<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1995.
1933 ACT REGISTRATION NO. 2-70639
1940 ACT REGISTRATION NO. 811-3136
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 20 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 21 /X/
(Check appropriate box or boxes)
------------------
KEMPER INTERNATIONAL FUND
(Exact name of Registrant as Specified in Charter)
120 South LaSalle Street, Chicago, Illinois 60603
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 781-1121
Philip J. Collora, Vice President and With a copy to:
Secretary Charles F. Custer
Kemper International Fund Vedder, Price, Kaufman & Kammholz
120 South LaSalle Street 222 North LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois 60601
(Name and Address of Agent for Service)
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's fiscal year ended October 31,
1994 was filed on or about December 23, 1994.
It is proposed that this filing will become effective (check appropriate
box)
/ / immediately upon filing pursuant to paragraph (b)
/X/ on March 1, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1) of Rule 485.
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
KEMPER INTERNATIONAL FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER
OF FORM N-1A LOCATION IN PROSPECTUS
------------ ----------------------
<S> <C>
1. Cover Page.............................. Cover Page
2. Synopsis................................ Summary; Summary of Expenses; Supplement to
Prospectus
3. Condensed Financial Information......... Financial Highlights; Performance; Supplement
to Prospectus
4. General Description of Registrant....... Summary; Investment Objectives and Policies;
Special Risk Considerations
5. Management of the Fund.................. Summary; Investment Manager and Underwriter
5A. Management's Discussion of Fund
Performance............................. Performance
6. Capital Stock and Other Securities...... Summary; Dividends and Taxes; Purchase of
Shares; Capital Structure
7. Purchase of Securities Being Offered.... Summary; Investment Manager and Underwriter;
Net Asset Value; Purchase of Shares; Special
Features; Supplement to Prospectus
8. Redemption or Repurchase................ Summary; Redemption or Repurchase of Shares
9. Pending Legal Proceedings............... Inapplicable
</TABLE>
<PAGE> 3
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
SUPPLEMENT TO PROSPECTUS
DATED MARCH 1, 1995
CLASS I SHARES
Kemper Global Income Fund (the "Global Fund") and Kemper
International Fund (the "International Fund") (collectively, the
"Funds") currently offer four classes of shares to provide
investors with different purchasing options. These are Class A,
Class B and Class C shares, which are described in the prospectus,
and Class I shares, which are described in the prospectus as
supplemented hereby.
Class I shares are available for purchase exclusively by the
following investors: (a) tax-exempt retirement plans of Kemper
Financial Services, Inc. ("KFS") and its affiliates; and (b) the
following investment advisory clients of KFS and its investment
advisory affiliates (including Kemper Asset Management Company
("KAMCO")) that invest at least $1 million in a Fund: (1)
unaffiliated benefit plans (other than individual retirement
accounts and self-directed retirement plans); (2) unaffiliated
banks and insurance companies purchasing for their own accounts;
and (3) endowment funds of unaffiliated non-profit organizations.
Class I shares currently are available for purchase only from
Kemper Distributors, Inc. or Kemper Clearing Corp., affiliates of
KFS and KAMCO. Share certificates are not available for Class I
shares.
The primary distinctions among the classes of each Fund's shares
lie in their initial and contingent deferred sales charge schedules
and in their ongoing expenses, including asset-based sales charges
in the form of Rule 12b-1 distribution fees. Class I shares are
offered at net asset value without an initial sales charge and are
not subject to a contingent deferred sales charge or a Rule 12b-1
distribution fee. Also, there is no administrative services fee
charged to Class I shares. As a result of the relatively lower
expenses for Class I shares, the level of income dividends per
share (as a percentage of net asset value) and, therefore, the
overall investment return, will be higher for Class I shares than
for Class A, Class B and Class C shares.
The following information for the Class I shares supplements the
"Summary of Expenses" section of the prospectus.
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
(applicable to both Funds) CLASS I
-------
<S> <C>
Maximum Sales Charge on Purchases
(as a percentage of offering price) . . . . . . . . . . . . None
Maximum Sales Charge on Reinvested Dividends. . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . None
Deferred Sales Charge (as a percentage of redemption
proceeds) . . . . . . . . . . . . . . . . . . . . . . . . . None
</TABLE>
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL
ANNUAL FUND OPERATING EXPENSES FUND FUND
(as a percentage of average net assets)
<S> <C> <C>
Management Fees (restated). . . . . . . . .75% .75%
12b-1 Fees . . . . . . . . . . . . . . . None None
Other Expenses (estimated). . . . . . . . .25% .26%
------ ------------
Total Operating Expenses. . . . . . . . . 1.00% 1.01%
====== ============
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
You would pay Global Fund $10 $32 $55 $122
the following International Fund $10 $32 $56 $124
expenses on a
$1,000
investment
assuming (1)
5% annual
return and (2)
redemption at
the end of each
time period:
</TABLE>
The purpose of the preceding table is to assist investors in
understanding the various costs and expenses that an investor in
Class I shares of a Fund will bear directly or indirectly.
As discussed in the prospectus under "Investment Manager and
Underwriter," effective May 31, 1994, the investment management fee
for each Fund changed. "Management Fees" have been restated based
upon the new management fee.
"Other Expenses" for Class I shares, which were not available for
purchase prior to May 31, 1994, have been estimated for the current
fiscal year.
The Example assumes a 5% annual rate of return pursuant to
requirements of the Securities and Exchange Commission. This
hypothetical rate of return is not intended to be representative of
past or future performance of either Fund. The Example should not
be considered to be a representation of past or future expenses.
Actual expenses may be greater or lesser than those shown.
March 1, 1995
KGIF-1I (3/95)
<PAGE> 4
<TABLE>
<S> <C>
TABLE OF CONTENTS
- ------------------------------------------------
Summary 1
- ------------------------------------------------
Summary of Expenses 2
- ------------------------------------------------
Financial Highlights 4
- ------------------------------------------------
Investment Objectives and Policies 6
- ------------------------------------------------
Investment Manager and Underwriter 16
- ------------------------------------------------
Dividends and Taxes 19
- ------------------------------------------------
Net Asset Value 21
- ------------------------------------------------
Purchase of Shares 21
- ------------------------------------------------
Redemption or Repurchase of Shares 26
- ------------------------------------------------
Special Features 30
- ------------------------------------------------
Performance 33
- ------------------------------------------------
Capital Structure 35
- ------------------------------------------------
Account Application
- ------------------------------------------------
</TABLE>
This combined prospectus contains information about each of the Funds that a
prospective investor should know before investing and should be retained for
future reference. A Statement of Additional Information dated March 1, 1995, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. It is available upon request without charge from the Funds
at the address or telephone number on this cover or the firm from which this
prospectus was received.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. INVESTMENT IN A
FUND'S SHARES INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
(LOGO)
KEMPER
GLOBAL INCOME
FUND
KEMPER
INTERNATIONAL
FUND
PROSPECTUS MARCH 1, 1995
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
120 South LaSalle Street, Chicago, Illinois 60603
1-800-621-1048
The objective of Kemper Global Income Fund is to provide high current income
consistent with prudent total return asset management. The Fund pursues its
objective by investing primarily in investment grade foreign and domestic fixed
income securities.
The objective of Kemper International Fund is to seek a total return, a
combination of capital growth and income, principally through an internationally
diversified portfolio of equity securities.
There is no assurance that either Fund's objective will be achieved.
<PAGE> 5
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603, TELEPHONE 1-800-621-1048
SUMMARY
INVESTMENT OBJECTIVES. Kemper Global Income Fund (the "Global Fund") is an
open-end, non-diversified, management investment company. The Global Fund's
investment objective is to provide high current income consistent with prudent
total return asset management. The Fund pursues its objective by investing
primarily in a portfolio of investment grade foreign and domestic fixed income
securities. The Global Fund may also engage in options, financial futures,
delayed delivery and foreign currency transactions and may lend its portfolio
securities.
Kemper International Fund (the "International Fund") is an open-end, diversified
management investment company. The International Fund's investment objective is
to seek a total return, a combination of capital growth and income, principally
through an internationally diversified portfolio of equity securities. Under
normal circumstances, more than 80% of the International Fund's total assets
will be invested in non-U.S. issuers. The International Fund also may engage in
options, financial futures and foreign currency transactions. See "Investment
Objectives and Policies."
RISK FACTORS. Each Fund may invest without limit in securities of foreign
issuers. Foreign investments involve risk and opportunity considerations not
typically associated with investing in United States companies. The U.S. Dollar
value of a foreign security tends to decrease when the value of the U.S. Dollar
rises against the foreign currency in which the security is denominated and
tends to increase when the value of the U.S. Dollar falls against such currency.
Thus, the U.S. Dollar value of foreign securities in a Fund's portfolio, and the
Fund's net asset value, may change in response to changes in currency exchange
rates even though the value of the foreign securities in local currency terms
may not have changed. While a Fund's investments in foreign securities will
principally be in developed countries, the Fund may invest a portion of its
assets in developing or "emerging" markets, which involve exposure to economic
structures that are generally less diverse and mature than in the United States,
and to political systems that may be less stable. As a "non-diversified"
investment company, the Global Fund will be able to invest a relatively high
percentage of its assets in a limited number of issuers, therefore making the
Fund more susceptible to a single economic, political or regulatory occurrence
than a diversified company. Thus, an investment in either Fund should not be
considered as a complete investment program. There are special risks associated
with options, financial futures and foreign currency transactions and there is
no assurance that use of those investment techniques will be successful. Each
Fund's returns and net asset value will fluctuate. See "Investment Objectives
and Policies."
PURCHASES AND REDEMPTIONS. Each Fund provides investors with the option of
purchasing shares in the following ways:
<TABLE>
<S> <C>
Class A Shares................ Offered at net asset value plus a maximum sales charge of 4.5% of
the offering price for the Global Fund and 5.75% of the offering
price for the International Fund. Reduced sales charges apply to
purchases of $100,000 or more for the Global Fund and $50,000 or
more for the International Fund. The redemption within one year
of Class A shares purchased at net asset value under the Large
Order NAV Purchase Privilege may be subject to a 1% contingent
deferred sales charge.
Class B Shares................ Offered at net asset value, subject to a Rule 12b-1 distribution
fee and a contingent deferred sales charge that declines from 4%
to zero on certain redemptions made within six years of purchase.
Class B shares automatically convert into Class A shares (which
have lower ongoing expenses) six years after purchase.
Class C Shares................ Offered at net asset value without an initial or contingent
deferred sales charge, but subject to a Rule 12b-1 distribution
fee. Class C shares do not convert into another class.
</TABLE>
1
<PAGE> 6
Each class of shares represents interests in the same portfolio of investments
of a Fund. The minimum initial investment is $1,000 and investments thereafter
must be at least $100. Shares are redeemable at net asset value, which may be
more or less than original cost, subject, in the case of Class A shares
purchased under the Large Order NAV Purchase Privilege and for Class B shares,
to any applicable contingent deferred sales charge. See "Purchase of Shares" and
"Redemption or Repurchase of Shares."
INVESTMENT MANAGER AND UNDERWRITER. Kemper Financial Services, Inc. ("KFS") is
each Fund's investment manager. KFS is paid an investment management fee by each
Fund at the annual rate ranging from .75 of 1% to .62 of 1% of its average daily
net assets. Kemper Distributors, Inc. ("KDI"), an affiliate of KFS, is principal
underwriter and administrator for each Fund. For Class B and Class C shares, KDI
receives a Rule 12b-1 distribution fee of .75% of average daily net assets. KDI
also receives the amount of any contingent deferred sales charges paid on the
redemption of shares. The expenses of each Fund, and of other investment
companies investing in foreign securities, can be expected to be higher than for
investment companies investing primarily in domestic securities since the costs
of operation are higher, including custody and transaction costs for foreign
securities and investment management fees. Administrative services are provided
to shareholders under an administrative services agreement with KDI. Each Fund
pays an administrative services fee at the annual rate of up to .25 of 1% of
average daily net assets of each class of the Fund, which KDI pays to financial
services firms. See "Investment Manager and Underwriter."
DIVIDENDS. The Global Fund normally distributes monthly dividends of net
investment income, the International Fund normally distributes annual dividends
of net investment income and each Fund distributes any net realized short-term
and long-term capital gains annually. Income and capital gain dividends of a
Fund are automatically reinvested in additional shares of that Fund, without a
sales charge, unless the investor makes a different election. See "Dividends and
Taxes."
GENERAL. In the opinion of the staff of the Securities and Exchange Commission,
the use of this combined prospectus may make each Fund liable for any
misstatement or omission in this prospectus regardless of the particular Fund to
which it pertains.
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------- ------------------------- ----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO BOTH
FUNDS)(1)
Maximum Sales Charge on Purchases (as a percentage
of offering price)................................ 4.5%/5.75 *(2) None None
Maximum Sales Charge on Reinvested Dividends........ None None None
Redemption Fees..................................... None None None
Exchange Fee........................................ None None None
Deferred Sales Charge (as a percentage of redemption
proceeds)......................................... None(3) 4% during the first year, None
3% during the second and
third years, 2% during
the fourth and fifth
years and 1% in the sixth
year
*5.75% applies to the International Fund only.
</TABLE>
- ---------------
(1) Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Reduced sales charges apply to purchases of $100,000 (for the Global Fund)
or $50,000 (for the International Fund) or more. See "Purchase of
Shares--Initial Sales Charge Alternative--Class A Shares."
(3) The redemption within one year of shares purchased at net asset value under
the Large Order NAV Purchase Privilege may be subject to a 1% contingent
deferred sales charge. See "Purchase of Shares--Initial Sales Charge
Alternative--Class A Shares."
2
<PAGE> 7
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL
FUND FUND
------ -------------
<S> <C> <C>
CLASS A SHARES
Management Fees (restated).................................................... .75% .74%
12b-1 Fees.................................................................... None None
Other Expenses................................................................ .78% .79%
---- ----
Total Operating Expenses...................................................... 1.53% 1.53%
===== =========
CLASS B SHARES
Management Fees (restated).................................................... .75% .74%
12b-1 Fees(4)................................................................. .75% .75%
Other Expenses (estimated).................................................... .81% 1.09%
--- ----
Total Operating Expenses...................................................... 2.31% 2.58%
===== =========
</TABLE>
- ---------------
(4) Long-term shareholders may pay more than the economic equivalent of the
maximum initial sales charges permitted by the National Association of
Securities Dealers, although KDI believes that it is unlikely because of the
automatic conversion feature described under "Purchase of Shares--Deferred
Sales Charge Alternative--Class B Shares."
<TABLE>
<S> <C> <C>
CLASS C SHARES
Management Fees (restated).................................................... .75% .74%
12b-1 Fees(5)................................................................. .75% .75%
Other Expenses (estimated).................................................... .78% 1.03%
--- ----
Total Operating Expenses...................................................... 2.28% 2.52%
===== ======
</TABLE>
- ---------------
(5) As a result of the accrual of 12b-1 fees, long-term shareholders may pay
more than the economic equivalent of the maximum initial sales charges
permitted by the National Association of Securities Dealers.
EXAMPLE
<TABLE>
<CAPTION>
CLASS A SHARES FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a Global Fund $60 $ 91 $125 $219
$1,000 investment, assuming (1) 5% annual International Fund $72 $103 $136 $229
return and (2) redemption at the end of each
time period:
<CAPTION>
CLASS B SHARES(6)
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a Global Fund $53 $ 92 $134 $227
$1,000 investment, assuming (1) 5% annual International Fund $56 $100 $147 $242
return and (2) redemption at the end of each
time period:
You would pay the following expenses on the Global Fund $23 $ 72 $124 $227
same investment, assuming no redemption: International Fund $26 $ 80 $137 $242
</TABLE>
- ---------------
(6) Assumes conversion to Class A shares six years after purchase and was
calculated based upon the assumption that the shareholder was an owner of
the shares on the first day of the first year and the contingent deferred
sales charge was applied as follows: 1 year (3%), 3 years (2%), 5 years (1%)
and 10 years (0%). See "Redemption or Repurchase of Shares--Contingent
Deferred Sales Charge--Class B Shares" for more information regarding the
calculation of the contingent deferred sales charge.
<TABLE>
<CAPTION>
CLASS C SHARES
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a Global Fund $23 $71 $122 $262
$1,000 investment, assuming (1) 5% annual International Fund $26 $78 $134 $286
return and (2) redemption at the end of each
time period:
</TABLE>
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. Effective May 31, 1994, the investment management fee for each Fund
changed. "Management Fees" have been restated based upon the new management fee.
"Other Expenses" for Class B shares and Class C shares, which were not available
for purchase prior to May 31, 1994, have been estimated for the current fiscal
year. The Example assumes a 5% annual rate of return pursuant to requirements of
the Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of past or future performance of either Fund. The
Example should not be considered to be a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
3
<PAGE> 8
FINANCIAL HIGHLIGHTS
The tables below show financial information for each Fund expressed in terms of
one share outstanding throughout the period. The information in the table for
each Fund is covered by the report of the Fund's independent auditors. The
report for each Fund is contained in its Registration Statement and is available
from that Fund. The financial statements contained in each Fund's 1994 Annual
Report to Shareholders are incorporated herein by reference and may be obtained
by writing or calling that Fund.
GLOBAL FUND
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, JULY 1, 1993 TO YEAR ENDED JUNE 30, OCTOBER 1, 1989 TO
CLASS A SHARES 1994 DECEMBER 31, 1993 1993 1992 1991(A) JUNE 30, 1990
- --------------- ------------ ----------------- ----------------- ----------------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $ 9.29 9.21 9.44 9.26 9.98 9.00
- ------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .60 .27 .72 .76 .94 .60
- ------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions (.74) .16 )(.17 .22 -- .70
- ------------------------------------------------------------------------------------------------------------------------
Total from investment
operations (.14) .43 .55 .98 .94 1.30
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net
investment income .38 -- .72 .73 1.22 .32
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net
realized gain on
investments -- .05 .06 .07 .44 --
- ------------------------------------------------------------------------------------------------------------------------
Distribution in excess
of net realized
gain on investments -- .06 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Tax return of capital
distribution .22 .24 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends .60 .35 .78 .80 1.66 .32
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 8.55 9.29 9.21 9.44 9.26 9.98
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): (1.47) 4.73 6.16 10.77 9.30 14.74
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS (%):
Expenses 1.53 1.29 1.52 1.53 1.60 1.64
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 6.67 5.75 7.87 8.32 9.17 9.23
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1994 TO MAY 31, 1994 TO
DECEMBER 31, 1994 DECEMBER 31, 1994
CLASS B AND C SHARES CLASS B CLASS C
----------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $8.70 $8.70
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .30 .30
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
transactions (.14) (.14)
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .16 .16
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .19 .19
- ------------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution .11 .11
- ------------------------------------------------------------------------------------------------------------------------
Total dividends .30 .30
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.56 $8.56
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 1.89 1.91
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 2.27 2.23
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 5.89 5.93
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, JULY 1, 1993 TO YEAR ENDED JUNE 30, OCTOBER 1, 1989 TO
ALL CLASSES 1994 DECEMBER 31, 1993 1993 1992 1991(A) JUNE 30, 1990
------------ ----------------- ----------------- ----------------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA:
Net assets at end of
period (in
thousands) $170,700 83,021 78,068 71,790 58,631 28,391
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate (%) 378 484 372 292 346 444
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 9
INTERNATIONAL FUND
<TABLE>
<CAPTION>
OCT. 1
TO YEAR ENDED
YEAR ENDED OCTOBER 31, OCT. 31, SEPTEMBER 30,
CLASS A SHARES 1994 1993 1992 1991 1990 1989 1988 1987 1986 1986 1985
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period $ 10.56 8.17 8.76 9.52 9.94 9.35 9.19 8.92 12.41 7.68 6.96
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income -- .03 .22 .13 .15 .15 .07 .12 .02 .20 .09
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign
currency .86 2.54 (.67) .31 .23 .80 1.78 .34 (.23) 5.02 1.23
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations .86 2.57 (.45) .44 .38 .95 1.85 .46 (.21) 5.22 1.32
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net
investment income -- .18 -- .11 .08 .22 .11 -- .29 .08 .11
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution from net
realized gain on
investments .29 -- .14 1.09 .72 .14 1.58 .19 2.99 .41 .49
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends .29 .18 .14 1.20 .80 .36 1.69 .19 3.28 .49 .60
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 11.13 10.56 8.17 8.76 9.52 9.94 9.35 9.19 8.92 12.41 7.68
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 8.32 32.08 (5.17) 5.38 4.16 10.48 24.89 4.60 (2.57) 72.18 20.86
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
(%):(B)
Expenses 1.54 1.69 1.36 1.41 1.20 1.08 1.08 1.06 1.23 1.05 1.26
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .02 .37 2.61 1.42 1.66 1.48 1.04 1.09 1.79 2.43 1.43
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1994 TO MAY 31, 1994 TO
OCTOBER 31, 1994 OCTOBER 31, 1994
CLASS B AND C SHARES CLASS B CLASS C
---------------- ----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $10.58 $10.58
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.04) (.04)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency .55 .55
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .51 .51
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.09 $11.09
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 4.82 4.82
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 2.58 2.52
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.97) (.91)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ALL CLASSES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA:
Net assets at end of period
(in thousands) $418,282 289,898 165,890 184,946 200,730 170,304 176,915 176,666 176,947 184,832 50,131
- -----------------------------
Portfolio turnover rate (%) 103 156 143 209 191 79 89 144 349 149 135
- -----------------------------
</TABLE>
NOTES:
(a) Per share data for the Global Fund for the fiscal year ended June 30, 1991
were determined based upon average shares outstanding.
(b) Under the investment management agreement in effect through July 17, 1990,
the investment manager reimbursed the International Fund when operating
expenses exceeded certain limitations. Effective July 18, 1990, the
International Fund entered into a new investment management agreement which
changed the limitation; no expense reimbursement was made in 1991, 1992,
1993 or 1994.
5
<PAGE> 10
Ratios have been determined on an annualized basis. Total return is not
annualized and does not reflect the effect of any sales charges. The Funds are
organized as separate Massachusetts business trusts. As discussed under
"Investment Manager and Underwriter," effective May 31, 1994, the investment
management fee for each Fund changed, resulting in a potentially lower fee for
each Fund.
INVESTMENT OBJECTIVES AND POLICIES
The following information sets forth each Fund's investment objective and
policies. Each Fund's returns and net asset value will fluctuate and there is no
assurance that a Fund will achieve its objective.
GLOBAL FUND. The objective of the Global Fund is to provide high current income
consistent with prudent total return asset management. In seeking to achieve its
objective, the Fund will invest primarily in investment grade foreign and
domestic fixed income securities. In managing the Fund's portfolio to provide a
high level of current income, the investment manager will also be seeking to
protect net asset value and to provide investors with a total return, which is
measured by changes in net asset value as well as income earned. In so managing
the Fund's portfolio in an effort to reduce volatility and increase returns, the
investment manager may, as is discussed more fully below, adjust the Fund's
portfolio across various global markets, maturity ranges, quality ratings and
issuers based upon its view of interest rates and other market conditions
prevailing throughout the world.
As a global fund, the Fund may invest in securities issued by any issuer and in
any currency and may hold foreign currency. Under normal market conditions, as a
fundamental policy, at least 65% of the Fund's assets will be invested in the
securities of issuers located in at least three countries, one of which may be
the United States. Securities of issuers within a given country may be
denominated in the currency of another country, or in multinational currency
units such as the European Currency Unit ("ECU"). Since the Fund invests in
foreign securities, the net asset value of the Fund will be affected by
fluctuations in currency exchange rates. See "Special Risk Factors" below.
The Fund may seek to capitalize on investment opportunities presented throughout
the world and in international financial markets influenced by the increasing
interdependence of economic cycles and currency exchange rates. Currently, more
than 50% of the value of the world's debt securities is represented by
securities denominated in currencies other than the U.S. Dollar. Over the past
ten years, debt securities offered by certain foreign governments provided
higher investment returns than U.S. Government debt securities. Such returns
reflect interest rates prevailing in those countries and the effect of gains and
losses in the denominated currencies, which have had a substantial impact on
investment in foreign fixed income securities. The relative performance of
various countries' fixed income markets historically has reflected wide
variations relating to the unique characteristics of each country's economy.
Year-to-year fluctuations in certain markets have been significant, and negative
returns have been experienced in various markets from time to time. The
investment manager believes that investment in a global portfolio can provide
investors with more opportunities for attractive returns than investment in a
portfolio comprised exclusively of U.S. debt securities. Also, the flexibility
to invest in fixed income markets around the world can reduce risk since, as
noted above, different world markets have often performed, at a given time, in
radically different ways.
The Fund will allocate its assets among securities of various issuers,
geographic regions, and currency denominations in a manner that is consistent
with its objective based upon relative interest rates among currencies, the
outlook for changes in these interest rates, and anticipated changes in
worldwide exchange rates. In considering these factors, a country's economic and
political state, including such factors as inflation rate, growth prospects,
global trade patterns and government policies, will be evaluated.
It is currently anticipated that the Fund's assets will be invested principally
within Australia, Canada, Japan, New Zealand, the United States and Western
Europe, and in securities denominated in the currencies of these countries or
denominated in multinational currency units such as the ECU. The Fund may also
acquire securities and currency in less developed countries and in developing
countries.
The Fund may invest in debt securities of supranational entities denominated in
any currency. A supranational entity is an entity designated or supported by the
national governments of two or more countries to promote
6
<PAGE> 11
economic reconstruction or development. Examples of supranational entities
include, among others, the World Bank, the European Investment Bank and the
Asian Development Bank. The Fund may, in addition, invest in debt securities
denominated in the ECU of an issuer in any country (including supranational
issuers). The Fund is further authorized to invest in "semi-governmental
securities," which are debt securities issued by entities owned by either a
national, state or equivalent government or are obligations of such a government
jurisdiction that are not backed by its full faith and credit and general taxing
powers.
The Fund is authorized to invest in the securities of any foreign or domestic
issuer. Investments by the Fund in fixed income securities may include
obligations issued or guaranteed by United States or foreign governments
(including foreign states, provinces and municipalities) or their agencies and
instrumentalities; obligations issued or guaranteed by supranational entities;
debt obligations of foreign and domestic corporations, banks and other business
organizations; and other foreign and domestic debt securities such as
convertible securities and preferred stocks, cash and cash equivalents and
repurchase agreements. Under normal market conditions, the Fund, as a
fundamental policy, will invest at least 65%, and may invest up to 100%, of its
total assets in fixed income securities. Some of the Fund's fixed income
securities may be convertible into common stock or be traded together with
warrants for the purchase of common stock, and the Fund may convert such
securities into equities and hold them as equity upon conversion. Investments
may include securities issued by enterprises that have undergone or are
currently undergoing privatization.
The securities in which the Fund may invest will be "investment grade"
securities. Investment grade securities are those rated at the time of purchase
within the four highest grades assigned by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("S&P") or IBCA Limited (including
its affiliate IBCA, Inc.) ("IBCA"); or that are unrated but are of comparable
quality in the opinion of the investment manager. Most foreign fixed income
securities are unrated. The characteristics of the securities in the Fund's
portfolio, such as the maturity and the type of issuer, will affect yields and
yield differentials, which vary over time. The actual yield realized by the
investor is subject, among other things, to the Fund's expenses and the
investor's transaction costs.
When the investment manager deems it appropriate to invest for temporary
defensive purposes, such as during periods of adverse market conditions, or when
relative yields in other securities are not deemed attractive, part or all of
the Fund's assets may be invested in cash (including foreign currency) or cash
equivalent short-term obligations, either rated as high quality or considered to
be of comparable quality in the opinion of the investment manager, including,
but not limited to, certificates of deposit, commercial paper, short-term notes,
obligations issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities, and repurchase agreements secured thereby. In particular,
for defensive purposes a larger portion of the Fund's assets may be invested in
U.S. Dollar-denominated obligations to reduce the risks inherent in non-U.S.
Dollar-denominated assets.
The Fund will not normally engage in the trading of securities for the purpose
of realizing short-term profits, but it will adjust its portfolio as considered
advisable in view of prevailing or anticipated market conditions and the Fund's
investment objective. Accordingly, the Fund may sell portfolio securities in
anticipation of a rise in interest rates and purchase securities for inclusion
in its portfolio in anticipation of a decline in interest rates.
The Fund may purchase and sell options on securities, index options, financial
futures contracts and options on financial futures contracts, may enter into
forward foreign currency exchange contracts, foreign currency options and
foreign currency futures contracts and options thereon and may engage in delayed
delivery transactions. See "Additional Investment Information" below.
INTERNATIONAL FUND. The International Fund seeks a total return, a combination
of capital growth and income, principally through an internationally diversified
portfolio of equity securities. Investments may be made for capital growth or
for income or any combination thereof for the purpose of achieving a high
overall return. There is no limitation on the percentage or amount of the Fund's
assets that may be invested in growth or income, and therefore at any particular
time the investment emphasis may be placed solely or primarily on growth of
capital or on income. While the Fund invests principally in equity securities of
non-U.S. issuers, it may also invest in convertible and debt securities and
foreign currencies. The Fund invests primarily in non-U.S. issuers, and under
7
<PAGE> 12
normal circumstances more than 80% of the Fund's total assets will be invested
in non-U.S. issuers. In determining whether the Fund will be invested for
capital growth or income, the investment manager analyzes the international
equity and fixed income markets and seeks to assess the degree of risk and level
of return that can be expected from each market. See "Special Risk Factors."
In pursuing its objective, the Fund invests primarily in common stocks of
established non-U.S. companies believed to have potential for capital growth,
income or both. However, there is no requirement that the Fund invest
exclusively in common stocks or other equity securities. The Fund may invest in
any other type of security including, but not limited to, convertible securities
(including warrants), preferred stocks, bonds, notes and other debt securities
of companies (including Euro-currency instruments and securities) or obligations
of domestic or foreign governments and their political subdivisions. When the
investment manager believes that the total return potential in debt securities
equals or exceeds the potential return on equity securities, the Fund may
substantially increase its holdings in such debt securities. The Fund may
establish and maintain reserves for defensive purposes or to enable it to take
advantage of buying opportunities. The Fund's reserves may be invested in
domestic as well as foreign short-term money market instruments including, but
not limited to, government obligations, certificates of deposit, bankers'
acceptances, time deposits, commercial paper, short-term corporate debt
securities and repurchase agreements.
The Fund makes investments in various countries. Under normal circumstances,
business activities in not less than three different foreign countries will be
represented in the Fund's portfolio. The Fund may, from time to time, have more
than 25% of its assets invested in any major industrial or developed country
which in the view of the investment manager poses no unique investment risk. The
Fund may purchase securities of companies, wherever organized, that have their
principal activities and interests outside the United States. Investments may
include securities issued by enterprises that have undergone or are currently
undergoing privatization. Under exceptional economic or market conditions
abroad, the Fund may, for defensive purposes, invest all or a major portion of
its assets in U.S. Government obligations or securities of companies
incorporated in and having their principal activities in the United States. The
Fund may also invest its reserves in domestic short-term money-market
instruments as described above.
In determining the appropriate distribution of investments among various
countries and geographic regions, the investment manager ordinarily considers
such factors as prospects for relative economic growth among foreign countries;
expected levels of inflation; relative price levels of the various capital
markets; government policies influencing business conditions; the outlook for
currency relationships and the range of individual investment opportunities
available to the international investor. Currently, more than 60% of the market
capitalization of equity securities are represented by securities in currencies
other than the U.S. Dollar.
Generally, the Fund will not trade in securities for short-term profits but,
when circumstances warrant, securities may be sold without regard to the length
of time held.
The Fund may purchase and write (sell) options and engage in financial futures
and foreign currency transactions. See "Additional Investment Information"
below.
SPECIAL RISK FACTORS. There are risks inherent in investing in any security,
including shares of each Fund. The investment manager attempts to reduce risk
through fundamental research; however, there is no guarantee that such efforts
will be successful and each Fund's returns and net asset value will fluctuate
over time. There are special risks associated with each Fund's investments that
are discussed below.
Foreign securities involve currency risks. The U.S. Dollar value of a foreign
security tends to decrease when the value of the U.S. Dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the U.S. Dollar falls against such currency. Fluctuations in
exchange rates may also affect the earning power and asset value of the foreign
entity issuing the security. Dividend and interest payments may be repatriated
based on the exchange rate at the time of disbursement or payment, and
restrictions on capital flows
8
<PAGE> 13
may be imposed. Losses and other expenses may be incurred in converting between
various currencies in connection with purchases and sales of foreign securities.
Foreign securities may be subject to foreign government taxes that reduce their
attractiveness. Other risks of investing in such securities include political or
economic instability in the country involved, the difficulty of predicting
international trade patterns and the possible imposition of exchange controls.
The prices of such securities may be more volatile than those of domestic
securities and the markets for such securities may be less liquid. In addition,
there may be less publicly available information about foreign issuers than
about domestic issuers. Many foreign issuers are not subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers. There is generally less regulation of stock
exchanges, brokers, banks and listed companies abroad than in the United States.
With respect to certain foreign countries, there is a possibility of
expropriation or diplomatic developments that could affect investment in these
countries.
EMERGING MARKETS. While a Fund's investments in foreign securities will
principally be in developed countries, a Fund may make investments in developing
or "emerging" countries, which involve exposure to economic structures that are
generally less diverse and mature than in the United States, and to political
systems that may be less stable. A developing country or emerging market country
can be considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the United States, Canada, Japan, Australia, New
Zealand, Hong Kong, Singapore and most Western European countries. Currently,
investing in many emerging markets may not be desirable or feasible because of
the lack of adequate custody arrangements for a Fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or other reasons. As
opportunities to invest in securities in emerging markets develop, a Fund may
expand and further broaden the group of emerging markets in which it invests. In
the past, markets of developing countries have been more volatile than the
markets of developed countries; however, such markets often have provided higher
rates of return to investors. The investment manager believes that these
characteristics can be expected to continue in the future.
Many of the risks described above relating to foreign securities generally will
be greater for emerging markets than for developed countries. For instance,
economies in individual developing markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging markets have
experienced substantial rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain developing markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries with which they
trade.
Also, the securities markets of developing countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure, regulatory and
accounting standards in many respects are less stringent than in the United
States and other developed markets. There also may be a lower level of
monitoring and regulation of developing markets and the activities of investors
in such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States; this is particularly true with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Such settlement problems may cause emerging market securities to be illiquid.
The inability of a Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result
9
<PAGE> 14
either in losses to a Fund due to subsequent declines in value of the portfolio
security or, if a Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser. Certain emerging markets may lack
clearing facilities equivalent to those in developed countries. Accordingly,
settlements can pose additional risks in such markets and ultimately can expose
a Fund to the risk of losses resulting from a Fund's inability to recover from a
counterparty.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading securities may cease or may be
substantially curtailed and prices for a Fund's portfolio securities in such
markets may not be readily available. A Fund's portfolio securities in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the Board of Trustees.
Investment in certain emerging market securities is restricted or controlled to
varying degrees. These restrictions or controls may at times limit or preclude
foreign investment in certain emerging market securities and increase the costs
and expenses of a Fund. Emerging markets may require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments, the market could impose temporary
restrictions on foreign capital remittances.
FIXED INCOME. Since most foreign fixed income securities are not rated, a Fund
will invest in foreign fixed income securities based on KFS's analysis without
relying on published ratings. Since such investments will be based upon KFS's
analysis rather than upon published ratings, achievement of a Fund's goals may
depend more upon the abilities of KFS than would otherwise be the case.
The value of the fixed income securities held by a Fund, and thus the net asset
value of the Fund's shares, generally will fluctuate with (a) changes in the
perceived creditworthiness of the issuers of those securities, (b) movements in
interest rates, and (c) changes in the relative values of the currencies in
which a Fund's investments in fixed income securities are denominated with
respect to the U.S. Dollar. The extent of the fluctuation will depend on various
factors, such as the average maturity of a Fund's investments in foreign fixed
income securities, and the extent to which a Fund hedges its interest rate,
credit and currency exchange rate risks. Many of the foreign fixed income
obligations in which a Fund will invest will have long maturities. A longer
average maturity generally is associated with a higher level of volatility in
the market value of such securities in response to changes in market conditions.
Investments in sovereign debt, including Brady Bonds, involve special risks.
Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a Fund may be unable to
collect all or any part of its investment in a particular issue.
Foreign investment in certain sovereign debt is restricted or controlled to
varying degrees, including requiring governmental approval for the repatriation
of income, capital or proceed of sales by foreign investors. These restrictions
or controls may at times limit or preclude foreign investment in certain
sovereign debt or increase the costs and expenses of a Fund. A significant
portion of the sovereign debt in which a Fund may invest is issued as part of
debt restructuring and such debt is to be considered speculative. There is a
history of defaults with respect to commercial bank loans by public and private
entities issuing Brady Bonds. All or a portion of the interest payments and/or
principal repayment with respect to Brady Bonds may be uncollateralized.
PRIVATIZED ENTERPRISES. The governments of certain foreign countries have, to
varying degrees, embarked on privatization programs contemplating the sale of
all or part of their interests in state enterprises. A Fund's
10
<PAGE> 15
investments in the securities of privatized enterprises include privately
negotiated investments in a government- or state-owned or controlled company or
enterprise that has not yet conducted an initial equity offering, investments in
the initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.
In certain jurisdictions, the ability of foreign entities, such as a Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.
In the case of the enterprises in which a Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as the enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which a Fund may invest
enjoy the protection of and receive preferential treatment from the respective
sovereigns that own or control them. After making an initial equity offering
these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition.
DEPOSITORY RECEIPTS. For many foreign securities, there are U.S. Dollar
denominated ADRs, which are bought and sold in the United States and are issued
by domestic banks. ADRs represent the right to receive securities of foreign
issuers deposited in the domestic bank or a correspondent bank. ADRs do not
eliminate all the risk inherent in investing in the securities of foreign
issuers, such as changes in foreign currency exchange rates. However, by
investing in ADRs rather than directly in foreign issuers' stock, a Fund avoids
currency risks during the settlement period. In general, there is a large,
liquid market in the United States for most ADRs. The Funds may also invest in
European Depository Receipts ("EDRs"), which are receipts evidencing an
arrangement with a European bank similar to that for ADRs and are designed for
use in the European securities markets. EDRs are not necessarily denominated in
the currency of the underlying security.
The Global Fund has registered as a "non-diversified" investment company so that
it will be able to invest more than 5% of its assets in the obligations of an
issuer, subject to the diversification requirements of Subchapter M of the
Internal Revenue Code applicable to the Fund. This allows the Global Fund, as to
50% of its assets, to invest more than 5% of its assets, but not more than 25%,
in the fixed income securities of an individual foreign government or corporate
issuer. Currently, the Fund does not intend to invest more than 5% of its assets
in any individual corporate issuer. Since the Fund may invest a relatively high
percentage of its assets in the obligations of a limited number of issuers, the
Fund may be more susceptible to any single economic, political or regulatory
occurrence than a diversified investment company. See "Investment Restrictions"
in the Statement of Additional Information.
As noted above, the Global Fund may invest in securities that are rated within
the four highest grades by S&P, Moody's or IBCA or, if unrated, are of
comparable quality as determined by the investment manager. Securities rated
within the four highest grades are generally considered to be "investment
grade." Like higher rated securities,
11
<PAGE> 16
securities rated in the fourth grade are considered to have adequate capacity to
pay principal and interest, although they may have fewer protective provisions
than higher rated securities and thus may be adversely affected by severe
economic circumstances and are considered to have speculative characteristics.
The characteristics of the rating categories are described in the Statement of
Additional Information under "Appendix--Ratings of Investments."
Since interest rates vary with changes in economic, market, political and other
conditions, there can be no assurance that past interest rates are indicative of
future rates. The values of fixed income securities in a Fund's portfolio will
fluctuate depending upon market factors and inversely with current interest rate
levels.
Each Fund may engage in options, financial futures and foreign currency
transactions and the Global Fund may engage in delayed delivery transactions and
may lend its portfolio securities. For a description of special risks associated
with these investment techniques, see "Additional Investment Information" below.
ADDITIONAL INVESTMENT INFORMATION. The portfolio turnover rates for the Funds
are listed under "Financial Highlights." The Funds will have increased
opportunities to adjust their portfolios across various markets and may
experience a high portfolio turnover rate (over 100%), which involves
correspondingly greater brokerage commissions or other transaction costs. Higher
portfolio turnover may result in the realization of greater net short-term
capital gains. In order to continue to qualify as a regulated investment company
for federal income tax purposes, less than 30% of the annual gross income of a
Fund must be derived from the sale or other disposition of securities and
certain other investments held by the Fund for less than three months. See
"Dividends and Taxes" in the Statement of Additional Information.
The Global Fund may take full advantage of the entire range of maturities of
fixed income securities and may adjust the average maturity of its portfolio
from time to time, depending upon its assessment of relative yields on
securities of different maturities and its expectations of future changes in
interest rates. Thus, the average maturity of the Fund's portfolio may be
relatively short (under five years, for example) at some times and relatively
long (over 10 years, for example) at other times. Generally, since shorter term
debt securities tend to be more stable than longer term debt securities, the
portfolio's average maturity will be shorter when interest rates are expected to
rise and longer when interest rates are expected to fall. Since in most foreign
markets debt securities generally are issued with maturities of ten years or
less, it is currently anticipated that the average maturity of the Fund's
portfolio will normally be in the intermediate range (three to ten years).
The Global Fund may not borrow money except as a temporary measure for
extraordinary or emergency purposes, and then only in an amount up to one-third
of the value of its total assets, in order to meet redemption requests without
immediately selling any portfolio securities or other assets. If, for any
reason, the current value of the Fund's total assets falls below an amount equal
to three times the amount of its indebtedness from money borrowed, the Fund
will, within three days (not including Sundays and holidays), reduce its
indebtedness to the extent necessary. The Fund will not borrow for leverage
purposes. The Fund may pledge up to 15% of its total assets to secure any such
borrowings. The International Fund may not borrow money except for temporary or
emergency purposes (but not for the purchase of investments) and then only in an
amount not to exceed 5% of its net assets. The Fund may not pledge its assets in
an amount exceeding the amount of the borrowings secured by such pledge.
A Fund will not purchase illiquid securities, including repurchase agreements
maturing in more than seven days, if, as a result thereof, more than 15% of the
Fund's net assets valued at the time of the transaction would be invested in
such securities. See "Investment Policies and Techniques--Over-the-Counter
Options" in the Statement of Additional Information for a description of the
extent to which over-the-counter traded options are in effect considered as
illiquid for purposes of each Fund's limit on illiquid securities.
Each Fund has adopted certain fundamental investment restrictions which are
presented in the Statement of Additional Information and which, together with
the investment objective and any policies of the Fund specifically designated in
this prospectus as fundamental, cannot be changed without approval by holders of
a majority of its outstanding voting shares. As defined in the Investment
Company Act of 1940, this means the lesser of the vote of (a) 67% of the shares
of the Fund present at a meeting where more than 50% of the outstanding shares
are present
12
<PAGE> 17
in person or by proxy; or (b) more than 50% of the outstanding shares of the
Fund. Policies of a Fund that are neither designated as fundamental nor
incorporated into any of the fundamental investment restrictions referred to
above may be changed by the Board of Trustees of the applicable Fund without
shareholder approval.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS. Each Fund may deal in options on
securities, securities indexes and foreign currencies, which options may be
listed for trading on a national securities exchange or traded over-the-counter.
Each Fund may write (sell) covered call options and secured put options on up to
25% of its net assets and may purchase put and call options provided that no
more than 5% of its net assets may be invested in premiums on such options. A
Fund will not enter into any futures contracts or options on futures contracts
if the aggregate of the market value of the outstanding futures contracts of the
Fund and futures contracts subject to outstanding options written by the Fund
would exceed 50% of the total assets of the Fund.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying security or other asset at the exercise price
during the option period. A put option gives the purchaser the right to sell,
and the writer the obligation to buy, the underlying security or other asset at
the exercise price during the option period. The writer of a covered call owns
securities or other assets that are acceptable for escrow and the writer of a
secured put invests an amount not less than the exercise price in eligible
securities or other assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund foregoes any possible profit from
an increase in the market price of the underlying security or other asset over
the exercise price plus the premium received. In writing puts, there is a risk
that a Fund may be required to take delivery of the underlying security or other
asset at a disadvantageous price.
Over-the-counter traded options ("OTC options") differ from exchange traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of non-performance by the
dealer as a result of the insolvency of such dealer or otherwise, in which event
a Fund may experience material losses. However, in writing options the premium
is paid in advance by the dealer. OTC options are available for a greater
variety of securities and other assets, and a wider range of expiration dates
and exercise prices, than are exchange traded options.
Each Fund may engage in financial futures transactions. Financial futures
contracts are commodity contracts that obligate the long or short holder to take
or make delivery of a specified quantity of a financial instrument, such as a
security, or an amount of a foreign currency, or the cash value of a securities
index during a specified future period at a specified price. A Fund will "cover"
futures contracts sold by the Fund and maintain in a segregated account certain
liquid assets in connection with futures contracts purchased by the Fund as
described under "Investment Policies and Techniques" in the Statement of
Additional Information.
The Funds may engage in financial futures transactions and may use index options
in an attempt to hedge against the effects of fluctuations in interest rates and
other market conditions. For example, when the near-term market view is bearish
but the portfolio composition is judged satisfactory for the longer term,
exposure to temporary declines in the market may be reduced by entering into
futures contracts to sell securities or the cash value of a securities index.
Conversely, where the near-term view is bullish, but the Fund is believed to be
well positioned for the longer term with a high cash position, the Fund can
hedge against market increases by entering into futures contracts to buy
securities or the cash value of a securities index. In either case, the use of
futures contracts would tend to reduce portfolio turnover and facilitate the
Fund's pursuit of its investment objective. Also, if the Fund owned long-term
bonds and interest rates were expected to rise, it could sell financial futures
contracts or the cash value of a securities index. If interest rates did
increase, the value of the bonds in the Fund would decline, but this decline
would be offset in whole or in part by an increase in the value of the Fund's
futures contracts or the cash value of the securities index. If, on the other
hand, long-term interest rates were expected to decline, the Fund could hold
short-term debt securities and benefit from the income earned by holding such
securities, while at the same time the Fund could purchase futures contracts on
long-term bonds or the cash value of a securities index. Thus, the Fund could
take advantage of the anticipated rise in the value of long-term bonds without
actually buying them. The
13
<PAGE> 18
futures contracts and short-term debt securities could then be liquidated and
the cash proceeds used to buy long-term bonds.
Futures contracts entail risks. If the investment manager's judgment about the
general direction of interest rates, markets or exchange rates is wrong, the
overall performance may be poorer than if no such contracts had been entered
into. There may be an imperfect correlation between movements in prices of
futures contracts and portfolio assets being hedged. In addition, the market
prices of futures contracts may be affected by certain factors. If participants
in the futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the assets and futures market could result. Price
distortions also could result if investors in futures contracts decide to make
or take delivery of underlying securities or other assets rather than engage in
closing transactions because of the resultant reduction in the liquidity of the
futures market. In addition, because, from the point of view of speculators,
margin requirements in the futures market are less onerous than margin
requirements in the cash market, increased participation by speculators in the
futures market could cause temporary price distortions. Due to the possibility
of price distortions in the futures market and because of the imperfect
correlation between movements in the prices of securities or other assets and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment manager still may not result in a successful hedging
transaction. If any of these events should occur, a Fund could lose money on the
financial futures contracts and also on the value of its portfolio assets. The
costs incurred in connection with futures transactions could reduce a Fund's
return.
Index options involve risks similar to those risks relating to transactions in
financial futures contracts described above. Also, an option purchased by a Fund
may expire worthless, in which case the Fund would lose the premium paid
therefor.
A Fund may engage in futures transactions only on commodities exchanges or
boards of trade. A Fund will not engage in transactions in index options,
financial futures contracts or related options for speculation, but only as an
attempt to hedge against changes in interest rates or market conditions
affecting the values of securities or other assets that the Fund owns or intends
to purchase.
FOREIGN CURRENCY TRANSACTIONS. Each Fund may engage in foreign currency
transactions in connection with its investments in foreign securities. The Funds
will not speculate in foreign currency exchange. The value of the foreign
securities investments of a Fund measured in U.S. Dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. Each Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders (usually large
commercial banks) and their customers.
When a Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the U.S. Dollar cost
or proceeds, as the case may be. By entering into a forward contract in U.S.
Dollars for the purchase or sale of the amount of foreign currency involved in
an underlying security transaction, the Fund is able to protect itself against a
possible loss between trade and settlement dates resulting from an adverse
change in the relationship between the U.S. Dollar and such foreign currency.
However, this tends to limit potential gains which might result from a positive
change in such currency relationships. Each Fund may also hedge its foreign
currency exchange rate risk by engaging in currency financial futures and
options transactions.
When the investment manager believes that the currency of a particular foreign
country may suffer a substantial decline against the U.S. Dollar, it may enter
into a forward contract to sell an amount of foreign currency approximating the
value of some or all of a Fund's portfolio securities denominated in such
foreign currency. In this situation the Fund may, in the alternative, enter into
a forward contract to sell a different foreign currency for a fixed U.S. Dollar
amount where the investment manager believes that the U.S. Dollar value of the
currency to be sold
14
<PAGE> 19
pursuant to the forward contract will fall whenever there is a decline in the
U.S. Dollar value of the currency in which portfolio securities of the Fund are
denominated ("cross-hedge"). The forecasting of short-term currency market
movement is extremely difficult and whether such a short-term hedging strategy
will be successful is highly uncertain.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a contract. Accordingly, it may be
necessary for a Fund to purchase additional currency on the spot market (and
bear the expense of such purchase) if the market value of the security is less
than the amount of foreign currency the Fund is obligated to deliver when a
decision is made to sell the security and make delivery of the foreign currency
in settlement of a forward contract. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver.
Each Fund will not speculate in foreign currency exchange. The Funds do not
enter into forward contracts or maintain a net exposure in such contracts where
the Fund would be obligated to deliver an amount of foreign currency in excess
of the value of the Fund's portfolio securities or other assets (a) denominated
in that currency or (b), in the case of a "cross-hedge," denominated in a
currency or currencies that the investment manager believes will have price
movements that tend to correlate closely with that currency. There is no
limitation as to the percentage of the Global Fund's assets that may be
committed to forward contracts for the purchase of a foreign currency; the
International Fund does not intend to enter into such forward contracts if it
would have more than 15% of the value of its total assets committed to such
contracts. A Fund segregates cash or liquid high-grade securities in an amount
not less than the value of the Fund's total assets committed to forward foreign
currency exchange contracts entered into for the purchase of a foreign currency.
If the value of the securities segregated declines, additional cash or
securities are added so that the segregated amount is not less than the amount
of the Fund's commitments with respect to such contracts. A Fund generally does
not enter into a forward contract with a term longer than one year.
RISK CONSIDERATIONS. The Statement of Additional Information contains further
information about the characteristics, risks and possible benefits of options,
futures and foreign currency transactions. See "Investment Policies and
Techniques" in the Statement of Additional Information. The principal risks are:
(a) possible imperfect correlation between movements in the prices of options or
futures contracts and movements in the prices of the securities or currencies
hedged or used for cover; (b) lack of assurance that a liquid secondary market
will exist for any particular option or futures contract at any particular time;
(c) the need for additional skills and techniques beyond those required for
normal portfolio management; (d) losses on futures contracts resulting from
market movements not anticipated by the investment manager; and (e) the possible
need to defer closing out certain options or futures contracts in order to
continue to qualify for beneficial tax treatment afforded "regulated investment
companies" under the Internal Revenue Code.
DELAYED DELIVERY TRANSACTIONS. The Global Fund may purchase or sell portfolio
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions involve a commitment by the Fund to purchase or sell
securities with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price or yield to the Fund at
the time of entering into the transaction. The value of fixed income securities
to be delivered in the future will fluctuate as interest rates vary. Because the
Fund is required to set aside cash or liquid high grade securities at least
equal in value to its commitments to purchase when-issued or delayed delivery
securities, flexibility to manage the Fund's investments may be limited if
commitments to purchase when-issued or delayed delivery securities were to
exceed 25% of the value of its assets.
