions directly from the issuer or from an underwriter or market maker.
There are normally no brokerage commissions paid for such purchases. Purchases
from underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers include the
spread between the bid and ask prices.
The Fund did not pay any brokerage commissions during its fiscal year ended July
31, 1994.
MISCELLANEOUS
GENERAL
The cost of preparing, printing and mailing the enclosed proxy, accompanying
notice and proxy statement and all other costs in connection with solicitation
of proxies will be paid by Kemper and Zurich, including any additional
solicitation made by letter, telephone or telegraph. In addition to solicitation
by mail, certain officers and representatives of the Fund, officers and
employees of KFS and certain financial services firms and their representatives,
who will receive no extra compensation for their services, may solicit proxies
by telephone, telegram or personally. In addition, Kemper and Zurich may retain
a firm to solicit proxies on behalf of the Board and the boards of the other KFS
Advised Funds, the fee for which will be borne by Kemper and Zurich. A COPY OF
YOUR FUND'S ANNUAL REPORT AND MORE RECENT SEMI-ANNUAL REPORT ARE AVAILABLE
WITHOUT CHARGE UPON REQUEST BY WRITING TO THE FUND, 120 SOUTH LASALLE STREET,
CHICAGO, ILLINOIS 60603 OR BY CALLING 1-800-621-1048.
PROPOSALS OF SHAREHOLDERS
As a Massachusetts business trust, the Fund is not required to hold annual
shareholder meetings, but will hold special meetings as required or deemed
desirable. Since the Fund does not hold regular meetings of shareholders, the
anticipated date of the next special shareholders meeting cannot be provided.
Any shareholder proposal that may properly be included in the proxy solicitation
material for a special shareholder meeting must be received by the Fund no later
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than four months prior to the date when proxy statements are mailed to
shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any matters that will be presented for action at the
Meeting other than the matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in the accompanying form will
confer upon the person or persons entitled to vote the shares represented by
such proxy the discretionary authority to vote the shares as to any such other
matters in accordance with their best judgment in the interest of the Fund.
VOTING, QUORUM
Each share of the Fund is entitled to one vote on each matter submitted to a
vote of the shareholders of the Fund at the Meeting; no shares have cumulative
voting rights.
Each valid proxy will be voted in accordance with the instructions on the proxy
and as the persons named in the proxy determine on such other business as may
come before the Meeting. If no instructions are given, the proxy will be voted
FOR the election of the persons who have been nominated as trustees for the Fund
and FOR Items 2 and 3. Shareholders who execute proxies may revoke them at any
time before they are voted, either by writing to the Fund or in person at the
time of the Meeting. Proxies given by telephone or electronically transmitted
instruments may be counted if obtained pursuant to procedures designed to verify
that such instructions have been authorized.
Item 1 (election of trustees) requires a plurality vote of the shares of the
Fund. This means that the nine nominees receiving the largest number of votes
will be elected. Item 2 (ratification of selection of independent auditors)
requires the affirmative vote of a majority of the shares voting on the matter.
Item 3 (approval of new investment management agreement) requires the
affirmative vote of a "majority of the outstanding voting securities" of the
Fund. The term "majority of the outstanding voting securities" as defined in the
1940 Act means: the affirmative vote of the lesser of (1) 67% of the voting
securities of the Fund present at the meeting if more than 50% of the
outstanding shares of the Fund are present in person or by proxy or (2) more
than 50% of the outstanding shares of the Fund.
On Items 1 and 2, the Fund will vote in the aggregate and not by series. On Item
3 each series will vote separately.
