[Federal Register Volume 62, Number 225 (Friday, November 21, 1997)]
[Notices]
[Pages 62369-62372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30571]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 22891; 812-10860]


Kemper Technology Fund, et al.; Notice of Application

November 17, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for exemption under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') from section 15(a) of the 
Act.

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[[Page 62370]]

SUMMARY OF APPLICATION: Applicants seek an order to permit the 
implementation, without shareholder approval, of new investment 
advisory agreements between Zurich Kemper Investments, Inc. (``ZKI'') 
and Zurich Kemper Value Advisors, Inc. (``ZKVA'') (collectively, the 
``Advisers''), and the Funds (as defined below) (the ``New Advisory 
Agreements'') for a period of up to 120 days following the date of 
consummation of a merger and until each New Advisory Agreement receives 
shareholder approval (but in no event later than April 30, 1998) (the 
``Interim Period''). The order also would permit the Advisers to 
receive all fees earned under the New Advisory Agreements during the 
Interim Period following shareholder approval.

APPLICANTS: ZKI; ZKVA; Scudder, Stevens & Clark, Inc. (``Scudder''); 
Kemper Technology Fund (``KTEC''), Kemper Total Return Fund (``KTRF''), 
Kemper Growth Fund (``KGF''), Kemper Small Capitalization Equity Fund 
(``KSCF''), Kemper Income and Capital Preservation Fund (``KICPF''), 
Kemper National Tax-Free Income Series (``KNTIS''), Kemper Diversified 
Income Fund (``KDIF''), Kemper High Yield Series (``KHYS''), Kemper 
U.S. Government Securities Fund (``KGSF''), Kemper International Fund 
(``KIF''), Kemper State Tax-Free Income Series (``KSTIS''), Kemper 
Portfolios (``KP''), Kemper Adjustable Rate U.S. Government Fund 
(``KARGF''), Kemper Blue Chip Fund (``KBCF''), Kemper Global Income 
Fund (``KGIF), Kemper Value Plus Growth Fund (``KVGF''), Kemper 
Quantitative Equity Fund (``KQEF''), Kemper Asian Growth Fund 
(``KAGF''), Kemper Aggressive Growth Fund (``KAGGF''), Zurich Money 
Funds (``ZMF''), Zurich YieldWise Money Fund (``ZYMF''), Cash 
Equivalent Fund (``CEF''), Tax-Exempt California Money Market Fund 
(``TECMF''), Investors Cash Trust (``ICT''), Investors Municipal Cash 
Fund (``IMCF''), Cash Account Trust (``CAT''), Kemper Value Fund, Inc. 
(``KVF''), Kemper Horizon Fund (``KHF''), Kemper Europe Fund 
(``KEUF''), Kemper Target Equity Fund (``KTEF''), Kemper High Income 
Trust (``KHI''), Kemper Intermediate Government Trust (``KGT''), Kemper 
Municipal Income Trust (``KTF''), Kemper Multi-Market Income Trust 
(``KMM''), Kemper Strategic Municipal Income Trust (``KSM''), The 
Growth Fund of Spain, Inc. (``GSP''), Kemper Strategic Income Fund 
(``KST''), Investors Fund Series (``INFS'') and Kemper International 
Bond Fund (``KIBF'') (each a ``Fund'', collectively the ``Funds'').

FILING DATES: The application was filed on November 5, 1997. Applicants 
have agreed to file an amendment during the notice period, the 
substance of which is included in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on December 8, 
1997, and should be accompanied by proof of service on applicants in 
the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549. Applicants: Funds & ZKI, 222 South Riverside Plaza, Chicago, 
Illinois 60606; ZKVA, 280 Park Avenue, New York, NY 10017; Scudder, 345 
Park Avenue, New York, NY 10154.

FOR FURTHER INFORMATION CONTACT: John K. Forst, Attorney Advisor, at 
(202) 942-0569, or Mary Kay Frech, Branch Chief, at (202) 942-0564 
(Office of Investment Company Regulation, Division of Investment 
Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 
20549 (tel. 202-942-8090).