To the extent the Global Fund engages in when-issued or delayed purchases, it
will do so for the purpose of acquiring portfolio securities consistent with the
Fund's investment objective and policies and not for the purpose of investment
leverage or to speculate in interest rate changes. The Fund will only make
commitments to purchase securities on a when-issued or delayed basis with the
intention of actually acquiring the securities, but the Fund reserves the right
to sell these securities before the settlement date if deemed advisable.
15
<PAGE> 20
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Global Fund may lend its portfolio securities (principally to
broker-dealers) without limit where such loans are callable at any time and are
continuously secured by segregated collateral (cash or U.S. Government
securities) equal to no less than the market value, determined daily, of the
securities loaned. The Fund will receive amounts equal to dividends or interest
on the securities loaned. It also will earn income for having made the loan. Any
cash collateral pursuant to these loans will be invested in short-term money
market instruments. As with other extensions of credit, there are risks of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. However, the loans would be made only to firms
deemed by the Fund's investment manager to be of good standing, and when the
Fund's investment manager believes the potential earnings to justify the
attendant risk. Management will limit such lending to not more than one-third of
the value of the Global Fund's total assets.
INVESTMENT MANAGER AND UNDERWRITER
INVESTMENT MANAGER. Kemper Financial Services, Inc. ("KFS"), 120 South LaSalle
Street, Chicago, Illinois 60603, is the investment manager of each Fund and
provides each Fund with continuous professional investment supervision. KFS is
one of the largest investment managers in the country and has been engaged in
the management of investment funds for more than forty-five years. KFS and its
affiliates provide investment advice and manage investment portfolios for the
Kemper Funds, the Kemper insurance companies, Kemper Corporation and other
corporate, pension, profit-sharing and individual accounts representing
approximately $60 billion under management. KFS acts as investment manager or
principal underwriter for 24 open-end and seven closed-end investment companies,
with 56 separate investment portfolios representing more than 3 million
shareholder accounts. KFS is a wholly owned subsidiary of Kemper Financial
Companies, Inc., which is a financial services holding company that is more than
95% owned by Kemper Corporation, a diversified insurance and financial services
holding company.
Responsibility for overall management of each Fund rests with its Board of
Trustees and officers. Professional investment supervision is provided by KFS.
The investment management agreements provide that KFS shall act as each Fund's
investment adviser, manage its investments and provide it with various services
and facilities. KFS will utilize the services of Kemper Investment Management
Company Limited, 1 Fleet Place, London EC4M 7RQ, a wholly owned subsidiary of
KFS, with respect to foreign securities investments of the Funds including
analysis, research, execution and trading services.
Gordon K. Johns and J. Patrick Beimford, Jr. are the co-portfolio managers of
the Global Fund. Mr. Johns has served in this capacity since the Fund commenced
operations in October 1989 and Mr. Beimford has served in this capacity since
September 1993. Mr. Johns joined Kemper Investment Management Company Limited
("KIMCO") in September 1988 and is currently an Executive Vice President of KFS,
a Director and Managing Director of KIMCO and a Vice President of the Fund. As
reflected above, KIMCO is an affiliate of KFS that provides services to KFS with
respect to the Fund's foreign investments. He received a B.A. in law from
Balliol College in Oxford, United Kingdom. Mr. Beimford joined KFS in April 1976
and is currently an Executive Vice President and Head of the Fixed Income
Department of KFS and a Vice President of the Fund. He received a B.S.I.M. in
Business from Purdue University, Lafayette, Indiana, and an M.B.A. in Finance
from the University of Chicago, Chicago, Illinois. Mr. Beimford is a Chartered
Financial Analyst.
KFS has a Fixed Income Investment Committee that determines overall investment
strategy for fixed income portfolios managed by KFS. The Fixed Income Committee
is currently comprised of the following members: J. Patrick Beimford, Jr., Frank
E. Collecchia, George Klein, Michael A. McNamara, Christopher J. Mier, Frank J.
Rachwalski, Jr., Harry E. Resis, Jr., Robert H. Schumacher, John E. Silvia,
Kenneth T. Urbaszewski and Christopher T. Vincent. The portfolio managers work
together as a team with the Fixed Income Committee and various fixed income
analysts and traders to manage the Fund's investments. Analysts provide market,
economic and financial research and analysis that is used by the Fixed Income
Committee to establish broad parameters for fixed income portfolios, including
duration and cash levels. In addition, credit research by analysts is used by
portfolio managers in selecting securities appropriate for the Fund's policies.
The KFS International Fixed Income Investments area, directed by Gordon K.
Johns, provides research and analysis regarding foreign investments to the
16
<PAGE> 21
portfolio managers. After investment decisions are made, fixed income traders
execute the portfolio manager's instructions through various broker-dealer
firms.
Dennis H. Ferro is the portfolio manager for the International Fund and has
served in this capacity since he joined KFS in March 1994. He is currently an
Executive Vice President of KFS. Prior to coming to KFS, Mr. Ferro was
President, Managing Director and Chief Investment Officer of an international
investment advisory firm. He received a B.A. in Political Science from Villanova
University, Villanova, Pennsylvania and an M.B.A. in Finance from St. Johns
University, Jamaica, New York. Mr. Ferro is a Chartered Financial Analyst.
KFS has an Equity Investment Committee that determines overall investment
strategy for equity portfolios managed by KFS. The Equity Investment Committee
is currently comprised of the following members: Daniel J. Bukowski, Tracy
McCormick Chester, C. Beth Cotner, James H. Coxon, Richard A. Goers, Karen A.
Hussey, Frank D. Korth, Gary A. Langbaum, James R. Neel and Thomas M. Regner.
The portfolio managers work as a team with the Equity Investment Committee and
various equity analysts and equity traders to manage the Fund's investments.
Equity analysts--through research, analysis and evaluation--work to develop
investment ideas appropriate for the Fund. These ideas are studied and debated
by the Equity Investment Committee and, if approved, are added to a list of
eligible investments. The portfolio managers use the list of eligible
investments to help them structure the Fund's portfolio in a manner consistent
with the Fund's objective. The KFS International Equity Investments area,
directed by Dennis H. Ferro, provides research and analysis regarding foreign
investments to the portfolio managers. After investment decisions are made,
equity traders execute the portfolio manager's instructions through various
broker-dealer firms.
Each Fund pays KFS an investment management fee, payable monthly, at the annual
rate of .75 of 1% of the first $250 million of its average daily net assets, .72
of 1% of average daily net assets between $250 million and $1 billion, .70 of 1%
of average daily net assets between $1 billion and $2.5 billion, .68 of 1% of
average daily net assets between $2.5 billion and $5 billion, .65 of 1% of
average daily net assets between $5 billion and $7.5 billion, .64 of 1% of
average daily net assets between $7.5 billion and $10 billion, .63 of 1% of
average daily net assets between $10 billion and $12.5 billion and .62 of 1% of
its average daily net assets over $12.5 billion. Before May 31, 1994, the Funds
paid KFS under a different schedule that is described in the Statement of
Additional Information. The expenses of each Fund, and of other investment
companies investing in foreign securities, can be expected to be higher than for
investment companies investing primarily in domestic securities since the costs
of operation are higher, including custody and transaction costs for foreign
securities and investment management fees.
PRINCIPAL UNDERWRITER. Pursuant to an underwriting and distribution services
agreement ("distribution agreement") with each Fund, Kemper Distributors, Inc.
("KDI"), an affiliate of KFS, is the principal underwriter and distributor of
each Fund's shares and acts as agent of each Fund in the sale of its shares. KDI
bears all its expenses of providing services pursuant to the distribution
agreement, including the payment of any commissions. KDI provides for the
preparation of advertising or sales literature and bears the cost of printing
and mailing prospectuses to persons other than shareholders. KDI bears the cost
of qualifying and maintaining the qualification of Fund shares for sale under
the securities laws of the various states and each Fund bears the expense of
registering its shares with the Securities and Exchange Commission. KDI may
enter into related selling group agreements with various broker-dealers,
including affiliates of KDI, that provide distribution services to investors.
KDI also may provide some of the distribution services. Before February 1, 1995,
KFS was the Funds' principal underwriter and distributor.
CLASS A SHARES. KDI receives no compensation from the Fund as principal
underwriter for Class A shares and pays all expenses of distribution of each
Fund's Class A shares under the distribution agreement not otherwise paid by
dealers or other financial services firms. As indicated under "Purchase of
Shares," KDI retains the sales charge upon the purchase of shares and pays or
allows concessions or discounts to firms for the sale of Fund shares.
CLASS B SHARES. For its services under the distribution agreement, KDI receives
a fee from each Fund, payable monthly, at the annual rate of .75 of 1% of
average daily net assets of each Fund attributable to Class B shares. This
17
<PAGE> 22
fee is accrued daily as an expense of Class B shares. KDI also receives any
contingent deferred sales charges. See "Redemption or Repurchase of
Shares--Contingent Deferred Sales Charge--Class B Shares." KDI currently
compensates firms for sales of Class B shares at a commission rate of 3.75%.
CLASS C SHARES. For its services under the distribution agreement, KDI receives
a fee from each Fund, payable monthly, at the annual rate of .75 of 1% of
average daily net assets of each Fund attributable to Class C shares. This fee
is accrued daily as an expense of Class C shares. KDI currently pays firms for
sales of Class C shares a distribution fee, payable quarterly, at an annual rate
of .75 of 1% of net assets attributable to Class C shares maintained and
serviced by the firm. A firm becomes eligible for the distribution fee based
upon assets in accounts in the month of purchase and the fee continues until
terminated by KDI or a Fund.
RULE 12b-1 PLAN. Since each distribution agreement provides for fees payable as
an expense of the Class B shares and the Class C shares that are used by KDI to
pay for distribution services for those classes, that agreement is approved and
reviewed separately for the Class B shares and the Class C shares in accordance
with Rule 12b-1 under the Investment Company Act of 1940, which regulates the
manner in which an investment company may, directly or indirectly, bear the
expenses of distributing its shares. The table below shows amounts paid in
connection with each Fund's Rule 12b-1 Plan during its 1994 fiscal year.+
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION FEES
EXPENSES PAID CONTINGENT DEFERRED
INCURRED BY BY FUND TO SALES CHARGES PAID
UNDERWRITER UNDERWRITER TO UNDERWRITER
------------------- ------------------ -------------------
FUND CLASS B CLASS C CLASS B CLASS C CLASS B
- -------------------------------------------- -------- ------- ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
Global...................................... $134,000 8,000 146,000 0 107,000
International............................... $337,000 18,000 48,000 1,000 8,000
</TABLE>
- ---------------
+ Class B and Class C shares were first offered on May 31, 1994.
If a Rule 12b-1 Plan is terminated in accordance with its terms, the obligation
of a Fund to make payments to KDI pursuant to the Plan will cease and the Fund
will not be required to make any payments past the termination date. Thus, there
is no legal obligation for the Fund to pay any expenses incurred by KDI in
excess of its fees under a Plan, if for any reason the Plan is terminated in
accordance with its terms. Future fees under a Plan may or may not be sufficient
to reimburse KDI (or KFS as predecessor to KDI) for its expenses incurred.
ADMINISTRATIVE SERVICES. KDI also provides information and administrative
services for Fund shareholders pursuant to an administrative services agreement
("administrative agreement"). KDI enters into related arrangements with various
financial services firms, such as broker-dealer firms or banks ("firms"), that
provide services and facilities for their customers or clients who are
shareholders of the Fund. Such administrative services and assistance may
include, but are not limited to, establishing and maintaining shareholder
accounts and records, processing purchase and redemption transactions, answering
routine inquiries regarding the Fund and its special features and such other
services as may be agreed upon from time to time and permitted by applicable
statute, rule or regulation. KDI bears all its expenses of providing services
pursuant to the administrative agreement, including the payment of any service
fees. For services under the administrative agreement, each Fund pays KDI a fee,
payable monthly, at the annual rate of up to .25 of 1% of average daily net
assets of each class of the Fund. With respect to Class A shares, KDI then pays
each firm a service fee at an annual rate of (a) up to .15 of 1% of net assets
for the Global Fund and .25 of 1% of net assets for the International Fund of
those accounts in the Fund that it maintains and services attributable to Class
A shares acquired prior to October 1, 1993, and (b) up to .25 of 1% of net
assets of those accounts in each Fund that it maintains and services
attributable to Class A shares acquired on or after October 1, 1993. With
respect to Class B shares and Class C shares, KDI pays each firm a service fee,
payable quarterly, at an annual rate of up to .25 of 1% of net assets of those
accounts in the Fund that it maintains and services attributable to Class B
shares and Class C shares, respectively. Firms to which service fees may be paid
include broker-dealers affiliated with KDI. A firm becomes eligible for the
service fee based on assets in the accounts in the month following the month of
purchase (in the month of purchase for Class C shares) and the fee continues
18
<PAGE> 23
until terminated by KDI or the Fund. The fees are calculated monthly and paid
quarterly. KDI may advance to financial services firms the first year service
fee related to Class B shares sold by such firms at a rate of up to .25 of 1% of
the purchase price of such shares. As compensation therefor, KDI may retain the
administrative services fee paid by a Fund with respect to such shares for the
first year after purchase. Financial services firms will become eligible for
future service fees with respect to such shares commencing in the thirteenth
month following the month of purchase.
KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for each Fund. Currently, the
administrative services fee payable to KDI is based only upon Fund assets in
accounts for which there is a firm listed on a Fund's records and it is intended
that KDI will pay all the administrative services fee that it receives from each
Fund to firms in the form of service fees. The effective administrative services
fee rate to be charged against all assets of each Fund while this procedure is
in effect will depend upon the proportion of Fund assets that is in accounts for
which there is a firm of record as well as, with respect to the Class A shares
of the Global Fund, the date when shares representing such assets were
purchased.
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. The Chase Manhattan Bank, N.A., Chase
MetroTech Center, Brooklyn, New York 11245, as custodian, has custody of all
securities and cash of each Fund held outside the United States. Investors
Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas City, Missouri
64105, as custodian, and United Missouri Bank, n.a., Tenth and Grand Streets,
Kansas City, Missouri 64105 and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, as sub-custodians, have custody of
all securities and cash of each Fund maintained in the United States. They
attend to the collection of principal and income, and payment for and collection
of proceeds of securities bought and sold by each Fund. IFTC also is each Fund's
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Kemper Service Company, an affiliate of KFS, serves as "Shareholder
Service Agent" of each Fund and as such, performs all of IFTC's duties as
transfer agent and dividend-paying agent. For a description of shareholder
service agent fees payable to the Shareholder Service Agent, see "Investment
Manager and Underwriter" in the Statement of Additional Information.
PORTFOLIO TRANSACTIONS. KFS places all orders for purchases and sales of a
Fund's securities. Subject to seeking best execution of orders, KFS may consider
sales of shares of a Fund and other funds managed by KFS as a factor in
selecting broker-dealers. See "Portfolio Transactions" in the Statement of
Additional Information.
DIVIDENDS AND TAXES
DIVIDENDS. The Global Fund normally distributes monthly dividends of net
investment income, the International Fund normally distributes annual dividends
of net investment income, and each Fund distributes any net realized short-term
and long-term capital gains annually.
Dividends paid by a Fund as to each class of its shares will be calculated in
the same manner, at the same time and on the same day. The level of income
dividends per share (as a percentage of net asset value) will be lower for Class
B and Class C shares than for Class A shares primarily as a result of the
distribution services fee applicable to Class B and Class C shares.
Distributions of capital gains, if any, will be paid in the same amount for each
class.
Income dividends and capital gain dividends, if any, of a Fund will be credited
to shareholder accounts in full and fractional shares of the same class of that
Fund at net asset value except that, upon written request to the Shareholder
Service Agent, a shareholder may select one of the following options:
(1) To receive income and short-term capital gain dividends in cash and
long-term capital gain dividends in shares of the same class at net asset
value; or
(2) To receive income and capital gain dividends in cash.
19
<PAGE> 24
Any dividends of a Fund that are reinvested normally will be reinvested in
shares of the same class of that same Fund. However, upon written request to the
Shareholder Service Agent, a shareholder may elect to have dividends of a Fund
invested without sales charge in shares of the same class of another Kemper Fund
at the net asset value of such class of such other fund. See "Special
Features--Class A Shares--Combined Purchases" for a list of such other Kemper
Funds. To use this privilege of investing dividends of a Fund in shares of
another Kemper Fund, shareholders must maintain a minimum account value of
$1,000 in the Fund distributing the dividends and a minimum account value of
$1,000 in the Kemper Fund in which dividends are reinvested. The Funds will
reinvest dividend checks (and future dividends) in shares of that same Fund and
class if checks are returned as undeliverable.
TAXES. Each Fund intends to continue to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code ("Code") and, if so
qualified, will not be liable for federal income taxes to the extent its
earnings are distributed. Dividends derived from net investment income and net
short-term capital gains are taxable to shareholders as ordinary income and
long-term capital gain dividends are taxable to shareholders as long-term
capital gain regardless of how long the shares have been held and whether
received in cash or shares. Long-term capital gain dividends received by
individual shareholders are taxed at a maximum rate of 28%. Dividends declared
in October, November or December to shareholders of record as of a date in one
of those months and paid during the following January are treated as paid on
December 31 of the calendar year declared. It is anticipated that only a small
portion, if any, of the ordinary income dividends paid by either Fund will
qualify for the dividends received deduction available to corporate
shareholders.
A dividend received shortly after the purchase of shares reduces the net asset
value of the shares by the amount of the dividend and, although in effect a
return of capital, will be taxable to the shareholder. If the net asset value of
shares were reduced below the shareholder's cost by dividends representing gains
realized on sales of securities, such dividends would be a return of investment
though taxable as stated above.
The International Fund intends to continue to qualify for and make the election
permitted under Section 853 of the Code. If more than 50% of the value of the
Global Fund's total assets at the close of a fiscal year consists of foreign
securities, the Global Fund may make the election permitted under Section 853 of
the Code. If this election is made, shareholders will be able to claim a credit
or deduction on their income tax returns for, and will be required to treat as
part of the amounts distributed to them, their pro rata portion of the income
taxes paid by the Fund to foreign countries (which taxes relate primarily to
investment income). The shareholders of a Fund may claim a credit by reason of
that Fund's election, subject to certain limitations imposed by Section 904 of
the Code. Also, under the Code, no deduction for foreign taxes may be claimed by
individual shareholders who do not elect to itemize deductions on their federal
income tax returns; although such a shareholder may claim a credit for foreign
taxes and in any event will be treated as having taxable income in the amount of
the shareholder's pro rata share of foreign taxes paid by the Fund.
Gains and losses attributable to fluctuations in the value of foreign currencies
will be characterized generally as ordinary gain or loss under Section 988 of
the Code. For example, if a Fund sold a foreign bond and part of the gain or
loss on the sale were attributable to an increase or decrease in the value of a
foreign currency, then the currency gain or loss would be treated as ordinary
income or loss. If such transactions result in greater net ordinary income, the
dividends paid by the Fund will be increased; if the result of such transactions
is lower net ordinary income, a portion of dividends paid could be classified as
a return of capital.
Each Fund is required by law to withhold 31% of taxable dividends and redemption
proceeds paid to certain shareholders who do not furnish a correct taxpayer
identification number (in the case of individuals, a social security number) and
in certain other circumstances. Trustees of qualified retirement plans and
403(b)(7) accounts are required by law to withhold 20% of the taxable portion of
any distribution that is eligible to be "rolled over." The 20% withholding
requirement does not apply to distributions from Individual Retirement Accounts
("IRAs") or any part of a distribution that is transferred directly to another
qualified retirement plan, 403(b)(7) account, or IRA. Shareholders should
consult with their tax advisers regarding the 20% withholding requirement.
20
<PAGE> 25
After each transaction, shareholders will receive a confirmation statement
giving complete details of the transaction except that statements will be sent
quarterly for dividend reinvestment, periodic investment and redemption programs
and reinvestment programs for unit investment trusts underwritten by an
affiliate of KFS. Information for income tax purposes will be provided after the
end of the calendar year. Shareholders are encouraged to retain copies of their
account confirmation statements or year-end statements for tax reporting
purposes. However, those who have incomplete records may obtain historical
account transaction information at a reasonable fee.
NET ASSET VALUE
The net asset value per share of a Fund is determined separately for each class
by dividing the value of the Fund's net assets attributable to that class by the
number of shares of that class outstanding. The per share net asset value of the
Class B and Class C shares of a Fund will generally be lower than that of the
Class A shares of the Fund because of the higher expenses borne by the Class B
and Class C shares. Portfolio securities that are primarily traded on a domestic
securities exchange are valued at the last sale price on the exchange or, if
there is no recent last sale price available, at the last current bid quotation.
Portfolio securities that are primarily traded on foreign securities exchanges
are generally valued at the preceding closing values of such securities on their
respective exchanges where primarily traded. A security that is listed or traded
on more than one exchange is valued at the quotation on the exchange determined
to be the primary market for such security by the Board of Trustees or its
delegates. Securities not so traded or listed are valued at the last current bid
quotation if market quotations are available. Fixed income securities are valued
by using market quotations, or independent pricing services that use prices
provided by market makers or estimates of market values obtained from yield data
relating to instruments or securities with similar characteristics. Equity
options are valued at the last sale price unless the bid price is higher or the
asked price is lower, in which event such bid or asked price is used. Exchange
traded fixed income options are valued at the last sale price unless there is no
sale price, in which event current prices provided by market makers are used.
Over-the-counter traded fixed income options are valued based upon current
prices provided by market makers. Financial futures and options thereon are
valued at the settlement price established each day by the board of trade or
exchange on which they are traded. Other securities and assets are valued at
fair value as determined in good faith by the Board of Trustees. Because of the
need to obtain prices as of the close of trading on various exchanges throughout
the world, the calculation of net asset value does not necessarily take place
contemporaneously with the determination of the prices of a Fund's foreign
securities. For purposes of determining the Fund's net asset value, all assets
and liabilities initially expressed in foreign currency values will be converted
into U.S. Dollar values at the mean between the bid and offered quotations of
such currencies against U.S. Dollars as last quoted by any recognized dealer. If
an event were to occur after the value of a security was so established but
before the net asset value per share was determined, which was likely to
materially change the net asset value, then that security would be valued using
fair value considerations by the Board of Trustees or its delegates. On each day
the New York Stock Exchange (the "Exchange") is open for trading, the net asset
value is determined as of the earlier of 3:00 p.m. Chicago time or the close of
the Exchange.
PURCHASE OF SHARES
ALTERNATIVE PURCHASE ARRANGEMENTS. Class A shares of each Fund are sold to
investors subject to an initial sales charge. Class B shares are sold without an
initial sales charge but are subject to higher ongoing expenses than Class A
shares and a contingent deferred sales charge payable upon certain redemptions.
Class B shares automatically convert to Class A shares six years after issuance.
Class C shares are sold without an initial or a contingent deferred sales charge
but are subject to higher ongoing expenses than Class A shares and do not
convert into another class. When placing purchase orders, investors must specify
whether the order is for Class A, Class B or Class C shares.
The primary distinctions among the classes of each Fund's shares lie in their
initial and contingent deferred sales charge structures and in their ongoing
expenses, including asset-based sales charges in the form of Rule 12b-1
distribution fees. These differences are summarized in the table below. See,
also, "Summary of Expenses." Each
21
<PAGE> 26
class has distinct advantages and disadvantages for different investors, and
investors may choose the class that best suits their circumstances and
objectives.
<TABLE>
<CAPTION>
ANNUAL 12b-1 FEES
(AS A % OF AVERAGE DAILY
SALES CHARGE NET ASSETS) OTHER INFORMATION
--------------------------------- ------------------------ ---------------------------------
<S> <C> <C> <C>
Class A Maximum initial sales charge of None Initial sales charge waived or
4.5% (for the Global Fund) and reduced for certain purchases
5.75% (for the International
Fund) of the public offering
price
Class B Maximum contingent deferred sales 0.75% Shares convert to Class A shares
charge of 4% of redemption six years after issuance
proceeds; declines to zero after
six years
Class C None 0.75% No conversion feature
</TABLE>
The minimum initial investment for each Fund is $1,000 and the minimum
subsequent investment is $100. The minimum initial investment for an Individual
Retirement Account is $250 and the minimum subsequent investment is $50. Under
an automatic investment plan, such as Bank Direct Deposit, Payroll Direct
Deposit or Government Direct Deposit, the minimum initial and subsequent
investment is $50. These minimum amounts may be changed at any time in
management's discretion.
Share certificates will not be issued unless requested in writing. It is
recommended that investors not request share certificates unless needed for a
specific purpose. You cannot redeem shares by telephone or wire transfer or use
the telephone exchange privilege if share certificates have been issued. A lost
or destroyed certificate is difficult to replace and can be expensive to the
shareholder (a bond worth 2% or more of the certificate value is normally
required).
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES. The public offering of Class A
shares for purchasers of the Global Fund choosing the initial sales charge
alternative is the net asset value plus a sales charge, as set forth below.
<TABLE>
<CAPTION>
GLOBAL FUND--SALES CHARGE
----------------------------------------
ALLOWED
TO
DEALERS
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF OF NET OF
OFFERING ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE* PRICE
------ ------ ------
<S> <C> <C> <C>
Less than $100,000.................................. 4.50 % 4.71 % 4.00 %
$100,000 but less than $250,000..................... 3.50 3.63 3.00
$250,000 but less than $500,000..................... 2.60 2.67 2.25
$500,000 but less than $1 million................... 2.00 2.04 1.75
$1 million and over................................. 0.00 ** 0.00 ** ***
- ---------------
* Rounded to the nearest one-hundredth percent.
** Redemption of shares may be subject to a contingent deferred sales charge as discussed below.
*** Commission is payable by KDI as discussed below.
</TABLE>
22
<PAGE> 27
The public offering price of Class A shares for purchasers of the International
Fund choosing the initial sales charge alternative is the net asset value plus a
sales charge, as set forth below.
<TABLE>
<CAPTION>
INTERNATIONAL FUND--SALES CHARGE
----------------------------------------
ALLOWED
TO
DEALERS
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF OF NET OF
OFFERING ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE* PRICE
------ ------ ------
<S> <C> <C> <C>
Less than $50,000................................... 5.75 % 6.10 % 5.20 %
$50,000 but less than $100,000...................... 4.50 4.71 4.00
$100,000 but less than $250,000..................... 3.50 3.63 3.00
$250,000 but less than $500,000..................... 2.60 2.67 2.25
$500,000 but less than $1 million................... 2.00 2.04 1.75
$1 million and over................................. .00 ** .00 ** ***
- ---------------
* Rounded to the nearest one-hundredth percent.
** Redemption of shares may be subject to a contingent deferred sales charge as discussed below.
*** Commission is payable by KDI as discussed below.
</TABLE>
Each Fund receives the entire net asset value of all Class A shares sold. KDI,
the Funds' principal underwriter, retains the sales charge on sales of Class A
shares from which it allows discounts from the applicable public offering price
to investment dealers, which discounts are uniform for all dealers in the United
States and its territories. The normal discount allowed to dealers is set forth
in the above table. Upon notice to all dealers with whom it has sales
agreements, KDI may reallow up to the full applicable sales charge, as shown in
the above table, during periods and for transactions specified in such notice
and such reallowances may be based upon attainment of minimum sales levels.
During periods when 90% or more of the sales charge is reallowed, such dealers
may be deemed to be underwriters as that term is defined in the Securities Act
of 1933.
Class A shares of a Fund may be purchased at net asset value to the extent that
the amount invested represents the net proceeds from a redemption of shares of a
mutual fund for which KFS does not serve as investment manager ("non-Kemper
fund") provided that: (a) the investor has previously paid either an initial
sales charge in connection with the purchase of the non-Kemper fund shares
redeemed or a contingent deferred sales charge in connection with the redemption
of the non-Kemper fund shares, and (b) the purchase of Fund shares is made
within 90 days after the date of such redemption. To make such a purchase at net
asset value, the investor or the investor's dealer must, at the time of
purchase, submit a request that the purchase be processed at net asset value
pursuant to this privilege. The redemption of the shares of the non-Kemper fund
is, for federal income tax purposes, a sale upon which a gain or loss may be
realized.
Class A shares of a Fund may be purchased at net asset value by: (a) any
purchaser provided that the amount invested in the Fund or other Kemper Mutual
Funds listed under "Special Features--Class A Shares--Combined Purchases" totals
at least $1,000,000 including purchases of Class A shares pursuant to the
"Combined Purchases," "Letter of Intent" and "Cumulative Discount" features
described under "Special Features"; or (b) a participant-directed qualified
retirement plan described in Code Section 401(a) or a participant-directed
non-qualified deferred compensation plan described in Code Section 457 provided
in either case that such plan has not less than 200 eligible employees (the
"Large Order NAV Purchase Privilege"). Redemption within one year of shares
purchased under the Large Order NAV Purchase Privilege may be subject to a
contingent deferred sales charge. See "Redemption or Repurchase of
Shares--Contingent Deferred Sales Charge--Large Order NAV Purchase Privilege."
KDI may in its discretion compensate investment dealers or other financial
services firms in connection with the sale of Class A shares of each Fund to
employer sponsored employee benefit plans using the subaccount recordkeeping
system made available through KFS at net asset value in accordance with the
Large Order NAV Purchase Privilege up to the following amounts: 1.00% of the net
asset value of shares sold on amounts up to $5 million in any calendar year,
.50% on the next $5 million and .25% on amounts over $10 million in such
calendar year. KDI may in its discretion compensate investment dealers or other
financial services firms in connection with the sale of Class A shares of each
Fund to other purchasers at net asset value in accordance with the Large Order
23
<PAGE> 28
NAV Purchase Privilege up to the following amounts: .70% of the net asset value
of shares sold on amounts up to $3 million, .50% on the next $2 million and .25%
on amounts over $5 million. For purposes of determining the appropriate
commission percentage to be applied to a particular sale under the foregoing
schedules, KDI will consider the cumulative amount invested by the purchaser in
the Fund and other Kemper Mutual Funds listed under "Special Features--Class A
Shares--Combined Purchases," including purchases pursuant to the "Combined
Purchases," "Letter of Intent" and "Cumulative Discount" features referred to
above. The privilege of purchasing Class A shares of a Fund at net asset value
under the Large Order NAV Purchase Privilege is not available if another net
asset value purchase privilege is also applicable.
Class A shares may be sold to officers, trustees, directors, employees
(including retirees) and sales representatives of the Fund, its investment
manager, its principal underwriter or certain affiliated companies, for
themselves or members of their families, or to any trust, pension,
profit-sharing or other benefit plan for only such persons at net asset value
and in any amount. Class A shares may be sold at net asset value in any amount
to registered representatives and employees of broker-dealers having selling
group agreements with KDI and officers, directors and employees of service
agents of the Fund, for themselves or their spouses or dependent children, or to
any trust or pension, profit-sharing or other benefit plan for only such
persons. Class A shares may be sold at net asset value in any amount to selected
employees (including their spouses and dependent children) of banks and other
financial services firms that provide administrative services related to order
placement and payment to facilitate transactions in shares of each Fund for
their clients pursuant to an agreement with KDI or one of its affiliates. Only
those employees of such banks and other firms who as part of their usual duties
provide services related to transactions in Fund shares may purchase Fund Class
A shares at net asset value hereunder. Class A shares may also be sold at net
asset value in any amount to unit investment trusts underwritten by an affiliate
of KFS. In addition, unitholders of unit investment trusts underwritten by an
affiliate of KFS may purchase Fund Class A shares at net asset value through
reinvestment programs described in the prospectuses of such trusts which have
such programs. Class A shares of a Fund may be sold at net asset value through
certain investment advisers registered under the Investment Advisers Act of 1940
and other financial services firms that adhere to certain standards established
by KDI, including a requirement that such shares be sold for the benefit of
their clients participating in a "wrap account" or similar program under which
such clients pay a fee to the investment adviser or other firm. Such shares are
sold for investment purposes and on the condition that they will not be resold
except through redemption or repurchase by the Fund. Each Fund may also issue
Class A shares at net asset value in connection with the acquisition of the
assets of or merger or consolidation with another investment company, or to
shareholders in connection with the investment or reinvestment of income and
capital gain dividends.
The sales charge scale is applicable to purchases made at one time by any
"purchaser" which includes an individual; or an individual, his or her spouse
and children under the age of 21; or a trustee or other fiduciary of a single
trust estate or single fiduciary account; or an organization exempt from federal
income tax under Section 501(c)(3) or (13) of the Code; or a pension,
profit-sharing or other employee benefit plan whether or not qualified under
Section 401 of the Code; or other organized group of persons whether
incorporated or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase of redeemable
securities of a registered investment company at a discount. In order to qualify
for a lower sales charge, all orders from an organized group will have to be
placed through a single investment dealer or other firm and identified as
originating from a qualifying purchaser.
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES. Investors choosing the
deferred sales charge alternative may purchase Class B shares at net asset value
per share without any sales charge at the time of purchase. Since Class B shares
are being sold without an initial sales charge, the full amount of the
investor's purchase payment will be invested in Class B shares for his or her
account. A contingent deferred sales charge may be imposed upon redemption of
Class B shares. See "Redemption or Repurchase of Shares--Contingent Deferred
Sales Charge--Class B Shares."
KDI compensates firms for sales of Class B shares at the time of sale at a
commission rate of up to 3.75% of the amount of Class B shares purchased. KDI is
compensated by each Fund for services as distributor and principal underwriter
for Class B shares. See "Investment Manager and Underwriter."
24
<PAGE> 29
Class B shares of a Fund will automatically convert to Class A shares of the
same Fund six years after issuance on the basis of the relative net asset value
per share. The purpose of the conversion feature is to relieve holders of Class
B shares from the distribution services fee when they have been outstanding long
enough for KDI to have been compensated for distribution related expenses. For
purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and other distributions paid with respect to Class B
shares in a shareholder's Fund account will be converted to Class A shares on a
pro rata basis.
PURCHASE OF CLASS C SHARES. The public offering price of the Class C shares of a
Fund is the next determined net asset value. No initial or contingent deferred
sales charge is imposed. Since Class C shares are sold without an initial sales
charge, the full amount of the investor's purchase payment will be invested in
Class C shares for his or her account. KDI pays firms for sales of Class C
shares a distribution fee, payable quarterly, at an annual rate of .75 of 1% of
net assets attributable to Class C shares maintained and serviced by the firm.
KDI is compensated by each Fund as distributor and principal underwriter for
Class C shares. See "Investment Manager and Underwriter."
WHICH ARRANGEMENT IS BETTER FOR YOU? The decision as to which class of shares
provides a more suitable investment for an investor depends on a number of
factors, including the amount and intended length of the investment. Investors
making investments that qualify for reduced sales charges might consider Class A
shares. Investors who prefer not to pay an initial sales charge and who plan to
hold their investment for more than six years might consider Class B shares.
Investors who prefer not to pay an initial sales charge but who plan to redeem
their shares within six years might consider Class C shares. Orders for Class B
shares or Class C shares for $500,000 or more will be declined. Orders for Class
B shares or Class C shares by employer sponsored employee benefit plans using
the subaccount record keeping system made available through KFS will be invested
instead in Class A shares at net asset value where the combined subaccount value
in a Fund or other Kemper Mutual Funds listed under "Special Features--Class A
Shares--Combined Purchases" is in excess of $5 million including purchases
pursuant to the "Combined Purchases," "Letter of Intent" and "Cumulative
Discount" features described under "Special Features." For more information
about the three sales arrangements, consult your financial representative or the
Funds' Shareholder Service Agent. Financial services firms may receive different
compensation depending upon which class of shares they sell.
GENERAL. Banks and other financial services firms may provide administrative
services related to order placement and payment to facilitate transactions in
shares of a Fund for their clients, and KDI may pay them a transaction fee up to
the level of the discount or commission allowable or payable to dealers as
described above. Banks currently are prohibited under the Glass-Steagall Act
from providing certain underwriting or distribution services. Banks or other
financial services firms may be subject to various state laws regarding the
services described above and may be required to register as dealers pursuant to
state law. If banking firms were prohibited from acting in any capacity or
providing any of the described services, management would consider what action,
if any, would be appropriate. Management does not believe that termination of a
relationship with a bank would result in any material adverse consequences to a
Fund.
In addition to the discounts or commissions described above, KDI will, from time
to time, pay or allow additional discounts, commissions or promotional
incentives, in the form of cash or other compensation, to firms that sell shares
of the Funds. Non-cash compensation includes luxury merchandise and trips to
luxury resorts. In some instances, such discounts, commissions or other
incentives will be offered only to certain firms that sell or are expected to
sell during specified time periods certain minimum amounts of shares of a Fund
or other funds underwritten by KDI.
Orders for the purchase of shares of a Fund will be confirmed at a price based
on the net asset value of that Fund next determined after receipt by KDI of the
order accompanied by payment. However, orders received by dealers or other firms
prior to the determination of net asset value (see "Net Asset Value") and
received by KDI prior to the close of its business day will be confirmed at a
price based on the net asset value effective on that day. The Funds reserve the
right to determine the net asset value more frequently than once a day if deemed
desirable. Dealers and other financial services firms are obligated to transmit
orders promptly. Collection may take significantly longer for a check drawn on a
foreign bank than for a check drawn on a domestic bank. Therefore, if an order
is accompanied by a check drawn on a foreign
25
<PAGE> 30
bank, funds must normally be collected before shares will be purchased. See
"Purchase and Redemption of Shares" in the Statement of Additional Information.
Investment dealers and other firms provide varying arrangements for their
clients to purchase and redeem Fund shares. Some may establish higher minimum
investment requirements than set forth above. Firms may arrange with their
clients for other investment or administrative services. Such firms may
independently establish and charge additional amounts to their clients for such
services, which charges would reduce the clients' return. Firms also may hold
Fund shares in nominee or street name as agent for and on behalf of their
customers. In such instances, the Funds' transfer agent will have no information
with respect to or control over accounts of specific shareholders. Such
shareholders may obtain access to their accounts and information about their
accounts only from their firm. Certain of these firms may receive compensation
from the Funds through the Shareholder Service Agent for recordkeeping and other
expenses relating to these nominee accounts. In addition, certain privileges
with respect to the purchase and redemption of shares or the reinvestment of
dividends may not be available through such firms. Some firms may participate in
a program allowing them access to their clients' accounts for servicing
including, without limitation, transfers of registration and dividend payee
changes; and may perform functions such as generation of confirmation statements
and disbursement of cash dividends. Such firms, including affiliates of KDI, may
receive compensation from the Funds through the Shareholder Service Agent for
these services. This prospectus should be read in connection with such firms'
material regarding their fees and services.
Each Fund reserves the right to withdraw all or any part of the offering made by
this prospectus and to reject purchase orders. Also, from time to time, a Fund
may temporarily suspend the offering of any class of its shares to new
investors. During the period of such suspension, persons who are already
shareholders of such class of such Fund normally are permitted to continue to
purchase additional shares of such class and to have dividends reinvested.
Shareholders should direct their inquiries to Kemper Service Company, 811 Main
Street, Kansas City, Missouri 64105-2005 or to the firm from which they received
this prospectus.
REDEMPTION OR REPURCHASE OF SHARES
GENERAL. Any shareholder may require the Fund to redeem his or her shares. When
shares are held for the account of a shareholder by the Fund's transfer agent,
the shareholder may redeem them by sending a written request with signatures
guaranteed to Kemper Mutual Funds, Attention: Redemption Department, P.O. Box
419557, Kansas City, Missouri 64141-6557. When certificates for shares have been
issued, they must be mailed to or deposited with the Shareholder Service Agent,
along with a duly endorsed stock power and accompanied by a written request for
redemption. Redemption requests and a stock power must be endorsed by the
account holder with signatures guaranteed by a commercial bank, trust company,
savings and loan association, federal savings bank, member firm of a national
securities exchange or other eligible financial institution. The redemption
request and stock power must be signed exactly as the account is registered
including any special capacity of the registered owner. Additional documentation
may be requested, and a signature guarantee is normally required, from
institutional and fiduciary account holders, such as corporations, custodians
(e.g., under the Uniform Transfers to Minors Act), executors, administrators,
trustees or guardians.
The redemption price for shares of a Fund will be the net asset value per share
of that Fund next determined following receipt by the Shareholder Service Agent
of a properly executed request with any required documents as described above.
Payment for shares redeemed will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly executed request
accompanied by any outstanding share certificates in proper form for transfer.
When a Fund is asked to redeem shares for which it may not have yet received
good payment, it may delay transmittal of redemption proceeds until it has
determined that collected funds have been received for the purchase of such
shares, which will be up to 15 days from receipt by the Fund of the purchase
amount. The redemption within one year of Class A shares purchased at net asset
value under the Large Order NAV Purchase Privilege may be subject to a 1%
contingent deferred sales charge (see "Purchase of Shares") and the redemption
of Class B shares may be subject to a contingent deferred sales charge (see
"Contingent Deferred Sales Charge--Class B Shares" below).
26
<PAGE> 31
Because of the high cost of maintaining small accounts, the Funds reserve the
right to redeem an account (and, in the case of Class B shares, impose any
applicable contingent deferred sales charge) that falls below the minimum
investment level, currently $1,000, as a result of redemptions. Currently,
Individual Retirement Accounts and employee benefit plan accounts are not
subject to this procedure. A shareholder will be notified in writing and will be
allowed 60 days to make additional purchases to bring the account value up to
the minimum investment level before a Fund redeems the shareholder account. The
investment required to reach that level may be made at net asset value (without
any initial sales charge in the case of Class A shares).
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions and EXPRESS-Transfer transactions (see "Special Features")
and exchange transactions for individual and institutional accounts and
pre-authorized telephone redemption transactions for certain institutional
accounts. Shareholders may choose these privileges on the account application or
by contacting the Shareholder Service Agent for appropriate instructions. Please
note that the telephone exchange privilege is automatic unless the shareholder
refuses it on the account application. Neither a Fund nor its agents will be
liable for any loss, expense or cost arising out of any telephone request
pursuant to these privileges, including any fraudulent or unauthorized request,
and THE SHAREHOLDER WILL BEAR THE RISK OF LOSS, so long as the Fund or its agent
reasonably believes, based upon reasonable verification procedures, that the
telephonic instructions are genuine. The verification procedures include
recording instructions, requiring certain identifying information before acting
upon instructions and sending written confirmations.
TELEPHONE REDEMPTIONS. If the proceeds of the redemption (prior to the
imposition of any contingent deferred sales charge in the case of Class B
shares) are $50,000 or less and the proceeds are payable to the shareholder of
record at the address of record, normally a telephone request or a written
request by any one account holder without signature guarantee is sufficient for
redemptions by individual or joint account holders, and trust, executor and
guardian account holders (excluding custodial accounts for gifts and transfers
to minors), provided the trustee, executor or guardian is named in the account
registration. Other institutional account holders and custodial accounts for
gifts and transfers to minors may exercise this special privilege of redeeming
shares by telephone request or written request without signature guarantee
subject to the same conditions as individual account holders and subject to the
limitations on liability described under "General" above, provided that this
privilege has been pre-authorized by the institutional account holder by written
instruction to the Shareholder Service Agent with signatures guaranteed.
Telephone requests may be made by calling 1-800-621-1048. Shares purchased by
check or through EXPRESS-Transfer or Bank Direct Deposit may not be redeemed
under this privilege of redeeming shares by telephone request until such shares
have been owned for at least 15 days. This privilege of expedited redemption of
shares by telephone request or by written request without a signature guarantee
may not be used to redeem shares held in certificated form and may not be used
if the shareholder's account has had an address change within 30 days of the
redemption request. During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to use the telephone
redemption privilege, although investors can still redeem by mail. The Funds
reserve the right to terminate or modify this privilege at any time.
REPURCHASES (CONFIRMED REDEMPTIONS). A request for repurchase may be
communicated by a shareholder through a securities dealer or other financial
services firm to KDI, which a Fund has authorized to act as its agent. There is
no charge by KDI with respect to repurchases; however, dealers or other firms
may charge customary commissions for their services. Dealers and other financial
services firms are obligated to transmit orders promptly. The repurchase price
will be the net asset value next determined after receipt of a request by KDI.
However, requests for repurchases received by dealers or other firms prior to
the determination of net asset value (see "Net Asset Value") and received by KDI
prior to the close of KDI's business day will be confirmed at the net asset
value effective on that day. The offer to repurchase may be suspended at any
time. Requirements as to stock powers, certificates, payments and delay of
payments are the same as for redemptions.
EXPEDITED WIRE TRANSFER REDEMPTIONS. If the account holder has given
authorization for expedited wire redemption to the account holder's brokerage or
bank account, shares of a Fund can be redeemed and proceeds sent by federal wire
transfer to a single previously designated account. Requests received by the
Shareholder Service Agent prior to the determination of net asset value will
result in shares being redeemed that day at the net asset
27
<PAGE> 32
value effective on that day and normally the proceeds will be sent to the
designated account the following business day. Delivery of the proceeds of a
wire redemption request of $250,000 or more may be delayed by the Fund for up to
seven days if KFS deems it appropriate under then current market conditions.
Once authorization is on file, the Shareholder Service Agent will honor requests
by telephone at 1-800-621-1048 or in writing, subject to the limitations on
liability described under "General" above. The Funds are not responsible for the
efficiency of the federal wire system or the account holder's financial services
firm or bank. The Funds currently do not charge the account holder for wire
transfers. The account holder is responsible for any charges imposed by the
account holder's firm or bank. There is a $1,000 wire redemption minimum
(including any contingent deferred sales charge). To change the designated
account to receive wire redemption proceeds, send a written request to the
Shareholder Service Agent with signatures guaranteed as described above or
contact the firm through which shares of the Fund were purchased. Shares
purchased by check or through EXPRESS-Transfer or Bank Direct Deposit may not be
redeemed by wire transfer until such shares have been owned for at least 15
days. Account holders may not use this privilege to redeem shares held in
certificated form. During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to use the expedited
redemption privilege. The Funds reserve the right to terminate or modify this
privilege at any time.
CONTINGENT DEFERRED SALES CHARGE--LARGE ORDER NAV PURCHASE PRIVILEGE. A
contingent deferred sales charge of 1% may be imposed upon redemption of Class A
shares that are purchased under the Large Order NAV Purchase Privilege if they
are redeemed within one year of purchase. The charge will not be imposed upon
redemption of reinvested dividends or share appreciation. The charge is applied
to the value of the shares redeemed excluding amounts not subject to the charge.
The contingent deferred sales charge will be waived in the event of: (a)
redemptions by a participant-directed qualified retirement plan described in
Code Section 401(a) or a participant-directed non-qualified deferred
compensation plan described in Code Section 457; (b) redemptions by employer
sponsored employee benefit plans using the subaccount record keeping system made
available through KFS; (c) redemption of shares of a shareholder (including a
registered joint owner) who has died; (d) redemption of shares of a shareholder
(including a registered joint owner) who after purchase of the shares being
redeemed becomes totally disabled (as evidenced by a determination by the
federal Social Security Administration); and (e) redemptions under a Fund's
Systematic Withdrawal Plan at a maximum of 10% per year of the net asset value
of the account.
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES. A contingent deferred sales
charge may be imposed upon redemption of Class B shares. There is no such charge
upon redemption of any share appreciation or reinvested dividends on Class B
shares. The charge is computed at the following rates applied to the value of
the shares redeemed excluding amounts not subject to the charge.
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES
YEAR OF REDEMPTION AFTER PURCHASE CHARGE
------------------------------------------------------------------------ ----------
<S> <C>
First................................................................... 4%
Second.................................................................. 3%
Third................................................................... 3%
Fourth.................................................................. 2%
Fifth................................................................... 2%
Sixth................................................................... 1%
</TABLE>
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<PAGE> 33
Class B shareholders who originally acquired their shares as Initial Shares of
Kemper Portfolios, formerly known as Kemper Investment Portfolios, hold them
subject to the same CDSC schedule that applied when those shares were purchased,
as follows:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
YEAR OF ---------------------------------------------------------------------------------------
REDEMPTION SHARES PURCHASED ON OR AFTER
AFTER SHARES PURCHASED ON OR AFTER FEBRUARY 1, 1991 AND BEFORE SHARES PURCHASED BEFORE
PURCHASE MARCH 1, 1993 MARCH 1, 1993 FEBRUARY 1, 1991
----------------- ---------------------------- ---------------------------- -----------------------
<S> <C> <C> <C>
First............ 4% 3% 5%
Second........... 3% 3% 4%
Third............ 3% 2% 3%
Fourth........... 2% 2% 2%
Fifth............ 2% 1% 2%
Sixth............ 1% 1% 1%
</TABLE>
The following example will illustrate the operation of the contingent deferred
sales charge. Assume that an investor makes a single purchase of $10,000 of a
Fund's Class B shares and that 16 months later the value of the shares has grown
by $1,000 through reinvested dividends and by an additional $1,000 in
appreciation to a total of $12,000. If the investor were then to redeem the
entire $12,000 in share value, the contingent deferred sales charge would be
payable only with respect to $10,000 because neither the $1,000 of reinvested
dividends nor the $1,000 of share appreciation is subject to the charge. The
charge would be at the rate of 3% ($300) because it was in the second year after
the purchase was made.
The rate of the contingent deferred sales charge under the schedule above is
determined by the length of the period of ownership. Investments are tracked on
a monthly basis. The period of ownership for this purpose begins the first day
of the month in which the order for the investment is received. In the event no
specific order is requested, the redemption will be made first from Class B
shares representing reinvested dividends and then from the earliest purchase of
Class B shares. For example, an investment made in June, 1994 will be eligible
for the 3% charge if redeemed on or after June 1, 1995. KDI receives any
contingent deferred sales charge directly.
The contingent deferred sales charge will be waived: (a) in the event of the
total disability (as evidenced by a determination by the federal Social Security
Administration) of the shareholder (including a registered joint owner)
occurring after the purchase of the shares being redeemed, (b) in the event of
the death of the shareholder (including a registered joint owner), (c) for
redemptions made pursuant to a systematic withdrawal plan (see "Special
Features--Systematic Withdrawal Plan" below), (d) for redemptions made pursuant
to any IRA systematic withdrawal based on the shareholder's life expectancy
including, but not limited to, substantially equal periodic payments described
in Internal Revenue Code Section 72(t)(2)(A)(iv) prior to age 59 1/2 and (e) for
redemptions to satisfy required minimum distributions after age 70 1/2 from an
IRA account (with the maximum amount subject to this waiver being based only
upon the shareholder's Kemper IRA accounts). The contingent deferred sales
charge will also be waived in connection with the following redemptions of
shares held by employer sponsored employee benefit plans maintained on the
subaccount record keeping system made available by KFS: (a) redemptions to
satisfy participant loan advances (note that loan repayments constitute new
purchases for purposes of the contingent deferred sales charge and the
conversion privilege), (b) redemptions in connection with retirement
distributions (limited at any one time to 10% of the total value of plan assets
invested in a Fund), (c) redemptions in connection with distributions qualifying
under the hardship provisions of the Internal Revenue Code and (d) redemptions
representing returns of excess contributions to such plans. During the period
from the date of this prospectus until June 1, 1995, the contingent deferred
sales charge will be waived in connection with the redemption of Class B shares
of a Fund and other Kemper Mutual Funds by a retirement plan qualified under
Internal Revenue Code Section 401(k) subject to the following conditions: (a)
the proceeds of the redemption are reinvested in Class A shares of a Fund or
other Kemper Mutual Funds (which reinvestment will be at net asset value without
any sales charge), (b) all Class B shares of the Fund and other Kemper Mutual
Funds held by the plan are so redeemed and reinvested, and (c) the average
contingent deferred sales charge that would have been imposed on such a
redemption, but for this waiver, is 2.5% or less.