The Declaration of Trust of the Fund provides that the presence at a shareholder
meeting in person or by proxy of at least 30% of the shares of the Fund
constitutes a quorum for the Fund. Thus, the meeting for the Fund could not take
place on its scheduled date if less than 30% of the shares of the Fund were
represented. If, by the time scheduled for the meeting, a quorum of shareholders
of the Fund is not present or if a quorum is present but sufficient votes in
favor of any of the items are not received, the persons named as proxies may
propose one
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or more adjournments of the meeting for the Fund to permit further soliciting of
proxies from its shareholders. Any such adjournment will require the affirmative
vote of a majority of the shares of the Fund as to which the meeting is being
adjourned present (in person or by proxy) at the session of the meeting to be
adjourned. The persons named as proxies will vote in favor of any such
adjournment if they determine that such adjournment and additional solicitation
are reasonable and in the interest of the Fund's shareholders.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e., shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for purposes of
convening the Meeting. On Item 1, abstentions and broker non-votes will have no
effect; the nine nominees receiving the largest number of votes will be elected.
On Item 2, abstentions and broker non-votes will not be counted as "votes cast"
and will have no effect on the result of the vote. On Item 3 abstentions and
broker non-votes will be considered to be both present at the Meeting and issued
and outstanding and, as a result, will have the effect of being counted as voted
against the Item.
The Board of Trustees of the Fund recommends an affirmative vote on all items.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
Philip J. Collora
Secretary
20
25
EXHIBIT A
FORM OF
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this day of , 199 by and between KEMPER MONEY MARKET
FUND, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, the shares of beneficial
interest ("Shares") of which are registered under the Securities Act of 1933;
and
WHEREAS, the Fund is authorized to issue Shares in separate series with each
such series representing the interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund wants to retain the Adviser under this Agreement to render
investment advisory and management services to the portfolios of the Fund known
as the Money Market Portfolio, Government Securities Portfolio and Tax-Exempt
Portfolio (the "Initial Portfolios"), together with any other Fund portfolios
which may be established later and served by the Adviser hereunder, being herein
referred to collectively as the "Portfolios" and individually referred to as a
"Portfolio"; and
WHEREAS, the Adviser is willing to render such investment advisory and
management services for the Initial Portfolios;
NOW THEREFORE, in consideration of the mutual covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for the
Initial Portfolios or other Portfolios hereunder and to manage the investment
and reinvestment of the assets of such Portfolios in accordance with applicable
investment objectives and policies and limitations, and to administer their
affairs to the extent requested by and subject to the supervision of the Board
of Trustees of the Fund for the period and upon the terms herein set forth. The
investment of funds shall be subject to all applicable restrictions of the
Agreement and Declaration of Trust and By-laws of the Fund as may from time to
time be in force.
The Adviser accepts such employment and agrees during such period to render such
services, to furnish office facilities and equipment, to provide clerical,
bookkeeping and administrative services for the Fund, to provide shareholder and
information services, to permit any of its officers or employees to serve
without compensation as trustees or officers of the Fund if elected to such
positions and to assume the obligations herein set forth for the compensation
herein provided. The Adviser shall for all purposes herein provided be deemed to
be an independent contractor, and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Fund in any way
or
A-1
26
otherwise be deemed an agent of the Fund. It is understood and agreed that the
Adviser, by separate agreement with the Fund, may also act as underwriter for
the Fund.
2. In the event that the Fund establishes one or more portfolios other than the
Initial Portfolios with respect to which it desires to retain the Adviser to
render investment advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render such services it
shall notify the Fund in writing whereupon such portfolio or portfolios shall
become a Portfolio or Portfolios hereunder.
3. For the services and facilities described in Section 1, the Fund will pay to
the Adviser at the end of each calendar month, an investment management fee
computed by applying the following annual rate to the combined average daily net
assets of the Portfolios:
ANNUAL RATE AVERAGE DAILY NET ASSETS
------------------------ ---------------------------
.50 of 1%.............. on the first $215 million
.375 of 1%.............. on the next $335 million
.30 of 1%.............. on the next $250 million
.25 of 19%............. on average net assets
over $800 million
The fee as computed above shall be allocated to each Portfolio based upon the
relative average daily net assets of each Portfolio managed by the Adviser.