Applicants' Representations

    1. Scudder is an investment adviser registered under the Investment 
Advisers Act of 1940 (the `'Advisers Act''). The Funds are registered 
as open-end or closed-end investment companies under the Act. The 
Advisers are investment advisers registered under the Advisers Act and 
serve in the capacity of investment manager, investment adviser, or 
subadviser to at least one of the Funds or a series of the Funds under 
advisory agreements (the ``Existing Advisory Agreements'').\1\ Zurich 
Insurance Company (``Zurich'') is the indirect parent of ZKI. ZKVA is a 
wholly-owned subsidiary of ZKI.
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    \1\ ZKI is investment manager for the following Funds under 
Existing Advisory Agreements: KTEC, KTRF, KGF, KSCF, KICSPF, KNTIS, 
KDIF, KHYS, KGSF, KIF, KSTIS, KP, KARGF, KBCF, KGIF, KVGF, KQEF, 
KAGF, KAGGF, KHF, KEUF, KTEF, KHI, KGT, KMM, KTF, KSM, GSP, KST, 
CEF, TECMF, ICT, CAT, IMCF, INFS, KIBF, ZMF and ZYMF. ZKVA is 
investment manager for KVF and two series of INFS. Under agreements 
with ZKI, ZKVA is subadviser to KHF, KVGF and certain series of 
INFS. Under agreements with ZKI, Zurich Investment Management 
Limited, an indirect subsidiary of Zurich Insurance Company 
(``ZIML''), is subadviser to KEUF, KTEF, KHF, KTEC, KTRF, KGF, KSCF, 
KICPF, KDIF, KHYS, KIF, KBCF, KGIF, KVGF, KQEF, KAGF, KAGGF, KHI, 
KGT, KMM, KST, GSP, certain series of INFS and KIBF.
    In each of the foregoing cases, whether acting as investment 
manager, investment adviser, or subadviser, each Adviser and ZIML is 
acting as an investment adviser within the meaning of section 
2(a)(20) of the Act, and serves as investment manager, investment 
adviser or subadviser under a contract subject to section 15 of the 
Act.
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    2. On June 26, 1997, Zurich, ZKI Holding Corp., ZKI, Scudder and 
the representatives of the beneficial owners of the capital stock of 
Scudder entered into a transaction agreement (the ``Transaction 
Agreement''), under which Zurich will become the majority stockholder 
in Scudder, and ZKI will become a wholly-owned subsidiary of, or be 
combined with, Scudder (the ``Transaction''). Upon completion of the 
Transaction, Scudder will change its name to Scudder Kemper 
Investments, Inc. (``SKI'').\2\ Applicants expect consummation of the 
Transaction on December 5, 1997.
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    \2\ Subsequent to the execution of the Transaction Agreement, 
Zurich agreed to cause ownership of ZIML to be transferred by Zurich 
to SKI. In addition, as a wholly owned subsidiary of ZKI, ZKVA will 
become part of SKI.
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    3. Applicants believe that the Transaction will result in an 
assignment of the Existing Advisory Agreements and that the Existing 
Advisory Agreements will terminate by their terms on the closing date 
of the Transaction. Applicants request an exemption to permit (i) 
implementation, during the Interim Period, prior to obtaining 
shareholder approval, of the New Advisory Agreements, and (ii) the 
Advisers to receive from each Fund, upon approval of that Fund's 
shareholders of the New Advisory Agreement, any and all fees earned 
under the related New Advisory Agreement during the applicable Interim 
Period. Applicants represent that the New Advisory Agreements will have 
substantially the same terms and conditions as the Existing Advisory 
Agreements, except for the effective dates. Applicants state that each 
Fund should receive, during the Interim Period, the same advisory 
services, provided in the same manner and at the same fee levels, by 
substantially the same personnel as it received prior to the 
Transaction.\3\
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    \3\ Except for KSCF and KAGGF, the management fee under the New 
Advisory Agreements will be paid at the end of each month and will 
be computed as \1/12\ of the applicable annual rate based upon the 
average daily net assets (weekly net assets in the case of KHI, KGT, 
KTF, KMM, KSM, GSP and KST) for such month; whereas under the 
Existing Advisory Agreements, the management fee is paid at the end 
of each month and is computed at the annual rate based upon the 
average daily net assets (weekly net assets in the case of KHI, KGT, 
KTF, KMM, KSM, GSP and KST). While the annual rates are the same 
under the New Advisory Agreements and the Existing Advisory 
Agreements, depending upon the level of net assets at any time, the 
fees may differ. However, if at any time during the Interim Period, 
the fees payable under the New Advisory Agreements are greater than 
those that would have been payable under the Existing Advisory 
Agreements, the excess amount shall be waived. For KSCF and KAGGF, 
the management fee will continue on the same basis as under the 
Existing Advisory Agreements as if there were no termination of the 
Existing Advisory Agreements.

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[[Page 62371]]