29
<PAGE> 34
REINVESTMENT PRIVILEGE. A shareholder who has redeemed Class A shares of a Fund
or any other Kemper Mutual Fund listed under "Special Features--Class A
Shares--Combined Purchases" may reinvest up to the full amount redeemed at net
asset value at the time of the reinvestment in Class A shares of the Fund or of
the other listed Kemper Mutual Funds. A shareholder of a Fund or any other
Kemper Mutual Fund who redeems shares purchased under the Large Order NAV
Purchase Privilege (see "Purchase of Shares") or Class B shares and incurs a
contingent deferred sales charge may reinvest up to the full amount redeemed at
net asset value at the time of the reinvestment in Class A shares or Class B
shares, as the case may be, of a Fund or of other Kemper Mutual Funds. The
amount of any contingent deferred sales charge also will be reinvested. These
reinvested shares will retain their original cost and purchase date for purposes
of the contingent deferred sales charge. Also, a holder of Class B shares who
has redeemed shares may reinvest up to the full amount redeemed, less any
applicable contingent deferred sales charge that may have been imposed upon the
redemption of such shares, at net asset value in Class A shares of a Fund or of
the other Kemper Mutual Funds listed under "Special Features--Class A
Shares--Combined Purchases." Purchases through the reinvestment privilege are
subject to the minimum investment requirements applicable to the shares being
purchased and may only be made for Kemper Funds available for sale in the
shareholder's state of residence as listed under "Special Features--Exchange
Privilege." The reinvestment privilege can be used only once as to any specific
shares and reinvestment must be effected within six months of the redemption. If
a loss is realized on the redemption of Fund shares, the reinvestment may be
subject to the "wash sale" rules if made within 30 days of the redemption,
resulting in a postponement of the recognition of such loss for federal income
tax purposes. The reinvestment privilege may be terminated or modified at any
time.
SPECIAL FEATURES
CLASS A SHARES--COMBINED PURCHASES. A Fund's Class A shares may be purchased at
the rate applicable to the discount bracket attained by combining concurrent
investments in Class A shares of any of the following funds: Kemper Technology
Fund, Kemper Total Return Fund, Kemper Growth Fund, Kemper Small Capitalization
Equity Fund, Kemper Income and Capital Preservation Fund, Kemper Municipal Bond
Fund, Kemper Diversified Income Fund, Kemper High Yield Fund, Kemper U.S.
Government Securities Fund, Kemper International Fund, Kemper State Tax-Free
Income Series, Kemper Adjustable Rate U.S. Government Fund, Kemper Blue Chip
Fund, Kemper Global Income Fund, Kemper Target Equity Fund (series are subject
to a limited offering period), Kemper Intermediate Municipal Bond Fund, Kemper
Cash Reserves Fund (available only upon exchange or conversion from Class A
shares of another Kemper Mutual Fund), Kemper U.S. Mortgage Fund and Kemper
Short-Intermediate Government Fund ("Kemper Mutual Funds"). Except as noted
below, there is no combined purchase credit for direct purchases of shares of
Kemper Money Market Fund, Cash Equivalent Fund, Tax-Exempt California Money
Market Fund, Cash Account Trust, Tax-Exempt New York Money Market Fund or
Investors Cash Trust ("Money Market Funds"), which are not considered "Kemper
Mutual Funds" for purposes hereof. For purposes of the Combined Purchases
feature described above as well as for the Letter of Intent and Cumulative
Discount features described below, employer sponsored employee benefit plans
using the subaccount record keeping system made available through KFS may
include: (a) Money Market Funds as "Kemper Mutual Funds", (b) all classes of
shares of any Kemper Mutual Fund and (c) the value of any other plan
investments, such as guaranteed investment contracts and employer stock,
maintained on such subaccount record keeping system.
CLASS A SHARES--LETTER OF INTENT. The same reduced sales charges for Class A
shares, as shown in the applicable prospectus, also apply to the aggregate
amount of purchases of such Kemper Mutual Funds listed above made by any
purchaser within a 24-month period under a written Letter of Intent ("Letter")
provided by KDI. The Letter, which imposes no obligation to purchase or sell
additional Class A shares, provides for a price adjustment depending upon the
actual amount purchased within such period. The Letter provides that the first
purchase following execution of the Letter must be at least 5% of the amount of
the intended purchase, and that 5% of the amount of the intended purchase
normally will be held in escrow in the form of shares pending completion of the
intended purchase. If the total investments under the Letter are less than the
intended amount and thereby qualify only for a higher sales charge than actually
paid, the appropriate number of escrowed shares are redeemed and the
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<PAGE> 35
proceeds used toward satisfaction of the obligation to pay the increased sales
charge. The Letter for an employer sponsored employee benefit plan maintained on
the subaccount record keeping system available through KFS may have special
provisions regarding payment of any increased sales charge resulting from a
failure to complete the intended purchase under the Letter. A shareholder may
include the value (at the maximum offering price) of all shares of such Kemper
Mutual Funds held of record as of the initial purchase date under the Letter as
an "accumulation credit" toward the completion of the Letter, but no price
adjustment will be made on such shares. Only investments in Class A shares of a
Fund are included for this privilege.
CLASS A SHARES--CUMULATIVE DISCOUNT. Each Fund's Class A shares also may be
purchased at the rate applicable to the discount bracket attained by adding to
the cost of Fund shares being purchased the value of all Class A shares of the
above mentioned Kemper Mutual Funds (computed at the maximum offering price at
the time of the purchase for which the discount is applicable) already owned by
the investor.
CLASS A SHARES--AVAILABILITY OF QUANTITY DISCOUNTS. An investor or the
investor's dealer or other financial services firm must notify the Shareholder
Service Agent or KDI whenever a quantity discount or reduced sales charge is
applicable to a purchase. Upon such notification, the investor will receive the
lowest applicable sales charge. Quantity discounts described above may be
modified or terminated at any time.
EXCHANGE PRIVILEGE. Shareholders of Class A, Class B and Class C shares may
exchange their shares for shares of the corresponding class of other Kemper
Mutual Funds in accordance with the provisions below.
CLASS A SHARES. Class A shares of the Kemper Mutual Funds and shares of the
Money Market Funds listed under "Special Features--Class A Shares--Combined
Purchases" above may be exchanged for each other at their relative net asset
values. Shares of Money Market Funds that were acquired by purchase (not
including shares acquired by dividend reinvestment) are subject to the
applicable sales charge on exchange. Series of Kemper Target Equity Fund are
available on exchange only during the Offering Period for such series as
described in the applicable prospectus. Cash Equivalent Fund, Tax-Exempt
California Money Market Fund, Cash Account Trust, Tax-Exempt New York Money
Market Fund and Investors Cash Trust are available on exchange but only through
a financial services firm having a services agreement with KDI. Exchanges may
only be made for funds that are eligible for sale in the shareholder's state of
residence. Currently, Tax-Exempt California Money Market Fund is available for
sale only in California and Tax-Exempt New York Money Market Fund is available
for sale only in New York, Connecticut, New Jersey and Pennsylvania.
Class A shares of a Fund purchased under the Large Order NAV Purchase Privilege
may be exchanged for Class A shares of another Kemper Mutual Fund or a Money
Market Fund under the exchange privilege described above without paying any
contingent deferred sales charge at the time of exchange. If the Class A shares
received on exchange are redeemed thereafter, a contingent deferred sales charge
may be imposed in accordance with the foregoing requirements provided that the
shares redeemed will retain their original cost and purchase date for purposes
of the contingent deferred sales charge.
CLASS B SHARES. Class B shares of a Fund and Class B shares of any other Kemper
Mutual Fund listed under "Special Features--Class A Shares--Combined Purchases"
may be exchanged for each other at their relative net asset values. Class B
shares may be exchanged without any contingent deferred sales charge being
imposed at the time of exchange. For purposes of the contingent deferred sales
charge that may be imposed upon the redemption of the shares received on
exchange, amounts exchanged retain their original cost and purchase date.
CLASS C SHARES. Class C shares of a Fund and Class C shares of any other Kemper
Mutual Fund listed under "Special Features--Class A Shares--Combined Purchases"
may be exchanged for each other at their relative net asset values.
GENERAL. Shares purchased by check or through EXPRESS-Transfer or Bank Direct
Deposit may not be exchanged until they have been owned for at least 15 days. In
addition, shares of a Kemper Mutual Fund (except Kemper Cash Reserves Fund)
acquired by exchange from another Kemper Mutual Fund, or from a Money Market
Fund, may not be exchanged thereafter until they have been owned for 15 days.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged.
Exchanges are
31
<PAGE> 36
made based on relative dollar values of the shares involved in the exchange.
There is no service fee for an exchange; however, dealers or other firms may
charge for their services in effecting exchange transactions. Exchanges will be
effected by redemption of shares of the fund held and purchase of shares of the
other fund. For federal income tax purposes, any such exchange constitutes a
sale upon which a gain or loss may be realized, depending upon whether the value
of the shares being exchanged is more or less than the shareholder's adjusted
cost basis of such shares. Shareholders interested in exercising the exchange
privilege may obtain prospectuses of the other funds from dealers, other firms
or KDI. Exchanges may be accomplished by a written request to Kemper Mutual
Funds, Attention: Exchange Department, P.O. Box 419557, Kansas City, Missouri
64141-6557, or by telephone if the shareholder has given authorization. Once the
authorization is on file, the Shareholder Service Agent will honor requests by
telephone at 1-800-621-1048, subject to the limitations on liability under
"Redemption or Repurchase of Shares--General." Any share certificates must be
deposited prior to any exchange of such shares. During periods when it is
difficult to contact the Shareholder Service Agent by telephone, it may be
difficult to implement the telephone exchange privilege. The exchange privilege
is not a right and may be suspended, terminated or modified at any time. Except
as otherwise permitted by applicable regulations, 60 days' prior written notice
of any termination or material change will be provided.
SYSTEMATIC EXCHANGE PRIVILEGE. The owner of $1,000 or more of any class of the
shares of a Kemper Mutual Fund or Money Market Fund may authorize the automatic
exchange of a specified amount ($100 minimum) of such shares for shares of the
same class of another such Kemper Fund. If selected, exchanges will be made
automatically until the privilege is terminated by the shareholder or the Kemper
Fund. Exchanges are subject to the terms and conditions described above under
"Exchange Privilege," including the $1,000 minimum investment requirement for
the Kemper Fund acquired on exchange. This privilege may not be used for the
exchange of shares held in certificated form.
EXPRESS-TRANSFER. EXPRESS-Transfer permits the transfer of money via the
Automated Clearing House System (minimum $100 and maximum $2,500) from a
shareholder's bank, savings and loan, or credit union account to purchase shares
in the Fund. Shareholders can also redeem shares (minimum $500 and maximum
$2,500) from their Fund account and transfer the proceeds to their bank, savings
and loan, or credit union checking account. By enrolling in EXPRESS-Transfer,
the shareholder authorizes the Shareholder Service Agent to rely upon telephone
instructions from ANY PERSON to transfer the specified amounts between the
shareholder's Fund account and the predesignated bank, savings and loan or
credit union account, subject to the limitations on liability under "Redemption
or Repurchase of Shares--General." Once enrolled in EXPRESS-Transfer, a
shareholder can initiate a transaction by calling Kemper Shareholder Services
toll free at 1-800-621-1048 Monday through Friday, 8:00 a.m. to 3:00 p.m.
Chicago time. Shareholders may terminate this privilege by sending written
notice to Kemper Service Company, P.O. Box 419415, Kansas City, Missouri
64141-6415. Termination will become effective as soon as the Shareholder Service
Agent has had a reasonable time to act upon the request. EXPRESS-Transfer cannot
be used with passbook savings accounts or for tax-deferred plans such as
Individual Retirement Accounts ("IRAs").
BANK DIRECT DEPOSIT. A shareholder may purchase additional Fund shares through
an automatic investment program. With the Bank Direct Deposit Purchase Plan,
monthly investments are made automatically from the shareholder's account at a
bank, savings and loan or credit union into the shareholder's Fund account. By
enrolling in Bank Direct Deposit, the shareholder authorizes the Fund and its
agents to either draw checks or initiate Automated Clearing House debits against
the designated account at a bank or other financial institution. This privilege
may be selected by completing the appropriate section on the Account Application
or by contacting the Shareholder Service Agent for appropriate forms. A
shareholder may terminate his or her Plan by sending written notice to Kemper
Service Company, P.O. Box 419415, Kansas City, Missouri 64141-6415. Termination
by a shareholder will become effective within thirty days after the Shareholder
Service Agent has received the request. A Fund may immediately terminate a
shareholder's Plan in the event that any item is unpaid by the shareholder's
financial institution. A Fund may terminate or modify this privilege at any
time.
PAYROLL DIRECT DEPOSIT AND GOVERNMENT DIRECT DEPOSIT. A shareholder may invest
in a Fund through Payroll Direct Deposit or Government Direct Deposit. Under
these programs, all or a portion of a
32
<PAGE> 37
shareholder's net pay or government check is automatically invested in a Fund
account each payment period. A shareholder may terminate participation in these
programs by giving written notice to the shareholder's employer or government
agency, as appropriate. (A reasonable time to act is required.) A Fund is not
responsible for the efficiency of the employer or government agency making the
payment or any financial institutions transmitting payments.
SYSTEMATIC WITHDRAWAL PLAN. The owner of $5,000 or more of a class of a Fund's
shares at the offering price (net asset value plus, in the case of Class A
shares, the initial sales charge) may provide for the payment from the owner's
account of any requested dollar amount to be paid to the owner or a designated
payee monthly, quarterly, semiannually or annually. The $5,000 minimum account
size is not applicable to Individual Retirement Accounts. The minimum periodic
payment is $100. The maximum annual rate at which Class B shares may be redeemed
under a systematic withdrawal plan is 10% of the net asset value of the account.
Shares are redeemed so that the payee will receive payment approximately the
first of the month. Any income and capital gain dividends will be automatically
reinvested at net asset value. A sufficient number of full and fractional shares
will be redeemed to make the designated payment. Depending upon the size of the
payments requested and fluctuations in the net asset value of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust the account.
The purchase of Class A shares while participating in a systematic withdrawal
plan ordinarily will be disadvantageous to the investor because the investor
will be paying a sales charge on the purchase of shares at the same time that
the investor is redeeming shares upon which a sales charge may already have been
paid. Therefore, the Funds will not knowingly permit additional investments of
less than $2,000 if the investor is at the same time making systematic
withdrawals. KDI will waive the contingent deferred sales charge on redemption
of Class B shares made pursuant to a systematic withdrawal plan. The right is
reserved to amend the systematic withdrawal plan on 30 days' notice. The plan
may be terminated at any time by the investor or the Funds.
TAX-SHELTERED RETIREMENT PLANS. KFS provides retirement plan services and
documents and KDI can establish investor accounts in any of the following types
of retirement plans:
- - Individual Retirement Accounts ("IRAs") trusteed by IFTC. This includes
Simplified Employee Pension Plan ("SEP") IRA accounts and prototype documents.
- - 403(b)(7) Custodial Accounts also trusteed by IFTC. This type of plan is
available to employees of most non-profit organizations.
- - Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum annual contribution per participant is the lesser of
25% of compensation or $30,000.
Brochures describing the above plans as well as model defined benefit plans,
target benefit plans, 457 plans, 401(k) plans and materials for establishing
them are available from KDI upon request. The brochures for plans trusteed by
IFTC describe the current fees payable to IFTC for its services as trustee.
Investors should consult with their own tax advisers before establishing a
retirement plan.
PERFORMANCE
The Funds may advertise several types of performance information for a class of
shares, including "average annual total return" and "total return" and, for the
Global Fund, "yield." Performance information will be computed separately for
Class A, Class B and Class C shares. Each of these figures is based upon
historical results and is not necessarily representative of the future
performance of any class of the Funds. Any advertisement or information that
contains performance data of a Fund will include performance data for all
classes of the Fund offered by this prospectus.
The Global Fund's yield is a measure of the net investment income per share
earned over a specific one month or 30-day period expressed as a percentage of
the maximum offering price of the Fund's shares. Yield is an annualized
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<PAGE> 38
figure, which means that it is assumed that the Fund generates the same level of
net investment income over a one year period. Net investment income is assumed
to be compounded semiannually when it is annualized.
Average annual total return and total return figures measure both the net
investment income generated by, and the effect of any realized and unrealized
appreciation or depreciation of, the underlying investments in a Fund's
portfolio for the period in question, assuming the reinvestment of all
dividends. Thus, these figures reflect the change in the value of an investment
in the Fund during a specified period. Average annual total return will be
quoted for at least the one, five and ten year periods ending on a recent
calendar quarter (or if such periods have not yet elapsed, at the end of a
shorter period corresponding to the life of the Fund). Average annual total
return figures represent the average annual percentage change over the period in
question. Total return figures represent the aggregate percentage or dollar
value change over the period in question.
A Fund's performance may be compared to that of the Consumer Price Index or, for
the Global Fund, various unmanaged bond indexes such as the Salomon Brothers
High Grade Corporate Bond Index, the Lehman Brothers Government/Corporate Bond
Index and the Salomon Brothers World Government Bond Index, or for the
International Fund various unmanaged equity indexes such as the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index and the Europe
Australia Far East ("EAFE") Index and may also be compared to the performance of
other mutual funds or mutual fund indexes as reported by independent mutual fund
reporting services such as Lipper Analytical Services, Inc. ("Lipper"). Lipper
performance calculations are based upon changes in net asset value with all
dividends reinvested and do not include the effect of any sales charges. Also,
investors may want to compare the historical returns of various global
securities markets. Such returns would not necessarily be representative of the
future performance of such markets or of the performance of the Fund.
A Fund may quote information from publications such as Morningstar, Inc., The
Wall Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago
Tribune, USA Today, Institutional Investor and Registered Representative. Also,
investors may want to compare the historical returns of various investments,
performance indexes of those investments or economic indicators, including but
not limited to stocks, bonds, certificates of deposit, money market funds and
U.S. Treasury obligations. Bank product performance may be based upon, among
other things, the BANK RATE MONITOR National IndexTM or various certificate of
deposit indexes. Money market fund performance may be based upon, among other
things, the IBC/Donoghue's Money Fund Report(R) or Money Market Insight(R),
reporting services on money market funds. Performance of U.S. Treasury
obligations may be based upon, among other things, various U.S. Treasury bill
indexes. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured.
A Fund may depict the historical performance of the securities in which the Fund
may invest over periods reflecting a variety of market or economic conditions
either alone or in comparison with alternative investments, performance indexes
of those investments or economic indicators. The Fund may also describe its
portfolio holdings and depict its size or relative size compared to other mutual
funds, the number and make-up of its shareholder base and other descriptive
factors concerning the Fund.
The Global Fund may include in its sales literature and shareholder reports a
quotation of the current "distribution rate" for a class of the Fund.
Distribution rate is simply a measure of the level of dividends distributed for
a specified period. It differs from yield, which is a measure of the income
actually earned by the Fund's investments, and from total return, which is a
measure of the income actually earned by, plus the effect of any realized and
unrealized appreciation or depreciation of such investments during the period.
Distribution rate is, therefore, not intended to be a complete measure of
performance. Distribution rate may sometimes be greater than yield since, for
instance, it may include gains from the sale of options or other short-term and
possibly long-term gains (which may be non-recurring) and may not include the
effect of amortization of bond premiums. As reflected under "Investment
Objectives and Policies--Additional Investment Information," option writing can
limit the potential for capital appreciation.
The Global Fund's Class A shares are sold at net asset value plus a maximum
sales charge of 4.5% of the offering price. The International Fund's Class A
shares are sold at net asset value plus a maximum sales charge of 5.75% of
34
<PAGE> 39
the offering price. While the maximum sales charge is normally reflected in a
Fund's Class A performance figures, certain total return calculations may not
include such charge and those results would be reduced if it were included.
Class B shares and Class C shares are sold at net asset value. Redemptions of
Class B shares within the first six years after purchase may be subject to a
contingent deferred sales charge that ranges from 4% during the first year to 0%
after six years. Yield figures for Class B shares do not include the effect of
any contingent deferred sales charge. Average annual total return figures do,
and total return figures may, include the effect of the contingent deferred
sales charge for the Class B shares that may be imposed at the end of the period
in question. Performance figures for the Class B shares not including the effect
of the applicable contingent deferred sales charge would be reduced if it were
included.
A Fund's returns and net asset value will fluctuate and shares of a Fund are
redeemable by an investor at the then current net asset value, which may be more
or less than original cost. Redemption of Class B shares may be subject to a
contingent deferred sales charge as described above. Additional information
concerning each Fund's performance, and the performance of various global stock
and bond markets, appears in the Statement of Additional Information. Additional
information about each Fund's performance also appears in its Annual Report to
Shareholders, which is available without charge from the applicable Fund.
CAPITAL STRUCTURE
The Funds are open-end management investment companies, organized as separate
business trusts under the laws of Massachusetts. The Global Fund was organized
as a business trust under the laws of Massachusetts on August 3, 1988. The
International Fund was organized as a business trust under the laws of
Massachusetts on October 24, 1985 and, effective January 31, 1986, that Fund
pursuant to a reorganization succeeded to the assets and liabilities of Kemper
International Fund, Inc., a Maryland corporation organized in 1980.
Each Fund may issue an unlimited number of shares of beneficial interest in one
or more series or "Portfolios," all having no par value, which may be divided by
the Board of Trustees into classes of shares. Currently, each Fund offers four
classes of shares of a single Portfolio. These are Class A, Class B and Class C
shares, as well as Class I shares, which are available for purchase exclusively
by the following investors: (a) tax-exempt retirement plans of KFS and its
affiliates; and (b) the following investment advisory clients of KFS and its
investment advisory affiliates that invest at least $1 million in a Fund: (1)
unaffiliated benefit plans (other than individual retirement accounts and
self-directed retirement plans); (2) unaffiliated banks and insurance companies
purchasing for their own accounts; and (3) endowment funds of unaffiliated
non-profit organizations. The Board of Trustees may authorize the issuance of
additional classes and additional Portfolios if deemed desirable, each with its
own investment objective, policies and restrictions. Since the Funds may offer
multiple Portfolios, each is known as a "series company." Shares of a Fund have
equal noncumulative voting rights except that Class B and Class C shares have
separate and exclusive voting rights with respect to each Fund's Rule 12b-1
Plan. Shares of each class also have equal rights with respect to dividends,
assets and liquidation of such Fund subject to any preferences (such as
resulting from different Rule 12b-1 distribution fees), rights or privileges of
any classes of shares of a Fund. Shares are fully paid and nonassessable when
issued, are transferable without restriction and have no preemptive or
conversion rights. The Funds are not required to hold annual shareholder
meetings and do not intend to do so. However, they will hold special meetings as
required or deemed desirable for such purposes as electing trustees, changing
fundamental policies or approving an investment management agreement. Subject to
the Agreement and Declaration of Trust of each Fund, shareholders may remove
trustees. If shares of more than one Portfolio are outstanding, shareholders
will vote by Portfolio and not in the aggregate or by class except when voting
in the aggregate is required under the Investment Company Act of 1940, such as
for the election of trustees, or when voting by class is appropriate.
35
<PAGE> 40
INSTITUTIONAL ACCOUNT APPLICATION GUIDE
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
INSTRUCTIONS
Please make sure you are using the correct application. Use the Institutional
Account Application for Corporate, Trust or other Fiduciary accounts. Use the
Individual Account Application for Individual, Joint Owners and Transfer to
Minor accounts.
THIS APPLICATION CANNOT BE USED TO ESTABLISH A RETIREMENT ACCOUNT WITH INVESTORS
FIDUCIARY TRUST COMPANY AS TRUSTEE. This application also cannot be used for any
modification of an existing account. To obtain an application for Retirement
Accounts, or forms to modify your account, call 1-800-621-1048.
- - Please print information exactly as you wish it to appear on the account.
- - Please check the box that is applicable to the type of account you are
opening.
- - PLEASE BE SURE TO COMPLETE BOTH SECTIONS I AND II.
- - PLEASE BE SURE TO SIGN THIS APPLICATION.
- - Signature(s) of authorized person(s) are required.
READ THIS IMPORTANT INFORMATION
FUND FEATURES
Exchanges. If you elect this option:
- You are authorizing exchanges between Kemper Mutual Funds by ANY
PERSON by telephone.
- Shares held in certificated form may not be exchanged until they
have been received by the Fund's Shareholder Service Agent and
deposited to the account.
- If exchanging to a new account, the minimum requirement is $1,000.
- Subsequent exchanges may be made for $100 or more.
Systematic Exchanges. If you elect this option:
- You are authorizing monthly exchanges from your Fund account to
another Fund account with the same registration.
- Shares may not be held in certificated form.
- The minimum initial account balance for Fund shares being
exchanged is $1,000.
- The minimum monthly exchange is $100 per Fund exchanged into.
Wire Redemptions. If you elect this option:
- You are authorizing the Fund or its agents to honor telephone or
other instructions from ANY PERSON for the redemption of Fund
shares. Proceeds will be wire transferred to the bank account
referenced on the application.
- Shares held in certificated form may not be redeemed under this
privilege.
- The amount redeemed must be at least $1,000.
Telephone Redemptions. If you elect this option:
- You are authorizing the Fund or its agents to honor telephone or
other instructions from ANY PERSON for the redemption of Fund
shares. Redemptions may not exceed $50,000 and proceeds are to be
payable to the shareholder of record and mailed to the address of
record.
- Shares held in certificated form may not be redeemed under this
privilege.
CERTIFICATION
The account holders certify that they have the power and authority to establish
this account and select the privileges requested. Account holders can request
the following telephone privileges on this application: expedited wire transfer
redemptions, telephone exchange transactions and pre-authorized telephone
redemption transactions. Please note that the telephone exchange privilege is
automatic unless the account holder refuses it. Neither the Fund nor its agents
will be liable for any loss, expense or cost arising out of any telephone
request pursuant to these privileges, including any fraudulent or unauthorized
request, and THE ACCOUNT HOLDER WILL BEAR THE RISK OF LOSS, so long as the Fund
or its agent reasonably believes, based upon reasonable verification procedures,
that the telephonic instructions are genuine. The verification procedures
include recording instructions, requiring certain identifying information before
acting upon instructions and sending written confirmations. The account holders
certify that the current prospectus for the Fund (including any Kemper Fund
selected under the Systematic Exchange Privilege) has been received and read and
that the authorizations hereon shall continue until the Fund receives written
notice of a modification signed by all appropriate parties or a termination
signed by any party. This account is subject to the terms of the Fund's
prospectus, as amended from time to time, and the terms herein set forth, and is
subject to acceptance by the Fund and to the laws of Illinois. All terms shall
be binding upon the heirs, representatives, successors and assigns of the
account holders.
All persons signing as representatives warrant as individuals that each person
signing is an authorized representative of the account holder, that the account
and privileges selected have been duly authorized, that all signatures hereon
are genuine and that the persons indicated hereon are authorized to sign.
The account holders authorize the Fund to provide the trustees or custodian of
their tax-deferred retirement plan any information necessary to administer such
a plan.
QUESTIONS
Shareholders may call 1-800-621-1048 to speak with a Kemper Shareholder Services
Representative.
Financial Representatives may call 1-800-621-5027 to speak with a Kemper Sales
Support Representative.
<PAGE> 41
INSTITUTIONAL ACCOUNT APPLICATION--SECTION I OF II (LOGO)
KEMPER GLOBAL INCOME FUND/KEMPER INTERNATIONAL FUND
MAIL TO: KEMPER MUTUAL FUNDS, ATTENTION: NEW APPLICATIONS, P.O. BOX 419356,
KANSAS CITY, MO 64141-6356
- --------------------------------------------------------------------------------
1. YOUR ACCOUNT REGISTRATION.
<TABLE>
<S> <C> <C> <C>
NAME OF
TRUSTEE(S)/AUTHORIZED
SIGNER(S)
FIRST NAME M.I. LAST NAME
FIRST NAME M.I. LAST NAME
NAME OF
ORGANIZATION
</TABLE>
- --------------------------------------------------------------------------------
2. IS THIS A RETIREMENT PLAN*? / / Yes / / No. If Yes, designate type below. If
No, complete Item 3.
<TABLE>
<S> <C>
/ / Self Directed IRA / / Defined Benefit
/ / Profit Sharing Plan / / Target Benefit
/ / Money Purchase Pension Plan / / 401(k) Salary Deferral
/ / Other
</TABLE>
* If each participant is to have a separate account for the contributions, call
1-800-621-1048 for special forms. Series of Kemper National Tax-Free Income
Series and Kemper State Tax-Free Income Series are not appropriate for certain
qualified plans.
- --------------------------------------------------------------------------------
3. TYPE OF ORGANIZATION (COMPLETE IF ANSWER TO ITEM 2 ABOVE IS NO.).
<TABLE>
<S> <C> <C>
/ / Corporation / / Sole Proprietorship / / Other
/ / Partnership / / Trust
Trust Date (required)
</TABLE>
- --------------------------------------------------------------------------------
4. MAILING ADDRESS.
<TABLE>
<S> <C> <C>
Street Address
City State Zip
Tax ID No.
</TABLE>
- --------------------------------------------------------------------------------
5. AMOUNT INVESTED AND FUND/CLASS SELECTION.
Please Do Not Write In This Space
Make checks payable to Kemper Mutual Funds.
The minimum initial investment is $1,000 per Fund.*
FUND AMOUNT CLASS
Kemper Global Income Fund $
Kemper International Fund $
*See Letter of Intent Conditions if
Item 7 is selected.
- --------------------------------------------------------------------------------
6. RIGHTS OF ACCUMULATION -- CLASS A.
Cum. Discount Number (if known). We own shares in
other Kemper Mutual Funds which may entitle this purchase to a reduced sales
charge as described in the Fund prospectus.
Existing Fund Name(s) Account Number(s)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------------------------------------------------------------------------------
7. LETTER OF INTENT -- CLASS A (OPTIONAL). We agree to the Letter of Intent
Conditions on the reverse side of this application.
We intend to invest, within a 24 month period beginning on the date hereof
(initial purchase date) in shares of the Fund purchased hereunder and one or
more of the other funds listed in Item 6 above (the "Funds"), an aggregate
amount which, together with the value of shares of any of the Funds then owned
by us, will equal or exceed the amount indicated below:
/ /$50,000 / /$100,000 / /$250,000 / /$500,000 / /$1,000,000
- --------------------------------------------------------------------------------
8. YOUR BROKER/DEALER. Representative's Phone Number
<TABLE>
<S> <C> <C>
Dealer Number Branch Number Representative's Number
Firm Name Representative's Last Name
Branch Address
</TABLE>
<PAGE> 42
TEAR OUT COMPLETED APPLICATION
INSTITUTIONAL ACCOUNT APPLICATION--SECTION II OF II
- --------------------------------------------------------------------------------
9. DIVIDENDS.
Choose how you wish to receive dividends. IF NO BOXES ARE CHECKED, OPTION A WILL
BE ASSIGNED.
A. / /All income and capital gains dividends REINVESTED in the account.
B. All income and short-term capital gains dividends IN CASH and long-term
capital gains REINVESTED in the account. (COMPLETE CASH DIVIDENDS SECTION
BELOW.)
C. / /All income and capital gains dividends paid IN CASH. (COMPLETE CASH
DIVIDENDS SECTION BELOW.)
D.All dividends REINVESTED in another Kemper Fund account: (See prospectus
regarding limitations on this privilege.)
Fund Name Account Number
PLEASE SEND CASH DIVIDENDS TO (if no special payee, cash dividends will be sent
to the account registration address):
/ / Account registration address.
/ / Special Payee as follows:
Name of Payee Account No. (if applicable)
Street Address
City State Zip
- --------------------------------------------------------------------------------
10. EXCHANGES.
I authorize exchanges between Kemper Mutual Funds upon instruction from ANY
PERSON by telephone. / / Yes / / No
IF NEITHER BOX IS CHECKED, THE TELEPHONE EXCHANGE PRIVILEGE WILL BE PROVIDED.
- --------------------------------------------------------------------------------
11. SYSTEMATIC EXCHANGE PRIVILEGE (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF
THIS PRIVILEGE IS NOT WANTED.
I authorize the monthly exchange of shares FROM my account established by this
Application as follows. The account registration on the account being exchanged
INTO is/will be identical to that listed in Item 1 of this Application.
Fund (to exchange INTO): Account No. (if existing)
Choose one of the following options. Monthly exchange amount must be at least
$100.
/ / Exchange shares at net asset value in the amount of $ .
/ / Exchange % annual rate of the net asset value of my account.
/ / Exchange sufficient amounts to exchange my entire account within (choose
one): / / years or / / months.
If you want to establish the Systematic Exchange Privilege with options other
than those listed above, call the Shareholder Service Agent at 1-800-621-1048.
- --------------------------------------------------------------------------------
12. WIRE REDEMPTIONS (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF THIS
PRIVILEGE IS NOT WANTED.
The Fund or its agents are authorized to honor telephone or other instructions
from ANY PERSON for the redemption of Fund shares. Proceeds are to be wire
transferred to the bank account referenced below. ($1,000 minimum per
redemption.)
Name of Depositor
(as shown on bank records)
Name of Bank Bank Account No.
(a savings and loan or credit union may not be able to receive wire redemptions)
Address of Bank
City State Zip
- --------------------------------------------------------------------------------
13. TELEPHONE REDEMPTIONS (OPTIONAL). / / Yes / / No PLEASE CROSS OUT
THIS SECTION IF THIS PRIVILEGE IS NOT WANTED.
The Fund or its agents are authorized to honor telephone or other instructions
from ANY PERSON for the redemption of Fund shares. The amount of the redemption
shall not exceed $50,000 and the proceeds are to be payable to the shareholder
of record and mailed to the address of record.
- --------------------------------------------------------------------------------
14. CERTIFICATION AND SIGNATURE (SUBJECT TO CERTIFICATION SHOWN ON APPLICATION
GUIDE).
Under penalties of perjury, the account owner hereby certifies (1) that the Tax
I.D. Number above is correct and (2) that the account owner is not subject to
backup withholding because (a) the account owner has not been notified of being
subject to backup withholding as a result of a failure to report all interest or
dividends, or (b) the I.R.S. has provided notification that the account owner is
no longer subject to backup withholding. (Cross out (2) if it is not correct.)
<TABLE>
<S> <C>
X X
Authorized Signature Title Authorized Signature Title
X
Date Authorized Signature Title
Daytime Phone #
</TABLE>
SIGNATURE GUARANTEE: REQUIRED ONLY IF ITEM 12 (WIRE REDEMPTIONS) OR ITEM 13
(TELEPHONE REDEMPTIONS) IS SELECTED. A signature guarantee must be supplied by a
commercial bank, trust company, savings and loan association, federal savings
bank, member of a national securities exchange or other eligible financial
institution.
AFFIX SIGNATURE GUARANTEE STAMP
<TABLE>
<S> <C>
Signature Guaranteed by Authorized Signature
</TABLE>
<PAGE> 43
LETTER OF INTENT ("LOI") CONDITIONS -- CLASS A
(APPLICABLE IF ITEM 7 LETTER OF INTENT SELECTED)
The first investment hereunder must equal or exceed $1,000 or 5% of the
indicated amount, whichever is greater. The value of shares owned by us on the
initial purchase date is determined by the maximum offering price on that date.
Each investment will be made at the public offering price applicable to a single
transaction of the dollar amount indicated on the application, as described in
the applicable Fund Prospectus in effect at the time of such investment. We
understand that the levels at which reduced sales charges are available may vary
for different Funds. We agree that the sales charge schedules for the Funds are
subject to change.
We are making no commitment to purchase shares, but if our investments within 24
months from the initial purchase date do not aggregate the sum specified, we
will pay the increased amount of sales charge as prescribed below. In
determining the total amount of purchases, any shares purchased under this LOI
and then sold within the 24-month period will be deducted from our total
purchases. Exchanges between Funds will not be deducted.
Five percent (5%) of the dollar amount specified in this LOI will be held in
escrow by Kemper Distributors, Inc. (the principal underwriter) in the form of
shares of one or more of the Funds being purchased (computed to the nearest full
share at public offering price) registered in our name. All income and capital
gain dividends on the escrowed shares will be reinvested in additional shares or
paid in cash per our dividend instructions. If the shares held in escrow in
connection with this LOI are to be exchanged in accordance with the Exchange
Privilege described in the applicable Fund Prospectus, the smallest number of
full shares of the Kemper Mutual Fund to be issued on the exchange having the
same aggregate net asset value as the shares being exchanged shall be
substituted in the escrow account. If we complete the investment specified
within the 24 month period, the escrowed shares will be released.
If our total investments pursuant to this Letter are less than the amount
specified, we will remit to the principal underwriter the difference in the
sales charge actually paid and the sales charge which we would have paid if our
total investments hereunder had been made at a single time. If we do not pay
such difference in sales charge within 7 business days after written request by
the principal underwriter or our dealer, we irrevocably constitute and appoint
the principal underwriter Kemper Distributors, Inc., our attorney, with full
power of substitution, to surrender for redemption the necessary number of the
escrowed shares to realize such difference without further notice or demand. If
shares of more than one Fund are held in escrow, shares of only one Fund, or
more than one Fund, as determined in the sole discretion of the principal
underwriter may be redeemed for this purpose. In the event of a deficiency after
such surrender, we shall remain liable for such deficiency.
We agree that we or our dealer will refer to this LOI in placing any future
order for us for shares of the Fund(s) hereunder. If additional Funds are to be
added to the LOI, we or our dealer will notify the Shareholder Service Agent for
the Kemper Mutual Funds of that fact.
All purchases under this LOI must be by the same purchaser as described in the
applicable Fund Prospectus.
We agree that this LOI is subject to the terms of the applicable Fund Prospectus
that is currently in effect from time to time and that neither Kemper
Distributors, Inc. nor any Fund has any obligation to sell shares of any Fund
hereunder.
<PAGE> 44
INDIVIDUAL ACCOUNT APPLICATION GUIDE
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
INSTRUCTIONS
Please make sure you are using the correct application. Use the Individual
Account Application for Individual, Joint Owners and Transfer to Minor accounts.
Use the Institutional Account Application for Corporate, Trust or other
Fiduciary accounts. This application cannot be used for any modification of an
existing account. This application also cannot be used to establish an
Individual Retirement Account (IRA) with Investors Fiduciary Trust Company as
trustee. To obtain an IRA application, or forms to modify your account, call
1-800-621-1048.
- - Please print information exactly as you wish it to appear on the account.
- - Please check the box that is applicable to the type of account you are
opening.
- - Please insure that the social security number for a joint account is for the
FIRST named registrant and for a transfer to minor account is for the MINOR.
- - PLEASE BE SURE TO COMPLETE BOTH SECTIONS I AND II.
- - PLEASE BE SURE TO SIGN THIS APPLICATION. If the account is registered in the
name of:
- an individual, the individual must sign.
- joint owners, all must sign.
- a custodian for a minor, the custodian must sign.
READ THIS IMPORTANT INFORMATION
FUND FEATURES
Exchanges. If you elect this option:
- You are authorizing exchanges between Kemper Mutual Funds by ANY
PERSON by telephone.
- Shares held in certificated form may not be exchanged until they
have been received by the Fund's Shareholder Service Agent and
deposited to the account.
- If exchanging to a new account, the minimum requirement is $1,000.
- Subsequent exchanges may be made for $100 or more.
Systematic Exchanges. If you elect this option:
- You are authorizing monthly exchanges from your Fund account to
another Fund account with the same registration.
- Shares may not be held in certificated form.
- The minimum initial account balance for Fund shares being exchanged
is $1,000.
- The minimum monthly exchange is $100 per Fund exchanged into.
Systematic Withdrawal Plans. If you elect this option:
- Shares may not be held in certificated form.
- The Plan may not be selected in conjunction with a Letter of Intent.
- Your account value must be at least $5,000.
- All dividends will be reinvested.
Wire Redemptions. If you elect this option:
- You are authorizing the Fund or its agents to honor telephone or
other instructions from ANY PERSON for the redemption of Fund
shares. Proceeds will be wire transferred to the bank account
referenced on the application.
- Shares held in certificated form may not be redeemed under this
privilege.
- The amount redeemed must be at least $1,000.
CERTIFICATION
The account holders certify that they have the power and authority to establish
this account and select the privileges requested. Account holders can request
the following telephone privileges on this application: expedited wire transfer
redemption and telephone exchange transactions. Please note that the telephone
exchange privilege is automatic unless the account holder refuses it. Neither
the Fund nor its agents will be liable for any loss, expense or cost arising out
of any telephone request pursuant to these privileges, including any fraudulent
or unauthorized request, and THE ACCOUNT HOLDER WILL BEAR THE RISK OF LOSS, so
long as the Fund or its agent reasonably believes, based upon reasonable
verification procedures, that the telephonic instructions are genuine. The
verification procedures include recording instructions, requiring certain
identifying information before acting upon instructions, and sending written
confirmations. The account holders certify that the current prospectus for the
Fund (including any Kemper Fund selected under the Systematic Exchange
Privilege) has been received and read and that the authorizations hereon shall
continue until the Fund receives written notice of a modification signed by all
appropriate parties or a termination signed by any party. This account is
subject to the terms of the Fund's prospectus, as amended from time to time, and
the terms herein set forth, and is subject to acceptance by the Fund and to the
laws of Illinois. All terms shall be binding upon the heirs, representatives and
assigns of the account holders.
QUESTIONS
Shareholders may call 1-800-621-1048 to speak with a Kemper Shareholder Services
Representative.
Financial Representatives may call 1-800-621-5027 to speak with a Kemper Sales
Support Representative.
<PAGE> 45
INDIVIDUAL ACCOUNT APPLICATION--SECTION I OF II IJKLM(LOGO)
KEMPER GLOBAL INCOME FUND/KEMPER INTERNATIONAL FUND
MAIL TO: KEMPER MUTUAL FUNDS, ATTENTION: NEW APPLICATIONS, P.O. BOX 419356,
KANSAS CITY, MO 64141-6356
- --------------------------------------------------------------------------------
1. YOUR ACCOUNT REGISTRATION.
<TABLE>
<S> <C>
/ / INDIVIDUAL FIRST NAME M.I. LAST NAME
OR
/ / JOINT TENANT* FIRST NAME M.I. LAST NAME
FIRST NAME M.I. LAST NAME
* Joint accounts will be registered as joint tenants with rights of survivorship unless otherwise indicated.
- ---------------------------------------------------------------------------------------------------------------------------
/ / TRANSFER TO A Custodian's Name Minor's Name
Minor (only one permitted) (only one permitted)
</TABLE>
- --------------------------------------------------------------------------------
2. YOUR MAILING ADDRESS.
<TABLE>
<CAPTION>
<S> <C>
Street Address Apt. #
City State Zip
I am a citizen of / / U.S. / / Other (Please specify) Social Security No.
(for first registrant or minor)
</TABLE>
- --------------------------------------------------------------------------------
3. AMOUNT INVESTED AND FUND/CLASS SELECTION.
Please Do Not Write In This Space
Make checks payable to Kemper Mutual
Funds. The minimum initial investment
is $1,000 per Fund ($50 if Item 12
selected).*
FUND AMOUNT CLASS
Kemper Global Income Fund $
Kemper International Fund $
*See Letter of Intent if Item 6 is
selected.
- --------------------------------------------------------------------------------
4. DIVIDENDS.
Choose how you wish to receive dividends. IF NO BOXES ARE CHECKED, OPTION A WILL
BE ASSIGNED.
<TABLE>
<S> <C>
A. / / All income and capital gains dividends REINVESTED in my account.
B. / / All income and short-term capital gains dividends IN CASH and long-term capital gains REINVESTED in my account.
(COMPLETE CASH DIVIDENDS SECTION BELOW.)
C. / / All income and capital gains dividends paid to me IN CASH. (COMPLETE CASH DIVIDENDS SECTION BELOW.)
D. / / All dividends REINVESTED in another Kemper Fund account: (See prospectus regarding limitations on this privilege.)
</TABLE>
Fund Name Account Number
PLEASE SEND CASH DIVIDENDS TO (if no special payee, cash dividends will be sent
to the account registration address):
/ / Account registration address. / / Special Payee as follows:
<TABLE>
<S> <C>
Name of Payee Account No. (if applicable)
Street Address
City State Zip
</TABLE>
- --------------------------------------------------------------------------------
5. RIGHTS OF ACCUMULATION--CLASS A.
Cum. Discount Number (if known). I own shares in
other Kemper Mutual Funds which may entitle this purchase to a reduced sales
charge as described in the Fund prospectus.
Existing Fund Name(s) Account Number(s)
- --------------------------------------------------------------------------------
6. LETTER OF INTENT--CLASS A (OPTIONAL). I agree to the Letter of Intent
Conditions on the reverse side of this application.
I intend to invest, within a 24-month period beginning on the date hereof
(initial purchase date) in shares of the Fund purchased hereunder and one or
more of the other funds listed in Item 5 above (the "Funds"), an aggregate
amount which, together with the value of shares of any of the Funds then owned
by me, will equal or exceed the amount indicated below:
/ /$50,000 / /$100,000 / /$250,000 /
/$500,000 / /$1,000,000
- --------------------------------------------------------------------------------
7. YOUR BROKER/DEALER. Representative's Phone Number
<TABLE>
<CAPTION>
<S> <C> <C>
Dealer Number Branch Number Representative's Number
Firm Name Representative's Last Name
Branch Address
</TABLE>
<PAGE> 46
TEAR OUT COMPLETED APPLICATION
PLEASE ATTACH VOIDED CHECK HERE
INDIVIDUAL ACCOUNT APPLICATION--SECTION II OF II
- --------------------------------------------------------------------------------
8. EXCHANGES.
I authorize exchanges between Kemper Funds upon instruction from ANY PERSON by
telephone. / / Yes / /No
IF NEITHER BOX IS CHECKED, THE TELEPHONE EXCHANGE PRIVILEGE WILL BE PROVIDED.
- --------------------------------------------------------------------------------
9. SYSTEMATIC EXCHANGE PRIVILEGE (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF
THIS PRIVILEGE IS NOT WANTED.
I authorize the monthly exchange of shares FROM my account established by this
Application as follows. The account registration on the account being exchanged
INTO is/will be identical to that listed in Item 1 of this Application.
Fund (to exchange INTO): Account No.
Choose one of the following options. Monthly exchange amount must be at least
$100.
/ / Exchange shares at net asset value in the amount of $ .
/ / Exchange % annual rate of the net asset value of my account.
/ / Exchange sufficient amounts to exchange my entire account within (choose
one): / / years or / / months.
If you want to establish the Systematic Exchange Privilege with options other
than those listed above, call the Shareholder Service Agent at 1-800-621-1048.
- --------------------------------------------------------------------------------
10. SYSTEMATIC WITHDRAWAL PLAN (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF
THIS PRIVILEGE IS NOT WANTED.
Please establish a Systematic Withdrawal Plan to begin:
(Month, Year) for my account(s) established by this Application. The payment
($100 minimum) may be either a specified dollar amount or an annualized
percentage (10% maximum) of the net asset value of the account as determined by
a monthly valuation.
<TABLE>
<CAPTION>
Fund Withdrawal
Amount or
Annualized Percentage Payment Frequency Send Check to
<S> <C> <C>
/ / Monthly / / Quarterly / / Semi-Annually / / / Acc't registration /
$ / Annually / Special
/ / Monthly / / Quarterly / / Semi-Annually / / / Acc't registration /
$ / Annually / Special
</TABLE>
Please send the Systematic Withdrawal Plan check to (check above; IF NO SPECIAL
PAYEE, PAYMENT WILL BE SENT TO ACCOUNT REGISTRATION ADDRESS).
Special Payee Address:
Name Account No. (if applicable)
Address
City State Zip
- --------------------------------------------------------------------------------
11. WIRE REDEMPTIONS (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF THIS
PRIVILEGE IS NOT WANTED.
I authorize the Fund or its agents to honor telephone or other instructions from
ANY PERSON for the redemption of Fund shares. Proceeds are to be wire
transferred to the bank account referenced below. ($1,000 minimum per
redemption.)
Name of Depositor
(as shown on bank records)
Name of Bank Bank Account No.
(a savings and loan or credit union may not be able to receive wire redemptions)
Address of Bank
City State Zip
- --------------------------------------------------------------------------------
12. AUTOMATIC INVESTING (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF THIS
PRIVILEGE IS NOT WANTED.
A. BANK DIRECT DEPOSIT
I authorize the Fund's Agent to draw checks or initiate Automated Clearing House
("ACH") debits against the bank account described on the attached voided check
beginning on the day of each month for my account(s) established by this
Application. WRITE "VOID" ACROSS THE FACE OF A CHECK FOR THE BANK ACCOUNT YOU
WISH TO USE, THEN ATTACH THE CHECK TO THIS FORM. A $50 minimum applies.
<TABLE>
<CAPTION>
If you do not have check writing privileges and therefore cannot attach
Fund Amount a voided check, please complete the following information:
<S> <C> <C> <C>
$ Name of Bank Branch (if applicable)
$ Address of Bank
City State Zip
Bank Account No.
</TABLE>
B. DIRECT DEPOSIT OF PAYROLL/GOVERNMENT CHECK
For information on direct deposit of payroll or government checks please call
the Shareholder Service Agent at 1-800-621-1048.
- --------------------------------------------------------------------------------
13. CERTIFICATION AND SIGNATURE (SUBJECT TO CERTIFICATION SHOWN ON APPLICATION
GUIDE).
Under penalties of perjury, the undersigned hereby certify (1) that the Social
Security Number above is correct and (2) that the account owner is not subject
to backup withholding because (a) the account owner has not been notified of
being subject to backup withholding as a result of a failure to report all
interest or dividends, or (b) the I.R.S. has provided notification that the
account owner is no longer subject to backup withholding. (Cross out (2) if it
is not correct.)
<TABLE>
<S> <C>
X X
Signature Co-Owner (if applicable)
X
Date Co-Owner (if applicable)
Daytime Phone #
</TABLE>
<PAGE> 47
LETTER OF INTENT ("LOI") CONDITIONS -- CLASS A
(APPLICABLE IF ITEM 6 LETTER OF INTENT SELECTED)
The first investment hereunder must equal or exceed $1,000 or 5% of the
indicated amount, whichever is greater. The value of shares owned by me on the
initial purchase date is determined by the maximum offering price on that date.
Each investment will be made at the public offering price applicable to a single
transaction of the dollar amount indicated on the application, as described in
the applicable Fund Prospectus in effect at the time of such investment. I
understand that the levels at which reduced sales charges are available may vary
for different Funds. I agree that the sales charge schedules for the Funds are
subject to change.
I am making no commitment to purchase shares, but if my investments within 24
months from the initial purchase date do not aggregate the sum specified, I will
pay the increased amount of sales charge as prescribed below. In determining the
total amount of purchases, any shares purchased under this LOI and then sold
within the 24 month period will be deducted from my total purchases. Exchanges
between Funds will not be deducted.
Five percent (5%) of the dollar amount specified in this LOI will be held in
escrow by Kemper Distributors, Inc. (the principal underwriter) in the form of
shares of one or more of the Funds being purchased (computed to the nearest full
share at public offering price) registered in my name. All income and capital
gain dividends on the escrowed shares will be reinvested in additional shares or
paid in cash per my dividend instructions. If the shares held in escrow in
connection with this LOI are to be exchanged in accordance with the Exchange
Privilege described in the applicable Fund Prospectus, the smallest number of
full shares of the Kemper Mutual Fund to be issued on the exchange having the
same aggregate net asset value as the shares being exchanged shall be
substituted in the escrow account. If I complete the investment specified within
the 24 month period, the escrowed shares will be released.
If my total investments pursuant to this Letter are less than the amount
specified, I will remit to the principal underwriter the difference in the sales
charge actually paid and the sales charge which I would have paid if my total
investments hereunder had been made at a single time. If I do not pay such
difference in sales charge within 7 business days after written request by the
principal underwriter or my dealer, I irrevocably constitute and appoint the
principal underwriter Kemper Distributors, Inc., my attorney, with full power of
substitution, to surrender for redemption the necessary number of the escrowed
shares to realize such difference without further notice or demand. If shares of
more than one Fund are held in escrow, shares of only one Fund, or more than one
Fund, as determined in the sole discretion of the principal underwriter may be
redeemed for this purpose. In the event of a deficiency after such surrender, I
shall remain liable for such deficiency.
I agree that I or my dealer will refer to this LOI in placing any future order
for me for shares of the Fund(s) hereunder. If additional Funds are to be added
to the LOI, I or my dealer will notify the Shareholder Service Agent for the
Kemper Mutual Funds of that fact.
All purchases under this LOI must be by the same purchaser as described in the
applicable Fund Prospectus.
I agree that this LOI is subject to the terms of the applicable Fund Prospectus
that is currently in effect from time to time and that neither Kemper
Distributors, Inc. nor any Fund has any obligation to sell shares of any Fund
hereunder.