If expenses borne by the Portfolios which the Adviser manages in any fiscal year
(including the Adviser's fee, but excluding interest, taxes, fees incurred in
acquiring and disposing of portfolio securities and, to the extent permitted,
extraordinary expenses), exceed 1.5% of average daily net assets of the
Portfolios up to $30 million and 1% of average daily net assets of the
Portfolios over $30 million, the Adviser will reduce its fee or reimburse the
Fund for any excess. The expense limitation guarantee shall be allocated to each
Portfolio upon a fee reduction or reimbursement based upon the relative average
daily net assets of each Portfolio. If for any month the expenses of the
Portfolios properly chargeable to the income account shall exceed 1/12 of the
percentage of daily net assets allowable as expenses, the payment to the Adviser
for that month shall be reduced, and, if necessary, the Adviser shall make a
refund payment to the Fund so that the total net expense will not exceed such
percentage. As of the end of the Fund's fiscal year, however, the foregoing
computations and payments shall be readjusted so that the aggregate compensation
payable to the Adviser for the year is equal to the percentage set forth herein
of the average daily net assets as determined as described herein throughout the
fiscal year, diminished to the extent necessary so that the total of said
expense item shall not exceed the expense limitation. The aggregate of
repayments, if any, by the Adviser to the Fund for the year shall be the amount
necessary to limit the said net expense to said percentage.
The net asset value of each Portfolio shall be calculated in accordance with the
provisions of the Fund's prospectus or at such other time or times as the
trustees
A-2
27
may determine in accordance with the provisions of the Investment Company Act of
1940. On each day when net asset value is not calculated, the net asset value of
a Share of a Portfolio shall be deemed to be the net asset value of such a Share
as of the close of business on the last day on which such calculation was made
for the purpose of the foregoing computations.
For the month and year in which this Agreement becomes effective or terminates,
there shall be an appropriate proration on the basis of the number of days that
the Agreement is in effect during the month and year, respectively. The services
of the Adviser to the Fund under this Agreement are not to be deemed exclusive,
and the Adviser shall be free to render similar services or other services to
others so long as its services hereunder are not impaired thereby.
4. In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for any other
charges of the custodian and for calculating the net asset value of the Fund as
provided in the Prospectus of the Fund. The Adviser shall not be required to pay
and the Fund shall assume and pay the charges and expenses of its operations,
including compensation of the trustees (other than those affiliated with the
Adviser), charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent or any registrar of the Fund, costs of
acquiring and disposing of portfolio securities, interest, if any, on
obligations incurred by the Fund, costs of share certificates and of reports,
membership dues in the Investment Company Institute or any similar organization,
costs of reports and notices to shareholders, other like miscellaneous expenses
and all taxes and fees payable to federal, state or other governmental agencies
on account of the registration of securities issued by the Fund, filing of
corporate documents or otherwise. The Fund shall not pay or incur any obligation
for any management or administrative expenses for which the Fund intends to seek
reimbursement from the Adviser as herein provided without first obtaining the
written approval of the Adviser. The Adviser shall arrange, if desired by the
Fund, for officers or employees of the Adviser to serve, without compensation
from the Fund, as trustees, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law.
5. Subject to applicable statutes and regulations, it is understood that
trustees, officers, or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund otherwise than as a trustee, officer or agent.
6. The Adviser shall not be liable for any error of judgment or of law, or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except loss resulting from willful misfeasance bad faith or
gross negligence on the part of the Adviser in the performance of its
obligations and duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
A-3
28
7. This Agreement shall become effective on the date hereof and shall remain in
full force until , 199 , unless sooner terminated as hereinafter
provided. This Agreement shall continue in force from year to year thereafter,
but only as long as such continuance is specifically approved at least annually
for each Portfolio in the manner required by the Investment Company Act of 1940;
provided, however, that if the continuation of this Agreement is not approved
for a Portfolio, the Adviser may continue to serve in such capacity for such
Portfolio in the manner and to the extent permitted by the Investment Company
Act of 1940 and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment, and
may be terminated at any time without the payment of any penalty with respect to
any or all Portfolios by the Fund or by the Adviser on sixty (60) days written
notice to the other party. The Fund may effect termination with respect to any
Portfolio by action of the Board of Trustees or by vote of a majority of the
outstanding shares of such Portfolio, accompanied by appropriate notice.