    4. The board of trustees or directors, as the case may be, of each 
Fund (``Board'') met on one or more dates between June 30, 1997 and 
September 20, 1997 to consider the Transaction and its anticipated 
effects upon the investment management and other services provided to 
the Funds by the Advisers and their affiliates. The Board members who 
are not ``interested persons'' of the Funds as that term is defined in 
section 2(a)(19) of the Act (``Independent Trustees'') also met 
separately with counsel on a number of occasions to discuss the 
Transaction. On September 15, 1997 and September 20, 1997, the Boards, 
including the Independent Trustees, voted unanimously in accordance 
with section 15(c) of the Act to approve the New Advisory Agreements 
and to recommend them to shareholders for their approval.
    5. Proxy materials for the shareholders meetings relating to the 
New Advisory Agreements were mailed by the Funds on or about October 
22, 1997. Applicants state that it is possible that shareholders of 
each of the Funds will approve the New Advisory Agreements at the 
shareholders meetings expected to be held on December 3, 1997. 
Applicants note, however, that it may be necessary to adjourn a meeting 
to permit additional shareholders to vote their shares.
    6. Applicants propose to enter into an escrow arrangement with an 
unaffiliated financial institution. The fees payable to the Advisers 
during the Interim Period under the New Advisory Agreements will be 
paid into an interest-bearing escrow account maintained by the escrow 
agent. The escrow agent will release the amounts held in the escrow 
account (including any interest earned): (a) to the applicable Adviser 
only upon approval of the Funds' shareholders of the relevant New 
Advisory Agreement; or (b) to the relevant Fund if the Interim Period 
has ended and its New Advisory Agreement has not received the requisite 
shareholder approval. Before any such release is made, the Funds' 
Boards would be notified.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in pertinent part, that it is 
unlawful for any person to serve as an investment adviser to a 
registered investment company, except pursuant to a written contract 
that has been approved by the vote of a majority of the outstanding 
voting securities of the investment company. Section 15(a) further 
requires that the written contract provide for its automatic 
termination in the event of its ``assignment.'' Section 2(a)(4) of the 
Act defines the term ``assignment'' to include any direct or indirect 
transfer of a contract by the assignor, or of a controlling block of 
the assignor's outstanding voting securities by a security holder of 
the assignor.
    2. Applicants state that the Transaction will be deemed to result 
in an assignment of the Existing Advisory Agreements and, therefore, 
their termination upon consummation of the Transaction.
    3. Section 6(c) provides that the SEC may exempt any person, 
security, or transaction from any provision of the Act, if and to the 
extent that such exemption is necessary or appropriate, in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard.
    4. Applicants submit that it is in the best interests of 
shareholders to have sufficient time to consider and return proxies and 
to hold shareholder meetings. Applicants also believe it is desirable 
to close the Transaction as soon as possible.
    5. Applicants believe that the requested relief is necessary to 
permit continuity of investment management services for the Funds 
during the Interim Period. Applicants also believe that the Interim 
Period would facilitate the orderly and reasonable consideration of the 
New Advisory Agreements with respect to those Funds whose shareholders 
have not voted in sufficient numbers by the date of the shareholders 
meeting.
    6. Applicants submit that the scope and quality of services 
provided to the Funds during the Interim Period will not be diminished. 
The New Advisory Agreements would be substantially the same as the 
Existing Advisory Agreements, except for their effective dates. 
Applicants submit that they are not aware of any material changes in 
the personnel who will provide investment management services during 
the Interim Period. Accordingly, the Funds should receive, during the 
Interim Period, the same advisory services, provided in the same 
manner, at the same fee levels, by substantially the same personnel as 
they received before the Transaction.
    7. Applicants submit that to deprive the Advisers of their 
customary fees during the Interim Period would be unduly harsh and 
unreasonable. Applicants emphasize that the fees payable to the 
Advisers have been approved by the Boards, including a majority of the 
Independent Trustees, in accordance with their fiduciary and other 
obligations under the Act, and that such fees will not be released by 
the escrow agent without the approval of the respective Fund's 
shareholders.

Applicants' Conditions

    Applicants agree as conditions to the issuance of the exemptive 
order requested by the application that:
    1. The New Advisory Agreements to be implemented during the Interim 
Period will have substantially the same terms and conditions as the 
Existing Advisory Agreements, except for the effective dates.
    2. Fees earned by an Adviser in respect of the New Advisory 
Agreements during the Interim Period will be maintained in an interest-
bearing escrow account, and amounts in the account (including interest 
earned on such amounts) will be paid (a) to an Adviser in accordance 
with the New Advisory Agreements, after the requisite shareholder 
approvals are obtained, or (b) to the respective Fund, in the absence 
of such approval with respect to such Fund.
    3. The Funds will hold a meeting of shareholders to vote on 
approval of the New Advisory Agreements on December 3, 1997, or within 
the 120-day period following the consummation of the Transaction (but 
in no event later than April 30, 1998).
    4. Zurich or its affiliates will bear the costs of preparing and 
filing the application, and any costs relating to the solicitation of 
approval of the Funds' shareholders necessitated by the consummation of 
the Transaction.
    5. The Advisers will take all appropriate steps so that the scope 
and quality of advisory and other services provided to the Funds during 
the Interim Period will be at least equivalent, in the judgment of the 
Boards, including a majority of the Independent Trustees, to the scope 
and quality of services previously provided. If personnel providing 
material services during the Interim Period change materially, the 
Advisers will apprise

[[Page 62372]]

and consult with the Boards of the affected Funds to assure that the 
Boards, including a majority of the Independent Trustees, are satisfied 
that the services provided will not be diminished in scope or quality.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-30571 Filed 11-20-97; 8:45 am]
BILLING CODE 8010-01-M