<PAGE> 48
KEMPER
GLOBAL
INCOME
FUND
KEMPER
INTERNATIONAL
FUND
PROSPECTUS
AND APPLICATION
March 1, 1995
INVESTMENT MANAGER
Kemper Financial Services, Inc.
PRINCIPAL UNDERWRITER
Kemper Distributors, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
1-800-621-1048
KIF-1 3/95 (LOGO)printed on recycled paper
(LOGO)
KEMPER
<PAGE> 49
KEMPER INTERNATIONAL FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER LOCATION IN STATEMENT OF
OF FORM N-1A ADDITIONAL INFORMATION
------------ ------------------------
<S> <C>
10. Cover Page............................... Cover Page
11. Table of Contents........................ Table of Contents
12. General Information and History.......... Inapplicable
13. Investment Objectives and Policies....... Investment Restrictions; Investment Policies
and Techniques
14. Management of the Fund................... Investment Manager and Underwriter;
Officers and Trustees
15. Control Persons and Principal Holders of
Securities............................... Officers and Trustees
16. Investment Advisory and Other Services... Investment Manager and Underwriter;
Officers and Trustees
17. Brokerage Allocation and Other
Practices................................ Portfolio Transactions
18. Capital Stock and Other Securities....... Shareholder Rights
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Purchase and Redemption of Shares
20. Tax Status............................... Dividends and Taxes
21. Underwriters............................. Investment Manager and Underwriter
22. Calculation of Performance Data.......... Performance
23. Financial Statements..................... Financial Statements
</TABLE>
<PAGE> 50
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1995
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
1-800-621-1048
This Statement of Additional Information is not a prospectus. It is the combined
Statement of Additional Information for Kemper Global Income Fund and Kemper
International Fund (the "Funds"). It should be read in conjunction with the
combined prospectus of the Funds dated March 1, 1995. The prospectus may be
obtained without charge from the Funds.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
- --------------------------------------------------------------------------
<S> <C>
Investment Restrictions............................................ B-1
Investment Policies and Techniques................................. B-4
Dividends and Taxes................................................ B-10
Performance........................................................ B-11
Investment Manager and Underwriter................................. B-19
Portfolio Transactions............................................. B-23
Purchase and Redemption of Shares.................................. B-24
Officers and Trustees.............................................. B-26
Shareholder Rights................................................. B-27
Appendix--Ratings of Investments................................... B-29
</TABLE>
The financial statements appearing in each Fund's Annual Report to Shareholders
are incorporated herein by reference. The Report for the Fund for which this
Statement of Additional Information is requested accompanies this document.
KIF-1 3/95 (LOGO)printed on recycled paper
<PAGE> 51
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions which,
together with the investment objective and fundamental policies of such Fund,
cannot be changed without approval of a "majority" of its outstanding voting
shares. As defined in the Investment Company Act of 1940, this means the lesser
of (1) 67% of the Fund's shares present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy; or (2) more than 50% of
the Fund's outstanding shares.
THE GLOBAL FUND MAY NOT, AS A FUNDAMENTAL POLICY:
(1) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the U.S. Government, its agencies or instrumentalities) if, as a result,
more than 5% of the total value of the Fund's assets would be invested in
securities of that issuer except that, with respect to 50% of the Fund's total
assets, the Fund may invest up to 25% of its total assets in securities of any
one issuer.
(2) Purchase more than 10% of any class of voting securities of any issuer.
(3) Make loans to others provided that the Fund may purchase debt obligations or
repurchase agreements and it may lend its securities in accordance with its
investment objective and policies.
(4) Borrow money except as a temporary measure for extraordinary or emergency
purposes, and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
portfolio securities. If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Fund will, within three days (not including Sundays and
holidays), reduce its indebtedness to the extent necessary. The Fund will not
borrow for leverage purposes and will not purchase securities or make
investments while borrowings are outstanding.
(5) Pledge, hypothecate, mortgage or otherwise encumber more than 15% of its
total assets and then only to secure borrowings permitted by restriction 4
above. (The collateral arrangements with respect to options, financial futures
and delayed delivery transactions and any margin payments in connection
therewith are not deemed to be pledges or other encumbrances.)
(6) Purchase securities on margin, except to obtain such short-term credits as
may be necessary for the clearance of transactions; however, the Fund may make
margin deposits in connection with options and financial futures transactions.
(7) Make short sales of securities or other assets or maintain a short position
for the account of the Fund unless at all times when a short position is open it
owns an equal amount of such securities or other assets or owns securities
which, without payment of any further consideration, are convertible into or
exchangeable for securities or other assets of the same issue as, and equal in
amount to, the securities or other assets sold short and unless not more than
10% of the Fund's total assets is held as collateral for such sales at any one
time.
(8) Write or sell put or call options, combinations thereof or similar options
on more than 25% of the Fund's net assets; nor may the Fund purchase put or call
options if more than 5% of the Fund's net assets would be invested in premiums
on put and call options, combinations thereof or similar options; however, the
Fund may buy or sell options on financial futures contracts.
(9) Purchase securities (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if as a result of such purchase
25% or more of the Fund's total assets would be invested in any one industry.
(10) Invest in commodities or commodity futures contracts, although it may buy
or sell financial futures contracts and options on such contracts, and engage in
foreign currency transactions; or in real estate (including real estate limited
partnerships), although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate including
real estate investment trusts.
B-1
<PAGE> 52
(11) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities.
(12) Issue senior securities except as permitted under the Investment Company
Act of 1940.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The Global
Fund did not borrow money as permitted by investment restriction number 4 in the
latest fiscal year and it has no present intention of borrowing during the
current year. The Global Fund has adopted the following non-fundamental
restrictions, which may be changed by the Board of Trustees without shareholder
approval. The Global Fund may not:
(i) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more than
5% of the securities of such issuer.
(ii) Invest for the purpose of exercising control or management of another
issuer.
(iii) Invest in interests in oil or gas exploration or development programs,
although it may invest in the securities of issuers which invest in or sponsor
such programs.
(iv) Invest more than 15% of its net assets in illiquid securities.
(v) Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York or American Stock
Exchanges. Warrants acquired in units or attached to securities may be deemed to
be without value for such purposes.
(vi) Purchase securities of other open-end investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
(vii) Invest in oil, gas or other mineral leases.
(viii) Invest more than 5% of the Fund's total assets in securities of issuers
(other than obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities) which with their predecessors have a record of less than
three years continuous operation, and equity securities of issuers which are not
readily marketable.
(ix) Invest more than 5% of its total assets in restricted securities, excluding
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid pursuant to
procedures adopted by the Board of Trustees, provided that the total amount of
Fund assets invested in restricted securities will not exceed 15% of total
assets.
(x) Invest more than 10% of its total assets in securities of real estate
investment trusts.
THE INTERNATIONAL FUND MAY NOT, AS A FUNDAMENTAL POLICY:
(1) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States or any foreign government or their agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total assets
would be invested in securities of that issuer. With respect to 75% of its
assets, the Fund will limit its investments in the securities of any one foreign
government issuer to 5% of the Fund's total assets.
(2) Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities. All debt securities and all preferred stocks are each
considered as one class.
B-2
<PAGE> 53
(3) Lend money or securities, provided that the making of time or demand
deposits with banks and the purchase of debt securities such as bonds,
debentures, commercial paper, repurchase agreements and short-term obligations
in accordance with its objective and policies are not prohibited.
(4) Borrow money except for temporary or emergency purposes (but not for the
purpose of purchase of investments) and then only in an amount not to exceed 5%
of the Fund's net assets; or pledge the Fund's securities or receivables or
transfer or assign or otherwise encumber them in an amount exceeding the amount
of the borrowing secured thereby.
(5) Make short sales of securities, or purchase any securities on margin except
to obtain such short-term credits as may be necessary for the clearance of
transactions; however, the Fund may make margin deposits in connection with
financial futures and options transactions.
(6) Write or sell put or call options, combinations thereof or similar options
on more than 25% of the Fund's net assets; nor may it purchase put or call
options if more than 5% of the Fund's net assets would be invested in premiums
on put and call options, combinations thereof or similar options; however, the
Fund may buy or sell options on financial futures contracts.
(7) Concentrate more than 25% of the value of its assets in any one industry.
Water, communications, electric and gas utilities shall each be considered a
separate industry. This limitation shall not apply to obligations issued by the
United States or any foreign government or their agencies or instrumentalities.
(8) Invest in commodities or commodity futures contracts, although it may buy or
sell financial futures contracts and options on such contracts and may enter
into foreign currency transactions; or in real estate, although it may invest in
securities which are secured by real estate and securities of issuers which
invest or deal in real estate.
(9) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities. The Fund may buy and sell
securities outside the United States which are not registered with the
Securities and Exchange Commission or marketable in the United States.
(10) Issue senior securities except as permitted under the Investment Company
Act of 1940.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The
International Fund did not borrow money as permitted by investment restriction
number 4 in the latest fiscal year and it has no present intention of borrowing
during the current year. The International Fund has adopted the following
non-fundamental restrictions, which may be changed by the Board of Trustees
without shareholder approval. The International Fund may not:
(i) Invest more than 5% of the Fund's total assets in securities of issuers
which with their predecessors have a record of less than three years continuous
operation, and equity securities of issuers which are not readily marketable.
(ii) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more than
5% of the securities of such issuer.
(iii) Invest for the purpose of exercising control or management of another
issuer.
(iv) Invest in interests in oil, gas or other mineral exploration or development
programs, although it may invest in the securities of issuers which invest in or
sponsor such programs.
(v) Purchase securities of other investment companies, except in connection with
a merger, consolidation, acquisition or reorganization, or by purchase in the
open market of securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than customary broker's
commission, is involved and
B-3
<PAGE> 54
only if immediately thereafter not more than (i) 3% of the total outstanding
voting stock of such company is owned by the Fund, (ii) 5% of the Fund's total
assets would be invested in any one such company, and (iii) 10% of the Fund's
total assets would be invested in such securities.
(vi) Invest more than 15% of its net assets in illiquid securities.
(vii) Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York or American Stock
Exchanges. Warrants acquired in units or attached to securities may be deemed to
be without value for such purposes.
(viii) Invest in oil, gas, and other mineral leases.
(ix) Purchase or sell real property (including limited partnership interests but
excluding readily marketable interests in real estate investment trusts and
readily marketable securities of companies which invest in real estate).
(x) Invest more than 5% of its total assets in restricted securities, excluding
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid pursuant to
procedures adopted by the Board of Trustees, provided that the total amount of
Fund assets invested in restricted securities will not exceed 15% of total
assets.
(xi) Invest more than 10% of its total assets in securities of real estate
investment trusts.
INVESTMENT POLICIES AND TECHNIQUES
GENERAL. Each Fund may engage in futures and options transactions in accordance
with its investment objective and policies. The Funds intends to engage in such
transactions if it appears to the investment manager to be advantageous to do
so, in order to pursue its investment objective, to hedge against the effects of
fluctuating interest rates and to stabilize the value of its assets and not for
speculation. The use of futures and options, and possible benefits and attendant
risks, are discussed below, along with information concerning certain other
investment policies and techniques.
FINANCIAL FUTURES CONTRACTS. Each Fund may enter into contracts for the future
delivery of a financial instrument, such as a security, or an amount of foreign
currency, or the cash value of a securities index or other appropriate index, as
available, such as a foreign currency index. This investment technique is
designed primarily to hedge (i.e., protect) against anticipated future changes
in market conditions or foreign exchange rates which otherwise might adversely
affect the value of securities or other assets which the Fund holds or intends
to purchase. A "sale" of a futures contract means the undertaking of a
contractual obligation to deliver the underlying securities or the cash value of
an index or foreign currency called for by the contract at a specified price
during a specified delivery period. A "purchase" of a futures contract means the
undertaking of a contractual obligation to acquire the underlying securities or
cash value of an index or foreign currency at a specified price during a
specified delivery period. At the time of delivery in the case of fixed income
securities pursuant to the contract, adjustments are made to recognize
differences in value arising from the delivery of securities with a different
interest rate than that specified in the contract. In some cases, securities
called for by a futures contract may not have been issued at the time the
contract was written.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities or other assets, in most cases a party
will close out the contractual commitment before delivery without having to make
or take delivery of the underlying assets by purchasing (or selling, as the case
may be) on a commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, if effected through a member of
an exchange, cancels the obligation to make or take delivery of the underlying
securities or other assets. All transactions in the futures market are made,
offset or fulfilled through a clearing house associated with the exchange on
which the contracts are traded. A Fund will incur brokerage fees when it
purchases or sells contracts, and will be required to maintain margin deposits.
At the time a Fund enters into a futures contract, it is required to deposit
with
B-4
<PAGE> 55
its custodian, on behalf of the broker, a specified amount of cash or eligible
securities, called "initial margin." The initial margin required for a futures
contract is set by the exchange on which the contract is traded. Subsequent
payments, called "variation margin," to and from the broker are made on a daily
basis as the market price of the futures contract fluctuates. The costs incurred
in connection with futures transactions could reduce a Fund's return. Futures
contracts entail risks. If the investment manager's judgment about the general
direction of markets or exchange rates is wrong, the overall performance may be
poorer than if no such contracts had been entered into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio assets being hedged. In addition, the market prices of
futures contracts may be affected by certain factors. If participants in the
futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the assets and futures markets could result. Price
distortions also could result if investors in futures contracts decide to make
or take delivery of underlying securities or other assets rather than engage in
closing transactions because of the resultant reduction in the liquidity of the
futures market. In addition, because, from the point of view of speculators,
margin requirements in the futures market are less onerous than margin
requirements in the cash market, increased participation by speculators in the
futures market could cause temporary price distortions. Due to the possibility
of price distortions in the futures market and because of the imperfect
correlation between movements in the prices of securities or other assets and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment manager still may not result in a successful hedging
transaction. If any of these events should occur, the Fund could lose money on
the financial futures contracts and also on the value of its portfolio assets.
OPTIONS ON FINANCIAL FUTURES CONTRACTS. Each Fund may purchase and write call
and put options on financial futures contracts. An option on a futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract at a specified exercise price at any time during
the period of the option. Upon exercise, the writer of the option delivers the
futures contract to the holder at the exercise price. A Fund would be required
to deposit with its custodian initial margin and maintenance margin with respect
to put and call options on futures contracts written by it. Each Fund will
establish segregated accounts or will provide cover with respect to written
options on financial futures contracts in a manner similar to that described
under "Options on Securities." Options on futures contracts involve risks
similar to those risks relating to transactions in financial futures contracts
described above. Also, an option purchased by a Fund may expire worthless, in
which case the Fund would lose the premium paid therefor.
OPTIONS ON SECURITIES. Each Fund may write (sell) "covered" call options on
securities as long as it owns the underlying securities subject to the option or
an option to purchase the same underlying securities, having an exercise price
equal to or less than the exercise price of the "covered" option, or will
establish and maintain for the term of the option a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
obligations ("eligible securities") having a value at least equal to the
fluctuating market value of the optioned securities. A Fund may write "covered"
put options provided that, as long as the Fund is obligated as a writer of a put
option, the Fund will own an option to sell the underlying securities subject to
the option, having an exercise price equal to or greater than the exercise price
of the "covered" option, or it will deposit and maintain in a segregated account
eligible securities having a value equal to or greater than the exercise price
of the option. A call option gives the purchaser the right to buy, and the
writer the obligation to sell, the underlying security at the exercise price
during the option period. A put option gives the purchaser the right to sell,
and the writer has the obligation to buy, the underlying security at the
exercise price during the option period. The premium received for writing an
option will reflect, among other things, the current market price of the
underlying security, the relationship of the exercise price to such market
price, the price volatility of the underlying security, the option period,
supply and demand and interest rates. The exercise price of an option may be
below, equal to or above the current market value of the underlying security at
the time the option is written. The Funds may write or purchase spread options,
which are options for which the exercise price may be a fixed dollar spread or
yield spread between the security underlying the option and another security it
does not own, but that is used as a bench mark. The buyer of a put who also owns
the related security is protected by ownership of a put option against any
decline in that
B-5
<PAGE> 56
security's price below the exercise price less the amount paid for the option.
The ability to purchase put options allows a Fund to protect capital gains in an
appreciated security it owns, without being required to actually sell that
security. At times a Fund would like to establish a position in a security upon
which call options are available. By purchasing a call option, a Fund is able to
fix the cost of acquiring the security, this being the cost of the call plus the
exercise price of the option. This procedure also provides some protection from
an unexpected downturn in the market because a Fund is only at risk for the
amount of the premium paid for the call option which it can, if it chooses,
permit to expire.
During the option period the covered call writer gives up the potential for
capital appreciation above the exercise price should the underlying asset rise
in value, and the secured put writer retains the risk of loss should the
underlying asset decline in value. For the covered call writer, substantial
appreciation in the value of the underlying asset would result in the asset
being "called away." For the secured put writer, substantial depreciation in the
value of the underlying asset would result in the asset being "put to" the
writer. If a covered call option expires unexercised, the writer realizes a gain
and the buyer a loss in the amount of the premium. If the covered call option
writer has to sell the underlying asset because of the exercise of the call
option, it realizes a gain or loss from the sale of the underlying asset, with
the proceeds being increased by the amount of the premium.
If a secured put option expires unexercised, the writer realizes a gain and the
buyer a loss in the amount of the premium. If the secured put writer has to buy
the underlying asset because of the exercise of the put option, the secured put
writer incurs an unrealized loss to the extent that the current market value of
the underlying asset is less than the exercise price of the put option minus the
premium received.
OVER-THE-COUNTER OPTIONS. As indicated in the prospectus (see "Investment
Objectives and Policies"), each Fund may deal in over-the-counter traded options
("OTC options"). OTC options differ from exchange traded options in several
respects. They are transacted directly with dealers and not with a clearing
corporation, and there is a risk of nonperformance by the dealer as a result of
the insolvency of such dealer or otherwise, in which event a Fund may experience
material losses. However, in writing options the premium is paid in advance by
the dealer. OTC options are available for a greater variety of securities, and a
wider range of expiration dates and exercise prices, than are exchange traded
options. Since there is no exchange, pricing is normally done by reference to
information from market makers, which information is carefully monitored by the
investment manager and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it voluntarily only
by entering into a closing transaction. In the case of OTC options, there can be
no assurance that a continuous liquid secondary market will exist for any
particular option at any specific time. Consequently, a Fund may be able to
realize the value of an OTC option it has purchased only by exercising it or
entering into a closing sale transaction with the dealer that issued it.
Similarly, when a Fund writes an OTC option, it generally can close out that
option prior to its expiration only by entering into a closing purchase
transaction with the dealer to which the Fund originally wrote it. If a covered
call option writer cannot effect a closing transaction, it cannot sell the
underlying asset until the option expires or the option is exercised. Therefore,
a covered call option writer of an OTC option may not be able to sell an
underlying asset even though it might otherwise be advantageous to do so.
Likewise, a secured put writer of an OTC option may be unable to sell the assets
pledged to secure the put for other investment purposes while it is obligated as
a put writer. Similarly, a purchaser of such put or call option might also find
it difficult to terminate its position on a timely basis in the absence of a
secondary market.
The Funds understand the position of the staff of the Securities and Exchange
Commission ("SEC") to be that purchased OTC options and the assets used as
"cover" for written OTC options are illiquid securities. The investment manager
disagrees with this position and has found the dealers with which it engages in
OTC options transactions generally agreeable to and capable of entering into
closing transactions. The Funds have adopted procedures for engaging in OTC
options for the purpose of reducing any potential adverse effect of such
transactions upon the liquidity of the Funds' portfolios. A brief description of
such procedures is set forth below.
B-6
<PAGE> 57
A Fund will only engage in OTC options transactions with dealers approved by the
investment manager pursuant to procedures adopted by the Fund's Board of
Trustees. The investment manager believes that the approved dealers should be
able to enter into closing transactions if necessary and, therefore, present
minimal credit risks to a Fund. The investment manager will monitor the
creditworthiness of the approved dealers on an ongoing basis. A Fund currently
will not engage in OTC options transactions if the amount invested by the Fund
in OTC options, plus a "liquidity charge" related to OTC options written by the
Fund, plus the amount invested by the Fund in illiquid securities, would exceed
15% of the Fund's net assets. The "liquidity charge" referred to above is
computed as described below.
The Funds anticipate entering into agreements with dealers to which a Fund sells
OTC options. Under these agreements a Fund would have the absolute right to
repurchase the OTC options from the dealer at any time at a price no greater
than a price established under the agreements (the "Repurchase Price"). The
"liquidity charge" referred to above for a specific OTC option transaction will
be the Repurchase Price related to the OTC option less the intrinsic value of
the OTC option. The intrinsic value of an OTC call option for such purposes will
be the amount by which the current market value of the underlying security
exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value
of the underlying security. If there is no such agreement requiring a dealer to
allow the Fund to repurchase a specific OTC option written by the Fund, the
"liquidity charge" will be the current market value of the assets serving as
"cover" for such OTC option.
OPTIONS ON SECURITIES INDICES. Each Fund also may purchase and write call and
put options on securities indices in an attempt to hedge against market
conditions affecting the values of securities that the Fund owns or intends to
purchase, and not for speculation. Through the writing or purchase of index
options, a Fund can achieve many of the same objectives as through the use of
options on individual securities. Options on securities indices are similar to
options on a security except that, rather than the right to take or make
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount of
cash if the closing level of the securities index upon which the option is based
is greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option. The
writer of the option is obligated, in return for the premium received, to make
delivery of this amount. Unlike security options, all settlements are in cash
and gain or loss depends upon price movements in the market generally (or in a
particular industry or segment of the market), rather than upon price movements
in individual securities. Price movements in securities that the Fund owns or
intends to purchase will probably not correlate perfectly with movements in the
level of an index since the prices of such securities may be affected by
somewhat different factors and, therefore, the Fund bears the risk that a loss
on an index option would not be completely offset by movements in the price of
such securities.
A Fund will cover call options written on a securities index by owning
securities whose price changes, in the opinion of the Fund's investment manager,
are expected to be similar to those of the index, or in such other manner as may
be in accordance with applicable laws, regulations and exchange rules. Price
changes of the securities owned will probably not be perfectly correlated with
the index. The Fund will secure put options written on a securities index by
segregating liquid high-grade securities equal to the exercise price, or in such
other manner as may be in accordance with applicable laws, regulations and
exchange rules. When a Fund writes an option on a securities index, it will
segregate and mark-to-market eligible securities equal in value to at least 100%
of the exercise price in the case of a put, or the contract value in the case of
a call. In addition, if the Fund writes a call option on a securities index at a
time when the contract value exceeds the exercise price, the Fund will segregate
and mark-to-market, until the option expires or is closed out, cash or cash
equivalents equal in value to such excess.
Each Fund may also purchase and write (sell) options on other appropriate
indices, as available, such as foreign currency indices. Options on futures
contracts and index options involve risks similar to those risks relating to
transactions in financial futures contracts described above. Also, an option
purchased by a Fund may expire worthless, in which case the Fund would lose the
premium paid therefor.
B-7
<PAGE> 58
FOREIGN CURRENCY OPTIONS. A foreign currency option provides the option buyer
with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period in the secondary market for such options any
time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a put
rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect the Fund against an adverse movement in the
value of a foreign currency, it does not limit the gain which might result from
a favorable movement in the value of such currency. For example, if a Fund were
holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if the Fund has
entered into a contract to purchase a security denominated in a foreign currency
and had purchased a foreign currency call to hedge against a rise in value of
the currency but instead the currency had depreciated in value between the date
of purchase and the settlement date, the Fund would not have to exercise its
call but could acquire in the spot market the amount of foreign currency needed
for settlement.
FOREIGN CURRENCY FUTURES TRANSACTIONS. As part of its financial futures
transactions (see "Financial Futures Contracts" and "Options on Financial
Futures Contracts" above), each Fund may use foreign currency futures contracts
and options on such futures contracts. Through the purchase or sale of such
contracts, a Fund may be able to achieve many of the same objectives as through
forward foreign currency exchange contracts more effectively and possibly at a
lower cost.
Unlike forward foreign currency exchange contracts, foreign currency futures
contracts and options on foreign currency futures contracts are standardized as
to amount and delivery period and are traded on boards of trade and commodities
exchanges. It is anticipated that such contracts may provide greater liquidity
and lower cost than forward foreign currency exchange contracts.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days ("term") from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders (usually large
commercial banks) and their customers. The investment manager believes that it
is important to have the flexibility to enter into such forward contracts when
it determines that to do so is in the best interests of a Fund. A Fund will not
speculate in foreign currency exchange.
If a Fund retains the portfolio security and engages in an offsetting
transaction with respect to a forward contract, the Fund will incur a gain or a
loss (as described below) to the extent that there has been movement in forward
contract prices. If the Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign currency.
Should forward prices decline during the period between the Fund's entering into
a forward contract for the sale of foreign currency and the date it enters into
an offsetting contract for the purchase of the foreign currency, the Fund would
realize a gain to the extent the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund would suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. Although such contracts tend to minimize the risk of loss due to
a decline in the value of the hedged currency, they also tend to limit any
potential gain which might result should the value of such currency increase.
The Fund will have to convert its holdings of foreign currencies into U.S.
Dollars from time to time. Although foreign exchange dealers do not charge a fee
for conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
The returns available from foreign currency denominated debt instruments can be
adversely affected by changes in exchange rates. The investment manager believes
that the use of foreign currency hedging techniques, including "cross-hedges,"
can help protect against declines in the U.S. Dollar value of income available
for distribution to
B-8
<PAGE> 59
shareholders, and against declines in the net asset value of the Fund's shares
resulting from adverse changes in currency exchange rates. For example, the
return available from securities denominated in a particular foreign currency
would diminish if the value of the U.S. Dollar increased against that currency.
Such a decline could be partially or completely offset by the increased value of
a cross-hedge involving a forward foreign currency exchange contract to sell a
different foreign currency, if that contract were available on terms more
advantageous to the Fund than a contract to sell the currency in which the
position being hedged is denominated. The Funds' investment manager believes
that cross-hedges can therefore provide significant protection of net asset
value in the event of a general rise in the U.S. Dollar against foreign
currencies. For example, the Global Fund may invest in high yielding securities
denominated in a Western European currency, such as the French Franc, and seek
to hedge against the effect of an increase in the value of the U.S. Dollar
against that currency by entering into a forward exchange contract to sell the
lower yielding German Mark, which has historically had price movements that tend
to correlate closely with those of the French Franc. However, a cross-hedge
cannot provide assured protection against exchange rate risks and, if the Fund's
investment manager misjudges future exchange rate relationships, the Fund could
be in a less advantageous position than if such a hedge had not been
established.
A Fund will not enter into forward contracts or maintain a net exposure in such
contracts when the Fund would be obligated to deliver an amount of foreign
currency in excess of the value of the Fund's portfolio securities or other
assets (a) denominated in that currency or (b), in the case of a "cross-hedge"
(see "Investment Objectives and Policies" in the prospectus), denominated in a
currency or currencies that the investment manager believes will tend to
correlate closely with that currency with regard to price movements. The
investment manager will normally seek to select currencies for sale under a
forward contract for a "cross-hedge" that would reflect a price movement
correlation of .8 or higher with respect to the currency being hedged (1
reflects a perfect correlation, 0 reflects a random relationship and -1 reflects
a diametrically opposite correlation). There is, of course, no assurance that
any specific correlation can be maintained for any specific transaction. See
"Foreign Currency Transactions" under "Investment Objectives and
Policies--Additional Investment Information" in the prospectus. There is no
limitation as to the percentage of the Global Fund's assets that may be
committed to forward contracts for the purchase of a foreign currency; the
International Fund does not intend to enter into such forward contracts if it
would have more than 15% of the value of its total assets committed to such
contracts. A Fund segregates cash or liquid high-grade securities in an amount
not less than the value of the Fund's total assets committed to forward foreign
currency exchange contracts entered into for the purchase of a foreign currency.
If the value of the securities segregated declines, additional cash or
securities is added so that the segregated amount is not less than the amount of
the Fund's commitments with respect to such contracts. A Fund generally does not
enter into a forward contract with a term longer than one year.
DELAYED DELIVERY TRANSACTIONS. The Global Fund may purchase or sell portfolio
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions involve a commitment by the Fund to purchase or sell
securities with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price or yield to the Fund at
the time of entering into the transaction. When the Fund enters into a delayed
delivery purchase, it becomes obligated to purchase securities and it has all
the rights and risks attendant to ownership of a security, although delivery and
payment occur at a later date. The value of fixed income securities to be
delivered in the future will fluctuate as interest rates vary. At the time the
Fund makes the commitment to purchase a security on a when-issued or delayed
delivery basis, it will record the transaction and reflect the liability for the
purchase and the value of the security in determining its net asset value.
Likewise, at the time the Fund makes the commitment to sell a security on a
delayed delivery basis, it will record the transaction and include the proceeds
to be received in determining its net asset value; accordingly, any fluctuations
in the value of the security sold pursuant to a delayed delivery commitment are
ignored in calculating net asset value so long as the commitment remains in
effect. The Fund generally has the ability to close out a purchase obligation on
or before the settlement date, rather than take delivery of the security.
To the extent the Global Fund engages in when-issued or delayed delivery
purchases, it will do so for the purpose of acquiring portfolio securities
consistent with the Fund's investment objective and policies and not for
investment leverage or to speculate in interest rate changes. The Fund will only
make commitments to purchase securities on a
B-9
<PAGE> 60
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but the Fund reserves the right to sell these securities before
the settlement date if deemed advisable.
REGULATORY RESTRICTIONS. To the extent required to comply with SEC Release No.
IC-10666, when purchasing a futures contract, writing a put option or entering
into a delayed delivery purchase or a forward foreign currency exchange
purchase, a Fund will maintain in a segregated account cash, U.S. Government
securities or liquid high-grade debt obligations equal to the value of such
contracts. A Fund will use cover in connection with selling a futures contract.
A Fund will not engage in transactions in financial futures contracts or options
thereon for speculation, but only to attempt to hedge against changes in market
conditions affecting the values of securities or other assets which the Fund
holds or intends to purchase.
REPURCHASE AGREEMENTS. A Fund may invest in repurchase agreements, which are
instruments under which the Fund acquires ownership of a security from a
broker-dealer or bank that agrees to repurchase the security at a mutually
agreed upon time and price (which price is higher than the purchase price),
thereby determining the yield during the Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement, the Fund
might incur expenses in enforcing its rights, and could experience losses,
including a decline in the value of the underlying securities and loss of
income. The securities underlying a repurchase agreement will be marked-to-
market every business day so that the value of such securities is at least equal
to the investment value of the repurchase agreement, including any accrued
interest thereon. Each Fund currently does not intend to invest more than 5% of
its net assets in repurchase agreements during the current year.
SHORT SALES AGAINST-THE-BOX. The Global Fund may make short sales
against-the-box for the purpose of deferring realization of gain or loss for
federal income tax purposes. A short sale "against-the-box" is a short sale in
which the Fund owns at least an equal amount of the securities or other assets
sold short or securities convertible into or exchangeable for, without payment
of any further consideration, securities or other assets of the same issue as,
and at least equal in amount to, the securities or other assets sold short. The
Fund may engage in such short sales only to the extent that not more than 10% of
the Fund's total assets (determined at the time of the short sale) is held as
collateral for such sales. The Fund currently does not intend, however, to
engage in such short sales to the extent that more than 5% of its net assets
will be held as collateral therefor during the current year.
DIVIDENDS AND TAXES
DIVIDENDS. The Global Fund normally distributes monthly dividends of net
investment income, the International Fund normally distributes annual dividends
of net investment income and each Fund distributes any net realized short-term
and long-term capital gains at least annually.
The level of income dividends per share (as a percentage of net asset value)
will be lower for Class B and Class C shares than for Class A shares primarily
as a result of the distribution services fee applicable to Class B and Class C
shares. Distributions of capital gains, if any, will be paid in the same amount
for each class.
A Fund may at any time vary the foregoing dividend practice and, therefore,
reserves the right from time to time either to distribute or to retain for
reinvestment such of its net investment income and its net short-term and long-
term capital gains as the Board of Trustees of the Fund determines appropriate
under then current circumstances. In particular, and without limiting the
foregoing, a Fund may make additional distributions of net investment income or
capital gain net income in order to satisfy the minimum distribution
requirements contained in the Internal Revenue Code (the "Code"). Dividends will
be reinvested in shares of the Fund paying such dividends unless shareholders
indicate in writing that they wish to receive them in cash or in shares of other
Kemper Funds as provided in the prospectus.
TAXES. Each Fund intends to continue to qualify as a regulated investment
company under Subchapter M of the Code and, if so qualified, will not be liable
for federal income taxes to the extent its earnings are distributed. One of
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<PAGE> 61
the Subchapter M requirements to be satisfied is that less than 30% of a Fund's
gross income during the fiscal year must be derived from gains (not reduced by
losses) from the sale or other disposition of securities and certain other
investments held for less than three months. A Fund may be limited in its
options, futures and foreign currency transactions in order to prevent
recognition of such gains.
A Fund's options, futures and foreign currency transactions are subject to
special tax provisions that may accelerate or defer recognition of certain gains
or losses, change the character of certain gains or losses, or alter the holding
periods of certain of the Fund's securities.
A 4% excise tax is imposed on the excess of the required distribution for a
calendar year over the distributed amount for such calendar year. The required
distribution is the sum of 98% of a Fund's net investment income for the
calendar year plus 98% of its capital gain net income for the one-year period
ending October 31, plus any undistributed net investment income from the prior
calendar year, plus any undistributed capital gain net income from the one year
period ended October 31 in the prior calendar year, minus any overdistribution
in the prior calendar year. For purposes of calculating the required
distribution, foreign currency gains or losses occurring after October 31 are
taken into account in the following calendar year. The Funds intend to declare
or distribute dividends during the appropriate periods of an amount sufficient
to prevent imposition of the 4% excise tax.
It is anticipated that only a small portion, if any, of the ordinary income
dividends from the Funds will be eligible for the dividends received deduction
available to corporate shareholders. The aggregate amount eligible for the
dividends received deduction may not exceed the aggregate qualifying dividends
received by a Fund for the fiscal year.
A shareholder who redeems shares of a Fund will recognize capital gain or loss
for federal income tax purposes measured by the difference between the value of
the shares redeemed and the adjusted cost basis of the shares. Any loss
recognized on the redemption of Fund shares held six months or less will be
treated as long-term capital loss to the extent that the shareholder has
received any long-term capital gain dividends on such shares. A shareholder who
has redeemed shares of a Fund or any other Kemper Mutual Fund listed in the
prospectus under "Special Features--Class A Shares--Combined Purchases" may
reinvest the amount redeemed at net asset value at the time of the reinvestment
in shares of the Fund or in shares of the other Kemper Mutual Funds within six
months of the redemption as described in the prospectus under "Redemption or
Repurchase of Shares--Reinvestment Privilege." If a shareholder realizes a loss
on the redemption or exchange of a Fund's shares and reinvests in shares of the
same Fund within 30 days before or after the redemption or exchange, the
transactions may be subject to the wash sale rules resulting in a postponement
of the recognition of such loss for federal income tax purposes. An exchange of
a Fund's shares for shares of another fund is treated as a redemption and
reinvestment for federal income tax purposes upon which gain or loss may be
recognized.
Investment income derived from foreign securities may be subject to foreign
income taxes withheld at the source. Because the amount of a Fund's investments
in various countries will change from time to time, it is not possible to
determine the effective rate of such taxes in advance.
Shareholders who are non-resident aliens are subject to U.S. withholding tax on
ordinary income dividends (whether received in cash or shares) at a rate of 30%
or such lower rate as prescribed by any applicable tax treaty.
PERFORMANCE
As described in the prospectus, each Fund's historical performance or return for
a class of shares may be shown in the form of "average annual total return" and
"total return" figures, and for the Global Fund may be shown in the form of
"yield" figures. These various measures of performance are described below.
Performance information will be computed separately for each class.
Yield is a measure of the net investment income per share earned over a specific
one month or 30-day period expressed as a percentage of the maximum offering
price of the Global Fund's shares (which is net asset value for
B-11
<PAGE> 62
Class B and Class C shares) at the end of the period. Average annual total
return and total return measure both the net investment income generated by, and
the effect of any realized or unrealized appreciation or depreciation of, the
underlying investments in the Fund's portfolio.
The Global Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. The Fund's Class
A shares' yield based upon the one-month period ended December 31, 1993 was
4.18%. Class B shares and Class C shares were not available prior to May 31,
1994. The Fund's yield is computed by dividing the net investment income per
share earned during the specified one month or 30-day period by the maximum
offering price per share (which is net asset value for Class B and Class C
shares) on the last day of the period, according to the following formula:
<TABLE>
<S> <C>
a - b
YIELD = 2[( ------- +1)(6) - 1
cd
</TABLE>
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period
(which is net asset value for Class B and Class C shares).
In computing the foregoing yield, the Global Fund follows certain standardized
accounting practices specified by Securities and Exchange Commission rules.
These practices are not necessarily consistent with those that the Fund uses to
prepare its annual and interim financial statements in conformity with generally
accepted accounting principles.
Each Fund's average annual total return quotation is computed in accordance with
a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for a Fund for a specific period is
found by first taking a hypothetical $1,000 investment ("initial investment") in
the Fund's shares on the first day of the period, adjusting to deduct the
maximum sales charge (in the case of Class A shares), and computing the
"redeemable value" of that investment at the end of the period. The redeemable
value in the case of Class B shares may or may not include the effect of the
applicable contingent deferred sales charge that may be imposed at the end of
the period. The redeemable value is then divided by the initial investment, and
this quotient is taken to the Nth root (N representing the number of years in
the period) and 1 is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all income and capital gains dividends
paid by the Fund have been reinvested at net asset value on the reinvestment
dates during the period. Average annual total return figures for Class A shares
for various periods are set forth in the tables below.
Calculation of a Fund's total return is not subject to a standardized formula,
except when calculated for the Fund's "Financial Highlights" table in the Fund's
financial statements. Total return performance for a specific period is
calculated by first taking an investment (assumed below to be $10,000) ("initial
investment") in the Fund's shares on the first day of the period, either
adjusting or not adjusting to deduct the maximum sales charge (in the case of
Class A shares), and computing the "ending value" of that investment at the end
of the period. The total return percentage is then determined by subtracting the
initial investment from the ending value and dividing the remainder by the
initial investment and expressing the result as a percentage. The ending value
in the case of Class B shares may or may not include the effect of the
applicable contingent deferred sales charge that may be imposed at the end of
the period. The calculation assumes that all income and capital gains dividends
paid by the Fund have been reinvested at net asset value on the reinvestment
dates during the period. Total return may also be shown as the increased dollar
value of the hypothetical investment over the period. Total return calculations
that do not include the effect of the sales charge for Class A shares or the
contingent deferred sales charge for Class B shares
B-12
<PAGE> 63
would be reduced if such charge were included. Total return figures for Class A
shares for various periods are set forth in the tables below.
A Fund's performance figures are based upon historical results and are not
necessarily representative of future performance. The Global Fund's Class A
shares are sold at net asset value plus a maximum sales charge of 4.5% of the
offering price and the International Fund's Class A shares are sold at net asset
value plus a maximum sales charge of 5.75% of the offering price. Class B and
Class C shares are sold at net asset value. Redemption of Class B shares may be
subject to a contingent deferred sales charge that is 4% in the first year
following the purchase, declines by a specified percentage each year thereafter
and becomes zero after six years. Returns and net asset value will fluctuate.
Factors affecting each Fund's performance include general market conditions,
operating expenses and investment management. Any additional fees charged by a
dealer or other financial services firm would reduce returns described in this
section. Shares of each Fund are redeemable at the then current net asset value,
which may be more or less than original cost.
The figures below show performance information for various periods. Comparative
information with respect to certain indices is also included. There are
differences and similarities between the investments which a Fund may purchase
and the investments measured by the indices which are described herein. The
Consumer Price Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. The Salomon Brothers High Grade Corporate
Bond Index generally represents the performance of high grade long-term
corporate bonds during various market conditions. The Lehman Brothers
Government/ Corporate Bond Index generally represents the performance of
intermediate and long-term government and investment grade corporate debt
securities during various market conditions. The Dow Jones Industrial Average
and the Standard & Poor's 500 Stock Index are indices of common stocks which are
considered to be generally representative of the U.S. stock market. The Europe
Australia Far East ("EAFE") Index is an index that is considered to be generally
representative of major non-U.S. stock markets. The Lipper International Fund
Index is a weighted performance average of other mutual funds that invest
primarily in securities of foreign issuers. The foregoing indices are unmanaged.
The net asset value and returns of the Funds will fluctuate. No adjustment has
been made for taxes payable on dividends. The periods indicated were ones of
fluctuating securities prices and interest rates.
B-13
<PAGE> 64
GLOBAL FUND--DECEMBER 31, 1994
<TABLE>
<CAPTION>
COMPARED TO
----------------------------------------
Salomon
Salomon Bros.
Capital Bros. High Lehman
TOTAL Initial Gain Income Ending Percentage Ending Percentage Consumer World Grade Brothers
RETURN $10,000 Dividends Dividends Value Increase Value Increase Price Govt. Corp. Govt./Corp.
TABLE Investment Reinvested Reinvested (adjusted) (adjusted) (unadjusted) (unadjusted) Index Index(4) Index(5) Index(6)
(1) (2) (1) (1) (1) (1) (3)
- ------ ------ ---- ------ -------- ------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
SHARES
Life of
Fund(+) $9,076 $ 28 $5,437 $ 14,541 45.4 % $ 15,219 52.2 % 19.8% 63.4% 54.7% 50.2%
Five
Years 8,806 26 5,033 13,865 38.7 14,523 45.2 24.2 58.7 49.4 44.9
Three
Years 8,074 19 2,078 10,171 1.7 10,654 6.5 8.6 22.3 16.7 15.3
One Year 8,788 0 620 9,408 (5.9) 9,853 (1.5) 2.7 2.4 (5.7) (3.5)
CLASS B
SHARES
Life of
Fund(++) $9,839 $ 0 $ 350 $ 9,795 (2.0)% $ 10,189 1.9 % 1.5% 3.1% 0.5% 0.6%
CLASS C
SHARES
Life of
Fund(++) $9,839 $ 0 $ 352 -- -- $ 10,191 1.9 % 1.5% 3.1% 0.5% 0.6%
</TABLE>
<TABLE>
<CAPTION>
Salomon
Salomon Bros.
Fund Fund Fund Bros. High Lehman
AVERAGE ANNUAL Class Class Class Consumer World Grade Brothers
TOTAL RETURN A B C Price Govt. Corp. Govt./Corp.
TABLE Shares Shares Shares Index(3) Index(4) Index(5) Index(6)
- ------------------- ------ ------ ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) 7.4 % -- -- 3.5% 9.8% 8.7 % 8.1 %
Life of Fund(++) -- (3.5)% 3.3% 2.6 5.4 0.8 1.1
Five Years 6.8 3.7 9.7 8.4 7.7
Three Years 0.6 -- -- 2.8 7.0 5.3 4.9
One Year (5.9) -- -- 2.7 2.4 (5.7) (3.5)
</TABLE>
- ---------------
(+) Since October 1, 1989 for Class A shares.
(++) Since May 31, 1994 for Class B and Class C shares.
B-14
<PAGE> 65
INTERNATIONAL FUND--OCTOBER 31, 1994
<TABLE>
<CAPTION>
Initial Income Ending Percentage
TOTAL $10,000 Capital Gain Dividends Value Increase
RETURN Investment Dividends Reinvested (adjusted) (adjusted)
TABLE (1) Reinvested (2) (1) (1)
- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Life of Fund(+) $ 16,864 $ 21,837 $ 11,457 $ 50,158 401.6%
Ten Years 16,464 16,692 8,058 41,214 312.1
Five Years 10,550 2,045 1,436 14,031 40.3
Three Years 11,980 511 302 12,793 27.9
One Year 9,937 247 29 10,213 2.1
Year to Date 9,704 0 0 9,704 )(3.0
CLASS B SHARES
Life of Fund(++) $ 10,482 $ 0 $ 0 $ 10,082 % 0.8
CLASS C SHARES
Life of Fund(++) $ 10,482 $ 0 $ 0 -- --
<CAPTION>
COMPARED TO
--------------------------------------------------------
Ending Percentage
TOTAL Value Increase Dow Jones Standard Consumer
RETURN (unadjusted) (unadjusted) Industrial & Poor's Price
TABLE (1) (1) Average(7) 500(8) Index(3)
- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <<C> <C>
CLASS A SHARES
Life of Fund(+) $ 53,222 432.2% 581.2% 492.9% % 66.5
Ten Years 43,738 337.4 362.3 296.7 42.0
Five Years 14,892 48.9 72.7 62.1 19.0
Three Years 13,562 35.7 38.0 31.3 8.8
One Year 10,832 8.3 9.4 3.9 2.6
Year to Date 10,296 3.0 6.3 3.5 2.5
CLASS B SHARES
Life of Fund(++) $ 10,482 % 4.8 % 5.5 % 5.1 % 1.4
CLASS C SHARES
Life of Fund(++) $ 10,482 % 4.8 % 5.5 % 5.1 % 1.4
<CAPTION>
Lipper
TOTAL Inter-
RETURN EAFE national
TABLE Index(9) Fund(10)
- ----------------- ---------------- ----------------
CLASS A SHARES
Life of Fund(+) 432.1% % *
Ten Years 359.9 *
Five Years 12.6 53.3
Three Years 24.9 41.9
One Year 8.5 11.5
Year to Date 11.2 5.5
CLASS B SHARES
Life of Fund(++) % 4.3 % 4.1
CLASS C SHARES
Life of Fund(++) % 4.3 % 4.1
</TABLE>
<TABLE>
<CAPTION>
Fund Fund Fund Dow Standard
AVERAGE ANNUAL Class Class Class Jones & Consumer Lipper
TOTAL RETURN A B C Industrial Poor's Price EAFE International
TABLE Shares Shares Shares Average(7) 500(8) Index(3) Index(9) Fund(10)
- ---------------- ---- ---- ---- ---- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) 12.7% -- -- 15.4% 14.2% 3.9% 13.3% *%
Life of Fund(++) -- 2.0% 12.0% 13.6 12.5 3.3 10.5 10.1
Ten Years 15.2 16.6 14.8 3.6 16.5 *
Five Years 7.0 11.6 10.1 3.6 2.4 8.9
Three Years 8.6 11.3 9.5 2.9 7.7 12.4
One Year 2.1 9.4 3.9 2.6 8.5 11.5
</TABLE>
- ---------------
* Data not available
(+) Since May 21, 1981 for Class A shares.
(++) Since May 31, 1994 for Class B and Class C shares.
FOOTNOTES FOR ALL FUNDS
(1) The Initial Investment and adjusted amounts for Class A shares were
adjusted for the maximum initial sales charge at the beginning of the
period, which is 5.75% for the International Fund and 4.5% for the Global
Fund. The Initial Investment for Class B and Class C shares was not
adjusted. Amounts were adjusted for Class B shares for the contingent
deferred sales charge that may be imposed at the end of the period based
upon the schedule for shares sold currently, see "Redemption or Repurchase
of Shares" in the prospectus. No adjustments were made to Class C shares
since they do not have an initial or contingent deferred sales charge.
(2) Includes short-term capital gain dividends, if any.
(3) The Consumer Price Index is a statistical measure of change, over time, in
the prices of goods and services in major expenditure groups for all urban
consumers. Source is Towers Data Systems.
(4) The Salomon Brothers World Government Bond Index is on a U.S. Dollar total
return basis with all dividends reinvested and is comprised of government
bonds from ten countries (United States, Japan, United Kingdom, Germany,
France, Canada, the Netherlands, Australia, Switzerland and Denmark). This
index is unmanaged. The minimum maturity is 1 year. Source is Lipper
Analytical Services, Inc.
(5) The Salomon Brothers High Grade Corporate Bond Index is on a total return
basis with all dividends reinvested and is comprised of high grade
long-term industrial and utility bonds rated in the top two rating
categories. This index is unmanaged. Source is Lipper Analytical Services,
Inc.
(6) The Lehman Brothers Government/Corporate Bond Index is on a total return
basis and is comprised of all publicly issued, non- convertible, domestic
debt of the U.S. Government or any agency thereof, quasi-Federal
corporation, or corporate debt guaranteed by the U.S. Government and all
publicly issued, fixed-rate, non-convertible, domestic debt of the three
major corporate classifications: industrial, utility, and financial. Only
notes and bonds with a minimum outstanding principal amount of $1,000,000
and a minimum of one year to maturity are included. Bonds included must
have a rating of at least Baa by Moody's Investors Service, Inc., BBB by
Standard & Poor's Corporation or in the case of bank bonds not rated by
either Moody's or S&P, BBB by Fitch Investors Service. This index is
unmanaged. Source is Lipper Analytical Services, Inc.
B-15
<PAGE> 66
(7) The Dow Jones Industrial Average is an unmanaged weighted average of thirty
blue chip industrial corporations listed on the New York Stock Exchange.
Assumes reinvestment of dividends. Source is Towers Data Systems.
(8) The Standard & Poor's 500 Stock Index is an unmanaged unweighted average of
500 stocks, over 95% of which are listed on the New York Stock Exchange.
Assumes reinvestment of dividends. Source is Towers Data Systems.
(9) The EAFE Index (Morgan Stanley Capital International Europe, Australia, Far
East Index) is a generally accepted benchmark for performance of major
overseas markets. This index is unmanaged and is U.S. dollar adjusted.
Assumes reinvestment of dividends. Source is Towers Data Systems.
(10) The Lipper International Fund Index is a net asset value weighted index of
the performance of certain mutual funds tracked by Lipper Analytical
Services, Inc. The index is comprised of mutual funds that invest assets in
the securities whose primary trading markets are outside of the United
States. Performance is based on changes in net asset value with all
dividends reinvested and with no adjustment for sales charge. Source is
Lipper Analytical Services, Inc.
The following tables illustrate an assumed $10,000 investment in Class A shares
of each Fund, which includes the maximum sales charge of 4.5% for the Global
Fund and 5.75% for the International Fund, with income and capital gain
dividends reinvested in additional shares. The table for each Fund covers the
period from its commencement of operations through December 31, 1994.
- --------------------------------------------------------------------------------
GLOBAL FUND (10/1/89)
<TABLE>
<CAPTION>
CUMULATIVE VALUE OF SHARES
DIVIDENDS ACQUIRED
ANNUAL
ANNUAL CAPITAL REINVESTED
YEAR INCOME GAIN INITIAL REINVESTED CAPITAL
ENDED DIVIDENDS DIVIDENDS INVEST- INCOME GAIN TOTAL
12/31 REINVESTED* REINVESTED MENT DIVIDENDS* DIVIDENDS VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1989 $ 170 $ 0 $ 9,840 $ 172 $ 0 $ 10,012
1990 1,541 0 10,563 1,718 0 12,281
1991 1,119 0 10,732 2,916 0 13,648
1992 1,093 29 9,671 3,688 29 13,388
1993 1,097 0 9,862 4,866 30 14,758
1994 983 0 9,076 5,437 28 14,541
</TABLE>
* Includes short-term capital gain dividends.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INTERNATIONAL FUND (5/21/81)
<TABLE>
<CAPTION>
CUMULATIVE VALUE OF SHARES
DIVIDENDS ACQUIRED
<S> <C> <C> <C> <C> <C> <C>
ANNUAL
ANNUAL CAPITAL REINVESTED
YEAR INCOME GAIN REINVESTED CAPITAL
ENDED DIVIDENDS DIVIDENDS INITIAL INCOME GAIN TOTAL
12/31 REINVESTED* REINVESTED INVESTMENT DIVIDENDS* DIVIDENDS VALUE
<CAPTION>
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1981 $ 205 $ 0 $ 9,167 $ 223 $ 0 $ 9,390
1982 273 0 9,113 538 0 9,651
1983 161 162 11,348 845 164 12,357
1984 231 728 9,445 925 854 11,234
1985 181 743 13,773 1,585 2,157 17,515
1986 1,766 4,604 14,621 3,523 7,104 25,248
1987 923 3,978 12,561 3,909 10,407 26,877
1988 814 456 14,121 5,229 12,163 31,513
1989 1,965 813 15,364 7,866 14,135 37,365
1990 1,216 3,206 12,409 7,559 14,596 34,564
1991 0 591 13,318 8,113 16,287 37,718
1992 772 0 12,409 8,328 15,175 35,912
1993 132 1,140 16,378 11,128 21,209 48,715
1994 1,397 1,577 14,713 11,408 20,646 46,767
</TABLE>
* Includes short-term capital gain dividends.