This Agreement may be terminated with respect to any Portfolio at any time
without the payment of any penalty by the Board of Trustees or by vote of a
majority of the outstanding Shares of such Portfolio in the event that it shall
have been established by a court of competent jurisdiction that the Adviser or
any officer or director of the Adviser has taken any action which results in a
breach of the covenants of the Adviser set forth herein.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
8. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
9. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
10. All parties hereto are expressly put on notice of the Kemper Money Market
Fund Agreement and Declaration of Trust and all amendments thereto, all of which
are on file with the Secretary of The Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund. With respect to any claim by Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund arising hereunder)
allocated to a particular Portfolio, whether in accordance with the express
terms hereof or otherwise, the Adviser shall have recourse solely against the
assets of that Portfolio to satisfy such claim and shall have no recourse
against the assets of any other Portfolio for such purpose.
A-4
29
11. This Agreement shall be construed in accordance with applicable federal law
and (except as to Section 10 hereof which shall be construed in accordance with
the laws of the Commonwealth of Massachusetts) the laws of the State of
Illinois.
12. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to be
executed as of the day and year first above written.
KEMPER MONEY MARKET FUND
By:
----------------------------
Title:
-------------------------
ATTEST:
- ------------------------------
Title:
------------------------
KEMPER FINANCIAL SERVICES, INC.
By:
----------------------------
Title:
-------------------------
ATTEST:
- ------------------------------
Title:
------------------------
A-5
30
EXHIBIT B
FUNDS AND MANAGEMENT FEES
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ------------------ -----------
Kemper Technology Fund............................ $ 786 A
Kemper Total Return Fund.......................... 2,842 A
Kemper Growth Fund................................ 2,269 A
Kemper Small Capitalization Equity Fund........... 655 F
Kemper Income and Capital Preservation Fund....... 548 B
Kemper National Tax-Free Income Series
1. Kemper Municipal Bond Fund................... 3,634 C
2. Kemper Intermediate Municipal Bond Fund...... 13 B
Kemper Diversified Income Fund.................... 768 A
Kemper High Yield Fund............................ 3,517 A
Kemper U.S. Government Securities Fund............ 4,889 C
Kemper International Fund......................... 369 D
Kemper International Bond Fund.................... 7 D
Kemper State Tax-Free Income Series
1. Kemper California Tax-Free Income Fund....... 1,139 B
2. Kemper New York Tax-Free Income Fund......... 329 B
3. Kemper Florida Tax-Free Income Fund.......... 123 B
4. Kemper Texas Tax-Free Income Fund............ 16 B
5. Kemper Ohio Tax-Free Income Fund............. 31 B
6. Kemper Michigan Tax-Free Income Fund......... 2 B
7. Kemper New Jersey Tax-Free Income Fund....... 4 B
8. Kemper Pennsylvania Tax-Free Income Fund..... 2 B
Kemper Portfolios
1. Kemper Cash Reserves Fund.................... 214 E
2. Kemper U.S. Mortgage Fund.................... 3,652 B
3. Kemper Short-Intermediate Government Fund.... 250 B
Kemper Adjustable Rate U.S. Government Fund....... 150 B
Kemper Blue Chip Fund............................. 155 A
Kemper Global Income Fund......................... 172 D
Kemper Money Market Fund.......................... G
1. Money Market Portfolio....................... 3,998
2. Government Securities Portfolio.............. 586
3. Tax-Exempt Portfolio......................... 738
Cash Equivalent Fund
1. Money Market Portfolio....................... 3,451 H
2. Government Securities Portfolio.............. 1,687 H
Cash Equivalent Fund
1. Tax-Exempt Portfolio......................... 1,020 H