- --------------------------------------------------------------------------------
B-16
<PAGE> 67
Investors may want to compare a Fund's performance to that of certificates of
deposit issued by banks and other depository institutions. Certificates of
deposit may offer fixed or variable interest rates and principal is guaranteed
and may be insured. Withdrawal of the deposit prior to maturity will normally be
subject to a penalty. Rates offered by banks and other depository institutions
are subject to change at any time specified by the issuing institution. The
shares of the Fund are not insured and net asset value as well as yield will
fluctuate. Shares of a Fund are redeemable at net asset value which may be more
or less than original cost. Redemption of Class B shares may be subject to a
contingent deferred sales charge. The bonds in the Global Fund's portfolio are
generally of longer term than most certificates of deposit and may reflect
longer term market interest rate fluctuations.
Investors may also want to compare a Fund's performance to that of U.S. Treasury
bills, notes or bonds. Rates of Treasury obligations are fixed at the time of
issuance and payment of principal and interest is backed by the full faith and
credit of the U.S. Treasury. The market value of such instruments will generally
fluctuate inversely with interest rates prior to maturity and will equal par
value at maturity. Shares of a Fund are redeemable at net asset value, which may
be more or less than original cost. The Funds' returns will also fluctuate.
In order to appreciate more fully the opportunities for income throughout the
world and the potential advantages of investing in the Global Fund, investors
may want to compare the historical performance of various bond markets around
the world. Such performance, of course, would not necessarily be representative
of future actual or relative performance of such markets, or of the past or
future performance of the Fund.
The table below reflects the relative returns of certain unmanaged domestic bond
indexes and a foreign bond index over the periods indicated.
BOND INDEX TOTAL RETURNS
(PERIODS ENDED 12/31/94)
<TABLE>
<CAPTION>
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
----- ----- ------ ------
<S> <C> <C> <C> <C>
Salomon Non-U.S. Bond Index(1)............................. 5.99% 27.84% 71.28% 305.82%
Salomon Long-Term High Yield Bond Index(2)................. (3.79) 37.54 80.13 208.09
Salomon High Grade Corp. Bond Index(3)..................... (5.74) 16.72 49.43 198.97
Merrill Lynch Govt./Corp. Bond Index(4).................... (3.27) 15.68 45.45 157.17
Lehman Brothers Govt./Corp. Bond Index(5).................. (3.51) 15.26 44.93 155.53
</TABLE>
- ---------------
(1) The Salomon Brothers Non-U.S. Bond Index is on a U.S. dollar total return
basis with all dividends reinvested and is comprised of non-U.S. government
and corporate bonds with more than five years to maturity. This index is
unmanaged. Source is Lipper Analytical Services, Inc.
(2) The Salomon Brothers Long-Term High Yield Bond Index is on a total return
basis with all dividends reinvested and is comprised of high yield bonds
with a par value of $50 million or higher and a maturity of 10 years or
longer rated BB+ or lower by Standard & Poor's Corporation or Ba1 or lower
by Moody's Investors Service, Inc. This index is unmanaged. Source is
Salomon Brothers Inc.
(3) The Salomon Brothers High Grade Corporate Bond Index is on a total return
basis with all dividends reinvested and is comprised of high grade long-term
industrial and utility bonds rated in the top two rating categories. This
index is unmanaged. Source is Lipper Analytical Services, Inc.
(4) The Merrill Lynch Government/Corporate Bond Index is based upon the total
return with all dividends reinvested of 4,000 corporate and 300 government
bond issues with an intermediate average maturity and an average quality
rating of Aa (Moody's Investors Service, Inc.) or AA (Standard & Poor's
Corporation). This index is unmanaged. Source is Lipper Analytical Services,
Inc.
(5) The Lehman Brothers Government/Corporate Bond Index is on a total return
basis and is comprised of all publicly issued, nonconvertible, domestic debt
of the U.S. Government or any agency thereof, quasi-federal corporation, or
corporate debt guaranteed by the U.S. Government and all publicly issued,
fixed-rate, non-convertible, domestic debt of the three major corporate
classifications: industrial, utility, and financial. Only notes and bonds
with a minimum outstanding principal amount of $1,000,000 and a minimum of
one year to maturity are included. Bonds included must have a rating of at
least Baa by Moody's Investors Services, Inc., BBB by Standard & Poor's
Corporation or in the case of bank bonds not rated by either Moody's or S&P,
BBB by Fitch Investors Services. This index is unmanaged. Source is Lipper
Analytical Services, Inc.
B-17
<PAGE> 68
The following table depicts the best performing world government bond market for
each year during the period 1983-1994. The performance of these markets is
compared in each case to the performance of long-term U.S. Government bonds for
the same period. As shown in this table, the U.S. market, as represented by U.S.
Government bonds, was the best performing market in only one of the past ten
years. Performance is on a U.S. Dollar total return basis with all dividends
reinvested.
BEST WORLD BOND MARKETS VS. U.S. BOND MARKET
1983-1994
<TABLE>
<CAPTION>
Top Foreign Government Long-Term U.S.
Year Returns Govt. Returns
-------------------------- ----------------
<S> <C> <C>
1983................................. Japan 12.56% 4.09%
1984................................. Canada 8.82 14.27
1985................................. France 52.78 28.49
1986................................. Japan 43.55 21.01
1987................................. United Kingdom 47.57 (1.37)
1988................................. Australia 30.34 8.14
1989................................. Canada 17.97 17.40
1990................................. United Kingdom 29.16 7.47
1991................................. Australia 26.70 17.97
1992................................. Japan 11.96 7.78
1993................................. Japan 27.58 10.69
1994................................. Belgium 12.22 (3.36)
</TABLE>
- ---------------
Source: Salomon Brothers International Bond Market Performance Indexes.
The following table depicts the available yields from various global markets as
of January 10, 1995 and shows the wide range of yields among various markets.
Yield is a measure of the income generated by an investment and is not a
complete measure of performance. Yield does not include the effect of
appreciation or depreciation of the underlying investment due to changes in
interest rates or currency valuations or other market conditions, which may vary
from one global market to another. Thus, it is possible for a lower yielding
investment to outperform a higher yielding investment on a total return basis.
AVAILABLE YIELDS: INTERNATIONAL BONDS
<TABLE>
<CAPTION>
Long-Term Gov'ts. Long-Term Corp.
----------------- ----------------
<S> <C> <C>
Australia.................................... 10.42% 11.04%
Belgium...................................... 8.32 7.46
Canada....................................... 9.33 10.06
France....................................... 8.16 8.58
Germany...................................... 7.48 7.67
Holland...................................... 7.60 7.42
Italy........................................ 12.26 9.82
Japan........................................ 4.65 4.66
Spain........................................ 13.41 12.77
Sweden....................................... 10.90 11.36
Switzerland.................................. 5.21 5.38
Britain...................................... 8.71 9.15
United States................................ 7.83 8.54
</TABLE>
- ---------------
Source: The Economist. The Economist obtains its yield information from the
following sources: Banco Bilbao Vizcaya, Chase Manhattan, Belgium Bankers
Association, Royal Bank of Canada, Westpac Banking Corp., Credit Lyonnais, Bank
Nederland, Svenska Handelsbanken, CFSB, and the WEFA Group.
In 1994, the U.S. stock market ranked 19 in U.S. Dollar total return out of 27
markets. The source for non-U.S. stock markets is Morgan Stanley Capital
International, which ranks the major non-U.S. stock markets. The U.S.
B-18
<PAGE> 69
stock market is measured by the Standard & Poor's 500 Stock Index ("S&P 500"),
which is an unmanaged, unweighted average of 500 stocks, over 95% of which are
listed on the New York Stock Exchange. Morgan Stanley Capital International and
S&P 500 performance are on a total return basis after adjustment for
reinvestment of distributions. Morgan Stanley Capital International performance
data is U.S. Dollar adjusted and thus reflects both the change in local currency
terms plus the change in the value of the local currency against the U.S.
Dollar. This information is provided to compare the past performance of the U.S.
stock market with non-U.S. stock markets. It is not necessarily indicative of
the future performance of these markets or of the performance of the
International Fund as compared to any of these markets. The past performance of
the Fund as compared to various market indexes is provided above.
The following table compares the performance of the Class A shares of each Fund
over various periods with that of other mutual funds within the category
described below according to data reported by Lipper Analytical Services, Inc.
("Lipper"), New York, New York, which is a mutual fund reporting service. Lipper
performance figures are based on changes in net asset value, with all income and
capital gain dividends reinvested. Such calculations do not include the effect
of any sales charges. Future performance cannot be guaranteed. Lipper publishes
performance analyses on a regular basis.
GLOBAL FUND
<TABLE>
<CAPTION>
Lipper Mutual Fund
Performance Analysis
--------------------
General World Income
Funds
<S> <C>
Five Years (Period ended 12/31/94)......................................... 11 of 27
Three Years (Period ended 12/31/94)........................................ 38 of 45
One Year (Period ended 12/31/94)........................................... 19 of 107
</TABLE>
The Lipper General World Income Fund category includes funds which by prospectus
or portfolio practice invest primarily in U.S. Dollar and non-U.S. Dollar debt
instruments and, secondarily, in common and preferred stocks. This category
includes funds with a variety of objectives, policies and market and credit
risks that should be considered in reviewing these rankings.
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Lipper Mutual Fund
Performance Analysis
--------------------
International Funds
--------------------
<S> <C>
Ten Years (Period ended 12/31/94).......................................... 10 of 19
Five Years (Period ended 12/31/94)......................................... 31 of 50
One Year (Period ended 12/31/94)........................................... 118 of 157
</TABLE>
The Lipper International Funds category includes funds which invest their assets
in securities whose primary trading markets are outside of the United States.
INVESTMENT MANAGER AND UNDERWRITER
INVESTMENT MANAGER. Kemper Financial Services, Inc. ("KFS"), 120 South LaSalle
Street, Chicago, Illinois 60603, is each Fund's investment manager. Pursuant to
the investment management agreements, KFS acts as each Fund's investment
adviser, manages its investments, administers its business affairs, furnishes
office facilities and equipment, provides clerical, bookkeeping and
administrative services and permits any of its officers or employees to serve
without compensation as trustees or officers of the Fund if elected to such
positions. The investment management agreements provide that the Fund shall pay
the charges and expenses of its operations, including the
B-19
<PAGE> 70
fees and expenses of the trustees (except those who are officers or employees of
KFS), independent auditors, counsel, custodian and transfer agent and the cost
of share certificates, reports and notices to shareholders, brokerage
commissions or transaction costs, costs of calculating net asset value, taxes
and membership dues. Each Fund bears the expenses of registration of its shares
with the Securities and Exchange Commission, while KDI, as principal
underwriter, pays the cost of qualifying and maintaining the qualification of
each Fund's shares for sale under the securities laws of the various states. KFS
has agreed to reimburse each Fund to the extent required by applicable state
expense limitations should all operating expenses of each Fund, including the
investment management fees of KFS but excluding taxes, interest, distribution
fees, extraordinary expenses, brokerage commissions or transaction costs and any
other properly excludable expenses, exceed the applicable state expense
limitations. The Funds believe that the most restrictive state expense
limitation currently in effect would require that such operating expenses not
exceed 2.5% of the first $30 million of average daily net assets, 2% of the next
$70 million and 1.5% of average daily net assets over $100 million. Under such
state expense limitation, custodian costs attributable to foreign securities
that are in excess of similar domestic custodian costs are excluded from
operating expenses. A Fund may elect to seek an exemption from any otherwise
applicable state expense limitation and, if any such exemption were obtained,
the Fund would be subject to such limitations as may be required by such
exemption.
The investment management agreements provide that KFS shall not be liable for
any error of judgment or of law, or for any loss suffered by a Fund in
connection with the matters to which the agreements relate, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
KFS in the performance of its obligations and duties, or by reason of its
reckless disregard of its obligations and duties under each agreement.
Each Fund's investment management agreement continues in effect from year to
year so long as its continuation is approved at least annually by (a) a majority
of the trustees who are not parties to such agreement or interested persons of
any such party except in their capacity as trustees of the Fund and (b) by the
shareholders or the Board of Trustees of the Fund. Each Fund's investment
management agreement may be terminated at any time upon 60 days' notice by
either party, or by a majority vote of the outstanding shares of the Fund, and
will terminate automatically upon assignment. If additional Funds become subject
to an investment management agreement, the provisions concerning continuation,
amendment and termination shall be on a Fund by Fund basis. Additional Funds may
be subject to a different agreement.
Before May 31, 1994, each Fund paid KFS an investment management fee, payable
monthly, at the annual rate of .75 of 1% of its average daily net assets. The
current investment management fee rates paid by the Funds are in the prospectus,
see "Investment Manager and Underwriter." The investment management fees paid by
each Fund for its last three fiscal years are shown in the table below.
<TABLE>
<CAPTION>
FUND FISCAL 1994 FISCAL 1993 FISCAL 1992
- -------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Global........................................................ $ 864,000 * 520,000
International................................................. $ 2,666,000 1,498,000 1,311,000
</TABLE>
- ---------------
* $331,000 for the six months ended December 31, 1993 and $572,000 for the
fiscal year ended June 30, 1993.
PRINCIPAL UNDERWRITER. Pursuant to separate underwriting and distribution
services agreements ("distribution agreements"), Kemper Distributors, Inc., an
affiliate of KFS, is the principal underwriter and distributor for the shares of
each Fund and acts as agent of the Fund in the continuous offering of its
shares. KDI bears all of its expenses of providing services pursuant to the
distribution agreement, including the payment of any commissions. Each 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 was the Fund's principal
underwriter and distributor.
Each distribution agreement continues in effect from year to year so long as
such continuance is approved for each class at least annually by a vote of the
Board of Trustees of the Fund, including the Trustees who are not interested
B-20
<PAGE> 71
persons of the Fund and who have no direct or indirect financial interest in the
agreement. Each agreement automatically terminates in the event of its
assignment and may be terminated for a class at any time without penalty by a
Fund or by KDI upon 60 days' notice. Termination by a Fund with respect to a
class may be by vote of a majority of the Board of Trustees, or a majority of
the Trustees who are not interested persons of the Fund and who have no direct
or indirect financial interest in the agreement, or a "majority of the
outstanding voting securities" of the class of the Fund, as defined under the
Investment Company Act of 1940. The agreement may not be amended for a class to
increase the fee to be paid by a Fund with respect to such class without
approval by a majority of the outstanding voting securities of such class of the
Fund and all material amendments must in any event be approved by the Board of
Trustees in the manner described above with respect to the continuation of the
agreement. The provisions concerning the continuation, amendment and termination
of the distribution agreement are on a Fund by Fund basis and for each Fund on a
class by class basis.
CLASS A SHARES. The following information concerns the underwriting commissions
paid in connection with the distribution of each Fund's Class A shares for the
fiscal years noted.
<TABLE>
<CAPTION>
COMMISSIONS
COMMISSIONS PAID TO KEMPER
COMMISSIONS RETAINED UNDERWRITER AFFILIATED
FUND FISCAL YEAR BY UNDERWRITER PAID TO ALL FIRMS FIRMS
- ---------------------------------------- ----------- -------------------- ----------------- --------------
<S> <C> <C> <C> <C>
Global.................................. 1994 $ 15,000 111,000 37,000
1993A $ 16,000 26,000 51,000
1993B $ 53,000 406,000 112,000
1992 $ 86,000 585,000 173,000
International........................... 1994 $213,000 1,551,000 386,000
1993 $110,000 890,000 223,000
1992 $ 95,000 715,000 220,000
</TABLE>
- ---------------
1993A--Six months ended December 31, 1993
1993B--Fiscal year ended June 30, 1993
CLASS B SHARES AND CLASS C SHARES. Since the distribution agreement provides for
fees charged to Class B and Class C shares that are used by KDI to pay for
distribution services (see the prospectus under "Investment Manager and
Underwriter"), the agreement (the "Plan") is approved and renewed separately for
the Class B and Class C shares in accordance with Rule 12b-1 under the
Investment Company Act of 1940, which regulates the manner in which an
investment company may, directly or indirectly, bear expenses of distributing
its shares. Expenses of the Funds and of KFS, the principal underwriter until
February 1, 1995, in connection with the Rule 12b-1 Plans for the Class B and
Class C shares are set forth below. A portion of the marketing, sales and
operating expenses shown below could be considered overhead expense.
<TABLE>
<CAPTION>
DISTRIBUTION CONTINGENT TOTAL
FEES PAID DEFERRED COMMISSIONS COMMISSIONS
FISCAL BY FUND TO SALES CHARGES PAID BY UNDERWRITER PAID BY UNDERWRITER
FUND CLASS B SHARES YEAR* UNDERWRITER TO UNDERWRITER TO FIRMS TO AFFILIATED FIRMS
- ------------------------------- ------ ----------- -------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Global......................... 1994 $ 146,000 107,000 40,000 13,000
International.................. 1994 $ 48,000 8,000 202,000 59,000
<CAPTION>
OTHER DISTRIBUTION EXPENSES PAID BY UNDERWRITER
-----------------------------------------------------------
ADVERTISING MARKETING MISC.
AND PROSPECTUS AND SALES OPERATING INTEREST
FUND CLASS B SHARES LITERATURE PRINTING EXPENSES EXPENSES EXPENSES
- ------------------------------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Global......................... 13,000 18,000 17,000 21,000 11,000
International.................. 17,000 5,000 76,000 11,000 11,000
</TABLE>
- ---------------
* Class B shares were first offered on May 31, 1994.
<TABLE>
<CAPTION>
TOTAL DISTRIBUTION
DISTRIBUTION DISTRIBUTION FEES PAID
FEES PAID FEES PAID BY UNDERWRITER
FISCAL BY FUND BY UNDERWRITER TO AFFILIATED
FUND CLASS C SHARES YEAR** TO UNDERWRITER TO FIRMS FIRMS
- --------------------------------- ------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
Global........................... 1994 $ 0 0 0
International.................... 1994 $1,000 1,000 0
<CAPTION>
OTHER DISTRIBUTION EXPENSES PAID BY UNDERWRITER
--------------------------------------------------------------------
ADVERTISING MARKETING MISC.
AND PROSPECTUS AND SALES OPERATING INTEREST
FUND CLASS C SHARES LITERATURE PRINTING EXPENSES EXPENSES EXPENSES
- --------------------------------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Global........................... 1,000 3,000 2,000 2,000 0
International.................... 3,000 1,000 11,000 2,000 0
</TABLE>
- ---------------
** Class C shares were first offered on May 31, 1994.
B-21
<PAGE> 72
ADMINISTRATIVE SERVICES. Administrative services are provided to each Fund under
an administrative services agreement ("administrative agreement") with KDI. KDI
bears all its expenses of providing services pursuant to the administrative
agreement between KDI and each Fund, including the payment of service fees.
Until October 1, 1993, for the services under the administrative agreement, the
Global Fund paid KFS (as the predecessor to KDI) an administrative services fee,
payable monthly, at the annual rate of up to .15 of 1% of average daily net
assets of the Class A shares, and the International Fund at the annual rate of
up to .25 of 1% of average daily net assets of the Class A shares. Effective
October 1, 1993, for the services under the administrative agreement, each Fund
pays KDI an administrative services fee, payable monthly, at the annual rate of
up to .25 of 1% of average daily net assets of each class of the Fund. Before
February 1, 1995, KFS was the administrator.
KDI enters into related arrangements with various financial services firms, such
as broker-dealers or banks ("firms"), that provide services and facilities for
their customers or clients who are shareholders of a Fund. The firms provide
such office space and equipment, telephone facilities and personnel as is
necessary or beneficial for providing information and services to their clients.
Such services and assistance may include, but are not limited to, establishing
and maintaining shareholder accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Funds,
assistance to clients in changing dividend and investment options, account
designations and addresses and such other services as may be agreed upon from
time to time and permitted by applicable statute, rule or regulation. With
respect to Class A shares, KDI pays each firm a service fee, payable quarterly,
at an annual rate of (a) up to .15 of 1% of the net assets in Fund accounts that
it maintains and services (.25 of 1% of the International Fund) attributable to
Class A shares acquired prior to October 1, 1993, and (b) up to .25 of 1% of the
net assets in Fund accounts that it maintains and services attributable to Class
A shares acquired on or after October 1, 1993, in each case commencing with the
month after investment. With respect to Class B shares and Class C shares, KDI
pays each firm a service fee, payable quarterly, at an annual rate of up to .25
of 1% of the net assets in Fund accounts that it maintains and services
attributable to Class B shares and Class C shares, respectively, commencing with
the month after investment (month of investment for Class C shares); provided,
however, KDI may for Class B shares advance the first year service fee as
described in the prospectus under "Investment Manager and Underwriter." Firms to
which service fees may be paid include broker-dealers affiliated with KDI.
The following information concerns the administrative services fee paid by each
Fund.
<TABLE>
<CAPTION>
ADMINISTRATIVE SERVICE FEES
PAID BY FUND SERVICE FEES SERVICE FEES
------------------------------ PAID BY ADMINISTRATOR PAID BY ADMINISTRATOR
FUND FISCAL PERIOD CLASS A CLASS B CLASS C TO FIRMS TO AFFILIATED FIRMS
- ------------------------ ------------- -------- ------- ------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Global.................. 1994* $154,000 45,000 -- 224,000 58,000
1993A $ 62,000 -- -- 62,000 21,000
1993B $106,000 -- -- 106,000 37,000
1992 $ 94,000 -- -- 94,000 33,000
International........... 1994* $723,000 16,000 755,000 162,000
1993 $404,000 -- -- 404,000 100,000
1992 $362,000 -- -- 362,000 90,000
</TABLE>
- ---------------
1993A--Six months ended December 31, 1993
1993B--Fiscal year ended June 30, 1993
* Class B and Class C shares were first offered on May 31, 1994.
KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for a Fund. Currently, the
administrative services fee payable to KDI is based only upon Fund assets in
accounts for which there is a firm listed on the Fund's records and it is
intended that KDI will pay all the administrative services fees that it receives
from the Fund to firms in the form of service fees. The effective administrative
services fee rate to be charged against all
B-22
<PAGE> 73
assets of each Fund while this procedure is in effect will depend upon the
proportion of Fund assets that is in accounts for which there is a firm of
record as well as, with respect to the Global Fund's Class A shares, the date
when shares representing such assets were purchased. The Board of Trustees of a
Fund, in its discretion, may approve basing the fee to KDI on all Fund assets in
the future.
Certain trustees or officers of each Fund are also directors or officers of KFS,
KDI or of Kemper Investment Management Company Limited, a wholly owned
subsidiary of KFS, as indicated under "Officers and Trustees."
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. The Chase Manhattan Bank, N.A., Chase
MetroTech Center, Brooklyn, New York 11245, as custodian, has custody of all
securities and cash of each Fund held outside the United States. Investors
Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas City, Missouri
64105, as custodian, and United Missouri Bank, n.a., Tenth and Grand Streets,
Kansas City, Missouri 64106 and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, as sub-custodians, have custody of
all securities and cash of each Fund maintained in the United States. They
attend to the collection of principal and income, and payment for and collection
of proceeds of securities bought and sold by each Fund. IFTC is also each Fund's
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Kemper Service Company ("KSvC"), an affiliate of KFS, serves as
"Shareholder Service Agent." IFTC receives as transfer agent, and pays to KSvC,
annual account fees of $6 per account plus account set up, transaction,
maintenance and disaster recovery charges, annual fees associated with the
contingent deferred sales charge (Class B only) and out-of-pocket expense
reimbursement. IFTC's fee is reduced by certain earnings credits in favor of
each Fund. For the fiscal year ended December 31, 1994, the Global Fund incurred
custodian and transfer agent fees of $263,000 (excluding related expenses), to
IFTC and IFTC remitted shareholder service fees in the amount of $261,000 to
KSvC as Shareholder Service Agent. For the fiscal year ended October 31, 1994,
the International Fund incurred custodian and transfer agent fees of $1,135,000
(excluding related expenses) to IFTC and IFTC remitted shareholder service fees
in the amount of $1,146,000 to KSvC as Shareholder Service Agent. Prior to
February 1, 1995, IFTC was 50% owned by KFS.
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Funds' independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Funds' annual financial statements, review certain
regulatory reports and the Funds' federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Funds. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
PORTFOLIO TRANSACTIONS
KFS is the investment manager for the Kemper Funds and KFS and its affiliates
also furnish investment management services to other clients including Kemper
Corporation 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 a Fund and for one or more of the other clients
managed 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.
National securities exchanges have established limitations governing the maximum
number of options in each class which may be written by a single investor or
group of investors acting in concert. An exchange may order the liquidation of
positions found to be in violation of these limits, and it may impose certain
other sanctions. These position limits may restrict the number of options the
Fund will be able to write on a particular security.
The above mentioned factors may have a detrimental effect on the quantities or
prices of securities and options and futures contracts available to the Fund. On
the other hand, the ability of a Fund to participate in volume transactions may
produce better executions for a Fund in some cases. The Board of Trustees of
each Fund believes
B-23
<PAGE> 74
that the benefits of KFS's organization outweigh any limitations that may arise
from simultaneous transactions or position limitations.
KFS, in effecting purchases and sales of portfolio securities for the account of
a Fund, will implement the Fund's policy of seeking best execution of orders,
which includes best net prices, except to the extent that KFS may be permitted
to pay higher brokerage commissions for research services as described below.
Consistent with this policy, orders for portfolio transactions are placed with
broker-dealer firms giving consideration to the quality, 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 a Fund and KFS. Any research benefits derived are
available for all clients, including clients of affiliated companies. Since it
is only supplementary to KFS's own research efforts and must be analyzed and
reviewed by KFS' staff, the receipt of research information is not expected to
materially reduce expenses. In selecting among firms believed to meet the
criteria for handling a particular transaction, KFS may give consideration to
those firms that have sold or are selling shares of the Funds and of other funds
managed by KFS, as well as to those firms that provide market, statistical and
other research information to a Fund and KFS, although KFS is not authorized to
pay higher commissions or, in the case of principal trades, higher prices to
firms that provide such services, except as provided below.
KFS may in certain instances be permitted to pay higher brokerage commissions
(not including principal trades) solely for receipt of market, statistical and
other research services. Subject to Section 28(e) of the Securities Exchange Act
of 1934 and procedures that may be adopted by the Board of Trustees of each
Fund, a Fund could pay a firm that provides research services to KFS a
commission for effecting a securities transaction for the Fund in excess of the
amount other firms would have charged for the transaction if KFS determines in
good faith that the greater commission is reasonable in relation to the value of
the research services provided by the executing firm viewed in terms either of a
particular transaction or KFS's overall responsibilities to the Fund or other
clients. Not all of such research services may be useful or of value in advising
a particular Fund. Research benefits will be available for all clients of KFS
and its subsidiaries. The investment management fee paid by a Fund to KFS is not
reduced because KFS receives these research services.
The table below shows total brokerage commissions paid by each Fund for the last
three fiscal periods and for the most recent fiscal year, the percentage thereof
that was allocated to firms based upon research information provided or sales of
Kemper Mutual Fund Shares.
<TABLE>
<CAPTION>
ALLOCATED TO FIRMS
BASED ON
RESEARCH/SALES OF
KEMPER FUND SHARES
FUND FISCAL 1994 IN FISCAL 1994 FISCAL 1993 FISCAL 1992
- ------------------------------------------- ----------- ------------------ ----------- -----------
<S> <C> <C> <C> <C>
Global..................................... $ 0 0% $ 0* $ 0
International.............................. $ 2,655,000 98% $ 2,601,000 $ 1,795,000
</TABLE>
- ---------------
* Includes both the fiscal year ended June 30, 1993 and the six months ended
December 31, 1993.
PURCHASE AND REDEMPTION OF SHARES
As described in the prospectus, Fund shares are sold at their public offering
price, which is the net asset value next determined after an order is received
in proper form plus, with respect to Class A shares, an initial sales charge.
The minimum initial investment is $1,000 and the minimum subsequent investment
is $100 but such minimum amounts may be changed at any time. See the prospectus
for certain exceptions to these minimums. An order for the purchase of shares
that is accompanied by a check drawn on a foreign bank (other than a check drawn
on a Canadian bank in U.S. Dollars) will not be considered in proper form and
will not be processed unless and until the Fund determines that it has received
payment of the proceeds of the check. The time required for such a determination
will vary and cannot be determined in advance.
B-24
<PAGE> 75
Upon receipt by the Shareholder Service Agent of a request for redemption,
shares of a Fund will be redeemed by the Fund at the applicable net asset value
per share of such Fund as described in the Funds' prospectus. The redemption
within one year of Class A shares purchased at net asset value under the Large
Order NAV Purchase Privilege described in the prospectus may be subject to a 1%
contingent deferred sales charge (see "Purchase of Shares" in the prospectus).
Redemption of Class B shares may be subject to a contingent deferred sales
charge. When a Fund is asked to redeem shares for which it may not yet have
received good payment, it may delay the mailing of a redemption check until it
has determined that collected funds have been received for the purchase of such
shares, which will be up to 15 days.
Scheduled variations in or the elimination of the initial sales charge for
purchases of Class A shares or the contingent deferred sales charge for
redemptions of Class B shares by certain classes of persons or through certain
types of transactions as described in the prospectus is provided because of
expected economies in sales and sales-related efforts.
A Fund may suspend the right of redemption or delay payment more than seven days
(a) during any period when the New York Stock Exchange ("Exchange") is closed
other than customary weekend and holiday closings or during any period in which
trading on the Exchange is restricted, (b) during any period when an emergency
exists as a result of which (i) disposal of a Fund's investments is not
reasonably practicable, or (ii) it is not reasonably practicable for the Fund to
determine the value of its net assets, or (c) for such other periods as the
Securities and Exchange Commission may by order permit for the protection of a
Fund's shareholders.
Although it is the Global Fund's present policy to redeem in cash, if the Board
of Trustees determines that a material adverse effect would be experienced by
the remaining shareholders if payment were made wholly in cash, the Fund will
satisfy the redemption request in whole or in part by a distribution of
portfolio securities in lieu of cash, in conformity with the applicable rules of
the Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
occurred, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition would incur certain
transaction costs. Such a redemption would not be so liquid as a redemption
entirely in cash. The Global Fund has elected to be governed by Rule 18f-1 under
the Investment Company Act of 1940 pursuant to which the Fund is obligated to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
assets of the Fund during any 90-day period for any one shareholder of record.
The conversion of Class B shares to Class A shares may be subject to the
continuing availability of an opinion of counsel, ruling by the Internal Revenue
Service or other assurance acceptable to each Fund to the effect that (a) the
assessment of the distribution services fee with respect to Class B shares and
not Class A shares does not result in the Fund's dividends constituting
"preferential dividends" under the Internal Revenue Code, and (b) that the
conversion of Class B shares to Class A shares does not constitute a taxable
event under the Internal Revenue Code. The conversion of Class B shares to Class
A shares may be suspended if such assurance is not available. In that event, no
further conversions of Class B shares would occur, and shares might continue to
be subject to the distribution services fee for an indefinite period that may
extend beyond the proposed conversion date as described in the prospectus.
B-25
<PAGE> 76
OFFICERS AND TRUSTEES
The officers and trustees of each Fund, their principal occupations and their
affiliations, if any, with Kemper Financial Services, Inc., the investment
manager, and Kemper Distributors, Inc., principal underwriter, are as follows
(The number following each person's title is the number of investment companies
managed by KFS for which he or she holds similar positions):
DAVID W. BELIN, Trustee (21), 2000 Financial Center, 7th and Walnut, Des Moines,
Iowa; Member, Belin Harris Lamson McCormick, P.C. (attorneys).
LEWIS A. BURNHAM, Trustee (21), 16410 Avila Boulevard, Tampa, Florida; Director,
Management Consulting Services, McNulty and Company; formerly, Executive Vice
President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY, Trustee (21), One Park Place, Milwaukee, Wisconsin; Retired;
formerly, Executive Vice President, A. O. Smith Corporation (diversified
manufacturer).
ROBERT B. HOFFMAN, Trustee (21), 800 North Lindbergh Boulevard, St. Louis,
Missouri; Senior Vice President and Chief Financial Officer, Monsanto Company
(chemical products); prior thereto, Vice President, FMC Corporation
(manufacturer of machinery and chemicals); prior thereto, Director, Executive
Vice President and Chief Financial Officer, Staley Continental, Inc. (food
products).
DONALD R. JONES, Trustee (21), 1303 East Algonquin Road, Schaumburg, Illinois;
Retired; Director, Motorola, Inc. (manufacturer of electronic equipment and
components); formerly, Executive Vice President and Chief Financial Officer,
Motorola, Inc.
WILLIAM P. SOMMERS, Trustee (21), 333 Ravenswood Avenue, Menlo Park, California;
President and Chief Executive Officer, SRI International (research and
development); prior thereto, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton, Inc. (management consulting
firm) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
STEPHEN B. TIMBERS, Vice President and Trustee* (31), Kemper Center, Long Grove,
Illinois; President, Chief Operating Officer and Director, Kemper Corporation;
Chairman, Chief Executive Officer and Director, Kemper Financial Services, Inc.,
Director, Kemper Financial Companies, Inc. and Kemper Securities, Inc.
JOHN E. PETERS, Vice President* (31), 120 South LaSalle Street, Chicago,
Illinois; Senior Executive Vice President, Kemper Financial Services, Inc.;
President and Director, Kemper Distributors, Inc.
CHARLES F. CUSTER, Vice President and Assistant Secretary* (31), 222 North
LaSalle Street, Chicago, Illinois; Partner, Vedder, Price, Kaufman & Kammholz
(attorneys), Legal Counsel to the Fund.
JEROME L. DUFFY, Treasurer* (31), 120 South LaSalle Street, Chicago, Illinois;
Senior Vice President, Kemper Financial Services, Inc.
PHILIP J. COLLORA, Vice President and Secretary* (31), 120 South LaSalle Street,
Chicago, Illinois; Attorney, Senior Vice President and Assistant Secretary,
Kemper Financial Services, Inc.
ELIZABETH C. WERTH, Assistant Secretary* (23), 120 South LaSalle Street,
Chicago, Illinois; Vice President and Director of State Registrations, Kemper
Financial Services, Inc.
GLOBAL FUND:
J. PATRICK BEIMFORD, JR., Vice President* (24), 120 South LaSalle Street,
Chicago, Illinois; Executive Vice President/Director of Fixed Income
Investments, Kemper Financial Services, Inc.
GORDON K. JOHNS, Vice President* (3), River Plate House, 1 Fleet Place, London
EC4M 7RQ, Director and Managing Director, Kemper Investment Management Company
Limited; Executive Vice President, Kemper
B-26
<PAGE> 77
Financial Services, Inc.; formerly, Director and Head of Fixed Investment
Management, Lazard Investors, Ltd., a London based investment manager.
INTERNATIONAL FUND:
DENNIS H. FERRO, Vice President* (4), 120 South LaSalle Street, Chicago,
Illinois; Executive Vice President, Kemper Financial Services, Inc.; formerly,
President and Chief Investment Officer, Cigna International Investment Advisors,
Ltd.
* Interested persons as defined in the Investment Company Act of 1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds, except that Mr. Custer's law firm
receives fees from the Funds as counsel to the Funds. The table below shows
amounts paid or accrued to those trustees who are not designated "interested
persons" during each Fund's 1994 fiscal year except that the information in the
last column is for calendar year 1994.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM PENSION OR
FUNDS RETIREMENT BENEFITS TOTAL COMPENSATION
------------------------------ ACCRUED AS PART KEMPER FUNDS
NAME OF TRUSTEE GLOBAL INTERNATIONAL OF FUND EXPENSES PAID TO TRUSTEES**
- ----------------------------------- ------ ------------- ------------------- -------------------
<S> <C> <C> <C> <C>
David W. Belin*.................... $1,800 2,500 0 112,200
Lewis A. Burnham................... $1,600 1,900 0 90,100
Donald L. Dunaway*................. $2,000 2,500 0 115,400
Robert B. Hoffman.................. $1,500 1,900 0 87,400
Donald R. Jones.................... $1,600 2,000 0 94,300
William P. Sommers................. $1,500 1,800 0 84,100
</TABLE>
- ---------------
* Includes current fees deferred and interest pursuant to deferred compensation
agreements with the Funds. Deferred amounts accrue interest monthly at a rate
equal to the yield of Kemper Money Market Fund -- Money Market Portfolio.
** Includes compensation for service on the boards of twenty-three Kemper funds
(including two funds no longer in existence). Also includes amounts for new
funds estimated as if they had existed at the beginning of the year.
As of February 28, 1995, the trustees and officers as a group owned less than 1%
of the then outstanding shares of each Fund and no person owned of record more
than 5% of the outstanding shares of a Fund, except that Kemper Clearing Corp.,
111 E. Kilbourn Avenue, Milwaukee, Wisconsin owned of record 5.8% of KGIF.
SHAREHOLDER RIGHTS
The Funds generally are not required to hold meetings of their shareholders.
Under the Agreement and Declaration of Trust of each Fund ("Declaration of
Trust"), however, shareholder meetings will be held in connection with the
following matters: (a) the election or removal of trustees if a meeting is
called for such purpose; (b) the adoption of any contract for which approval by
shareholders is required by the Investment Company Act of 1940 ("1940 Act"); (c)
any termination of the Fund or a class to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other than
amendments changing the name of the Fund, supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or inconsistent
provision thereof); and (e) such additional matters as may be required by law,
the Declaration of Trust, the By-laws of the Fund, or any registration of the
Fund with the Securities and Exchange Commission or any state, or as the
trustees may consider necessary or desirable. The shareholders also would vote
upon changes in fundamental investment objectives, policies or restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of a
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described below) or a majority
of the trustees. In accordance with the 1940 Act (a) each Fund will hold a
shareholder meeting for the election of trustees at such time as less than a
B-27
<PAGE> 78
majority of the trustees have been elected by shareholders, and (b) if, as a
result of a vacancy in the Board of Trustees, less than two-thirds of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10% of the
outstanding shares. Upon the written request of ten or more shareholders who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of a Fund stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, each
Fund has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
Each Fund's Declaration of Trust provides that the presence at a shareholder
meeting in person or by proxy of at least 30% of the shares entitled to vote on
a matter shall constitute a quorum. Thus, a meeting of shareholders of a Fund
could take place even if less than a majority of the shareholders were
represented on its scheduled date. Shareholders would in such a case be
permitted to take action which does not require a larger vote than a majority of
a quorum, such as the election of trustees and ratification of the selection of
independent auditors. Some matters requiring a larger vote under the Declaration
of Trust, such as termination or reorganization of a Fund and certain amendments
of the Declaration of Trust, would not be affected by this provision; nor would
matters which under the 1940 Act require the vote of a "majority of the
outstanding voting securities" as defined in the 1940 Act.
Each Fund's Declaration of Trust specifically authorizes the Board of Trustees
to terminate the Fund or any Portfolio or class by notice to the shareholders
without shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of a
Fund. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of each Fund and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by a
Fund or the Fund's trustees. Moreover, the Declaration of Trust provides for
indemnification out of Fund property for all losses and expenses of any
shareholder held personally liable for the obligations of a Fund and each Fund
will be covered by insurance which the trustees consider adequate to cover
foreseeable tort claims. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered by KFS remote and not
material, since it is limited to circumstances in which a disclaimer is
inoperative and such Fund itself is unable to meet its obligations.
B-28
<PAGE> 79
APPENDIX--RATINGS OF INVESTMENTS
STANDARD & POOR'S CORPORATION BOND RATINGS
AAA. Debt rated AAA had the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC AND C. Debt rated BB, B, CCC, CC and C is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CI. The rating CI is reserved for income bonds on which no interest is being
paid.
D. Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
MOODY'S INVESTORS SERVICE, INC., BOND RATINGS
AAA. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
B-29
<PAGE> 80
CAA. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA. Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
IBCA LIMITED BOND RATINGS
AAA. Obligations for which there is the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly.
AA. Obligations for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions may increase investment
risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk. Capacity
for timely repayment of principal and interest is strong, although adverse
changes in business, economic or financial conditions may lead to increased
investment risk.
BBB. Obligations for which there is currently a low expectation of investment
risk. Capacity for timely repayment of principal and interest is adequate,
although adverse changes in business, economic or financial conditions are more
likely to lead to increased investment risk than for obligations in higher
categories.
B-30
<PAGE> 81
KEMPER INTERNATIONAL FUND
FINANCIAL STATEMENTS
PORTFOLIO OF INVESTMENTS October 31, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
COMMON STOCKS
CONTINENTAL EUROPE
FINLAND-4.1%
- -----------------------------------------------------------
Metsa Serla "B"
Paper company 100,000 $ 4,631
- -----------------------------------------------------------
Nokia Telecom
Telecommunications company 83,000 12,482
- -----------------------------------------------------------
17,113
FRANCE-3.8%
- -----------------------------------------------------------
Carrefour S.A.
Food retailer 12,000 5,276
- -----------------------------------------------------------
(a)Peugeot S.A.
Automobile company 30,000 4,480
- -----------------------------------------------------------
(a)Technip
Oil company 12,500 646
- -----------------------------------------------------------
Total Cie Francais
Oil company 85,000 5,497
- -----------------------------------------------------------
15,899
GERMANY-8.3%
- -----------------------------------------------------------
BMW
Automobile company 8,364 4,299
- -----------------------------------------------------------
Hoechst, A.G.
Chemicals and pharmaceuticals
manufacturer 25,000 5,460
- -----------------------------------------------------------
Mannesmann, A.G.
Diversified manufacturing company 37,000 9,866
- -----------------------------------------------------------
Siemens, A.G.
Electronics and telecommunications
manufacturer 19,000 7,921
- -----------------------------------------------------------
Veba, A.G.
Holding company 21,000 7,020
- -----------------------------------------------------------
34,566
IRELAND-1.3%
- -----------------------------------------------------------
Greencore Group PLC
Food producer 380,000 2,348
- -----------------------------------------------------------
Waterford Wedgewood PLC
Fine china/crystal manufacturer 3,550,000 3,248
- -----------------------------------------------------------
5,596
ITALY-1.7%
- -----------------------------------------------------------
Stet
Telecommunications operator 2,350,000 7,078
- -----------------------------------------------------------
NETHERLANDS-8.2%
- -----------------------------------------------------------
Aalberts Industries N.V.
Diversified holding company 40,800 1,955
- -----------------------------------------------------------
Hagemeyer N.V.
Trading company 63,048 5,017
- -----------------------------------------------------------
Pakhoed Holding N.V.
Shipping company 130,000 3,491
- -----------------------------------------------------------
Phillips N.V.
Electronics company 270,000 8,913
- -----------------------------------------------------------
Polygram N.V.
Music recording company 225,000 9,983
- -----------------------------------------------------------
Van Ommeren
Shipping company 180,000 4,920
- -----------------------------------------------------------
34,279
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
SPAIN-1.1%
- -----------------------------------------------------------
Repsol S.A., ADR
Oil and gas producer 150,000 $ 4,789
- -----------------------------------------------------------
(a)Tipel, S.A.
Leather skins processor 73,500 36
- -----------------------------------------------------------
4,825
SWEDEN-3.4%
- -----------------------------------------------------------
Atlas Copco
Industrial machinery manufacturer 320,000 4,349
- -----------------------------------------------------------
Ericsson "B"
Telecommunications equipment
manufacturer 160,000 9,709
- -----------------------------------------------------------
14,058
SWITZERLAND-2.0%
- -----------------------------------------------------------
Brown Boveri
Engineering and construction company 5,600 4,799
- -----------------------------------------------------------
Roche Holdings Genuss Chein
Chemicals and pharmaceuticals company 800 3,551
- -----------------------------------------------------------
8,350
TOTAL CONTINENTAL EUROPE-33.9% 141,764
- -----------------------------------------------------------
PACIFIC REGION
HONG KONG-1.9%
- -----------------------------------------------------------
Hutchison Whampoa Ltd.
Diversifed holding company 673,000 3,110
- -----------------------------------------------------------
Swire Pacific Ltd., 'A'
Property investment and development
company 320,000 2,443
- -----------------------------------------------------------
Wai Kee Holdings,
with warrants expiring 1996
Construction company 8,010,000 2,362
- -----------------------------------------------------------
7,915
JAPAN-21.5%
- -----------------------------------------------------------
(a)Amada Co., Ltd.
Equipment manufacturer 250,000 3,301
- -----------------------------------------------------------
(a)Autobacs Seven
warrants expiring 1996
Auto supplies and equipment retailer 640 2,560
- -----------------------------------------------------------
DDI Corp.
Telecommunications company 940 8,514
- -----------------------------------------------------------
Fujitsu Limited
Computer components manufacturer 450,000 5,152
- -----------------------------------------------------------
Honda Motor Co. Ltd.
Automobile company 200,000 3,486
- -----------------------------------------------------------
Japan Medical Supply
Medical equipment supplier 222,000 2,065
- -----------------------------------------------------------
Keiyo Company Ltd.
Retailer 248,000 4,042
- -----------------------------------------------------------
Kurita Water Industries
Water treatment equipment and
chemicals manufacturer 71,000 2,036
- -----------------------------------------------------------
Kyocera Corporation
Electronics manufacturer 36,000 2,740
- -----------------------------------------------------------
Matsushita Electric Industrial Co.
Ltd.
Consumer electronics and office
equipment manufacturer 200,000 3,321
- -----------------------------------------------------------
Mitsubishi Heavy Industries
Industrial machinery manufacturer 700,000 5,697
- -----------------------------------------------------------
</TABLE>
9
<PAGE> 82
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
- -----------------------------------------------------------
Mitsui Petrochemical Industries
Chemical company 119,000 $ 1,122
- -----------------------------------------------------------
Nippondenso Co. Ltd.
Automotive components manufacturer
and supplier 100,000 2,135
- -----------------------------------------------------------
Nippon Paper Industries
Paper company 300,000 2,367
- -----------------------------------------------------------
(a)Nisshin Steel Co., Ltd.
Steel manufacturer 400,000 2,100
- -----------------------------------------------------------
(a)NKK Corp.
Steel manufacturer 1,496,000 4,614
- -----------------------------------------------------------
Omron Corp.
Control components manufacturer 50,000 902
- -----------------------------------------------------------
Sanyo Shinpan Finance Co.
Consumer finance company 27,000 2,687
- -----------------------------------------------------------
Schimachu
Furniture manufacturer and retailer 200,000 6,808
- -----------------------------------------------------------
Sharp Corporation
Electronics manufacturer 300,000 5,601
- -----------------------------------------------------------
Suzuki Motor Co. Ltd.
Automobile company 289,000 3,667
- -----------------------------------------------------------
Tokio Marine & Fire Insurance Company
Limited
Insurance company 414,000 4,911
- -----------------------------------------------------------
Tokyo Electron
Electronics manufacturing company 90,000 3,008
- -----------------------------------------------------------
Tokyo Tanabe Co., Ltd.
Pharmaceuticals manufacturer 337,000 2,972
- -----------------------------------------------------------
(a)Toppan Printing
warrants expiring 1995
Printing company 2,800 1,540
- -----------------------------------------------------------
(a)Ube Industries, Ltd.
Diversified manufacturing company 600,000 2,568
- -----------------------------------------------------------
89,916
MALAYSIA-2.4%
- -----------------------------------------------------------
Road Builder Holdings
Construction company 278,000 1,729
- -----------------------------------------------------------
TA Enterprise Berhad
Investment holding company 696,000 2,260
- -----------------------------------------------------------
Technology Resource, Ltd.
Telecommunications company 1,281,000 4,985
- -----------------------------------------------------------
Uniphone Telecommunications
Telecommunications manufacturer 475,000 1,161
- -----------------------------------------------------------
10,135
PHILIPPINES-.5%
- -----------------------------------------------------------
(a)Universal Robina Corporation
Food manufacturer 2,541,500 2,196
- -----------------------------------------------------------
SINGAPORE-3.8%
- -----------------------------------------------------------
City Developments
Property development company 942,000 5,542
- -----------------------------------------------------------
(a)Creative Technologies Ltd.
Electronics company 100,000 1,380
- -----------------------------------------------------------
Keppel Corporation Limited
Conglomerate holding company 500,000 4,591
- -----------------------------------------------------------
United Overseas Bank
Banking 402,000 4,402
- -----------------------------------------------------------
15,915
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
THAILAND-.7%
- -----------------------------------------------------------
MDX Company Limited
Property development company 118,000 $ 502
- -----------------------------------------------------------
Siam City Bank
Banking 1,714,000 2,424
- -----------------------------------------------------------
2,926
TOTAL PACIFIC REGION-30.8% 129,003
- -----------------------------------------------------------
LATIN AMERICA AND EMERGING MARKETS
ARGENTINA-1.5%
- -----------------------------------------------------------
Astra
Oil producing company 934,200 1,987
- -----------------------------------------------------------
Quilmes Industrial, S.A.
Beer producer 85,800 2,252
- -----------------------------------------------------------
Telecom de Argentina
Telecommunications company 305,600 1,892
- -----------------------------------------------------------
6,131
BRAZIL-.7%
- -----------------------------------------------------------
Petroleo Brasileiro, S.A.
Oil and natural gas producer 17 3
- -----------------------------------------------------------
Usiminas S.A., ADR
Iron and steel company 189,500 3,150
- -----------------------------------------------------------
3,153
CHILE-.8%
- -----------------------------------------------------------
Enersis S.A., ADR
Electric utility company 50,000 1,469
- -----------------------------------------------------------
Maderas y Sinteticos Sociedad Anonima
MASISA, ADR
Wood products manufacturer 60,800 1,702
- -----------------------------------------------------------
3,171
COLUMBIA-.2%
- -----------------------------------------------------------
(a)Cementos Paz del Rio, S.A.
Cement company 34,000 825
- -----------------------------------------------------------
MEXICO-3.7%
- -----------------------------------------------------------
Cemex, "A"
Cement company 908,450 8,111
- -----------------------------------------------------------
(a)Corporacion Geo, ADR
Building company 64,200 1,757
- -----------------------------------------------------------
(a)Grupo Carso, S.A. de C.V., ADR
Diversified holding company 149,000 3,218
- -----------------------------------------------------------
Tefefonos de Mexico, S.A.
Telecommunications supplier 43,000 2,370
- -----------------------------------------------------------
15,456
PERU
- -----------------------------------------------------------
(a)Banco Wiese Limitado
Banking 6,800 145
- -----------------------------------------------------------
TOTAL LATIN AMERICA AND EMERGING MARKETS-6.9% 28,881
- -----------------------------------------------------------
COMMONWEALTH COUNTRIES
AUSTRALIA-4.9%
- -----------------------------------------------------------
Broken Hill Proprietary Co., Ltd.
Mineral and petroleum mining company 325,000 4,983
- -----------------------------------------------------------
(a)CSL Limited
Mineral and metal mining company 804,000 1,534
- -----------------------------------------------------------
Just Jeans Holdings Ltd.
Retail company 65,900 114
- -----------------------------------------------------------
</TABLE>
10
<PAGE> 83
(Dollars in thousands)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- --------
<S> <C> <C>
- -----------------------------------------------------------
(a)TNT Ltd.,"A"
Freight service company 2,100,000 $ 3,756
- -----------------------------------------------------------
Western Mining Holdings Limited
Mineral and petroleum mining company 1,635,800 10,187
- -----------------------------------------------------------
20,574
CANADA-3.6%
- -----------------------------------------------------------
Magna International Inc., "A"
Automobile parts company 123,400 4,411
- -----------------------------------------------------------
Noranda Inc.
Metal mining and manufacturing
company 299,700 5,896
- -----------------------------------------------------------
(a)Sceptre Resources
Energy resource company 275,800 2,446
- -----------------------------------------------------------
(a)Talisman Energy
Energy resource company 103,100 2,209
- -----------------------------------------------------------
14,962
NEW ZEALAND-1.8%
- -----------------------------------------------------------
Carter, Holt, Harvey Limited
Industrial pulp and paper producer 1,699,109 4,122
- -----------------------------------------------------------
Wilson & Horton
Newspaper publisher 704,950 3,473
- -----------------------------------------------------------
7,595
UNITED KINGDOM-9.1%
- -----------------------------------------------------------
British Petroleum Co., PLC
Petroleum mining and production
company 1,505,572 10,691
- -----------------------------------------------------------
Eastern Group PLC
Electric utility company 450,000 5,844
- -----------------------------------------------------------
Granada
Leisure goods company 387,375 3,316
- -----------------------------------------------------------
Manweb PLC
Electric utility company 300,000 3,961
- -----------------------------------------------------------
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- --------
<S> <C> <C>
- -----------------------------------------------------------
The RTZ Corporation PLC
Mining company 370,000 $ 5,186
- -----------------------------------------------------------
Siebe PLC
Industrial products manufacturer 328,103 2,889
- -----------------------------------------------------------
Vodafone Group PLC
Cellular telephone services 1,778,400 6,142
- -----------------------------------------------------------
38,029
TOTAL COMMONWEALTH COUNTRIES-19.4% 81,160
- -----------------------------------------------------------
TOTAL COMMON STOCKS-91.0%
(Cost: $334,274) 380,808
- -----------------------------------------------------------
MONEY MARKET INSTRUMENTS
Yield-4.78% to 5.22%
Due-November and December 1994
- -----------------------------------------------------------
Conagra Inc $ 6,000 5,989
- -----------------------------------------------------------
DIC Americas Inc. 5,500 5,485
- -----------------------------------------------------------
Eastman Kodak Company 5,000 4,999
- -----------------------------------------------------------
Eiger Capital Corporation 6,000 5,978
- -----------------------------------------------------------
Merrill Lynch & Co., Inc. 7,000 6,974
- -----------------------------------------------------------
Other 23,500 23,438
- -----------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS-12.7%
(Cost $52,865) 52,863
- -----------------------------------------------------------
TOTAL INVESTMENTS-103.7%
(Cost $387,139) 433,671
- -----------------------------------------------------------
LIABILITIES, LESS CASH AND OTHER ASSETS-(3.7)%
(15,389)
- -----------------------------------------------------------
NET ASSETS-100% $418,282
- -----------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Non-income producing security.
Based on the cost of investments of $387,139,000 for federal income tax purposes
at October 31, 1994, the aggregate gross unrealized appreciation was
$56,276,000, the aggregate gross unrealized depreciation was $9,744,000 and the
net unrealized appreciation of investments was $46,532,000.
See accompanying Notes to Financial Statements.
11
<PAGE> 84
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER INTERNATIONAL FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Kemper International Fund as of October 31,
1994, the related statements of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the fiscal periods since 1990.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
October 31, 1994, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
International Fund at October 31, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the fiscal periods
since 1990, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 28, 1994
12
<PAGE> 85
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994
(in thousands)
<TABLE>
<S> <C>
ASSETS
- --------------------------------------------
Investments, at value
(Cost: $387,139) $ 433,671
- --------------------------------------------
Cash 731
- --------------------------------------------
Receivable for:
Fund shares sold 1,438
- --------------------------------------------
Investments sold 3
- --------------------------------------------
Dividends and interest 468
- --------------------------------------------
Total assets 436,311
- --------------------------------------------
LIABILITIES AND NET ASSETS
- --------------------------------------------
Payable for:
Fund shares redeemed 488
- --------------------------------------------
Investments purchased 16,623
- --------------------------------------------
Management fee 250
- --------------------------------------------
Distribution services fee 16
- --------------------------------------------
Administrative services fee 72
- --------------------------------------------
Custodian and transfer agent
fees and related expenses 543
- --------------------------------------------
Other 37
- --------------------------------------------
Total liabilities 18,029
- --------------------------------------------
Net assets $ 418,282
- --------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------
Excess of amounts received from
issuance of shares over amounts
paid on redemptions of shares
on account of capital $ 347,767
- --------------------------------------------
Accumulated net realized gain on
sales of investments and foreign
currency transactions 23,240
- --------------------------------------------
Unrealized appreciation of investments
and foreign currency 46,512
- --------------------------------------------
Undistributed net investment income 763
- --------------------------------------------
Net assets applicable to shares outstanding $ 418,282
- --------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------
CLASS A SHARES
Net asset value and redemption price
per share ($388,972,411 / 34,936,638
shares outstanding) $11.13
- --------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of net
asset value or 5.75% of offering price) $11.81
- --------------------------------------------
CLASS B SHARES
Net asset value, offering price and
redemption price (subject to contingent
deferred sales charge) per share
($28,523,764 / 2,570,985 shares
outstanding) $11.09
- --------------------------------------------
CLASS C SHARES
Net asset value, offering price and
redemption price per share
($785,995 / 70,879 shares outstanding) $11.09
- --------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Year ended October 31, 1994
(in thousands)
<TABLE>
<S> <C>
INVESTMENT INCOME
- ---------------------------------------------
Dividends $ 5,464
- ---------------------------------------------
Interest 813
- ---------------------------------------------
6,277
- ---------------------------------------------
Less foreign taxes withheld 658
- ---------------------------------------------
Total investment income 5,619
- ---------------------------------------------
EXPENSES
- ---------------------------------------------
Management fee 2,666
- ---------------------------------------------
Administrative services fee 739
- ---------------------------------------------
Distribution services fees 49
- ---------------------------------------------
Custodian and transfer agent
fees and related expenses 1,862
- ---------------------------------------------
Professional fees 122
- ---------------------------------------------
Reports to shareholders 76
- ---------------------------------------------
Trustees' fees and other 98
- ---------------------------------------------
Total expenses 5,612
- ---------------------------------------------
Net investment income 7
- ---------------------------------------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
- ---------------------------------------------
Net realized gain on investments and
foreign currencies 25,062
- ---------------------------------------------
Net change in balance of unrealized
appreciation of investments and foreign
currencies 2,606
- ---------------------------------------------
Net gain on investments 27,668
- ---------------------------------------------
Net increase in net assets resulting
from operations $ 27,675
- ---------------------------------------------
</TABLE>
13
<PAGE> 86
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
Year ended October 31,
1994 1993
--------------- -----------
<S> <C> <C>
OPERATIONS
- -------------------------
Net investment income $ 7 739
- -------------------------
Net realized gain on
investments and foreign
currency 25,062 17,086
- -------------------------
Net change in
unrealized appreciation
and foreign currency 2,606 40,317
- -------------------------
Net increase in net
assets resulting from
operations 27,675 58,142
- -------------------------
Net equalization credits 641 1,350
- -------------------------
DIVIDENDS TO SHAREHOLDERS
- -------------------------
Distribution from net
investment income -- (3,708)
- -------------------------
Distribution from net
realized gain on
investments (8,297) --
- -------------------------
Total dividends to
shareholders (8,297) (3,708)
- -------------------------
Net increase from capital
share transactions 108,365 68,224
- -------------------------
Total increase in net
assets 128,384 124,008
- -------------------------
NET ASSETS
- -------------------------
Beginning of year 289,898 165,890
- -------------------------
End of year (including
undistributed net
investment income of
$763 in 1994 and $5,511
in 1993) $ 418,282 289,898
- -------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
Effective May 31, 1994, the Fund began offering three classes of shares. Class A
shares are sold to investors subject to an initial sales charge. Class B shares
are sold without an initial sales charge but are subject to higher ongoing
expenses than Class A shares and a contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically convert to Class A shares six
years after issuance. Class C shares are sold without an initial or a contingent
deferred sales charge but are subject to higher ongoing expenses than Class A
shares and do not convert into another class. The Fund may offer, to a limited
group of investors, Class I shares (none sold through October 31, 1994) which
are not subject to initial or contingent deferred sales charges and have lower
ongoing expenses than other classes. Each share represents an identical interest
in the investments of the Fund and has the same rights.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at value. Any portfolio securities that are primarily
traded on a domestic securities exchange are valued at the last sale price on
that exchange or, if there is no recent last sale price available, at the last
current bid quotation. Portfolio securities that are primarily traded on foreign
securities exchanges are generally valued at the preceding closing values of
such securities on their respective exchanges where primarily traded. A security
that is listed or traded on more than one exchange is valued at the quotation on
the exchange determined to be the primary market for such security by the Board
of Trustees or its delegates. All other securities not so traded are valued at
the last current bid quotation if market quotations are available. Fixed income
securities are valued by using market quotations, or independent pricing
services that use prices provided by market makers or estimates of market values
obtained from yield data relating to instruments or securities with similar
characteristics. Equity options are valued at the last sale price unless the bid
price is higher or the asked price is lower, in which event such bid or asked
price is used. Exchange traded fixed income options are valued at the last sale
price unless there is no sale price, in which event prices provided by market
makers are used. Over-the-counter traded fixed income options are valued based
upon current prices provided by market makers. Financial futures and options
thereon are valued at the settlement price established each day by the board of
trade or exchange on which they are traded. Forward foreign currency contracts
and foreign currencies are valued at the forward and current exchange rates,
respectively, prevailing on the day of valuation. Other securities and assets
are valued at fair value as determined in good faith by the Board of Trustees.
CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency values are converted into
U.S. dollar values at the mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by a recognized dealer. If such
quotations are not
14
<PAGE> 87
readily available, the rate of exchange is determined in good faith by the Board
of Trustees. Income and expenses and purchases and sales of investments are
translated into U.S. dollars at the rate of exchange prevailing on the
respective dates of such transactions. The Fund includes that portion of the
results of operations resulting from changes in foreign exchange rates with net
realized and unrealized gain on investments, as appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Dividend income is recorded on the ex-dividend date,
except that certain dividends from foreign securities are recorded as soon as
the information is available to the Fund. Interest income is recorded on the
accrual basis and includes amortization of money market instrument premium and
discount. Realized gains and losses from investment transactions are reported on
an identified cost basis.
FUND SHARE VALUATION
Fund shares are sold and redeemed on a continuous basis at net asset value (plus
an initial sales charge on most sales of Class A shares). Proceeds payable on
redemption of Class B shares will be reduced by the amount of any applicable
contingent deferred sales charge. On each day the New York Stock Exchange is
open for trading, the net asset value per share is determined as of the earlier
of 3:00 p.m. Chicago time or the close of the Exchange. The net asset value per
share is determined separately for each class by dividing the Fund's net assets
attributable to that class by the number of shares of the class outstanding.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of net asset value does not take
place contemporaneously with the determination of the prices of the majority of
the portfolio securities.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS
The Fund has complied with the special provisions of
the Internal Revenue Code available to investment
companies and therefore no federal income tax provision is required.
The Fund may make an election under the Internal Revenue Code so that
shareholders may claim a tax credit or deduction for their share of foreign
taxes paid by the Fund.
Net realized capital gains, if any, reduced by capital loss carryovers will be
distributed at least annually. Differences in dividends per share for a Fund are
due to different class expenses. Dividends payable to its shareholders are
recorded by the Fund on the ex-dividend date.
Effective November 1, 1993, the Fund adopted Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As a
result of this statement, the Fund changed the classification of distributions
to shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax regulations.
Accordingly, amounts as of November 1, 1993, have been reclassified to reflect a
decrease in undistributed net investment income of $6,001,000 and an increase in
accumulated net realized gain on investments of $6,001,000.
EQUALIZATION ACCOUNTING
A portion of proceeds from sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment income so that income per
share available for distribution is not affected by sales or redemptions of
shares.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Fund has a management agreement with Kemper Financial Services, Inc. (KFS).
For the period ended May 31, 1994 the Fund paid an investment management fee of
.75% of average daily net assets. Effective May 31, 1994, the Fund pays a fee at
an annual rate of .75% of the first $250 million of average daily net assets
declining gradually to .62% of average daily net assets in excess of $12.5
billion. The Fund incurred a management fee of $2,666,000 for the year ended
October 31, 1994.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
The Fund has an underwriting and distribution services agreement with KFS. As
principal underwriter for the Fund, KFS retained commissions of $213,000 for the
year ended October 31, 1994 for sales of Class A shares after allowing
$1,551,000 as commissions to firms of which $386,000 was paid to firms
affiliated with KFS. For services under the distribution services agreement, the
Fund pays KFS a fee of .75% of average daily net assets of the Class B and Class
C shares. Pursuant to the agreement, KFS enters into related selling group
agreements with various firms that provide distribution services to investors.
KFS compensates these firms at various rates for sales of Class B and Class C
shares. During the year ended October 31, 1994, the Fund incurred a distribution
services fee for Class B and Class C shares of $49,000, and KFS paid $203,000
for commissions and distribution fees to firms, including $59,000 to firms
affiliated with KFS. In addition, KFS received $8,000 of contingent deferred
sales charges.
ADMINISTRATIVE SERVICES AGREEMENT
The Fund has an administrative services agreement with KFS. For providing
information and administrative services to shareholders, the Fund pays KFS a fee
at an annual rate of up to .25% of average daily net assets. KFS in turn has
various agreements with financial services firms that provide these services and
pays these firms based on assets of Fund accounts the firms service. For the
year ended October 31, 1994, the Fund incurred an administrative services fee of
$739,000 and KFS paid $755,000 to firms, including $162,000 that was paid to
firms affiliated with KFS.
CUSTODIAN AND TRANSFER AGENT AGREEMENT
The Fund has a custodian agreement and a transfer agent agreement with Investors
Fiduciary Trust Company
15
<PAGE> 88
(IFTC), which is 50% owned by KFS. For the year ended October 31, 1994, the Fund
incurred custodian and transfer agent fees of $1,135,000 (excluding related
expenses). Pursuant to a services agreement with IFTC, Kemper Service Company
(KSvC), an affiliate of KFS, is the shareholder service agent of the Fund. For
the year ended October 31, 1994, IFTC remitted shareholder service fees of
$1,146,000 to KSvC.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the year ended October 31, 1994, the Fund made no direct payments to its
officers and incurred trustees' fees of $15,000 to independent trustees.
4. INVESTMENT TRANSACTIONS
Investment transactions for the year ended October 31, 1994 (excluding money
market instruments) are as follows (in thousands):
<TABLE>
<S> <C>
Purchases $426,103
- ------------------------------------------------------
Proceeds from sales 348,070
- ------------------------------------------------------
</TABLE>
5. CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of the Fund (in
thousands):
<TABLE>
<CAPTION>
Year ended October 31,
1994 1993
------------------- -----------------
Shares Amount Shares Amount
------- --------- ------ --------
<S> <C> <C> <C> <C>
Shares sold:
Class A 20,528 $ 217,366 14,991 $136,924
- ---------------------------------------------------------
Class B 3,185 34,449 -- --
- ---------------------------------------------------------
Class C 76 814 -- --
- ---------------------------------------------------------
Shares issued in
reinvestment of
dividends:
Class A 774 8,085 431 3,545
- ---------------------------------------------------------
Class B 1 14 -- --
- ---------------------------------------------------------
Shares redeemed:
Class A (13,841) (145,844) (8,276) (72,245)
- ---------------------------------------------------------
Class B (600) (6,469) -- --
- ---------------------------------------------------------
Class C (5) (50) -- --
- ---------------------------------------------------------
Conversion of
shares:
Class A 15 167 -- --
- ---------------------------------------------------------
Class B (15) (167) -- --
- ---------------------------------------------------------
Net increase
from capital
share
transactions $ 108,365 $ 68,224
- ---------------------------------------------------------
</TABLE>
6. PORTFOLIO BY INDUSTRY
At October 31, 1994, the Fund's portfolio of investments had the following
diversification (dollars in thousands):
<TABLE>
<CAPTION>
Value %
<S> <C> <C>
- --------------------------------------------------------
Automobiles, Parts and Services $ 25,038 6.0
- --------------------------------------------------------
Chemical, Medical Equipment and
Pharmaceutical 17,206 4.1
- --------------------------------------------------------
Communications 59,485 14.2
- --------------------------------------------------------
Construction and Building
Materials 10,647 2.5
- --------------------------------------------------------
Consumer Products and Services 16,547 3.9
- --------------------------------------------------------
Diversified 32,328 7.7
- --------------------------------------------------------
Electrical and Electronics 32,884 7.9
- --------------------------------------------------------
Energy Sources 59,204 14.2
- --------------------------------------------------------
Financial Services 16,829 4.0
- --------------------------------------------------------
Food and Beverages 12,072 2.9
- --------------------------------------------------------
Industrial Products and Services 34,526 8.3
- --------------------------------------------------------
Paper Products 11,120 2.7
- --------------------------------------------------------
Publishing 5,013 1.2
- --------------------------------------------------------
Real Estate and Property
Development 8,487 2.0
- --------------------------------------------------------
Retailing 10,964 2.6
- --------------------------------------------------------
Transportation 17,184 4.1
- --------------------------------------------------------
Utility 11,274 2.7
- --------------------------------------------------------
TOTAL COMMON STOCKS 380,808 91.0
- --------------------------------------------------------
MONEY MARKET INSTRUMENTS 52,863 12.7
- --------------------------------------------------------
TOTAL INVESTMENTS 433,671 103.7
- --------------------------------------------------------
LIABILITIES, LESS CASH
AND OTHER ASSETS (15,389) (3.7)
- --------------------------------------------------------
NET ASSETS $ 418,282 100.0
- --------------------------------------------------------
</TABLE>
16
<PAGE> 89
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class B Class C
Class A ----------- -----------
---------------------------------------------------- May 31, May 31,
1994 to 1994 to
Year ended October 31, October 31, October 31,
1994 1993 1992 1991 1990 1994 1994
---------------------------------------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $10.56 8.17 8.76 9.52 9.94 $10.58 $10.58
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) -- 0.03 0.22 0.13 0.15 (0.04) (0.04)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments and foreign
currency 0.86 2.54 (0.67) 0.31 0.23 0.55 0.55
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.86 2.57 (0.45) 0.44 0.38 0.51 0.51
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment
income -- 0.18 -- 0.11 0.08 -- --
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain
on investments 0.29 -- 0.14 1.09 0.72 -- --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends 0.29 0.18 0.14 1.20 0.80 -- --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.13 10.56 8.17 8.76 9.52 $11.09 $11.09
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 8.32 32.08 (5.17) 5.38 4.16 4.82 4.82
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.54 1.69 1.36 1.41 1.20 2.58 2.52
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 0.02 0.37 2.61 1.42 1.66 (0.97) (0.91)
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES:
Net assets at end of period (in
thousands) $418,282 289,898 165,890 184,946 200,730
- --------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 103 156 143 209 191
============================================================================================
</TABLE>
NOTE: Ratios have been determined on an annualized basis. Total return is not
annualized and does not reflect the effect of any sales charges.
17
<PAGE> 90
KEMPER INTERNATIONAL FUND
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(i) Financial statements included in Part A of the Registration
Statement: Financial Highlights.
(ii) Financial statements included in Part B of the Registration
Statement:
Statement of assets and liabilities--October 31, 1994.
Statement of operations for the year ended October 31, 1994.
Statement of changes in net assets for each of the two years in
the period ended October 31, 1994.
Portfolio of investments--October 31, 1994.
Notes to financial statements.
Schedules II, III, IV and V are omitted as the required information is
not present.
Schedule I has been omitted as the required information is presented in
the portfolio of investments at October 31, 1994.
(b) Exhibits
<TABLE>
<S> <C>
99.B1. Amended and Restated Agreement and Declaration of
Trust.
99.B2. By-Laws.(1)
99.B3. Inapplicable.
99.B4. (a) Text of Share Certificate.
(b) Written Instrument Establishing and
Designating Separate Classes of Shares.
99.B5. Investment Management Agreement.
99.B6. (a) Underwriting and Distribution Services
Agreement.
(b) Assignment and Assumption Agreement.
(c) Form of Selling Group Agreement.
99.B7. Inapplicable.
99.B8. (a) Custody Agreement (Form 1).
(b) Custody Agreement (Form 2).
99.B9. (a) Agency Agreement.
(b) Supplement to Agency Agreement.
(c) Administrative Services Agreement.
(d) Amendment to Administrative Services Agreement.
(e) Assignment and Assumption Agreement.
99.B10. Inapplicable.
99.B11. Report and Consent of Independent Auditors.
99.B12. Inapplicable.
99.B13. Inapplicable.
99.B14. (a) Kemper Retirement Plan Prototype.(3)
(b) Model Individual Retirement Account.(3)
99.B15. See 6(a) above (Class B and Class C shares).
99.B16. Performance Calculations.(2)
99.B24. Powers of Attorney.
27.All Classes Financial Data Schedule.
27.Class A Financial Data Schedule.
27.Class B Financial Data Schedule.
27.Class C Financial Data Schedule.
99.485(b)Letter Representation of Counsel (Rule 485(b)).
</TABLE>
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 7
to the Registration Statement on Form N-1A filed on or about
December 2, 1985.
C-1
<PAGE> 91
(2) Incorporated herein by reference to Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A filed on or about
February 17, 1990.
(3) Incorporated herein by reference to Post-Effective Amendment No. 16
to the Registration Statement on Form N-1A filed on or about
November 23, 1992.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of January 31, 1995, there were 58,996 Class A, 12,584 Class B and 1,056
Class C holders of record of the sole series of shares of Registrant.
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C-2
<PAGE> 92
ITEM 28.(A) BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information pertaining to business and other connections of the
Registrant's investment adviser is hereby incorporated by reference to the
section of the Prospectus captioned "Investment Manager and Underwriter," and to
the section of the Statement of Additional Information captioned "Investment
Manager and Underwriter."
Kemper Financial Services, Inc., investment adviser of the Registrant, is
investment adviser of the following:
Kemper Mutual Funds:
Kemper Technology Fund
Kemper Total Return Fund
Kemper Growth Fund
Kemper Small Capitalization Equity Fund
Kemper Income and Capital Preservation Fund
Kemper Money Market Fund
Kemper National Tax-Free Income Series
Kemper Diversified Income Fund
Kemper High Yield Fund
Cash Equivalent Fund
Kemper U.S. Government Securities Fund
Kemper International Fund
Kemper Portfolios
Kemper State Tax-Free Income Series
Tax-Exempt California Money Market Fund
Kemper Adjustable Rate U.S. Government Fund
Kemper Blue Chip Fund
Kemper Global Income Fund
Kemper Target Equity Fund
Cash Account Trust
Investors Cash Trust
Tax-Exempt New York Money Market Fund
Kemper Closed-End Funds:
Kemper High Income Trust
Kemper Intermediate Government Trust
Kemper Municipal Income Trust
Kemper Multi-Market Income Trust
Kemper Strategic Municipal Income Trust
The Growth Fund of Spain, Inc.
Kemper Strategic Income Fund
Kemper Financial Services, Inc. also furnishes investment advice to and
manages investment portfolios for other clients including Kemper Investors Fund,
Sterling Funds and Kemper International Bond Fund.
C-3
<PAGE> 93
Item 28(b) Business and Other Connections of Officers
and Directors of Kemper Financial Services Inc.,
the Investment Advisor
BORIS, JAMES R.
Director, Kemper Financial Services, Inc.
Director, INVEST Financial Corporation Holding Company
Director, INVEST Financial Corporation
Executive Vice President, Kemper Corporation
Director, Executive Vice President, Kemper Financial Companies,
Inc.
Director, Kemper Investors Life Insurance Company
Director, Kemper Sales Company
Director, Chairman and CEO, Kemper Securities, Inc.
MATHIS, DAVID B.
Director, Kemper Financial Services, Inc.
Director, Centre Reinsurance (Bermuda) Limited
Director, Centre Reinsurance Company Limited
Chairman of the Board, Centre Reinsurance Holdings Limited
Director, Federal Kemper Insurance Company
Director, Federal Kemper Life Assurance Company
Finance Committee, Fidelity Life Association
Chairman and Chief Executive Officer, Kemper Corporation
Director, Kemper Europe Reassurances, S.A. (KERSA)
Director, Kemper Financial Companies, Inc.
Director, Kemper International Insurance Company (PTE.) Limited
Director, Kemper Investors Life Insurance Company
Director, Kemper Securities Group Holdings, Inc.
Director, Kemper Securities, Inc.
Director, KERSA Holding Company Luxembourg
Director, Mound Agency of West Virginia, Inc.
Director, Mound Agency, Inc.
Director, Seven Continents Insurance Company, LTD.
TIMBERS, STEPHEN B.
Director, Chairman and Chief Executive Officer, Kemper
Financial Services, Inc.
Director, Vice President, Kemper Asset Holdings, Inc.
Director, Federal Kemper Insurance Company
Director, Federal Kemper Life Assurance Company
Director, Vice President, FKLA Loire Court, Inc.
Director, FKLA Realty Corporation
Director, President, Galaxy Offshore, Inc.
Director, Vice President, FLA First Nationwide, Inc.
Director, Vice President, FLA Plate Building, Inc.
Director, FLA Realty Corp.
Trustee and Vice President, Kemper Closed-End Funds
Director, President and Chief Operating Officer, Kemper
Corporation
Director, Kemper Financial Companies, Inc.
Director, President, Kemper International Management, Inc.
Trustee and Vice President, Kemper Investors Fund
Director, Kemper Investors Life Insurance Company
Trustee and Vice President, Kemper Mutual Funds
Director, Vice President, Kemper Portfolio Corp.
C-4
<PAGE> 94
Director, Vice President, Kemper Real Estate, Inc.
Director, Kemper Securities, Inc.
Director, Kemper Securities Holdings, Inc.
Director, Vice President, Kemper/Cymrot Management, Inc.
Director, Vice President, Kemper/Cymrot, Inc.
Director, Vice President, KFC Portfolio Corp.
Director, Vice President, KI Aaron Rents, Inc.
Director, Vice President, KI Arnold Industrial, Inc.
Director, Vice President, KI Canyon Park, Inc.
Director, Vice President, KI Dublin Boulevard, Inc.
Director, Vice President, KI LaFiesta Square, Inc.
Director, Vice President, KI Monterey Research, Inc.
Director, Vice President, KI Olive Street, Inc.
Director, Vice President, KI Thornton Boulevard, Inc.
Director, Vice President, KILICO Realty Corporation
Director, Vice President, KR 77 Fitness Center, Inc.
Director, Vice President, KR Avondale Redmond, Inc.
Director, Vice President, KR Black Mountain, Inc.
Director, Vice President, KR Brannan Resources, Inc.
Director, Vice President, KR Clay Capital, Inc.
Director, Vice President, KR Cranbury, Inc.
Director, Vice President, KR Delta Wetlands, Inc.
Director, Vice President, KR Gainesville, Inc.
Director, Vice President, KR Hotels, Inc.
Director, Vice President, KR Lafayette Apartments, Inc.
Director, Vice President, KR Lafayette BART, Inc.
Director, Vice President, KR Palm Plaza, Inc.
Director, Vice President, KR Red Hill Associates, Inc.
Director, Vice President, KR Seagate/Gateway North, Inc.
Director, Vice President, KR Venture Way, Inc.
Director, Vice President, KR Walnut Creek, Inc.
Trustee, Vice President, Sterling Funds
Director, The LTV Corporation
Director, Gillett Holdings, Inc.
Director, Investment Analysts Society of Chicago
C-5
<PAGE> 95
NEAL, JOHN E.
President and Chief Operating Officer, Kemper Financial Services, Inc.
Director, Ardenwood Financial Corporation
Director, Avondale Redmond Inc.
Director, Bedford Holding Company
Director, Black Mountain, Inc.
Director, Brannan Resources, Inc.
Director, Butterfield Financial Corporation
Director, Camelot Financial Corporation
Director, Clay Capital, Inc.
Director, Concord Aviation, Inc.
Director, Coast Broadcasting Company
Director, Crow Canyon, Inc.
Director, Hawaii Kai Development Company
Director, Kacor Gateway, Inc.
Director, Kailua Associates, Inc.
Director, Kacor Trust Deed Company
Director, Community Investment Corporation
Director, Continental Community Development Corporation
Director, President, FKLA Loire Court, Inc.
Director, President, FKLA Realty Corporation
Director, President, FLA First Nationwide, Inc.
Director, President, FLA Plate Building, Inc.
Director, President, FLA Realty Corporation
Director, Kemper/Lumbermens Properties, Inc.
Director, Senior Vice President, Kemper Real Estate Management Company
Director, KRDC, Inc.
Director, Lafayette Apartments
Director, Lafayette Hills, Inc.
Director, Margarita Village Retirement Community
Director, Mesa Homes
Director, Mesa Homes Brokerage Company
Director, Mount Doloroes Corporation
Director, Montgomery Gallery, Inc.
Director, Monterey Research Park, Inc.
Director, One Business Centre
Director, Pacific Homes, Inc.
Director, Palomar Triad, Inc.
Director, Pine/Battery Properties, Inc.
Director, Rancho and Industrial Property Brokerage, Inc.
Director, Rancho California, Inc.
Director, Rancho Regional Shopping Center, Inc.
Director, Red Hill Associates, Inc.
Director, Seagate Associates, Inc.
Director, Seattle Gateway, Inc.
Director, Sutter Street, Inc.
Director, Technology Way, Inc.
Director, Time DC, Inc.
Director, Tourelle, Inc.
Director, Two Corporate Center
Director, Venture Way, Inc.
Director, President, Kemper Portfolio Corporation
Director, President, KFC Portfolio Corporation
Director, President, KILICO Realty Corporation
Director, President, KI Arnold Industrial, Inc.
Director, President, KI Canyon Park, Inc.
Director, President, KI Dublin Boulevard, Inc.
Director, President, KI La Fiesta Square, Inc.
Director, President, KI Lafayette BART, Inc.
Director, President, KI Monterey Research, Inc.
Director, President, KI Olive Street, Inc.
Director, President, KI Thornton Boulevard, Inc.
Director, President, KI Sutter Street, Inc.
Director, President, KR 77 Fitness Center, Inc.
Director, President, KR Avondale Redmond, Inc.
Director, President, KR Black Mountain, Inc.
Director, President, KR Brannan Resources, Inc.
Director, President, KR Clay Capital, Inc.
Director, President, KR Cranbury, Inc.
Director, President, KR Delta Wetlands, Inc.
Director, President, KR Gainesville, Inc.
Director, President, KR Hotels, Inc.
Director, President, KR Lafayette Apartments, Inc.
Director, President, KR Palm Plaza, Inc.
Director, President, KR Red Hill Associates, Inc.
Director, President, KR Seagate/Gateway North, Inc.
Director, President, KR Venture Way, Inc.
Director, President, KR Walnut Creek, Inc.
Director, K-P Greenway, Inc.
Director, K-P Enterprise Centers, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
Director, KRDC, Inc.
Director, President, SMS Realty Corp.
C-6
<PAGE> 96
PETERS, JOHN E.
Director, Senior Executive Vice President, Kemper Financial
Services, Inc.
Director, President, Kemper Distributors, Inc.
Vice President, Kemper Asset Management Company
Vice President, Kemper Closed-End Funds
Vice President, Kemper Investors Fund
Vice President, Kemper Mutual Funds
Director, Kemper Service Company
Vice President, Sterling Funds
FITZPATRICK, JOHN H.
Chief Financial Officer, Kemper Financial Services, Inc.
Director, Ardenwood Financial Corporation
Director, Camelot Financial Corporation
Director, Crow Canyon, Inc.
Director, Hawaii Kai Development Company
Director, Kacor Gateway, Inc.
Director, Kacor Trust Deed Company
Director, Vice President, FKLA Loire Court, Inc.
Director, Vice President, FLA First Nationwide, Inc.
Director, Vice President, FLA Plate Building, Inc.
Director, Executive Vice President and Chief Financial Officer,
Kemper Corporation
Director, Executive Vice President and Chief Financial Officer,
Kemper Financial Companies, Inc.
Senior Vice President, Kemper Investors Life Insurance Company
Director, Senior Vice President, Kemper Real Estate Management
Company
Director, Vice President, Kemper/Cymrot Management, Inc.
Director, Vice President, Kemper/Cymrot, Inc.
Director, Vice President Kemper/Lumbermens Properties, Inc.
Director, Senior Vice President, Kemper Real Estate Management Company
Director, KRDC, Inc.
Director, Margarita Retirement Community, Inc.
Director, Mesa Homes
Director, Mesa Homes Brokerage Company
Director, Montgomery Gallery, Inc.
Director, One Corporate Centre, Inc.
Director, Pacific Homes, Inc.
Director, Palomar Triad, Inc.
Director, Pine/Battery Properties, Inc.
Director, Rancho and Industrial Property Brokerage, Inc.
Director, Rancho California, Inc.
Director, Rancho Regional Shopping Center, Inc.
Director, Seattle Gateway, Inc.
Director, Sutter Street, Inc.
Director, Time DC, Inc.
Director, Two Corporate Center
Director, Vice President, KFC Portfolio Corp.
Director, Vice President, KI Aaron Rents, Inc.
Director, Vice President, KI Arnold Industrial, Inc.
Director, Vice President, KI Canyon Park, Inc.
Director, Vice President, KI Dublin Boulevard, Inc.
Director, Vice President, KI Lafayette BART, Inc.
Director, Vice President, KI LaFiesta Square, Inc.
Director, Vice President, KI Monterey Research, Inc.
Director, Vice President, KI Olive Street, Inc.
Director, Vice President, KI Thornton Boulevard, Inc.
Director, Vice President, KILICO Realty Corporation
Director, Vice President, KR 77 Fitness Center, Inc.
Director, Vice President, KR Avondale Redmond, Inc.
Director, Vice President, KR Black Mountain, Inc.
Director, Vice President, KR Brannan Resources, Inc.
Director, Vice President, KR Clay Capital, Inc.
Director, Vice President, KR Cranbury, Inc.
Director, Vice President, KR Delta Wetlands, Inc.
Director, Vice President, KR Gainesville, Inc.
Director, Vice President, KR Hotels, Inc.
Director, Vice President, KR Lafayette Apartments, Inc.
Director, Vice President, KR Palm Plaza, Inc.
Director, Vice President, KR Red Hill Associates, Inc.
Director, Vice President, KR Seagate/Gateway North, Inc.
Director, Vice President, KR Venture Way, Inc.
C-7
<PAGE> 97
Director, Vice President, KR Walnut Creek, Inc.
BEIMFORD, JR., JOSEPH P.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Galaxy Offshore, Inc.
Vice President, Investors Cash Trust
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Global Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper International Bond Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Money Market Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Municipal Bond Fund
Vice President, Kemper Municipal Income Trust
Vice President, Kemper Portfolios
Vice President, Kemper Short-Term Global Income Fund
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Income Fund
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Kemper U.S. Government Securities Fund
Vice President, Sterling Funds
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
CHAPMAN II, WILLIAM E.
Executive Vice President, Kemper Financial Services, Inc.
COTNER, C. BETH
Executive Vice President, Kemper Financial Services, Inc.
Trustee, Kemper Financial Services, Inc., Profit Sharing Plan
Vice President, Kemper Growth Fund
Vice President, Kemper Investors Fund
COXON, JAMES H.
Executive Vice President, Kemper Financial Services, Inc.
Director, Vice President, Galaxy Offshore, Inc.
Executive Vice President, Kemper Asset Management Company
Vice President, Kemper Investors Fund
Vice President, Kemper Target Equity Fund
Vice President, Sterling Funds
FERRO, DENNIS H.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Kemper International Fund
C-8
<PAGE> 98
Director, Kemper Investment Management Company Limited
Vice President, Kemper Investors Fund
Vice President, Kemper Target Equity Fund
Vice President, The Growth Fund of Spain, Inc.
JOHNS, GORDON K.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Global Income Fund
Vice President, Kemper International Bond Fund
Vice President, Kemper International Management, Inc.
Managing Director and Joint Secretary, Kemper Investment
Management Company Limited
Vice President, Kemper Portfolios
Director, Thames Heritage Parade Limited
LANGBAUM, GARY A.
Executive Vice President, Kemper Financial Services, Inc.
COLLECCHIA, FRANK E.
Senior Vice President, Kemper Financial Services, Inc.
Senior Investment Officer, Federal Kemper Life Assurance
Company
Senior Investment Officer, Fidelity Life Association
Vice President, FKLA Loire Court, Inc.
Vice President, FLA First Nationwide, Inc.
Vice President, FLA Plate Building, Inc.
Vice President, Galaxy Offshore, Inc.
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Investors Fund
Senior Investment Officer, Kemper Investors Life Insurance
Company
Vice President, Kemper Multi-Market Income Trust
Vice President, KI Aaron Rents, Inc.
Vice President, KI Arnold Industrial, Inc.
Vice President, KI Canyon Park, Inc.
Vice President, KI Dublin Boulevard, Inc.
Vice President, KI Lafayette BART, Inc.
Vice President, KI LaFiesta Square, Inc.
Vice President, KI Monterey Research, Inc.
Vice President, KI Olive Street, Inc.
Vice President, KI Thornton Boulevard, Inc.
Vice President, KR 300 North LaSalle Street, Inc.
Vice President, KR 77 Fitness Center, Inc.
Vice President, KR Avondale Redmond, Inc.
Vice President, KR Black Mountain, Inc.
Vice President, KR Brannan Resources, Inc.
Vice President, KR Clay Capital, Inc.
Vice President, KR Cranbury, Inc.
C-9
<PAGE> 99
Vice President, KR Delta Wetlands, Inc.
Vice President, KR Gainesville, Inc.
Vice President, KR Gulf Coast Factory Shops, Inc.
Vice President, KR Halawa Associates, Inc.
Vice President, KR Hotels, Inc.
Vice President, KR Huntley I, Inc.
Vice President, KR Huntley II, Inc.
Vice President, KR Lafayette Apartments, Inc.
Vice President, KR Palm Plaza, Inc.
Vice President, KR Red Hill Associates, Inc.
Vice President, KR Seagate/Gateway North, Inc.
Vice President, KR Venture Way, Inc.
Vice President, KR Walnut Creek, Inc.
DUDASIK, PATRICK H.
Senior Vice President, Kemper Financial Services, Inc.
Director, Treasurer and Chief Financial Officer, Kemper Advisors, Inc.
Vice President and Treasurer, Kemper Asset Management Company
Treasurer and Chief Financial Officer, Kemper Distributors, Inc.
Treasurer and Chief Financial Officer, Kemper Sales Company
Treasurer and Chief Financial Officer, Kemper Service Company
Treasurer and Chief Financial Officer, Supervised Service
Company, Inc.
DUFFY, JEROME L.
Senior Vice President, Kemper Financial Services, Inc.
Treasurer, Kemper Closed-End Funds
Treasurer, Kemper Investors Fund
Treasurer, Kemper Mutual Funds
Treasurer, Kemper Target Equity Fund
Treasurer, Sterling Funds
GLASSMAN, HARVEY
Senior Vice President, Kemper Financial Services, Inc.
GOERS, RICHARD A.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Technology Fund
GUENTHER, HAROLD E.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Galaxy Offshore, Inc.
INNES, BRUCE D.
Vice President, Kemper Financial Services, Inc.
Co-President, International Association of Corporate and
Professional Recruiters
KLEIN, GEORGE
Senior Vice President, Kemper Financial Services, Inc.
Director, Senior Vice President, Kemper Asset Management
Company
KORTH, FRANK D.
Senior Vice President, Kemper Financial Services, Inc.
C-10
<PAGE> 100
Vice President, Kemper Target Equity Fund
Vice President, Kemper Technology Fund
McNAMARA, MICHAEL A.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Portfolios
NATHANSON, IRA
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Corporation
NEEL, JAMES R.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Blue Chip Fund
Vice President, Sterling Funds
RACHWALSKI, JR. FRANK J.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Investors Cash Trust
Vice President, Kemper Investors Fund
Vice President, Kemper Money Market Fund
Vice President, Kemper Portfolios
Vice President, Sterling Funds
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
SCHUMACHER, ROBERT H.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Investors Fund
Vice President, Kemper Portfolios
Vice President, Kemper Strategic Income Fund
Vice President, Kemper U.S. Government Securities Fund
Vice President, Sterling Funds
URBASZEWSKI, KENNETH T.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
DIERENFELDT, DAVID F.
Senior Vice President, Associate General Counsel,
Assistant Secretary and Compliance Officer, Kemper Financial
Services, Inc.
Director, Chief Legal Officer and Chief Compliance Officer, Kemper Advisors,
Inc.
Vice President and Secretary, Kemper Distributors, Inc.
Assistant Secretary, Galaxy Offshore, Inc.
C-11
<PAGE> 101
Director, Secretary, INVEST Financial Corporation
Secretary, INVEST Financial Corporation Holding Company
Assistant Secretary, Investors Brokerage Services
Insurance Agency, Inc.
Assistant Secretary, Investors Brokerage Services, Inc.
Assistant Secretary, Kemper Asset Management Company
Assistant Secretary, Kemper International Management, Inc.
Assistant Secretary, Kemper Investment Management Company
Limited
Vice President and Assistant Secretary, Kemper Investors Fund
Assistant Secretary, Kemper Sales Company
Assistant Secretary, Kemper Service Company
Assistant Secretary, Supervised Service Company, Inc.
COLLORA, PHILIP J.
Senior Vice President and Assistant Secretary, Kemper Financial
Services, Inc.
Vice President and Assistant Secretary, Kemper Closed-End Funds
Assistant Secretary, Kemper International Management, Inc.
Vice President and Assistant Secretary, Kemper Investors Fund
Vice President and Assistant Secretary, Kemper Mutual Funds
Vice President and Assistant Secretary, Sterling Funds
BUKOWSKI, DANIEL J.
First Vice President, Kemper Financial Services, Inc.
BUTLER, DAVID H.
First Vice President, Kemper Financial Services, Inc.
CESSINE, ROBERT S.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Income and Capital Preservation Fund
CHIEN, CHRISTINE
First Vice President, Kemper Financial Services, Inc.
FISHER, REMY M.
First Vice President, Kemper Financial Services, Inc.
HALE, DAVID D.
First Vice President, Kemper Financial Services, Inc.
HARRINGTON, MICHAEL E.
First Vice President, Kemper Financial Services, Inc.
JACOBS, PETER M.
First Vice President, Kemper Financial Services, Inc.
LAUER, BRUCE H.
First Vice President, Kemper Financial Services, Inc.
McCRINDLE-PETRARCA, SUSAN
First Vice President, Kemper Financial Services, Inc.
C-12
<PAGE> 102
MIER, CHRISTOPHER J.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Municipal Bond Fund
Vice President, Kemper Municipal Income Trust
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Sterling Funds
PANOZZO, ROBERTA L.
First Vice President, Kemper Financial Services, Inc.
RESIS, JR., HARRY E.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Portfolios
SILVIA, JOHN E.
First Vice President, Kemper Financial Services, Inc.
VINCENT, CHRISTOPHER T.
First Vice President, Kemper Financial Services, Inc.
First Vice President, Kemper Asset Management Company
BURROW, DALE R.
Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Strategic Municipal Income Trust
COHEN, JERRI I.
Vice President, Kemper Financial Services, Inc.
DeMAIO, CHRIS C.
Vice President, Kemper Financial Services, Inc.
Vice President and Chief Accounting Officer, Kemper Service
Company
Vice President and Chief Accounting Officer, Supervised Service
Company, Inc.
DEXTER, STEPHEN P.
Vice President, Kemper Financial Services, Inc.
DOYLE, DANIEL J.
Vice President, Kemper Financial Services, Inc.
FENGER, JAMES
Vice President, Kemper Financial Services, Inc.
GERACI, AUGUST L.
Vice President, Kemper Financial Services, Inc.
C-13
<PAGE> 103
HORTON, ROBERT J.
Vice President, Kemper Financial Services, Inc.
KIEL, CAROL L.
Vice President, Kemper Financial Services, Inc.
KNAPP, WILLIAM M.
Vice President, Kemper Financial Services, Inc.
KOCH, DEBORAH L.
Vice President, Kemper Financial Services, Inc.
KRANZ, KATHY J.
Vice President, Kemper Financial Services, Inc.
KRUEGER, PAMELA D.
Vice President, Kemper Financial Services, Inc.
LeFEBVRE, THOMAS J.
Vice President, Kemper Financial Services, Inc.
CARNEY, ANN T.
Vice President, Kemper Financial Services, Inc.
McGOVERN, KAREN B.
Vice President, Kemper Financial Services, Inc.
MINER, EDWARD
Vice President, Kemper Financial Services, Inc.
MITCHELL, KATHERINE H.
Vice President, Kemper Financial Services, Inc.
PAYNE, ROBERT D.
Vice President, Kemper Financial Services, Inc.
PHILLIS, DAVID A.
Vice President, Kemper Financial Services, Inc.
PONTECORE, SUSAN E.
Vice President, Kemper Financial Services, Inc.
RADIS, STEVE A.
Vice President, Kemper Financial Services, Inc.
STUEBE, JOHN W.
Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
THOUIN-LEERKAMP, EDITH A.
Vice President, Kemper Financial Services, Inc.
C-14
<PAGE> 104
TRUTTER, JONATHAN W.
Vice President, Kemper Financial Services, Inc.
WERTH, ELIZABETH W.
Vice President, Kemper Financial Services, Inc.
Assistant Secretary, Kemper Mutual Funds
Assistant Secretary, Sterling Funds
WILLSON, STEPHEN R.
Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Strategic Municipal Income Trust
WITTNEBEL, MARK E.
Vice President, Kemper Financial Services, Inc.
KOVACS, WILLIAM P.
Vice President and Assistant Secretary, Kemper Financial
Services, Inc.
Director, Secretary, Kemper Advisors, Inc.
RATEKIN, DIANE E.
Assistant General Counsel and Assistant Secretary, Kemper
Financial Services, Inc.
Assistant Secretary, Kemper Distributors, Inc.
C-15
<PAGE> 105
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Kemper Distributors, Inc. acts as principal underwriter and distributor
of the Registrant's shares, the Kemper Mutual Funds, Kemper Investors Fund,
Sterling Funds and Kemper International Bond Fund.
(b) Information on the officers and directors of Kemper Distributors, Inc.
is set forth below. The principal business address is 120 South LaSalle Street,
Chicago, Illinois 60603.
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH
NAME POSITIONS AND OFFICES WITH UNDERWRITER REGISTRANT
- --------------------- ------------------------------------------------------------ ----------------
<S> <C> <C>
John E. Peters Principal, Director and President Vice President
James L. Greenawalt Director, Executive Vice President None
Patrick H. Dudasik Financial Principal, Treasurer and Chief Financial Officer None
Linda A. Bercher Senior Vice President None
Daniel T. O'Lear Senior Vice President None
David F. Dierenfeldt Vice President, Secretary None
Thomas V. Bruns Vice President None
Carlene D. Merold Vice President None
Diane E. Ratekin Assistant Secretary None
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All such accounts, books and other documents are maintained at the offices
of the Registrant, at the offices of Registrant's investment manager, Kemper
Financial Services, Inc. and Kemper Distributors, Inc., the Registrant's
principal underwriter, 120 South LaSalle Street, Chicago, Illinois 60603 or at
the offices of the transfer agent and one of the custodians of the Registrant,
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City, Missouri
64105 or at the offices of the other custodian of the Registrant, The Chase
Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York 11245 or at the
offices of the shareholder service agent, Kemper Service Company, 811 Main
Street, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-16
<PAGE> 106
S I G N A T U R E S
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago and State of
Illinois, on the 24th day of February, 1995.
KEMPER INTERNATIONAL FUND
By /s/ Stephen B. Timbers
--------------------------------------
Stephen B. Timbers, Vice President
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below on
February 24, 1995 on behalf of the following persons in the
capacities indicated.
SIGNATURE TITLE
--------- -----
/s/Stephen B. Timbers Vice President (Principal
- ----------------------------------- Executive Officer) and Trustee
Stephen B. Timbers
/s/David W. Belin* Trustee
- -----------------------------------
/s/Lewis A. Burnham* Trustee
- -----------------------------------
/s/Donald L. Dunaway* Trustee
- -----------------------------------
/s/Robert B. Hoffman* Trustee
- -----------------------------------
/s/Donald R. Jones* Trustee
- -----------------------------------
/s/William P. Sommers* Trustee
- -----------------------------------
/s/Jerome L. Duffy Treasurer (Principal
- ----------------------------------- Financial and
Jerome L. Duffy Accounting Officer)
*Philip J. Collora signs this document pursuant to powers of
attorney filed herewith.
/s/ Philip J. Collora
-------------------------------
Philip J. Collora
<PAGE> 107
KEMPER INTERNATIONAL FUND
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
PAGE
REFERENCE
------------
<S> <C> <C>
Exhibits
99.B1. Amended and Restated Agreement and Declaration of Trust.
99.B2. By-Laws.(1)
99.B3. Inapplicable.
99.B4. (a) Text of Share Certificate.
(b) Written Instrument Establishing and Designating Separate
Classes of Shares.
99.B5. Investment Management Agreement.
99.B6. (a) Underwriting and Distribution Services Agreement.
(b) Assignment and Assumption Agreement.
(c) Form of Selling Group Agreement.
99.B7. Inapplicable.
99.B8. (a) Custody Agreement (Form 1).
(b) Custody Agreement (Form 2).
99.B9. (a) Agency Agreement.
(b) Supplement to Agency Agreement.
(c) Administrative Services Agreement.
(d) Amendment to Administrative Services Agreement.
(e) Assignment and Assumption Agreement.
99.B10. Inapplicable.
99.B11. Report and Consent of Independent Auditors.
99.B12. Inapplicable.
99.B13. Inapplicable.
99.B14. (a) Kemper Retirement Plan Prototype.(3)
(b) Model Individual Retirement Account.(3)
99.B15. See 6(a) above (Class B and Class C shares).
99.B16. Performance Calculations.(2)
99.B24. Powers of Attorney.
27.All Classes Financial Data Schedule.
27.Class A Financial Data Schedule.
27.Class B Financial Data Schedule.
27.Class C Financial Data Schedule.
99.485(b)Letter Representation of Counsel (Rule 485(b)).
</TABLE>
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 7
to the Registration Statement on Form N-1A filed on or about
December 2, 1985.
(2) Incorporated herein by reference to Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A filed on or about
February 17, 1990.
(3) Incorporated herein by reference to Post-Effective Amendment No. 16
to the Registration Statement on Form N-1A filed on or about
November 23, 1992.
<PAGE> 1
EXHIBIT 99.B1
KEMPER INTERNATIONAL FUND
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Article IX, Section 4 of the Agreement and
Declaration of Trust of Kemper International Fund dated October
24, 1985, provides that the Agreement and Declaration of Trust
may be amended at any time by an instrument in writing signed
by a majority of the then Trustees when authorized so to do by
vote of Shareholders holding a majority of the Shares entitled
to vote; and
WHEREAS, the holders of a majority of the Shares entitled
to vote have authorized this Amendment and Restatement of said
Agreement and Declaration of Trust;
NOW, THEREFORE, said Agreement and Declaration of Trust is
amended and restated to read in its entirety as follows:
WITNESSETH
WHEREAS, this Trust has been formed for the purposes of
carrying on the business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees have
acquired and may hereafter acquire assets and properties, to
hold and manage as trustees of a Massachusetts voluntary
association with transferable shares in accordance with the
provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets and properties which
they may from time to time acquire in any manner as Trustees
hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the
holders from time to time of shares in this Trust as hereinafter
set forth.
ARTICLE I
NAME AND DEFINITIONS
NAME AND REGISTERED AGENT
SECTION 1. This Trust shall be known as Kemper
International Fund and the Trustees shall conduct the business
of the Trust under that name or any other name as they may from
time to time determine. The registered agent for the Trust in
<PAGE> 2
Massachusetts shall be CT Corporation System whose address is
2 Oliver Street, Boston, Massachusetts or such other person as
the Trustees may from time to time designate.
DEFINITIONS
SECTION 2. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts voluntary
association established by this Agreement and Declaration of
Trust, as amended from time to time, pursuant to Massachusetts
General Laws, Chapter 182;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article IV and then in
office;
(c) "Shares" mean the equal proportionate transferable
units of interest into which the beneficial interest in the
Trust shall be divided from time to time or, if more than one
series or class of shares is authorized under or pursuant to
Article III, the equal proportionate transferable units of
interest into which each such series or class shall be divided
from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act
of 1940 (and any successor statute) and the Rules and
Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person", "Assignment",
"Commission", "Interested Person", "Principal Underwriter" and
"vote of a majority of the outstanding voting securities" shall
have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as
amended from time to time;
(i) "Net asset value" shall have the meaning set forth in
Section 6 of Article VI hereof;
(j) The terms "series" or "series of Shares" refers to the
one or more separate investment portfolios of the Trust
authorized under or pursuant to Article III into which the
assets and liabilities of the Trust may be divided and the
Shares of the Trust representing the beneficial interest of
Shareholders in such respective portfolios; and
<PAGE> 3
(k) The terms "class" or "class of Shares" refers to the
division of Shares representing any series into two or more
classes authorized under or pursuant to Article III.