Tax-Exempt California Money Market Fund........... 94 H
Cash Account Trust................................ H
1. Money Market Portfolio....................... 397
2. Government Securities Portfolio.............. 150
3. Tax-Exempt Portfolio......................... 70
Investors Cash Trust
1. Government Securities Portfolio.............. 197 0.15%
B-1
31
TOTAL NET ASSETS* MANAGEMENT
FUND (MILLIONS) FEE**
---- ------------------ -----------
2. Treasury Portfolio........................... 67 0.15%
Tax-Exempt New York Money Market Fund............. 15 H
Kemper High Income Trust.......................... 200 0.85%
Kemper Intermediate Government Trust.............. 278 0.80%
Kemper Municipal Income Trust..................... 672 0.55%
Kemper Multi-Market Income Trust.................. 215 0.85%
Kemper Strategic Municipal Income Trust........... 126 0.60%
The Growth Fund of Spain, Inc. ................... 221 1.00%
Kemper Strategic Income Fund...................... 45 0.85%
Kemper Investors Fund
1. Money Market Portfolio....................... 65 0.50%
2. Total Return Portfolio....................... 626 0.55%
3. High Yield Portfolio......................... 265 0.60%
4. Equity Portfolio............................. 336 0.60%
5. Government Securities Portfolio.............. 96 0.55%
6. International Portfolio...................... 125 0.75%
7. Small Capitalization Equity Portfolio........ 18 0.65%
Kemper Target Equity Fund
1. Kemper Retirement Fund Series I.............. 105 0.50%
2. Kemper Retirement Fund Series II ............ 172 0.50%
3. Kemper Retirement Fund Series III ........... 123 0.50%
4. Kemper Retirement Fund Series IV ............ 151 0.50%
5. Kemper Retirement Fund Series V.............. 134 0.50%
6. Kemper Retirement Fund Series VI............. 3 0.50%
7. Kemper Worldwide 2004 Fund................... 30 0.60%
Sterling Funds
1. Equity Fund.................................. 0 I
2. Total Return Fund............................ 0 I
3. U.S. Government Securities Fund.............. 0 J
4. Municipal Bond Fund.......................... 0 J
5. Government Money Market Fund................. 0 K
Amway Mutual Fund, Inc.***........................ 63 0.45%
- ---------------
* Total Net Assets, in millions, as of May 31, 1995.
** Scheduled annual management fees payable to KFS as a percentage of average
daily net assets.
*** KFS serves as sub-adviser.
(A) .58 of 1% of the first $250 million, .55 of 1% of the next $750 million, .53
of 1% of the next $1.5 billion, .51 of 1% of the next $2.5 billion, .48 of
1% of the next $2.5 billion, .46 of 1% of the next $2.5 billion, .44 of 1%
of the next $2.5 billion and .42 of 1% thereafter.
(B) .55 of 1% of the first $250 million, .52 of 1% of the next $750 million, .50
of 1% of the next $1.5 billion, .48 of 1% of the next $2.5 billion, .45 of
1% of the next $2.5 billion, .43 of 1% of the next $2.5 billion, .41 of 1%
of the next $2.5 billion and .40 of 1% thereafter. KFS is currently waiving
its management fee for Kemper Intermediate Municipal Bond Fund, Kemper
B-2
32
Michigan Tax-Free Income Fund, Kemper New Jersey Tax-Free Income Fund and
Kemper Pennsylvania Tax-Free Income Fund.
(C) .45 of 1% of the first $250 million, .43 of 1% of the next $750 million, .41
of 1% of the next $1.5 billion, .40 of 1% of the next $2.5 billion, .38 of
1% of the next $2.5 billion, .36 of 1% of the next $2.5 billion, .34 of 1%
of the next $2.5 billion and .32 of 1% thereafter.
(D) .75 of 1% of the first $250 million, .72 of 1% of the next $750 million, .70
of 1% of the next $1.5 billion, .68 of 1% of the next $2.5 billion, .65 of
1% of the next $2.5 billion, .64 of 1% of the next $2.5 billion, .63 of 1%
of the next $2.5 billion and .62 of 1% thereafter.
(E) .40 of 1% of the first $250 million, .38 of 1% of the next $750 million, .35
of 1% of the next $1.5 billion, .32 of 1% of the next $2.5 billion, .30 of
1% of the next $2.5 billion, .28 of 1% of the next $2.5 billion, .26 of 1%
of the next $2.5 billion and .25 of 1% thereafter.