ARTICLE II
NATURE AND PURPOSE
The Trust is a voluntary association (commonly known as a
business trust) of the type referred to in Chapter 182 of the
General Laws of the Commonwealth of Massachusetts. The Trust
is not intended to be, shall not be deemed to be, and shall not
be treated as, a general or a limited partnership, joint
venture, corporation or joint stock company, nor shall the
Trustees or Shareholders or any of them for any purpose be
deemed to be, or be treated in any way whatsoever as though they
were, liable or responsible hereunder as partners or joint
venturers. The purpose of the Trust is to engage in, operate
and carry on the business of an open-end management investment
company and to do any and all acts or things as are necessary,
convenient, appropriate, incidental or customary in connection
therewith.
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
SECTION 1. The Shares of the Trust shall be issued in one
or more series as the Trustees may, without Shareholder
approval, authorize from time to time. Each series shall be
preferred over all other series in respect of the assets
allocated to that series as hereinafter provided. The
beneficial interest in each series shall at all times be divided
into Shares (without par value) of such series, each of which
shall, except as provided in the following sentence, represent
an equal proportionate interest in such series with each other
Share of the same series, none having priority or preference
over another Share of the same series. The Trustees may,
without Shareholder approval, divide the Shares of any series
into two or more classes, Shares of each such class having such
preferences and special or relative rights or privileges
(including conversion rights, if any) as the Trustees may
determine. The number of Shares authorized shall be unlimited,
and the Shares so authorized may be represented in part by
fractional Shares. The Trustees may from time to time divide
<PAGE> 4
or combine the shares of any series or class into a greater or
lesser number without thereby changing the proportionate
beneficial interests in the series or class. Without limiting
the authority of the Trustees set forth in this Section 1 to
establish and designate any further series or class, the
Trustees hereby establish and designate one series of Shares to
be known as the "Initial Portfolio." The establishment and
designation of any series or class of Shares in addition to the
foregoing shall be effective upon the execution by a majority
of the then Trustees of an instrument setting forth such
establishment and designation and the relative rights and
preferences of such series or class. As provided in Article IX,
Section 1 hereof, any series or class of Shares (whether or not
there shall then be Shares outstanding of said series or class)
may be terminated by the Trustees by written notice to the
Shareholders of such series or class or by the vote of the
Shareholders of such series or class entitled to vote more than
fifty percent (50%) of the votes entitled to be cast on the
matter. In the event of any such termination, a majority of the
then Trustees shall execute an instrument setting forth the
termination of such series or class.
OWNERSHIP OF SHARES
SECTION 2. The ownership and transfer of Shares shall be
recorded on the books of the Trust or its transfer or similar
agent. No certificates certifying the ownership of Shares shall
be issued except as the Trustees may otherwise determine from
time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer
of Shares and similar matters. The record books of the Trust
as kept by the Trust or any transfer or similar agent of the
Trust, as the case may be, shall be conclusive as to who are the
Shareholders of each series or class and as to the number of
Shares of each series or class held from time to time by each
Shareholder.
INVESTMENT IN THE TRUST; ASSETS OF A SERIES
SECTION 3. The Trustees may issue Shares of the Trust to
such persons and on such terms and, subject to any requirements
of law, for such consideration, which may consist of cash or
tangible or intangible property or a combination thereof, as
they may from time to time authorize.
All consideration received by the Trust for the issue or
sale of Shares of a particular series, together with all income,
earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any
funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall, irrevocably belong to
such series of Shares for all purposes, subject only to the
<PAGE> 5
rights of creditors, and shall be so handled upon the books of
account of the Trust and are herein referred to as "assets of"
such series. Any allocation of the assets of a series among any
classes of Shares of such series shall be made in a manner
consistent with the preferences and special or relative rights
or privileges of such classes.
RIGHT TO REFUSE ORDERS
SECTION 4. The Trust by action of its Trustees shall have
the right to refuse to accept any subscription for its Shares
at any time without any cause or reason therefore whatsoever.
Without limiting the foregoing, the Trust shall have the right
not to accept subscriptions under circumstances or in amounts
as the Trustees in their sole discretion consider to be
disadvantageous to existing Shareholders and the Trust may from
time to time set minimum and/or maximum amounts which may be
invested in Shares by a subscriber.
ORDER IN PROPER FORM
SECTION 5. The criteria for determining what constitutes
an order in proper form and the time of receipt of such an order
by the Trust shall be prescribed by resolution of the Trustees.
WHEN SHARES BECOME OUTSTANDING
SECTION 6. Shares subscribed for and for which an order
in proper form has been received shall be deemed to be
outstanding as of the time of acceptance of the order therefor
and the determination of the net price thereof, which price
shall be then deemed to be an asset of the Trust.
MERGER OR CONSOLIDATION
SECTION 7. In connection with the acquisition of all or
substantially all the assets or stock of another investment
company, investment trust, or of a company classified as a
personal holding company under Federal Income Tax laws, the
Trustees may issue or cause to be issued Shares of a series or
class and accept in payment therefor, in lieu of cash, such
assets at their market value, or such stock at the market value
of the assets held by such investment company or investment
trust, either with or without adjustment for contingent costs
or liabilities.
NO PREEMPTIVE RIGHTS, ETC.
SECTION 8. Shareholders shall have no preemptive or other
<PAGE> 6
right to receive, purchase or subscribe for any additional
Shares or other securities issued by the Trust. The
Shareholders shall have no appraisal rights with respect to
their Shares and, except as otherwise determined by the Trustees
in their sole discretion, shall have no exchange or conversion
rights with respect to their Shares.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
SECTION 9. Shares shall be deemed to be personal property
giving only the rights provided in this instrument. Every
Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms of the
Declaration of Trust and to have become a party thereto. The
death of a Shareholder during the continuance of the Trust shall
not operate to terminate the same nor entitle the representative
of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees,
but only to the rights of said decedent under this Trust.
Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power
to bind personally any Shareholder, nor except as specifically
provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
SHAREHOLDER INSPECTION RIGHTS
SECTION 10. Any Shareholder or his agent may inspect and
copy during normal business hours any of the following documents
of the Trust: By-Laws, minutes of the proceedings of the
Shareholders and annual financial statements of the Trust,
including a balance sheet and financial statements of
operations. The foregoing rights of inspection of Shareholders
of the Trust are the exclusive and sole rights of the
Shareholders with respect thereto and no Shareholder of the
Trust shall have, as a Shareholder, the right to inspect or copy
any of the books, records or other documents of the Trust except
as specifically provided in this Section 10 of this Article III
or except as otherwise determined by the Trustees.
ARTICLE IV
THE TRUSTEES
<PAGE> 7
NUMBER, DESIGNATION, ELECTION, TERM, ETC.
SECTION 1.
(a) INITIAL TRUSTEE. Robert J. Engling, the initial
Trustee, appointed other Trustees pursuant to subsection (c) of
this Section 1 and then resigned.
(b) NUMBER. The Trustees serving as such, whether named
above or hereafter becoming Trustees, may increase or decrease
the number of Trustees to a number other than the number
theretofore determined which number shall not be less than three
nor more than fifteen except during the period that the initial
Trustee named above is sole Trustee. No decrease in the number
of Trustees shall have the effect of removing any Trustee from
office prior to the expiration of his term, but the number of
Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 1.
(c) TERM AND ELECTION. Each Trustee, whether named above
or hereafter becoming a Trustee, shall serve as a Trustee until
the next meeting of Shareholders, if any, called for the purpose
of considering the election or re-election of such Trustee or
of a successor to such Trustee, and until the election and
qualification of his successor, if any, elected at such meeting,
or until such Trustee sooner dies, resigns, retires or is
removed. Upon the election and qualification of a new Trustee,
the Trust estate shall vest in the new Trustee (together with
the continuing or other new Trustees) without any further act
or conveyance. Prior to any sale of Shares pursuant to any
public offering, the initial Trustee named above shall have the
right to appoint other persons as Trustees each to serve as
Trustees as aforesaid until the first meeting of Shareholders
called for the purpose of the election or re-election of such
Trustee or of a successor to such Trustee.
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign
his trust or retire as a Trustee, by written instrument signed
by him and delivered to the other Trustees or to the Chairman
of the Board, if any, the President or the Secretary of the
Trust, and such resignation or retirement shall take effect upon
such delivery or upon such later date as is specified in such
instrument.
(e) REMOVAL. Any Trustee may be removed for cause at any
time by written instrument, signed by at least a majority of
the number of Trustees prior to such removal, specifying the
date upon which such removal shall become effective. Any
Trustee may be removed with or without cause (i) by the vote of
the Shareholders entitled to vote more than fifty percent (50%)
of the votes entitled to be cast on the matter voting together
without regard to series or class at any meeting called for such
<PAGE> 8
purpose, or (ii) by a written consent filed with the custodian
of the Trust's portfolio securities and executed by the
Shareholders entitled to vote more than fifty percent (50%) of
the votes entitled to be cast on the matter voting together
without regard to series or class.
Whenever ten or more Shareholders of record who have been
such for at least six months preceding the date of application,
and who hold in the aggregate Shares constituting at least one
percent of the outstanding Shares of the Trust, shall apply to
the Trustees in writing, stating that they wish to communicate
with other Shareholders with a view to obtaining signatures to
a request for a meeting to consider removal of a Trustee and
accompanied by a form of communication and request that they
wish to transmit, the Trustees shall within five business days
after receipt of such application inform such applicants as to
the approximate cost of mailing to the Shareholders of record
the proposed communication and form of request. Upon the
written request of such applicants, accompanied by a tender of
the material to be mailed and of the reasonable expenses of
mailing, the Trustees shall, within reasonable promptness, mail
such material to all Shareholders of record at their addresses
as recorded on the books of the Trust. Notwithstanding the
foregoing, the Trustees may refuse to mail such material on the
basis and in accordance with the procedures set forth in the
last two paragraphs of Section 16(c) of the 1940 Act.
(f) VACANCIES. Any vacancy or anticipated vacancy
resulting from any reason, including without limitation the
death, resignation, retirement, removal or incapacity of any of
the Trustees, or resulting from an increase in the number of
Trustees by the other Trustees may (but so long as there are at
least three remaining Trustees, need not unless required by the
1940 Act) be filled either by a majority of the remaining
Trustees, even if less than a quorum, through the appointment
in writing of such other person as such remaining Trustees in
their discretion shall determine or, whenever deemed appropriate
by the remaining Trustees, by the election by the Shareholders,
at a meeting called for such purpose, of a person to fill such
vacancy. Upon the appointment or election and qualification of
a new Trustee as aforesaid, the Trust estate shall vest in the
new Trustee, together with the continuing Trustees, without any
further act or conveyance, except that any such appointment or
election in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to
be effective at a later date shall become effective only at or
after the effective date of said retirement, resignation, or
increase in number of Trustees.
(g) MANDATORY ELECTION BY SHAREHOLDERS. Notwithstanding
the foregoing provisions of this Section 1, the Trustees shall
call a meeting of the Shareholders for the election of one or
more Trustees at such time or times as may be required in order
that the provisions of the 1940 Act may be complied with, and
<PAGE> 9
the authority hereinabove provided for the Trustees to appoint
any successor Trustee or Trustees shall be restricted if such
appointment would result in failure of the Trust to comply with
any provision of the 1940 Act.
(h) EFFECT OF DEATH, RESIGNATION, ETC. The death,
resignation, retirement, removal or incapacity of the Trustees,
or any one of them, shall not operate to annul or terminate the
Trust or to revoke or terminate any existing agency or contract
created or entered into pursuant to the terms of this
Declaration of Trust.
(i) NO ACCOUNTING. Except under circumstances which would
justify his removal for cause, no person ceasing to be a Trustee
as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required
to make an accounting to the Shareholders or remaining Trustees
upon such cessation.
POWERS
SECTION 2. The Trustees, subject only to the specific
limitations contained in this Declaration of Trust or otherwise
imposed by the 1940 Act or other applicable law, shall have,
without further or other authorization and free from any power
or control of the Shareholders, full, absolute and exclusive
power, control and authority over the Trust assets and the
business and affairs of the Trust to the same extent as if the
Trustees were the sole and absolute owners thereof in their own
right and to do all such acts and things as in their sole
judgment and discretion are necessary and incidental to, or
desirable for the carrying out of any of the purposes of the
Trust or conducting the business of the Trust. Any
determination made in good faith by the Trustees of the purposes
of the Trust or the existence of any power or authority
hereunder shall be conclusive. In construing the provisions of
this Declaration of Trust, there shall be a presumption in favor
of the grant of power and authority to the Trustees. Without
limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust containing
provisions relating to the business of the Trust, the conduct
of its affairs, its rights or powers and the rights or powers
of its Shareholders, Trustees, officers, employees and other
agents and may amend and repeal them to the extent that such By-
Laws do not reserve that right to the Shareholders; fill
vacancies in their number, including vacancies resulting from
increases in their number, unless a vote of the Trust's
Shareholders is required to fill such vacancies pursuant to the
1940 Act; elect and remove such officers and appoint and
terminate such agents as they consider appropriate; appoint from
their own number, and terminate, any one or more committees
consisting of two or more Trustees, including an executive
committee which may, when the Trustees are not in session,
<PAGE> 10
exercise some or all of the powers and authority of the Trustees
as the Trustees may determine; appoint an advisory board, the
members of which shall not be Trustees and need not be
Shareholders; employ one or more investment advisers or managers
as provided in Section 6 of this Article IV; employ one or more
custodians of the assets of the Trust and authorize such
custodians to employ subcustodians and to deposit all or any
part of such assets in a system or systems for the central
handling of securities; retain a transfer agent or a Shareholder
services agent, or both; provide for the distribution of Shares
by the Trust, through one or more principal underwriters or
otherwise; set record dates for the determination of
Shareholders with respect to various matters; and in general
delegate such authority as they consider desirable to any
officer of the Trust, to any committee of the Trustees and to
any agent or employee of the Trust or to any such custodian or
underwriter.
In furtherance of and not in limitation of the foregoing,
the Trustees shall have power and authority:
(a) To invest and reinvest in, to buy or otherwise
acquire, to hold, for investment or otherwise, to sell or
otherwise dispose of, to lend or to pledge, to trade in or deal
in securities or interests of all kinds, however evidenced, or
obligations of all kinds, however evidenced, or rights,
warrants, or contracts to acquire such securities, interests,
or obligations, of any private or public company, corporation,
association, general or limited partnership, trust or other
enterprise or organization, foreign or domestic, or issued or
guaranteed by any national or state government, foreign or
domestic, or their agencies, instrumentalities or subdivisions
(including but not limited to, bonds, debentures, bills, time
notes and all other evidences of indebtedness); negotiable or
non-negotiable instruments; any and all futures contracts;
government securities and money market instruments (including
but not limited to, bank certificates of deposit, finance paper,
commercial paper, bankers acceptances, and all kinds of
repurchase agreements);
(b) To invest and reinvest in, to buy or otherwise
acquire, to hold, for investment or otherwise, to sell or
otherwise dispose of foreign currencies, and funds and
exchanges, and make deposits in banks, savings banks, trust
companies, and savings and loan associations, foreign or
domestic;
(c) To acquire (by purchase, lease or otherwise) and to
hold, use, maintain, develop, and dispose of (by sale or
otherwise) any property, real or personal, and any interest
therein;
(d) To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets
<PAGE> 11
of the Trust;
(e) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Trustees shall deem
proper, granting to such person or persons such power and
discretion with relation to securities or property as the
Trustees shall deem proper;
(f) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;
(g) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust
or in the name of a custodian, subcustodian or other depositary
or a nominee or nominees or otherwise;
(h) Subject to the provisions of Article III, to allocate
assets, liabilities, income and expenses of the Trust to a
particular series of Shares or to apportion the same among two
or more series, provided that any liabilities or expenses
incurred by a particular series shall be payable solely out of
the assets of that series; and to the extent necessary or
appropriate to give effect to the preferences and special or
relative rights or privileges of any classes of Shares, to
allocate assets, liabilities, income and expenses of a series
to a particular class of Shares of that series or to apportion
the same among two or more classes of Shares of that series;
(i) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
issuer, any security or property of which is or was held in the
Trust; to consent to any contract, lease, mortgage, purchase or
sale of property by such corporation or issuer, and to pay calls
or subscriptions with respect to any security held in the Trust;
(j) To join with other security holders in acting through
a committee, depositary, voting trustee or otherwise, and in
that connection to deposit any security with, or transfer any
security to, any such committee, depositary or trustee, and to
delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(k) To compromise, arbitrate or otherwise adjust claims
in favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(l) To enter into joint ventures, general or limited
<PAGE> 12
partnerships and any other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of guaranty
or suretyship, or otherwise assume liability for payment
thereof; and to mortgage and pledge the Trust property or any
part thereof to secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation,
insurance policies insuring the assets of the Trust and payment
of distribution and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers,
principal underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have
been taken or omitted by any such person as Shareholder,
Trustee, officer, employee, agent, investment adviser or
manager, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability; and
(p) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase,
savings, thrift and other retirement, incentive and benefit
plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by
any present or future law or custom in regard to investments by
trustees of common law trusts. Except as otherwise provided
herein or from time to time in the By-Laws, any action to be
taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (if a quorum by present),
within or without Massachusetts, including any meeting held by
means of a conference telephone or other communications
equipment by means of which all persons participating in the
meeting can communicate with each other simultaneously and
participation by such means shall constitute presence in person
at a meeting, or by written consents of a majority of the
Trustees then in office.
PAYMENT OF EXPENSES, ALLOCATION OF LIABILITIES
<PAGE> 13
SECTION 3. The Trustees are authorized to pay or to cause
to be paid out of the principal or income of the Trust, or
partly out of principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in
connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees,
investment adviser or manager, principal underwriter, auditor,
counsel, custodian, transfer agent, shareholder servicing agent,
and such other agents or independent contractors and such other
expenses and charges as the Trustees may deem necessary or
proper to incur.
The assets of a particular series of Shares shall be
charged with the liabilities (including, in the discretion of
the Trustees or their delegate, accrued expenses and reserves)
incurred in respect of such series (but not with liabilities
incurred in respect of any other series) and such series shall
also be charged with its share of any other liabilities. Any
allocation of the liabilities of a series among classes of
Shares of that series shall be done in a manner consistent with
the preferences and special or relative rights or privileges of
such classes. The determination of the Trustees shall be final
and conclusive as to the amount of liabilities to be charged to
one or more particular series or class. The Trustees may
delegate from time to time the power to make such allocation to
one or more Trustees or to an agent of the Trust appointed for
such purpose. The liabilities with which a series is so charged
are herein referred to as the "liabilities of" such series.
SECTION 4. The Trustees shall have the power, as
frequently as they may determine, to cause each Shareholder to
pay directly, in advance or arrears, for charges for the Trust's
custodian or transfer or shareholder service or similar agent,
an amount fixed from time to time by the Trustees, by setting
off such charges due from such Shareholder from declared but
unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that
number of full and/or fractional shares which represents the
outstanding amount of such charges due from such Shareholder.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 5. Title to all of the assets of each series of
the Trust and of the Trust shall at all times be considered as
vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
SECTION 6. Subject to a favorable vote of a majority of
the outstanding voting securities of a series of the Trust, the
<PAGE> 14
Trustees may on behalf of such series, at any time and from time
to time, contract for exclusive or nonexclusive advisory and/or
management services for such series with a corporation, trust,
association or other organization, every such contract to comply
with such requirements and restrictions as may be set forth in
the By-Laws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of such series shall be held
uninvested and to make changes in such series' investments. The
Trustees may also, at any time and from time to time, contract
with a corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract to comply with
such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Trustees may determine.
The fact that:
(a) any of the Shareholders, Trustees or officers of
the Trust is a shareholder, director, officer, partner, trustee,
employee, manager, advisor, principal underwriter, or
distributor or agent of or for any corporation, trust,
association, or other organization, or of or for any parent or
affiliate of any organization, with which an advisory or
management or principal underwriter's or distributor's contract,
or transfer, shareholder services or other agency contract may
have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust, or that
(b) any corporation, trust, association or other
organization with which an advisory or management or principal
underwriter's or distributor's contract, or transfer,
shareholder services or other agency contract may have been or
may hereafter be made also has an advisory or management
contract, or principal underwriter's or distributor's contract,
or transfer, shareholder services or other agency contract with
one or more other corporations, trusts, associations, or other
organizations, or has other businesses or interests shall not
affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon
or executing the same or create any liability or accountability
to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
<PAGE> 15
VOTING POWERS
SECTION 1. Subject to the voting provisions of one or more
classes of Shares, the Shareholders shall have power to vote
only: (a) for the election or removal of Trustees as provided
in Article IV, Section 1; (b) with respect to any investment
advisor or manager as provided in Article IV, Section 6; (c)
with respect to any termination or reorganization of the Trust
or any series or class thereof to the extent and as provided in
Article IX, Section 1; (d) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Article
IX, Section 4; and (e) with respect to such additional matters
relating to the Trust as may be required by law, the 1940 Act,
this Declaration of Trust, the By-Laws or any registration of
the Trust with the Securities and Exchange Commission (or any
successor agency) or any state, or as the Trustees may consider
necessary or desirable.
Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote. Notwith-
standing any other provision of the Declaration of Trust, on any
matter submitted to a vote of Shareholders all Shares of the
Trust then entitled to vote shall, except to the extent
otherwise required or permitted by the preferences and special
or relative rights or privileges of any class of Shares, be
voted by individual series and not in the aggregate or by class,
except (a) when required by the 1940 Act, Shares shall be voted
in the aggregate and not by individual series; and (b) when the
Trustees have determined that the matter affects only the
interests of one or more series or classes, then only Sharehold-
ers of such series or class shall be entitled to vote thereon.
There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or
more persons shall be valid if executed by any one of them
unless at or prior to the exercise of the proxy the Trust
receives a specific written notice to the contrary from any one
of them. A proxy purporting to be executed by or on behalf of
a Shareholder shall be deemed valid unless challenged at or
prior to its exercise and the burden of proving invalidity shall
rest on the challenger.
Until Shares of any series or class are issued, the
Trustees may exercise all rights of Shareholders and may take
any action required by law, this Declaration of Trust or the By-
Laws to be taken by Shareholders of such series or class.
SHAREHOLDER MEETINGS
<PAGE> 16
SECTION 2. Meetings of Shareholders (including meetings
involving only one or more but less than all series or classes)
may be called and held from time to time for the purpose of
taking action upon any matter requiring the vote or authority
of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Such
meetings shall be held at the principal office of the Trust as
set forth in the By-Laws of the Trust or at any such other place
within the United States as may be designated in the call
thereof, which call shall be made by the Trustees or the
President of the Trust. Meetings of Shareholders may be called
by the Trustees or such other person or persons as may be
specified in the By-Laws upon written application by Sharehold-
ers holding at least twenty-five percent (25%) (or ten percent
(10%)) if the purpose of the meeting is to determine if a
Trustee is to be removed from office) of the Shares then
outstanding of all series and classes entitled to vote at such
meeting requesting a meeting be called for a purpose requiring
action by the Shareholders as provided herein or in the By-Laws
which purpose shall be specified in any such written applica-
tion.
Shareholders shall be entitled to at least seven days'
written notice of any meeting of the Shareholders.
QUORUM AND REQUIRED VOTE
SECTION 3. The presence at a meeting of Shareholders in
person or by proxy of Shareholders entitled to vote at least
thirty percent (30%) of all votes entitled to be cast at the
meeting of each series or class entitled to vote as a series or
class shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law
or of this Declaration of Trust permits or requires that the
holders of Shares shall vote in the aggregate and not as a
series or class, then the presence in person or by proxy of
Shareholders entitled to vote at least thirty percent (30%) of
all votes entitled to be cast at the meeting (without regard to
series or class) shall constitute a quorum. Any lesser number,
however, shall be sufficient for adjournments. Any adjourned
session or sessions may be held within a reasonable time after
the date set for the original meeting without the necessity of
further notice.
Except when a larger vote is required by any provisions of
the 1940 Act, this Declaration of Trust or the By-Laws, a
majority of the Shares of each series or class voted on the
matter shall decide that matter insofar as that series or class
is concerned, provided that where any provision of law, this
Declaration of Trust or the By-Laws permits or requires that the
holders of Shares vote in the aggregate and not as a series or
class, then a majority of the Shares voted on any matter
(without regard to series or class) shall decide such matter and
<PAGE> 17
a plurality shall elect a Trustee.
ACTION BY WRITTEN CONSENT
SECTION 4. Any action taken by Shareholders may be taken
without a meeting if Shareholders entitled to vote more than
fifty percent (50%) of the votes entitled to be cast on the
matter of each series or class or, where any provision of law,
this Declaration of Trust or the By-Laws permits or requires
that the holders of Shares vote in the aggregate and not as a
series or class, if Shareholders entitled to vote more than
fifty percent (50%) of the votes entitled to be cast thereon
(without regard to series or class) (or in either case such
larger vote as shall be required by any provision of this
Declaration of Trust or the By-Laws) consent to the action in
writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for
all purposes as a vote taken at a meeting of Shareholders.
ADDITIONAL PROVISIONS
SECTION 5. The By-Laws may include further provisions for
Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
DISTRIBUTIONS
SECTION 1. The Trustees may in their sole discretion from
time to time distribute to the Shareholders of any series such
income and gains, accrued or realized, as the Trustees may
determine, after providing for actual and accrued expenses and
liabilities of such series (including such reserves as the
Trustees may establish) determined in accordance with this
Declaration of Trust and good accounting practices. The
Trustees shall have full discretion to determine which items
shall be treated as income and which items as capital and their
determination shall be binding upon the Shareholders. Distribu-
tions to any series, if any be made, shall be in Shares of such
series, in cash or otherwise and on a date or dates determined
by the Trustees. At any time and from time to time in their
discretion, the Trustees may distribute to the Shareholders of
any series as of a record date or dates determined by the
<PAGE> 18
Trustees, in Shares of such series, in cash or otherwise, all
or part of any gains realized on the sale or disposition of
property of the series or otherwise, or all or part of any other
principal of the Trust attributable to the series. Except to
the extent otherwise required or permitted by the preferences
and special or relative rights or privileges of any classes of
Shares of that series, each distribution pursuant to this
Section 1 shall be made ratably according to the number of
Shares of the series held by the several Shareholders on the
applicable record date thereof, provided that distributions from
assets of a series may only be made to the holders of the Shares
of such series and provided that no distributions need be made
on Shares purchased pursuant to orders received, or for which
payment is made, after such time or times as the Trustees may
determine. Any distribution to the Shareholders of a particular
class of Shares shall be made to such Shareholders prorata in
proportion to the number of Shares of such class held by each
of them. Any distribution paid in Shares will be paid at the
net asset value thereof as determined in accordance with this
Declaration of Trust. The Trustees have the power, in their
discretion, to distribute for any year amounts sufficient to
enable the Trust to qualify as a "regulated investment company"
under the Internal Revenue Code as amended (or any successor
thereto) to avoid any liability for federal income tax in
respect of that year.
REDEMPTIONS AND REPURCHASES
SECTION 2. Any holder of Shares of the Trust may, by
presentation of a request in proper form, together with his
certificates, if any, for such Shares, in proper form for
transfer to the Trust or duly authorized agent of the Trust,
request redemption of his shares for the net asset value thereof
determined and computed in accordance with the provisions of
this Section 2 and the provisions of Section 6 of this Article
VI.
Upon receipt by the Trust or its duly authorized agent, as
the case may be, of such a request for redemption of Shares in
proper form, such Shares shall be redeemed at the net asset
value per share of the particular series or class next
determined after such request is received or determined as of
such other time fixed by the Trustees as may be permitted or
required by the 1940 Act. The criteria for determining what
constitutes a request for redemption in proper form and the time
of receipt of such request shall be fixed by the Trustees.
The obligation of the Trust to redeem its Shares as set
forth above in this Section 2 shall be subject to the condition
that such obligation may be suspended by the Trust by or under
authority of the Trustees during any period or periods when and
to the extent permissible under the 1940 Act. If there is such
a suspension, any Shareholder may withdraw any request for
<PAGE> 19
redemption which has been received by the Trust during any such
period and the applicable net asset value with respect to which
would but for such suspension be calculated as of a time during
such period. Upon such withdrawal, the Trust shall return to
the Shareholder the certificates therefor, if any.
The Trust may also purchase, repurchase or redeem Shares
in accordance with such other methods, upon such other terms and
subject to such other conditions as the Trustee may from time
to time authorize at a price not exceeding the net asset value
of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made. Shares redeemed or
repurchased by the Trust hereunder shall be canceled upon such
redemption or repurchase without further action by the Trust or
the Trustees and the number of issued and outstanding Shares of
the relevant series and class shall thereupon by reduced by such
amount.
PAYMENT FOR SHARES REDEEMED
SECTION 3. Payment of the redemption price for Shares
redeemed pursuant to this Article VI shall be made by the Trust
or its duly authorized agent after receipt by the Trust or its
duly authorized agent of a request for redemption in proper form
(together with any certificates for such Shares as provided in
Section 2 above) in accordance with procedures and subject to
conditions prescribed by the Trustees; provided, however, that
payment may be postponed during the period in which the
redemption of Shares is suspended under Section 2 above.
Subject to any generally applicable limitation imposed by the
Trustees, any payment on redemption, purchase or repurchase by
the Trust of Shares may, if authorized by the Trustees, be made
wholly or partly in kind, instead of in cash. Such payment in
kind shall be made by distributing securities or other property,
constituting, in the opinion of the Trustees, a fair
representation of the various types of securities and other
property then held by the series of Shares being redeemed,
purchased or repurchased (but not necessarily involving a
portion of each of the series' holdings) and taken at their
value used in determining the net asset value of the Shares in
respect of which payment is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
SECTION 4. The Trust shall have the right at its option
and at any time and from time to time to redeem Shares of any
Shareholder at the net asset value thereof as determined in
accordance with Section 6 of this Article VI, if at such time
such Shareholder owns fewer shares of a series or class than,
or Shares of a series or class having an aggregate net asset
value of less than, an amount determined from time to time by
the Trustees. Any such redemption at the option of the Trust
<PAGE> 20
shall be made in accordance with such other criteria and
procedures for determining the Shares to be redeemed, the
redemption date and the means of effecting such redemption as
the Trustees may from time to time authorize.
ADDITIONAL PROVISIONS RELATING TO DIVIDENDS, REDEMPTIONS AND
REPURCHASES
SECTION 5. The completion of redemption, purchase or
repurchase of Shares shall constitute a full discharge of the
Trust and the Trustees with respect to such Shares. No dividend
or distribution (including, without limitation, any distribution
paid upon termination of the Trust or of any series or class)
with respect to, nor any redemption or repurchase of, the Shares
of any series or class shall be effected by the Trust other than
from the assets of such series.
DETERMINATION OF NET ASSET VALUE
SECTION 6. The term "net asset value" of each Share of a
series or class as of any particular time shall be the quotient
obtained by dividing the value, as at such time, of the net
assets of such series or class (i.e., the value of the assets
of such series or class less the liabilities of such series or
class, exclusive of liabilities represented by the Shares of
such series or class) by the total number of Shares of such
series or class outstanding at such time, all determined and
computed in accordance with the Trust's current prospectus.
The Trustees, or any officer, or officers or agent of the
Trust designated for the purpose by the Trustees shall determine
the net asset value of the Shares of each series or class, and
the Trustees shall fix the time or times as of which the net
asset value of the Shares of each series or class shall be
determined and shall fix the periods during which any such net
asset value shall be effective as to sales, redemptions and
repurchases of, and other transactions in, the Shares of such
series or class, except as such times and periods for any such
transaction may be fixed by other provisions of this Declaration
of Trust or by the By-Laws.
Determinations in accordance with this Section 6 made in
good faith shall be binding on all parties concerned.
HOW LONG SHARES ARE OUTSTANDING
SECTION 7. Shares of the Trust surrendered to the Trust
for redemption by it pursuant to the provisions of Section 2 of
this Article VI shall be deemed to be outstanding until the
redemption price thereof is determined pursuant to this Article
<PAGE> 21
VI and, thereupon and until paid, the redemption price thereof
shall be deemed to be a liability of the Trust. Shares of the
Trust purchased by the Trust in the open market shall be deemed
to be outstanding until confirmation of purchase thereof by the
Trust and, thereupon and until paid, the purchase price thereof
shall be deemed to be a liability of the Trust. Shares of the
Trust redeemed by the Trust pursuant to Section 4 of this
Article VI shall be deemed to be outstanding until said Shares
are deemed to be redeemed in accordance with procedures adopted
by the Trustees pursuant to said Section 4.
ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF
TRUSTEES AND SHAREHOLDERS
SECTION 1. The Trustees as such shall be entitled to
reasonable compensation from the Trust if the rate thereof is
prescribed by such Trustees. Nothing herein shall in any way
prevent the employment of any Trustee for advisory, management,
legal, accounting, investment banking or other services and
payment for the same by the Trust, it being recognized that such
employment may result in such Trustee being considered an
Affiliated Person or an Interested Person.
LIMITATION OF LIABILITY
SECTION 2. The Trustees shall not be responsible or liable
in any event for any neglect or wrongdoing of any officer,
agent, employee, investment advisor or manager, principal
underwriter or custodian, nor shall any Trustee be responsible
for the act or omission of any other Trustee. Nothing in this
Declaration of Trust shall protect any Trustee against any
liability to which such Trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the
office of Trustee.
Every note, bond, contract, instrument, certificate, Share
or undertaking and every other act or thing whatsoever executed
or done by or on behalf of the Trust or the Trustee or any of
them in connection with the Trust shall be conclusively deemed
to have been executed or done only in or with respect to their
or his capacity as Trustees or Trustee and neither such Trustees
or Trustee nor the Shareholders shall be personally liable
thereon.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers
<PAGE> 22
or officer shall give notice that this Declaration of Trust is
on file with the Secretary of State of The Commonwealth of
Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust by them as Trustees or Trustee
or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them
or the Shareholders individually but are binding only upon the
assets and property of the Trust or a particular series of
Shares, and may contain such further recital as he or they may
deem appropriate, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually.
All persons extending credit to, contracting with or having
any claim against the Trust or a particular series of Shares
shall look only to the assets of the Trust or the assets of that
particular series of Shares, as the case may be, for payment
under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be
personally liable therefor.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 3. The exercise by the Trustees of their powers
and discretions hereunder shall be binding upon everyone
interested. A Trustee shall be liable only for his own willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee,
and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as
Trustees hereunder, and shall be under no liability for any act
or omission in accordance with such advice or for failing to
follow such advice. In discharging their duties, the Trustees,
when acting in good faith, shall be entitled to rely upon the
books of account of the Trust and upon written reports made to
the Trustees by any officer appointed by them, any independent
public accountant and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee
of any other party to any contract entered into pursuant to
Section 2 of Article IV. The Trustees shall not be required to
give any bond as such, nor any surety if a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
SECTION 4. No person dealing with the Trustees shall be
bound to make any inquiry concerning the validity of any
transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the
Trust or upon its order.
<PAGE> 23
ARTICLE VIII
INDEMNIFICATION
Subject to the exceptions and limitations contained in this
Article, every person who is, or has been, a Trustee or officer
of the Trust (including persons who serve at the request of the
Trust as directors, officers or trustees of another organization
in which the Trust has an interest as a shareholder, creditor
or otherwise) hereinafter referred to as a "Covered Person",
shall be indemnified by the Trust to the fullest extent
permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a
party or otherwise by virtue of his being or having been such
a Trustee, director or officer and against amounts paid or
incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered
Person:
(a) against any liability to the Trust or its
Shareholders by reason of a final adjudication by the court or
other body before which the proceeding was brought that he
engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office;
(b) with respect to any matter as to which he shall
have been finally adjudicated not to have acted in good faith
in the reasonable belief that his action was in the best
interest of the Trust; or
(c) in the event of a settlement or other disposition
not involving a final adjudication (as provided in paragraph (a)
or (b)) and resulting in a payment by a Covered Person, unless
there has been either a determination that such Covered Person
did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other body approving the
settlement or other disposition or a reasonable determination,
based on a review of readily available facts (as opposed to a
full trial-type inquiry) that he did not engage in such conduct:
(i) by a vote of a majority of the
Disinterested Trustees acting on the matter (provided that a
majority of the Disinterested Trustees then in office act on the
matter); or
(ii) by written opinion of independent legal
counsel.
<PAGE> 24
The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any
Covered Person may now or hereafter be entitled, shall continue
as to a person who has ceased to be such a Covered Person and
shall inure to the benefit of the heirs, executors and
administrators of such a person. Nothing contained herein shall
affect any rights to indemnification to which Trust personnel
other than Covered Persons may be entitled by contract or
otherwise under law.
Expenses of preparation and presentation of a defense to
any claim, action, suit or proceeding subject to a claim for
indemnification under this Article shall be advanced by the
Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled
to indemnification under this Article, provided that either:
(a) such undertaking is secured by a surety bond or
some other appropriate security or the Trust shall be insured
against losses arising out of any such advances; or
(b) a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter) or independent legal
counsel in a written opinion shall determine, based upon a
review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one
(a) who is not an "interested person" of the Trust, as defined
in the 1940 Act (including anyone who has been exempted from
being an "interested person" by any rule, regulation or order
of the Commission), and (b) against whom none of such actions,
suits or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or has been
pending.
As used in this Article, the words "claim", "action",
"suit" or "proceeding" shall apply to all claims, actions, suits
or proceedings (civil, criminal or other, including appeals),
actual or threatened; and the words "liability" and "expenses"
shall include without limitation, attorneys' fees, cost,
judgments, amounts paid in settlement, fines, penalties and
other liabilities.
In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his or her being or
having been a Shareholder and not because of his or her acts or
omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or
other legal representatives or in the case of a corporation or
<PAGE> 25
other entity, its corporate or other general successor) shall
be entitled to be held harmless from and indemnified against all
loss and expense arising from such liability but only out of the
assets of the particular series of Shares of which he or she is
or was a Shareholder; provided, however, there shall be no
liability or obligation of the Trust arising hereunder to
reimburse any Shareholder for taxes paid by reason of such
Shareholder's ownership of Shares or for losses suffered by
reason of any changes in value of any Trust assets.
ARTICLE IX
MISCELLANEOUS
DURATION, TERMINATION AND REORGANIZATION OF TRUST
SECTION 1. Unless terminated as provided herein, the Trust
shall continue without limitation of time. The Trust may be
terminated at any time by the Trustees by written notice to the
Shareholders without a vote of the Shareholders of the Trust or
by the vote of the Shareholders entitled to vote more than fifty
percent (50%) of the votes of each series or class entitled to
be cast on the matter. Any series or class of Shares may be
terminated at any time by the Trustees by written notice to the
Shareholders of such series or class without a vote of the
Shareholders of such series or class or by the vote of the
Shareholders of such series or class entitled to vote more than
fifty percent (50%) of the votes entitled to be cast on the
matter.
Upon termination of the Trust or of any one or more series
or classes of Shares, after paying or otherwise providing for
all charges, taxes, expenses and liabilities, whether due or
accrued or anticipated, of the particular series or class as may
be determined by the Trustees, the Trust shall in accordance
with such procedures as the Trustees consider appropriate reduce
to the extent necessary the remaining assets of the particular
series to distributable form in cash or other securities, or any
combination thereof, and distribute the proceeds to the
Shareholders of the series or class involved, ratably according
the number of Shares of such series or class held by the several
Shareholders of such series or class on the date of termination.
Any such distributions with respect to any series which has one
or more classes of Shares outstanding shall be made ratably to
such classes in the same proportion as the number of Shares of
each class bears to the total number of Shares of the series,
except to the extent otherwise required or permitted by the
preferences and special or relative rights or privileges of any
classes of Shares of any such series.
<PAGE> 26
At any time by the affirmative vote of the Shareholders of
the affected series entitled to vote more than fifty percent
(50%) of the votes entitled to be cast on the matter, the
Trustees may sell, convey and transfer the assets of the Trust,
or the assets belonging to any one or more series, to another
trust, partnership, association or corporation organized under
the laws of any state of the United States, or to the Trust to
be held as assets belonging to another series of the Trust, in
exchange for cash, shares or other securities (including, in the
case of a transfer to another series of the Trust, Shares of
such other series) with such transfer being made subject to or
with the assumption by the transferee of, the liabilities
belonging to each series the assets of which are so distributed.
Following such transfer, the Trustees shall distribute such
cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences
among the various series the assets belonging to which have so
been transferred) among the Shareholders of the series the
assets belonging to which have been so transferred; and if all
the assets of the Trust have been so distributed, the Trust
shall be terminated.
FILING OF COPIES, REFERENCES, HEADINGS
SECTION 2. The original or a copy of this instrument and
of each amendment hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each amendment hereto shall be filed by
the Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any
other governmental office where such filing may from time to
time be required. Anyone dealing with the Trust may rely on a
certificate by any officer of the Trust as to whether or not any
such amendments have been made and as to any matters in
connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any
such amendments. In this instrument and in any such amendment,
references to this instrument, and all expressions like
"herein", "hereof", and "hereunder", shall be deemed to refer
to this instrument as amended from time to time. Headings are
placed herein for convenience of reference only and shall not
be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may
be executed in any number of counterparts each of which shall
be deemed an original.
APPLICABLE LAW
SECTION 3. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is
to be governed by and construed and administered according to
<PAGE> 27
the laws of said Commonwealth. The Trust shall be of the type
commonly called a Massachusetts business trust, and without
limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust.
AMENDMENTS
SECTION 4. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the
then Trustees when authorized so to do by vote of Shareholders
holding more than fifty percent (50%) of the Shares of each
series entitled to vote, except that an amendment which in the
determination of the Trustees shall affect the holders of one
or more series or classes of Shares but not the holders of all
outstanding series and classes shall be authorized by vote of
the Shareholders holding more than fifty percent (50%) of the
Shares entitled to vote of each series or class affected and no
vote of Shareholders of a series or class not affected shall be
required. Amendments having the purpose of changing the name
of the Trust or of supplying any omission, curing any ambiguity
or curing, correcting or supplementing any provision which is
defective or inconsistent with the 1940 Act or with the
requirements of the Internal Revenue Code and the regulations
thereunder for the Trust's obtaining the most favorable
treatment thereunder available to regulated investment companies
shall not require authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands and seals for themselves and their assigns, as of this
27th day of May, 1994.
/s/ Charles M. Kierscht
----------------------------------
(SEAL) Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
(signatures continue)
/s/ David W. Belin
----------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
----------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
<PAGE> 28
/s/ Donald L. Dunaway
----------------------------------
Donald L. Dunaway, Trustee
235A North Elm Grove Road
Brookfield, Wisconsin 53005
/s/ Robert B. Hoffman
----------------------------------
Robert B. Hoffman, Trustee
1448 North Lake Shore Drive,
Apt. 7-8A
Chicago, IL 60610
/s/ Donald R. Jones
----------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
----------------------------------
Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
/s/ William P. Sommers
----------------------------------
William P. Sommers, Trustee
2181 Parkside Ave.
Hillsborough, California 94010
/s/ Stephen B. Timbers
----------------------------------
Stephen B. Timbers, Trustee
1448 North Lake Shore Drive,
Apt. 12 1/2 C
Chicago, Illinois 60610
<PAGE> 29
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
Then personally appeared the afore-named David W. Belin,
Lewis A. Burnham, Donald L. Dunaway, Robert B. Hoffman, Donald
R. Jones, Charles M. Kierscht, William P. Sommers and Stephen
B. Timbers who acknowledged the foregoing instrument to be their
free act and deed, before me this 27th day of May, 1994.
/s/ Mary A. McCallister
-----------------------------------------
NOTARY PUBLIC
<PAGE> 1
EXHIBIT 99.B4(a)
[Name]
is the owner of [number] shares
of beneficial interest in the above noted Fund (the "FUND"), of the
series and class, if any, specified, fully paid and nonassessable,
the said shares being issued and held subject to the provisions of
the Agreement and Declaration of Trust of the Fund, and all
amendments thereto, copies of which are on file with the Secretary
of The Commonwealth of Massachusetts. The said owner by accepting
this certificate agrees to and is bound by all of the said
provisions. The shares represented hereby are transferable in
writing by the owner thereof in person or by attorney upon
surrender of this certificate to the Fund properly endorsed for
transfer. This certificate is executed on behalf of the Trustees
of the Fund as Trustees and not individually and the obligations
hereof are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and
property of the Fund or, if applicable, the specified series of the
Fund. The shares may be subject to a contingent deferred sales
charge. This certificate is not valid unless countersigned by the
Transfer Agent.
<PAGE> 1
Exhibit 99.B4(b)
KEMPER INTERNATIONAL FUND
WRITTEN INSTRUMENT ESTABLISHING
AND DESIGNATING SEPARATE CLASSES OF SHARES
The undersigned constitute all the Trustees of Kemper
International Fund (the "Fund"), a Massachusetts business trust
governed by an Amended and Restated Agreement and Declaration of
Trust dated May 27, 1994 (the "Amended Declaration of Trust").
This instrument is executed pursuant to Section 1 of Article III of
the Amended Declaration of Trust in order to establish and
designate separate classes of shares of any series of the Fund, and
it is based in part upon resolutions of the Board of Trustees of
the Fund adopted at a meeting on January 14, 1994.
WHEREAS, Under the Amended Declaration of Trust the Board of
Trustees has the authority, in its discretion and without
shareholder approval, to divide the shares of any series of the
Fund into separate classes of shares;
WHEREAS, This Board of Trustees has previously approved,
subject to various conditions, the division of the shares of each
series of the Fund into four classes of shares, to be named "Class
A Shares," "Class B Shares," "Class C Shares" and "Class I Shares;"
WHEREAS, This Board of Trustees deems it desirable and in the
best interests of the Fund to divide the shares of each series of
the Fund, whether now existing or hereafter created (the "series"),
into four separate classes of shares to be named, as previously
indicated, "Class A Shares," "Class B Shares," "Class C Shares" and
"Class I Shares" and to provide investors with a conversion feature
from Class B Shares to the Class A Shares, which conversion feature
would thereby eliminate any distribution services fee then in
effect under any plan adopted pursuant to Rule 12b-1 of the
Investment Company Act of 1940 ("1940 Act") for such Class B
Shares; and
WHEREAS, This Board of Trustees believes that the creation of
four separate classes of shares as provided herein will be in the
best interests of and will have no negative effects upon the
current shareholders of the Fund;
NOW, THEREFORE, the establishment and designation of separate
classes of shares of any series of the Fund is approved in
accordance with the following provisions:
1. Subject to the conditions hereinafter set forth, the
shares of any series shall be divided into four classes to be known
respectively as the "Class A Shares," the "Class B Shares," the
"Class C Shares" and the "Class I Shares," which classes shall have
such preferences and special or relative rights and privileges as
may be determined from time to time by this Board of Trustees
subject always to the Amended Declaration of Trust and the 1940 Act
<PAGE> 2
and the rules and regulations thereunder.
2. Subject to the terms of the Amended Declaration of Trust,
the Class A Shares, Class B Shares, Class C Shares and Class I
Shares will have the same rights and privileges except that:
(A) the Class A Shares
(1) shall be sold subject to an initial sales charge as
described in the prospectus for the Fund as from time to time in
effect or shall be issued to shareholders in connection with the
conversion feature as hereinafter described;
(2) shall have an administrative service fee;
(3) shall not have a plan of distribution adopted under
Rule 12b-1 of the 1940 Act ("Rule 12b-1 plan") and no fees payable
under the Rule 12b-1 plans for the Class B Shares or Class C Shares
shall be allocated or charged to the Class A Shares; and
(4) shall have such dividend reinvestment, exchange and
redemption rights and privileges as may be described in the
prospectus for the Fund as from time to time in effect; and
(B) the Class B Shares
(1) shall be sold without an initial sales charge but
subject to a contingent deferred sales charge imposed upon the
redemption of the Class B shares as described in the prospectus of
the Fund as from time to time in effect;
(2) shall have an administrative service fee;
(3) shall have a Rule 12b-1 plan and any fees payable
from time to time under such plan shall be allocated and charged
to, and any voting rights with respect to such plan shall be
exercisable by, the Class B Shares only;
(4) shall convert to Class A Shares within a specified
number of years as hereinafter described; and
(5) shall have such purchase, dividend reinvestment,
exchange and redemption rights and privileges associated therewith
as may be described in the prospectus for the Fund as from time to
time in effect; and
(C) the Class C Shares
(1) shall be sold without any initial sales charge or
any contingent deferred sales charge;
(2) shall have an administrative service fee;
(3) shall have a Rule 12b-1 plan and any fees payable
<PAGE> 3
from time to time under such plan shall be allocated and charged
to, and any voting rights with respect to such plan shall be
exercisable by, the Class C Shares only; and
(4) shall have such purchase, dividend reinvestment,
exchange and redemption rights and privileges associated therewith
as may be described in the prospectus for the Fund as from time to
time in effect; and
(D) the Class I Shares
(1) shall be sold without any initial sales charge or
any contingent deferred sales charge;
(2) shall not have an administrative service fee;
(3) shall not have a Rule 12b-1 plan and no fees payable
under the plans for the Class B Shares or Class C Shares shall be
allocated or charged to the Class I Shares; and
(4) shall have such dividend reinvestment, exchange and
redemption rights and privileges as may be described in the
prospectus for the Fund as from time to time in effect.
3. Any shares of the Fund that are issued and outstanding at
the time when shares of the Fund are effectively divided into
separate classes of shares as set forth above shall be classified
as Class A Shares.
4. Class A Shares of a series shall be issued to holders of
Class B Shares of the same series pursuant to the following
described conversion feature:
(A) Class B Shares will convert to Class A Shares six
years after issuance of such Class B Shares; provided, however,
that any Class B Shares issued in exchange for shares originally
classified as Initial Shares of Kemper Portfolios, formerly known
as Kemper Investment Portfolios (KP), whether in connection with a
reorganization with a series of KP or otherwise, shall convert to
Class A Shares seven years after issuance of such Initial Shares if
such Initial Shares were issued prior to February 1, 1991;
(B) Class B Shares issued upon reinvestment of income
and capital gain dividends and other distributions will convert to
Class A Shares on a pro rata basis with other Class B Shares; and
(C) Conversion to Class A Shares shall be based upon the
relative net asset values of the Class A Shares and the Class B
Shares at the time of conversion.
IN WITNESS WHEREOF, the undersigned have this 27th day of May,
1994 signed these presents.
<PAGE> 4
/s/ Charles M. Kierscht
------------------------------------
Charles M. Kierscht
321 Princeton Road
Hinsdale, Illinois 60521
(signatures continue)
/s/ David W. Belin
------------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
------------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
------------------------------------
Donald L. Dunaway, Trustee
235A North Elm Grove Road
Brookfield, Wisconsin 53005
/s/ Robert B. Hoffman
------------------------------------
Robert B. Hoffman, Trustee
1448 North Lake Shore Drive, Apt 7-8A
Chicago, IL 60610
/s/ Donald R. Jones
------------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
------------------------------------
Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
<PAGE> 5
/s/ William P. Sommers
------------------------------------
William P. Sommers, Trustee
2181 Parkside Ave.
Hillsborough, California 94010
/s/ Stephen B. Timbers
------------------------------------
Stephen B. Timbers, Trustee
1448 North Lake Shore Drive,
Apt. 12 1/2 C
Chicago, Illinois 60610
<PAGE> 1
EXHIBIT 99.B5
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 28th day of May, 1994, by and between
KEMPER INTERNATIONAL FUND, a Massachusetts business trust (the
"Fund"), and KEMPER FINANCIAL SERVICES, INC., a Delaware
corporation (the "Adviser").