(F) Base investment management fee of .65 of 1% of average daily net assets plus
or minus an incentive fee based upon the investment performance of the fund
as compared with the performance of the Standard & Poor's 500 Stock Index
which may result in a total fee ranging from .35 of 1% to .95 of 1%.
(G) .50% of the first $215 million; .375% of the next $335 million; .30% of the
next $250 million; .25% thereafter (on the identified series in the
aggregate).
(H) .22% of the first $500 million; .20% of the next $500 million; .175% of the
next $1 billion; .16% of the next $1 billion; .15% thereafter (on the
identified series in the aggregate).
(I) .80% of the first $250 million; .79% of the next $750 million; .77% of the
next $1.5 billion; .75% thereafter.
(J) .65% of the first $250 million; .64% of the next $750 million; .62% of the
next $1.5 billion; .60% thereafter.
(K) .50% of the first $250 million; .49% of the next $750 million; .47% of the
next $1.5 billion; .45% thereafter.
B-3
33
EXHIBIT C
FEES AND EXPENSES
MMP GSP TEP
----------- --------- ---------
Fiscal Year End................. 07/31/94 07/31/94 07/31/94
Management Fees Paid to KFS..... $11,439,000 1,840,000 2,100,000
Effective Management Fee Rate... .27% .27 .27
Custodian, Transfer Agent Fees
Paid by Fund to IFTC.......... $ 7,530,000 837,000 624,000
Shareholder Service Fees Paid by
IFTC to KSVC.................. $ 7,189,000 782,000 562,000
C-1
34
Thank you for mailing your ballot promptly!
We appreciate your continuing support and look
forward to serving your future investment needs.
35
KEMPER MONEY MARKET FUND
Money Market Portfolio
Government Securities Portfolio
Tax-Exempt Portfolio
36
[FUND NAME]
[ACCOUNT NUMBER]
[SHARE COUNT]
[ADDRESSEE AND ADDRESS]
NOTE: GROUP B
For Withhold For All
1. To elect the following as trustees: All All Except
[ ] [ ] [ ]
01) David W. Belin, 02) Lewis A. Burnham, 03) Donald L. Dunaway,
04) Robert B. Hoffman, 05) Donald R. Jones, 06) David B. Mathis,
07) Shirley D. Peterson, 08) Stephen B. Timbers, 09) William F. Sommers
-----------------------------------------------------------------------
To withhold authority to vote on any individual nominee(s) please
print the number(s) on the line above.
2. Ratify or reject the selection of For Against Abstain
Ernst & Young LLP as the Fund's [ ] [ ] [ ]
independent auditors for the
current fiscal year.
3. Approve or disapprove a new investment [ ] [ ] [ ]
management agreement with Kemper
Financial Services, Inc. or its
successor on the same terms as the
current agreement.
Signature(s) (All registered owners of accounts shown to the left must
sign. If signing for a corporation, estate or trust, please indicate
your capacity or title.)
X
- -------------------------------------------------------------------------------
Signature Date
X
- -------------------------------------------------------------------------------
Signature Date
PLEASE VOTE TODAY!
37
Please Vote Promptly!
Your vote is needed! Please vote on the reverse side of this form and sign
in the space provided. Return your completed proxy in the enclosed envelope
today.
You may receive additional proxies for your other accounts with Kemper. These
are not duplicates; you should sign and return each proxy card in order for
your votes to be counted. Please return them as soon as possible to help
save the cost of additional mailings.
The signers of this proxy hereby appoint Stephen B. Timbers and Donald L.
Dunaway, and each of them, attorneys and proxies, with power of
substitution in each, to vote all shares for the signers at the special
meeting of shareholders to be held September 19, 1995, and at any
adjournments thereof, as specified herein, and in accordance with their
best judgement, on any other business that may properly come before this
meeting. If no specification is made herein, all shares will be voted "FOR"
the proposals set forth on this proxy.
The proxy is solocited by the Board of the Fund which recommends a vote
"FOR" all matters.