WHEREAS, the Fund is an open-end 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;
WHEREAS, the Fund is authorized to issue Shares in separate
series or portfolios with each representing the interests in a
separate portfolio of securities and other assets;
WHEREAS, the Fund currently offers or intends to offer
Shares in one portfolio, the Initial Portfolio, 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 Fund desires at this time to retain the
Adviser to render investment advisory and management services
to the Initial Portfolio, and the Adviser is willing to render
such services;
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 Portfolio and other
Portfolios hereunder and to manage the investment and
reinvestment of the assets of each such Portfolio in accordance
with the applicable investment objectives and policies and
limitations, and to administer the affairs of each such
Portfolio 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, and to place orders for the
purchase or sale of portfolio securities for the Fund's account
with brokers or dealers selected by it; and, in connection
therewith, the Adviser is authorized as the agent of the Fund
to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account
of the Fund. In connection with the selection of such brokers
or dealers and the placing of such orders, the Adviser is
directed to seek for the Fund best execution of orders. Subject
to such policies as the Board of Trustees of the Fund
determines, the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused
<PAGE> 2
the Fund to pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determined in good
faith that such amount of commission was reasonable in relation
to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of either that particular
transaction or the Adviser's overall responsibilities with
respect to the clients of the Adviser as to which the Adviser
exercises investment discretion. The Fund recognizes that all
research services and research that the Adviser receives or
generates are available for all clients, and that the Fund and
other clients may benefit thereby. 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 and clerical, bookkeeping and administrative services
for the Fund, 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 otherwise be deemed an agent
of the Fund. It is understood and agreed that the Adviser, by
separate agreements with the Fund, may also serve the Fund in
other capacities.
2. In the event that the Fund establishes one or more
portfolios other than the Initial Portfolio 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 for each Portfolio computed by
applying the following annual rates to the applicable average
daily net assets of the Portfolio:
<PAGE> 3
Applicable Average
Daily Net Assets
<TABLE>
<CAPTION>
(Thousands) Annual Rate
----------------- -----------
<S> <C>
$0 - $ 250,000 .75 of 1%
$ 250,000 - $ 1,000,000 .72 of 1%
$ 1,000,000 - $ 2,500,000 .70 of 1%
$ 2,500,000 - $ 5,000,000 .68 of 1%
$ 5,000,000 - $ 7,500,000 .65 of 1%
$ 7,500,000 - $10,000,000 .64 of 1%
$10,000,000 - $12,500,000 .63 of 1%
Over $12,500,000 .62 of 1%
</TABLE>
The fee as computed above shall be computed separately for,
and charged as an expense of, each Portfolio based upon the
average daily net assets of such Portfolio. 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.
4. 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.
5. 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, and of 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 trust documents or otherwise. The Fund
shall not pay or incur any obligation for any expenses for which
<PAGE> 4
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.
If expenses borne by the Fund for those 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, distribution services
fees, extraordinary expenses and any other expenses excludable
under state securities law limitations) exceed any applicable
limitation arising under state securities laws, the Adviser will
reduce its fee or reimburse the Fund for any excess to the
extent required by such state securities laws. If for any month
the expenses of the Fund properly chargeable to the income
account shall exceed 1/12 of the percentage of average 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
calculated in accordance with Section 3 hereof of the average
net asset value as determined as described herein throughout the
fiscal year, diminished to the extent necessary so that the
total of the aforementioned expense items of the Fund 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 in
accordance with the foregoing.
The net asset value for each Portfolio shall be calculated
in accordance with the provisions of the Fund's prospectus or
as the trustees 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
Portfolio shall be deemed to be the net asset value of such
Portfolio as of the close of business on the last day on which
such calculation was made for the purpose of the foregoing
computations.
6. 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.
7. The Adviser shall not be liable for any error of judgment
<PAGE> 5
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.
8. This Agreement shall become effective with respect to the
Initial Portfolio on the date hereof and shall remain in full
force until March 1, 1995, unless sooner terminated as
hereinafter provided. This Agreement shall continue in force
from year to year thereafter with respect to each Portfolio, but
only as long as such continuance is specifically approved for
each Portfolio at least annually in the manner required by the
Investment Company Act of 1940 and the rules and regulations
thereunder; 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 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 voting securities of such Portfolio.
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
voting securities 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.
The terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth
in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right
of the Adviser to receive payments on any unpaid balance of the
compensation described in Section 3 earned prior to such
termination.
9. 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.
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
<PAGE> 6
party at such address as such other party may designate for the
receipt of such notice.
11. All parties hereto are expressly put on notice of the
Fund's Agreement and Declaration of Trust and all amendments
thereto, all of which are on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder
and trustee liability contained therein. This Agreement has
been executed by and on behalf of the Fund by its representa-
tives 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 the 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.
12. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 11 hereof which
shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of
Illinois.
13. 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 INTERNATIONAL FUND
By: /s/ John E. Peters
---------------------------
Title: Vice President
ATTEST:
/s/ Philip J. Collora
- -------------------------
Title: Asst. Secretary
<PAGE> 7
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-----------------------------
Title: Sr. Vice President
ATTEST:
/s/ David F. Dierenfeldt
- ---------------------------
Title: Asst. Secretary
<PAGE> 1
EXHIBIT 99.B6(a)
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 28th day of May, 1994, between KEMPER
INTERNATIONAL FUND, a Massachusetts business trust (the "Fund"),
and KEMPER FINANCIAL SERVICES, INC., a Delaware corporation
("KFS").
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as
follows:
1. The Fund hereby appoints KFS to act as agent for the
distribution of shares of beneficial interest (hereinafter called
"shares") of the Fund in jurisdictions wherein shares of the Fund
may legally be offered for sale; provided, however, that the Fund
in its absolute discretion may (a) issue or sell shares directly to
holders of shares of the Fund upon such terms and conditions and
for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase
rights, the payment or reinvestment of dividends or distributions,
or otherwise; or (b) issue or sell shares at net asset value to the
shareholders of any other investment company, for which KFS shall
act as exclusive distributor, who wish to exchange all or a portion
of their investment in shares of such other investment company for
shares of the Fund. KFS shall appoint various financial service
firms ("Firms") to provide distribution services to investors. The
Firms shall provide such office space and equipment, telephone
facilities, personnel, literature distribution, advertising and
promotion as is necessary or beneficial for providing information
and distribution services to existing and potential clients of the
Firms. KFS may also provide some of the above services for the
Fund.
KFS accepts such appointment as distributor and principal
underwriter and agrees to render such services and to assume the
obligations herein set forth for the compensation herein provided.
KFS shall for all purposes herein provided be deemed to be an
independent contractor and, unless expressly provided herein or
otherwise authorized, shall have no authority to act for or
represent the Fund in any way. KFS, by separate agreement with the
Fund, may also serve the Fund in other capacities. The services of
KFS to the Fund under this Agreement are not to be deemed
exclusive, and KFS shall be free to render similar services or
other services to others so long as its services hereunder are not
impaired thereby.
In carrying out its duties and responsibilities hereunder, KFS
will, pursuant to separate written contracts, appoint various Firms
to provide advertising, promotion and other distribution services
contemplated hereunder directly to or for the benefit of existing
and potential shareholders who may be clients of such Firms. Such
Firms shall at all times be deemed to be independent contractors
retained by KFS and not the Fund.
<PAGE> 2
KFS shall use its best efforts with reasonable promptness to
sell such part of the authorized shares of the Fund remaining
unissued as from time to time shall be effectively registered under
the Securities Act of 1933 ("Securities Act"), at prices determined
as hereinafter provided and on terms hereinafter set forth, all
subject to applicable federal and state laws and regulations and to
the Agreement and Declaration of Trust of the Fund.
2. KFS shall sell shares of the Fund to or through qualified
Firms in such manner, not inconsistent with the provisions hereof
and the then effective registration statement (and related
prospectus) of the Fund under the Securities Act, as KFS may
determine from time to time, provided that no Firm or other person
shall be appointed or authorized to act as agent of the Fund
without the prior consent of the Fund. In addition to sales made
by it as agent of the Fund, KFS may, in its discretion, also sell
shares of the Fund as principal to persons with whom it does not
have selling group agreements.
Shares of any class of any series of the Fund offered for sale
or sold by KFS shall be so offered or sold at a price per share
determined in accordance with the then current prospectus. The
price the Fund shall receive for all shares purchased from it shall
be the net asset value used in determining the public offering
price applicable to the sale of such shares. Any excess of the
sales price over the net asset value of the shares of the Fund sold
by KFS as agent shall be retained by KFS as a commission for its
services hereunder. KFS may compensate Firms for sales of shares
at the commission levels provided in the Fund's prospectus from
time to time. KFS may pay other commissions, fees or concessions
to Firms, and may pay them to others in its discretion, in such
amounts as KFS shall determine from time to time. KFS shall be
entitled to receive and retain any applicable contingent deferred
sales charge as described in the Fund's prospectus. KFS shall also
receive any distribution services fee payable by the Fund as
provided in Section 8 hereof.
KFS will require each Firm to conform to the provisions hereof
and the Registration Statement (and related prospectus) at the time
in effect under the Securities Act with respect to the public
offering price or net asset value, as applicable, of the Fund's
shares, and neither KFS nor any such Firms shall withhold the
placing of purchase orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively
registered under the Securities Act for sale as herein contemplated
such shares as KFS shall reasonably request and as the Securities
and Exchange Commission shall permit to be so registered.
Notwithstanding any other provision hereof, the Fund may terminate,
suspend or withdraw the offering of shares whenever, in its sole
discretion, it deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any
and all information that may be reasonably necessary in connection
<PAGE> 3
with the qualification of its shares for sale (including the
qualification of the Fund as a dealer where necessary or advisable)
in such states as KFS may reasonably request (it being understood
that the Fund shall not be required without its consent to comply
with any requirement which in its opinion is unduly burdensome).
The Fund will furnish to KFS from time to time such information
with respect to the Fund and its shares as KFS may reasonably
request for use in connection with the sale of shares of the Fund.
5. KFS shall issue and deliver or shall arrange for various Firms
to issue and deliver on behalf of the Fund such confirmations of
sales made by it pursuant to this agreement as may be required. At
or prior to the time of issuance of shares, KFS will pay or cause
to be paid to the Fund the amount due the Fund for the sale of such
shares. Certificates shall be issued or shares registered on the
transfer books of the Fund in such names and denominations as KFS
may specify.
6. KFS shall order shares of the Fund from the Fund only to the
extent that it shall have received purchase orders therefor. KFS
will not make, or authorize Firms or others to make (a) any short
sales of shares of the Fund; or (b) any sales of such shares to any
trustee or officer of the Fund or to any officer or director of KFS
or of any corporation or association furnishing investment
advisory, managerial or supervisory services to the Fund, or to any
corporation or association, unless such sales are made in
accordance with the then current prospectus relating to the sale of
such shares. KFS, as agent of and for the account of the Fund, may
repurchase the shares of the Fund at such prices and upon such
terms and conditions as shall be specified in the current
prospectus of the Fund. In selling or reacquiring shares of the
Fund for the account of the Fund, KFS will in all respects conform
to the requirements of all state and federal laws and the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., relating to such sale or reacquisition, as the case may be,
and will indemnify and save harmless the Fund from any damage or
expense on account of any wrongful act by KFS or any employee,
representative or agent of KFS. KFS will observe and be bound by
all the provisions of the Agreement and Declaration of Trust of the
Fund (and of any fundamental policies adopted by the Fund pursuant
to the Investment Company Act of 1940, notice of which shall have
been given to KFS) which at the time in any way require, limit,
restrict, prohibit or otherwise regulate any action of the part of
KFS hereunder.
7. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by
KFS under this Agreement. The Fund will pay or cause to be paid
expenses (including the fees and disbursements of its own counsel)
of any registration of the Fund and its shares under the United
States securities laws and expenses incident to the issuance of
shares of beneficial interest, such as the cost of share
certificates, issue taxes, and fees of the transfer agent. KFS
will pay all expenses (other than expenses which one or more Firms
<PAGE> 4
may bear pursuant to any agreement with KFS) incident to the sale
and distribution of the shares issued or sold hereunder, including,
without limiting the generality of the foregoing, all (a) expenses
of printing and distributing any prospectus and of preparing,
printing and distributing or disseminating any other literature,
advertising and selling aids in connection with the offering of the
shares for sale (except that such expenses need not include
expenses incurred by the Fund in connection with the preparation,
typesetting, printing and distribution of any registration
statement or prospectus, report or other communication to
shareholders in their capacity as such), (b) expenses of
advertising in connection with such offering and (c) expenses
(other than the Fund's auditing expenses) of qualifying or
continuing the qualification of the shares for sale and, in
connection therewith, of qualifying or continuing the qualification
of the Fund as a dealer or broker under the laws of such states as
may be designated by KFS under the conditions herein specified. No
transfer taxes, if any, which may be payable in connection with the
issue or delivery of shares sold as herein contemplated or of the
certificates for such shares shall be borne by the Fund, and KFS
will indemnify and hold harmless the Fund against liability for all
such transfer taxes.
8. For the services and facilities described herein in connection
with Class B shares and Class C shares of each series of the Fund,
the Fund will pay to KFS at the end of each calendar month a
distribution services fee computed at the annual rate of .75% of
average daily net assets attributable to the Class B shares and
Class C shares of each such series. 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 foregoing fee shall be in addition to and shall not be reduced
or offset by the amount of any contingent deferred sales charge
received by KFS under Section 2 hereof.
The net asset value shall be calculated in accordance with the
provisions of the Fund's current prospectus. On each day when net
asset value is not calculated, the net asset value of a share of
any class of any series of the Fund shall be deemed to be the net
asset value of such a share as of the close of business on the last
previous day on which such calculation was made. The distribution
services fee for any class of a series of the Fund shall be based
upon average daily net assets of the series attributable to the
class and such fee shall be charged only to such class.
9. KFS shall prepare reports for the Board of Trustees of the
Fund on a quarterly basis in connection with the Fund's
distribution plan for Class B shares and Class C shares showing
amounts paid to the various Firms and such other information as
from time to time shall be reasonably requested by the Board of
Trustees.
<PAGE> 5
10. To the extent applicable, this Agreement constitutes the plan
for the Class B shares and Class C shares of each series of the
Fund pursuant to Rule 12b-1 under the Investment Company Act of
1940; and this Agreement and plan shall be approved and renewed in
accordance with Rule 12b-1 for such Class B shares and Class C
shares separately.
This Agreement shall become effective on the date hereof and
shall continue until March 1, 1995; and shall continue from year to
year thereafter only so long as such continuance is approved in the
manner required by the Investment Company Act of 1940.
This Agreement shall automatically terminate in the event of
its assignment and may be terminated at any time without the
payment of any penalty by the Fund or by KFS on sixty (60) days
written notice to the other party. The Fund may effect termination
with respect to any class of any series of the Fund by a vote of
(i) a majority of the Board of Trustees, (ii) a majority of the
trustees who are not interested persons of the Fund and who have no
direct or indirect financial interest in this Agreement or in any
agreement related to this Agreement, or (iii) a majority of the
outstanding voting securities of the class. Without prejudice to
any other remedies of the Fund, the Fund may terminate this
Agreement at any time immediately upon KFS' failure to fulfill any
of its obligations hereunder.
This Agreement may not be amended to increase the amount to be
paid to KFS by the Fund for services hereunder with respect to a
class of any series of the Fund without the vote of a majority of
the outstanding voting securities of such class. All material
amendments to this Agreement must in any event be approved by a
vote of the Board of Trustees of the Fund including the trustees
who are not interested persons of the Fund and who have no direct
or indirect financial interest in this Agreement or in any
agreement related to this Agreement, cast in person at a meeting
called for such purpose.
The terms "assignment", "interested" and "vote of a majority
of the outstanding voting securities" shall have the meanings set
forth in the Investment Company Act of 1940 and the rules and
regulations thereunder.
Termination of this Agreement shall not affect the right of
KFS to receive payments on any unpaid balance of the compensation
described in Section 8 earned prior to such termination.
11. KFS will not use or distribute, or authorize the use,
distribution or dissemination by Firms or others in connection with
the sale of Fund shares any statements other than those contained
in the Fund's current prospectus, except such supplemental
literature or advertising as shall be lawful under federal and
state securities laws and regulations. KFS will furnish the Fund
with copies of all such material.
<PAGE> 6
12. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
13. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at
such address as such other party may designate for the receipt of
such notice.
14. All parties hereto are expressly put on notice of the Fund's
Agreement and Declaration of Trust, and all amendments thereto, all
of which are on file with the Secretary of The Commonwealth of
Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by
and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the
Fund hereunder are not binding upon any of the Trustees, officers
or shareholders of the Fund individually but are binding upon only
the assets and property of the Fund. With respect to any claim by
KFS for recovery of any liability of the Fund arising hereunder
allocated to a particular series or class, whether in accordance
with the express terms hereof or otherwise, KFS shall have recourse
solely against the assets of that series or class to satisfy such
claim and shall have no recourse against the assets of any other
series or class for such purpose.
15. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 14 hereof which
shall be construed in accordance with the laws of The Commonwealth
of Massachusetts) the laws of the State of Illinois.
16. This Agreement is the entire contract between the parties
relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter
hereof.
<PAGE> 7
IN WITNESS WHEREOF, the Fund and KFS have caused this
Agreement to be executed as of the day and year first above
written.
KEMPER INTERNATIONAL FUND
By: /s/ John E. Peters
-----------------------
Title: Vice President
ATTEST:
/s/ Philip J. Collora
- ---------------------------
Title: Asst. Secretary
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-------------------------------
Title: Sr. Vice President
ATTEST:
/s/ David F. Dierenfeldt
- --------------------------
Title: Asst. Secretary
<PAGE> 1
EXHIBIT 99.B6(b)
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION ("Assignment and Assumption") made
and entered into as of February 1, 1995 by and between Kemper
Financial Services, Inc., a Delaware corporation ("Assignor"), and
Kemper Distributors, Inc., a Delaware corporation ("Assignee").
WHEREAS, Assignor serves as principal underwriter for Kemper
International Fund, a Massachusetts business trust (the "Fund"),
pursuant to that certain Underwriting and Distribution Services
Agreement dated May 28, 1994 by and between Assignor and the Fund
(the "Agreement");
WHEREAS, Assignee is a wholly-owned subsidiary of Assignor;
WHEREAS, It has been proposed that the rights, duties and
responsibilities of Assignor under the Agreement be transferred to
and assumed by Assignee;
WHEREAS, The Fund has determined that such transfer of rights,
duties and responsibilities is reasonable and in the best interests
of the Fund and the Fund's shareholders; and
NOW, THEREFORE, in consideration of the covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as
follows:
1. Assignment and Assumption. Assignor assigns and transfers
to Assignee all of Assignor's rights, interests, liabilities,
duties and obligations under the Agreement ("Assigned Rights and
Obligations"). Assignee accepts the foregoing assignment and
transfer of the Assigned Rights and Obligations and agrees to
assume, pay, perform and otherwise be fully responsible for the
same.
2. Further Assurances. From time to time, at the request of
either party, the other party will execute and deliver such further
instruments of assignment, transfer and assumption and take such
further action as may be required to assign, transfer and assume
the Assigned Rights and Obligations.
3. Applicable Law. This Assignment and Assumption shall be
governed by the laws of the State of Illinois.
4. Amendments. This Assignment and Assumption may only be
amended by the written agreement of the parties.
<PAGE> 2
IN WITNESS WHEREOF, the parties have each caused this
Assignment and Assumption to be executed on its behalf by a duly
authorized officer as of the date first written above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-----------------------------
Its: Senior Vice President
KEMPER DISTRIBUTORS, INC.
By: /s/ James L. Greenawalt
-------------------------------
Its: Executive Vice President
The undersigned hereby acknowledges and consents to the foregoing
Assignment and Assumption as of February 1, 1995.
KEMPER INTERNATIONAL FUND
By: /s/ John E. Peters
- --------------------------
Its: Vice President
<PAGE> 1
EXHIBIT 99.B6(c)
SELLING GROUP AGREEMENT KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street, Chicago, Illinois 60603
Dear Financial Services Firm:
As principal underwriter and distributor, we invite you to
join a Selling Group for the distribution of shares of the Kemper
Mutual Funds (herein called "Funds"), but only in those states in
which the shares of the respective Funds may legally be offered for
sale. As exclusive agent of each of the Funds, we offer to sell to
you shares of the Funds on the following terms:
1. In all sales of these shares to the public you shall act
as dealer for your own account, and in no transaction shall you
have any authority to act as agent for the issuer, for us, or for
any other member of the Selling Group.
2. Orders received from you will be accepted by us only at the
public offering price applicable to each order, as established by
the Prospectus of each Fund, subject to the discount, commission or
other concession, if any, as provided in such Prospectus. Upon
receipt from you of any order to purchase shares of a Fund, we
shall confirm to you in writing or by wire to be followed by a
confirmation in writing. Additional instructions may be forwarded
to you from time to time. All orders are subject to acceptance or
rejection by us in our sloe discretion.
3. You may offer and sell shares to your customers only at the
public offering price determined in the manner described in the
applicable Prospectus. The public offering price is the net asset
value per share as provided in the applicable Prospectus plus, with
respect to certain Funds, a sales charge from which you shall
receive a discount equal to a percentage of the applicable offering
price as provided in the applicable Prospectus. You shall receive
a sales commission, with respect to certain Funds, equal to a
percentage of the amount invested as provided in the applicable
Prospectus. You shall receive a distribution service fee, for
certain Funds for which such fees are available, as provided in the
applicable Prospectus which fee shall be payable with respect to
such assets, for such periods and at such intervals as are from
time to tome specified by us. The discounts or other concessions to
which you may be entitled in connection with sales to your
customers pursuant to any special features of a Fund (such as
cumulative discounts, letters of intent, etc., the terms of which
shall be as described in the applicable Prospectus and related
forms) shall be in accordance with the terms of such features. You
may receive an administrative service fee, with respect to certain
Funds for which such fees are available, as provided in the
applicable Prospectus, which fee shall be payable with respect to
such assets, for such periods and at such intervals as are from
time to time specified by us.
4. By accepting this agreement, you agree:
(a) To purchase shares only from us or from your
customers.
(b) That you will purchase shares from us only to cover
purchase orders already received from your customers, or for your
own bona fide investments.
<PAGE> 2
(c) That you will not purchase shares from your customers
at a price lower than the bid price then quoted by or for the Fund
involved. You may, however, sell shares for the account of your
customer to the Fund, or to us as agent for the Fund, at the bid
price currently quoted by or for the Fund and charge your customer
a fair commission for handling the transaction.
(d) That you will not withhold placing with us orders
received from your customers so as to profit yourself as a result
of such withholding.
5. We will not accept from you any conditional orders for
shares.
6. If any shares confirmed to you under the terms of this
agreement are repurchased by the issuing Fund or by us as agent for
the Fund, or are tendered for repurchase, within seven business
days after the date of our confirmation of the original purchase
order, you shall forthwith refund to us the full discount,
commission, finder's fee or other concession, if any, allowed or
paid to you on such shares.
7. Payment for shares ordered from us shall be in New York
clearing house funds and must be received by the appropriate Fund's
shareholder service agent within seven days after our acceptance of
your order (or such shorter time period as may be required by
applicable regulations). If such payment is not received, we
reserve the right, without notice, forthwith to cancel the sale or,
at our option, to sell the shares ordered back to the Fund, in
which case we may hold you responsible for any loss, including loss
of profit suffered by us as a result of your failure to make such
payment.
8. Shares sold to you hereunder shall be available in
negotiable form for delivery at the appropriate Fund's shareholder
services agent, against payment, unless other instructions have
been given.
9. All sales will be made subject to our receipt of shares
from the Fund. We reserve the right, in our discretion, without
notice, to suspend sales or withdraw the offering of shares
entirely. We reserve the right to modify, cancel or change the
terms of this agreement, upon 15 days prior written notice to you.
Also, the sales charges, discounts, commissions or other
concessions, service fees of any kind provided for hereunder are
subject to change at any time by the Funds and us.
10. All communications to us should be sent to the address in
the heading above. Any notice to you shall be duly given if mailed
or telegraphed to you at the address specified by you below.
11. This agreement shall be construed in accordance with the
laws of Illinois. This agreement is subject to the Prospectuses of
the Funds from time to time in effect, and, in the event of a
conflict, the terms of the Prospectuses shall control. References
herein to the "Prospectus" of a Fund shall mean the prospectus and
statement of additional information of such Fund as from time to
time in effect. Any changes, modifications or additions reflected
in any such Prospectus shall be effective on the date of such
Prospectus (or supplement thereto) unless specified otherwise.
<PAGE> 3
12. This agreement is subject to the Additional Stipulations
and Conditions on the reverse side hereof, all of which are a part
of this agreement.
Kemper Distributors, Inc.
By
-----------------------------
Authorized Signature
Title
--------------------------
We have read the foregoing agreement and accept and agree to the
terms and conditions thereof.
Firm
--------------------------
Witness
------------------------ By
-----------------------------
Authorized Representative
Dated Title
------------------------- --------------------------
<PAGE> 4
ADDITIONAL STIPULATIONS AND CONDITIONS
13. No person is authorized to make any representations
concerning shares of any Fund except those contained in the
Prospectus of such Fund and in printed information subsequently
issued by the Fund or by us as information supplemental to such
Prospectus. If you wish to use your own advertising with respect to
a Fund, all such advertising must be approved by us or by the Fund
prior to use. You shall be responsible for any required filing of
such advertising.
14. Your acceptance of this agreement constitutes a
representation (i) that you are a registered security dealer and a
member in good standing of the National Association of Securities
Dealers, Inc. and that you agree to comply with all state and
federal laws, rules and regulations applicable to transactions
hereunder and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., including specifically
Section 26, Article III thereof, or (ii) if you are offering and
selling shares of the Funds only in jurisdictions outside of the
several states, territories and possessions of the United States
and are not otherwise required to be a member of the National
Association of Securities Dealers, Inc., that you nevertheless
agree to conduct your business in accordance with the spirit of the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc., and to observe the laws and regulations of the
applicable jurisdiction. You likewise agree that you will not offer
to sell shares of any Fund in any state or other jurisdiction in
which they may not lawfully be offered for sale.
15. You shall make available an investment management account
for your customers through the Funds and shall provide such office
space and equipment, telephone facilities, personnel and literature
distribution as is necessary or appropriate for providing
information and services to your customer. Such services and
assistance may include, but not be limited to, establishment and
maintenance of shareholder accounts and records, processing
purchase and redemption transactions, answering routine inquiries
regarding the Funds, and such other services as may be agreed upon
from time to time and as may be permitted by applicable statute,
rule, or regulation. You agree to release, indemnify and hold
harmless the Funds, us and our respective representatives and
agents from any and all direct or indirect liabilities or losses
resulting from requests, directions, actions or inactions of or by
you, your officers, employees or agents regarding the purchase,
redemption or transfer of registration of shares of the Funds for
accounts of you, your customers and other shareholders or from any
unauthorized or improper use of any on-line computer facilities.
You shall prepare such periodic reports for us as shall reasonably
be requested by us. You shall immediately inform the Funds or us of
all written complaints received by you from Fund shareholders
relating to the maintenance of their accounts and shall promptly
answer all such complaints and other similar correspondence. You
shall provide the Funds and us on a timely basis with such
<PAGE> 5
information as may be required to complete various regulatory
forms.
16. As a result of the necessity to compute the amount of any
contingent deferred sales charge due with respect to the redemption
of shares, you may not hold shares of a Fund imposing such a charge
in an account registered in your name or in the name of your
nominee for the benefit of certain of your customers except with
our prior written consent. Except as otherwise permitted by us,
shares of such a Fund owned by a shareholder must be in a separate
identifiable account for such shareholder.
17. Shares of certain Funds have been divided into separate
classes: Class A Shares, Class B Shares and Class C Shares. Class
A shares are offered at net asset value plus an initial sales
charge. Class B Shares are offered at net asset value without an
initial sales charge but are subject to a contingent deferred sales
charge and a Rule 12b-1 fee and have a conversion feature. Class C
Shares are offered at net asset value without an initial sales
charge or contingent deferred sales charge but are subject to a
Rule 12b-1 fee and have no conversion feature. Please see the
appropriate Prospectuses for a more complete description of the
distinctions between the classes of shares.
It is important to investors not only to choose Funds
appropriate for their investment objectives, but also to choose the
appropriate distribution arrangement, based on the amount invested
and the expected duration of the investment. To assist investors in
these decisions, we have instituted the following policies with
respect to orders for shares of the Funds. The following policies
and procedures with respect to sales of classes of shares of the
Funds apply to each broker/dealer that distributes shares of the
Funds.
1. All purchase orders for $500,000 or more (not including
street name or omnibus accounts) should be for class A Shares.
2. Any purchase order of less than $500,000 may be for either
Class A, Class B or Class C Shares in light of the relevant facts
and circumstances, including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold the
shares; and
c. any other relevant circumstances such as the
availability of purchases under a Letter of Intent, Combined
Purchases or Cumulative Discount Privilege.
There are instances when one pricing structure may be more
appropriate than another. For example, investors who would qualify
for a reduced sales charge on Class A Shares may determine that
payment of a reduced front-end sales charge is preferable to
payment of an ongoing Rule 12b-1 fee. On the other hand, investors
whose orders would not qualify for such a discount and who plan to
hold their investment for more than six years may wish to defer the
sales charge and would consider Class B Shares. Investors who
prefer not to pay an initial sales charge and who plan to redeem
their shares within six years might consider Class C Shares.
Appropriate supervisory personnel within your organization
must ensure that all employees receiving investor inquiries about
the purchase of shares of the Funds advise the investor of the
<PAGE> 6
available pricing structures offered by the Funds and the impact of
choosing one method over another, including breakpoints and the
availability of Letters of Intent, Combined Purchases and
Cumulative Discounts. In some instances it may be appropriate for
a supervisory person to discuss a purchase with the investor.
18. This agreement shall be in substitution of any prior
selling group agreement between you and us regarding these shares.
This agreement shall not be applicable to the provision of services
for Cash Equivalent Fund, Tax-Exempt California Money Market Fund,
Tax Exempt New York Money Market Fund, Investors Cash Trust and
similar wholesale money market funds. The payment of related
distribution and services fees, shall be subject to separate
services agreements.
<PAGE> 1
EXHIBIT 99.B8(a)
CUSTODY AGREEMENT
AGREEMENT, made the 1st day of October, 1990 by and between
Kemper International Fund, a Massachusetts business trust having
its principal place of business at 120 South LaSalle Street,
Chicago, Illinois 60603 ("Fund") and Investors Fiduciary Trust
Company, a trust company organized and existing under the laws of
Missouri, having its principal place of business at Kansas City,
Missouri ("Custodian").
WHEREAS, Fund wants to appoint Investors Fiduciary Trust
Company as Custodian to have custody of a portion of Fund's
portfolio securities and monies pursuant to this Agreement; and,
for purposes related to its foreign investments held outside the
United States, Fund wants another custodian to have custody of the
remainder of Fund's portfolio securities and monies pursuant to a
separate agreement; and
WHEREAS, Investors Fiduciary Trust Company wants to accept
such appointment;
NOW, THEREFORE, for and in consideration of the mutual
promises contained herein, the parties hereto, intending to be
legally bound, mutually covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Fund hereby constitutes and appoints Investors Fiduciary
Trust Company as Custodian of Fund which is to include:
A. Custody of the securities and monies at any time owned
by Fund and received by Custodian; and
B. Performing certain accounting and record keeping
functions relating to its function as Custodian for Fund and each
of its Portfolios.
2. DELIVERY OF CORPORATE DOCUMENTS.
Fund has delivered or will deliver to Custodian prior to
the effective date of this Agreement, copies of the following
documents and all amendments or supplements thereto, property
certified or authenticated:
A. Resolutions of the Board of Trustees of Fund
appointing Investors Fiduciary Trust Company as Custodian hereunder
and approving the form of this Agreement; and
B. Resolutions of the Board of Trustees of Fund
authorizing certain persons to give instructions on behalf of Fund
to Custodian and authorizing Custodian to rely upon written
instructions over their signatures.
<PAGE> 2
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
All Fund's securities and moneys, except as permitted by
the Investment Company Act of 1940 ("1940 Act"), will be delivered
either to Custodian or to The Chase Manhattan Bank, N.A., pursuant
to a separate custody agreement. Fund will deliver or cause to be
delivered to Custodian on the effective date of this Agreement, or
as soon thereafter as practicable, and from time to time
thereafter, portfolio securities acquired by it and monies then
owned by it except as permitted by the 1940 Act or from time to
time coming into its possession during the time this Agreement
shall continue in effect. Custodian shall have no responsibility
or liability whatsoever for or on account of securities or monies
not so delivered. All securities so delivered to Custodian (other
than bearer securities) shall be registered in the name of Fund or
its nominee, or of a nominee of Custodian, or shall be properly
endorsed and in form for transfer satisfactory to Custodian.
B. Safekeeping
Custodian will receive delivery of and keep safely the
assets of Fund delivered to it from time to time. Custodian will
not deliver any such assets to any person except as permitted by
the provisions of this Agreement or any agreement executed by it
according to the terms of this Agreement. Custodian shall be
responsible only for the monies and securities of Fund held
directly by it or its nominees or sub-custodian under this
Agreement. Custodian may participate directly or indirectly
through a sub-custodian in the Depository Trust Company, the
Treasury/Federal Reserve Book Entry System, the Participants Trust
Company and any other securities depository approved by the Board
of Trustees of the Fund, subject to compliance with the provision
of Rule 17f-4 under the 1940 Act including, without limitation, the
specific provisions of subsections (a)(1) through (d)(4) thereof.
C. Registration of Securities
Custodian will hold stocks and other registerable
portfolio securities of Fund registered in the name of Fund or in
the name of any nominee of Custodian for whose fidelity and
liabilities Custodian shall be fully responsible, or in street
certificate form, so-called, with or without any indication of
fiduciary capacity. Unless otherwise instructed, Custodian will
register all such portfolio securities in the name of its
authorized nominee.
D. Exchange of Securities
Upon receipt of instructions, Custodian will exchange, or
cause to be exchanged, portfolio securities held by it for the
account of Fund for other securities or cash issued or paid in
connection with any reorganization, recapitalization, merger,
<PAGE> 3
consolidation, split-up of shares, change of par value, conversion
or otherwise, and will deposit any such securities in accordance
with the terms of any reorganization or protective plan. Without
instructions, Custodian is authorized to exchange securities held
by it in temporary form for securities in definitive form, to
effect an exchange of shares when the par value of the stock is
changed, and, upon receiving payment therefore, to surrender bonds
or other securities held by it at maturity or when advised of
earlier call for redemption, except that Custodian shall receive
instructions prior to surrendering any convertible security.
E. Purchases or Sales of Investments of Fund
Fund shall, on each business day on which a purchase or
sale of a portfolio security shall be made by it, deliver to
Custodian instructions which shall specify with respect to each
such transaction:
(1) The name of the issuer and description of the security;
(2) The number of shares or the principal amount purchased or
sold, and accrued interest, if any;
(3) The trade date;
(4) The settlement date;
(5) The date when the securities sold were purchased by Fund
or other information identifying the securities sold and to be
delivered;
(6) The price per unit and the brokerage commission, taxes
and other expenses in connection with the transaction;
(7) The total amount payable or receivable upon such
transaction; and
(8) The name of the person from whom or the broker or dealer
through whom the transaction was made.
In accordance with such purchase instructions, Custodian shall pay
for out of monies held for the account of Fund, but only insofar as
monies are available therein for such purpose, and receive the
portfolio securities so purchased by or for the account of Fund.
Such payment shall be made only upon receipt by Custodian of the
securities so purchased in form for transfer satisfactory to
Custodian.
In accordance with such sales instructions, Custodian will deliver
or cause to be delivered the securities thus designated as sold for
the account of Fund to the broker or other person specified in the
instructions relating to such sale, such delivery to be made only
upon receipt of payment therefor in such form as shall be
satisfactory to Custodian, with the understanding that Custodian
<PAGE> 4
may deliver or cause to be delivered securities for payment in
accordance with the customs prevailing among dealers in securities.
F. Purchases or Sales of Options and Futures Transactions
Fund will, on each business day on which a purchase or
sale of the following options and/or futures shall be made by it,
deliver to Custodian instructions which shall specify with respect
to each such purchase or sale:
(1) Securities Options
(a) The underlying security;
(b) The price at which purchased or sold;
(c) The expiration date;
(d) The number of contracts;
(e) The exercise price;
(f) Whether opening, exercising, expiring or closing the
transaction;
(g) Whether the transaction involves a put or call;
(h) Whether the option is written or purchased;
(i) Market on which option traded; and
(j) Name and address of the broker or dealer through
whom the sale or purchase was made.
(2) Options on Indices
(a) The index;
(b) The price at which purchased or sold;
(c) The exercise price;
(d) The premium;
(e) The multiple;
(f) The expiration date;
(g) Whether the transaction is an opening, exercising,
expiring or closing transaction;
(h) Whether the transaction involves a put or call;
(i) Whether the option is written or purchased; and
<PAGE> 5
(j) Name and address of the broker or dealer through whom
the sale or purchase was made.
(3) Securities Index Futures Transactions
(a) The last trading date specified in the contract and,
when available, the closing level, thereof;
(b) The index level on the date the contract is entered
into;
(c) The multiple;
(d) Any margin requirements;
(e) The need for a segregated margin account (in addition
to instructions; and, if not already in the possession of
Custodian, Fund shall deliver a substantially complete and executed
custodial safekeeping account and procedural agreement which shall
be incorporated into this Custody Agreement); and
(f) The name and address of the futures commission
merchant through whom the sale or purchase was made.
(4) Options on Index Futures Contracts
(a) The underlying index futures contract;
(b) The premium;
(c) The expiration date;
(d) The number of options;
(e) The exercise price;
(f) Whether the transaction involves an opening,
exercising, expiring or closing transaction;
(g) Whether the transaction involves a put or call;
(h) Whether the option is written or purchased; and
(i) The market on which the option is traded.
G. Securities Pledged to Secure Loans
(1) Upon receipt of instructions, Custodian will release
or cause to be released securities held in custody to the pledgee
designated in such instructions by way of pledge or hypothecation
to secure any loan incurred by Fund; provided, however, that the
securities shall be released only upon payment to Custodian of the
monies borrowed, except that in cases where additional collateral
is required to secure a borrowing already made, further securities
<PAGE> 6
may be released or caused to be released for that purpose upon
receipt of instructions. Upon receipt of instructions, Custodian
will pay, but only from funds available for such purpose, any such
loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing such loan.
(2) Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated in such
instructions; provided, however, that the securities shall be
released only upon deposit with Custodian of full cash collateral
as specified in such instructions, and that Fund will retain the
right to any dividends, interest or distribution on such loaned
securities. Upon receipt of instructions and the loaned
securities, Custodian will release the cash collateral to the
borrower.
H. Routine Matters
Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with securities
or other property of Fund except as may be otherwise provided in
this Agreement or directed from time to time by the Board of
Trustees of Fund.
I. Demand Deposit Account
Custodian will open and maintain a demand deposit account
or accounts in the name of Custodian, subject only to draft or
order by Custodian upon receipt of instructions. All monies
received by Custodian from or for the account of Fund shall be
deposited in said account or accounts. When properly authorized by
a resolution of the Board of Trustees of Fund, Custodian may open
and maintain an additional demand deposit account or accounts in
such other banks or trust companies as may be designated in such
resolution, such accounts, however, to be in the name of Custodian
and subject only to its draft or order.
J. Income and Other Payments to Fund
Custodian will:
(1) collect, claim and receive and deposit for the
account of Fund all income and other payments which become due and
payable on or after the effective date of this Agreement with
respect to the securities deposited under this Agreement, and
credit the account of Fund with such income on the payable date;
(2) execute ownership and other certificates and
affidavits for all federal, state and local tax purposes in
connection with the collection of bond and note coupons; and
<PAGE> 7
(3) take such other action as may be necessary or proper
in connection with:
(a) the collection, receipt and deposit of such income
and other payments, including but not limited to the presentation
for payment of:
(1) all coupons and other income items requiring
presentation;
(2) all other securities which may mature or be called,
redeemed, retired or otherwise become payable and regarding which
the Custodian has actual knowledge, or notice of which is contained
in publications of the type to which it normally subscribes for
such purpose; and
(b) the endorsement for collection, in the name of Fund,
of all checks, drafts or other negotiable instruments.
Custodian, however, shall not be required to institute
suit or take other extraordinary action to enforce collection
except upon receipt of instructions and upon being indemnified to
its satisfaction against the costs and expenses of such suit or
other actions. Custodian will receive, claim and collect all stock
dividends, rights and other similar items and deal with the same
pursuant to instructions. Unless prior instructions have been
received to the contrary, Custodian will, without further
instructions, sell any rights held for the account of Fund on the
last trade date prior to the date of expiration of such rights.
K. Payment of Dividends and Other Distributions
On the declaration of any dividend or other distribution
on the shares of beneficial interest of any Portfolio ("Portfolio
Shares") by the Board of Trustees of Fund, Fund shall deliver to
Custodian instructions with respect thereto, including a copy of
the Resolution of said Board of Trustees certified by the Secretary
or an Assistant Secretary of Fund wherein there shall be set forth
the record date as of which shareholders are entitled to receive
such dividend or distribution, and the amount payable per share on
such dividend or distribution.
On the date specified in such Resolution for the payment
of such dividend or other distribution, Custodian shall pay out of
the monies held for the account of Fund, insofar as the same shall
be available for such purposes, and credit to the account of the
Dividend Disbursing Agent for Fund, such amount as may be necessary
to pay the amount per share payable in cash on Portfolio Shares
issued and outstanding on the record date established by such
Resolution.
L. Portfolio Shares Purchased by Fund
<PAGE> 8
Whenever any Portfolio Shares are purchased by Fund, Fund
or its agent shall advise Custodian of the aggregate dollar amount
to be paid for such shares and shall confirm such advice in
writing. Upon receipt of such advice, Custodian shall charge such
aggregate dollar amount to the custody account of Fund and either
deposit the same in the account maintained for the purpose of
paying for the purchase of Portfolio Shares or deliver the same in
accordance with such advice.
M. Portfolio Shares Purchased from Fund
Whenever Portfolio Shares are purchased from Fund, Fund
will deposit or cause to be deposited with Custodian the amount
received for such shares. Custodian shall not have any duty or
responsibility to determine that Fund Shares purchased from Fund
have been added to the proper shareholder account or accounts or
that the proper number of such shares have been added to the
shareholder records.
N. Proxies and Notices
Custodian will promptly deliver or mail to Fund all
proxies properly signed, all notices of meetings, all proxy
statements and other notices, requests or announcements affecting
or relating to securities held by Custodian for Fund and will, upon
receipt of instructions, execute and deliver or cause its nominee
to execute and deliver such proxies or other authorizations as may
be required. Except as provided by this Agreement or pursuant to
instructions hereafter received by Custodian, neither it nor its
nominee shall exercise any power inherent in any such securities,
including any power to vote the same, or execute any proxy, power
of attorney, or other similar instrument voting any of such
securities, or give any consent, approval or waiver with respect
thereto, or take any other similar action.
O. Disbursements
Custodian will pay or cause to be paid insofar as funds
are available for the purpose, bills, statements and other
obligations of Fund (including but not limited to obligations in
connection with the conversion, exchange or surrender of securities
owned by Fund, interest charges, variation margin, dividend
disbursements, taxes, management fees, administration-distribution
fees, custodian fees, legal fees, auditors' fees, transfer agents'
fees, brokerage commissions, compensation to personnel, and other
operating expenses of Fund) pursuant to instructions of Fund
setting forth the name of the person to whom payment is to be made,
the amount of the payment, and the purpose of the payment.
P. Books, Records and Accounts
Custodian acknowledges that all the records it shall
prepare and maintain pursuant to this Agreement shall be the
property of Fund and that upon request of Fund it shall make Fund's
<PAGE> 9
records available to it, along with such other information and data
as are reasonably requested by Fund, for inspection, audit or
copying, or turn said records over to Fund.
Custodian shall, within a reasonable time, render to Fund
as of the close of business on each day, a detailed statement of
the amounts received or paid and of securities received or
delivered for the account of Fund during said day. Custodian
shall, from time to time, upon request by Fund, render a detailed
statement of the securities and monies held for Fund under this
Agreement, and Custodian shall maintain such books and records as
are necessary to enable it do so and shall permit such persons as
are authorized by Fund, including Fund's independent public
accountants, to examine such records or to confirm the contents of
such records; and, if demanded, shall permit federal and state
regulatory agencies to examine said securities, books and records.
Upon the written instructions of Fund or as demanded by federal or
state regulatory agencies, Custodian shall instruct any
sub-custodian to permit such persons as are authorized by Fund to
examine the books, records and securities held by such
sub-custodian which relate to Fund.
Q. Appointment of Sub-Custodian
Notwithstanding any other provisions of this Agreement,
all or any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more other
banks or trust companies acting as sub-custodians as may be
approved by resolutions of Fund's Board of Trustees, evidenced by
a copy thereof certified by the Secretary or Assistant Secretary of
Fund. Any such sub-custodian must have the qualifications required
for custodians under the 1940 Act unless exempted therefrom. The
sub-custodian may participate directly or indirectly in the
Depository Trust Company, the Treasury/Reserve Book Entry System,
the Participants Trust Company and any other securities depository
approved by the Board of Trustees of the Fund, to the same extent
and subject to the same conditions as Custodian hereunder. Neither
Custodian nor sub-custodian shall be entitled to reimbursement by
Fund for any fees or expenses of any sub-custodian. The
appointment of a sub-custodian shall not relieve Custodian of any
of its obligations hereunder.
R. Multiple Portfolios
If Fund shall issue shares of more than one Portfolio
during the term hereof, Custodian agrees that all securities and
other assets of Fund shall be segregated by Portfolio and all books
and records, account values or actions shall be maintained, held,
made or taken, as the case may be, separately for each Portfolio.
S. Other Custodian
<PAGE> 10
Pursuant to instructions, Custodian will transmit
securities and moneys of Fund to The Chase Manhattan Bank, N.A., as
custodian for Fund.
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written
or oral instructions to Custodian from an authorized person of
Fund. Certified copies of resolutions of the Board of Trustees of
Fund naming one or more persons authorized to give instructions in
the name and on behalf of Fund may be received and accepted by
Custodian as conclusive evidence of the authority of any person so
to act and may be considered to be in full force and effect (and
Custodian shall be fully protected in acting in reliance thereon)
until receipt by Custodian of notice to the contrary. Unless the
resolution authorizing any person to give instructions specifically
requires that the approval of anyone else shall first have been
obtained, Custodian shall be under no obligation to inquire into
the right of the person giving such instructions to do so.
Notwithstanding any of the foregoing provisions of this Section 4,
no authorizations or instructions received by Custodian from Fund
shall be deemed to authorize or permit any trustee, officer,
employee, or agent of Fund to withdraw any of the securities or
monies of Fund upon the mere receipt of instructions from such
trustee, officer, employee or agent.
B. No later than the next business day immediately
following each oral instruction referred to herein, Fund shall give
Custodian written confirmation of each such oral instruction.
Either party may electronically record any oral instruction whether
given in person or via telephone.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall hold harmless and indemnify Fund from
and against any loss or liability arising out of Custodian's
failure to comply with the terms of this Agreement or arising out
of Custodian's negligence, willful misconduct, or bad faith.
Custodian may request and obtain the advice and opinion of counsel
for Fund or of its own counsel with respect to questions or matters
of law, and it shall be without liability to Fund for any action
taken or omitted by it in good faith, in conformity with such
advice or opinion.
B. If Fund requires Custodian in any capacity to take,
with respect to any securities, any action which involves the
payment of money by it, or which in Custodian's opinion might make
it or its nominee liable for payment of monies or in any other way,
Custodian shall be and be kept indemnified by Fund in an amount and
form satisfactory to Custodian against any liability on account of
such action.
C. Custodian shall be entitled to receive, and Fund
agrees to pay to Custodian, on demand, reimbursement for such cash
<PAGE> 11
disbursements, costs and expenses as may be agreed upon from time
to time by Custodian and Fund.
D. Custodian shall be protected in acting as custodian
hereunder upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing to it
to be genuine and to have been properly executed and shall, unless
otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained
from Fund hereunder, a certificate signed by Fund's President, or
other officer specifically authorized for such purpose.
E. Without limiting the generality of the foregoing,
Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
(1) The validity of the issue of any securities purchased
by or for Fund, the legality of the purchase thereof or evidence of
ownership required by Fund to be received by Custodian, or the
propriety of the decision to purchase or amount paid therefor;
(2) The legality of the sales of any securities by or for
Fund, or the propriety of the amount paid therefor;
(3) The legality of the issue or sale of any shares of
Fund, or the sufficiency of the amount to be received therefor;
(4) The legality of the purchase of any shares of Fund,
or the propriety of the amount to be paid therefor; or
(5) The legality of the declaration of any dividend by
Fund, or the legality of the issue of any shares of Fund in payment
of any share dividend.
F. Custodian shall not be liable for, or considered to be
the custodian of, any money represented by any check, draft, wire
transfer, clearing house funds, uncollected funds, or instrument
for the payment of money received by it on behalf of Fund, until
Custodian actually receives such money, provided only that it shall
advise Fund promptly if it fails to receive any such money in the
ordinary course of business, and use its best efforts and cooperate
with Fund toward the end that such money shall be received.
G. Subject to the obligations of Custodian under Section
3.B. hereof, Custodian shall not be responsible for loss occasioned
by the acts, neglects, defaults or insolvency of any broker, bank,
trust company, or any other person with whom Custodian may deal in
the absence of negligence, misconduct or bad faith on the part of
Custodian.
H. Custodian shall provide Fund for its approval by its
Board of Trustees agreements with banks or trust companies which
will act as sub-custodian for Fund pursuant to this Agreement; and,
as set forth in Section 3.B. hereof, Custodian shall be
<PAGE> 12
responsible for the monies and securities of the Fund held by it or
its nominees or sub-custodians under this Agreement.
6. COMPENSATION.
Fund shall pay to Custodian such compensation at such times as
may from time to time be agreed upon in writing by Custodian and
Fund. Custodian may charge such compensation against monies held
by it for the account of Fund. Custodian shall also be entitled,
notwithstanding the provisions of Sections 5B or 5C hereof, to
charge against any monies held by it for the account of Fund the
amount of any loss, damage, liability or expense for which it shall
be entitled to reimbursement under the provisions of this
Agreement. Custodian shall not be entitled to reimbursement by
Fund for any loss or expenses of any sub-custodian.
7. TERMINATION.
Either party to this Agreement may terminate the same by
notice in writing, delivered or mailed, postage prepaid, to the
other party hereto and received not less than sixty (60) days prior
to the date upon which such termination shall take effect. Upon
termination of this Agreement, Fund shall pay to Custodian such
compensation for its reimbursable disbursements, costs and expenses
paid or incurred to such date and Fund shall use its best efforts
to obtain a successor custodian. Unless the holders of a majority
of the outstanding shares of Fund vote to have the securities,
funds and other properties held under this Agreement delivered and
paid over to some other person, firm or corporation specified in
the vote, having not less the Two Million Dollars ($2,000,000)
aggregate capital, surplus and undivided profits, as shown by its
last published report, and meeting such other qualifications for
custodian as set forth in the Bylaws of Fund, the Board of Trustees
of Fund shall, forthwith upon giving or receiving notice of
termination of this Agreement, appoint as successor custodian a
bank or trust company having such qualifications. Custodian shall,
upon termination of this Agreement, deliver to the successor
custodian so specified or appointed, at custodian's office, all
securities then held by Custodian hereunder, duly endorsed and in
form for transfer, and all funds and other properties of Fund
deposited with or held by Custodian hereunder, and shall cooperate
in effecting changes in book-entries at the Depository Trust
Company, the Treasury/Federal Reserve Book-Entry System, the
Participants Trust Company and any other securities depository
holding assets of the Fund. In the event no such vote has been
adopted by the shareholders of Fund and no written order
designating a successor custodian shall have been delivered to
Custodian on or before the date when such termination shall become
effective, then Custodian shall deliver the securities, funds and
properties of Fund to a bank or trust company at the selection of
Custodian and meeting the qualifications for custodian, if any, set
forth in the Bylaws of Fund and having not less than Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided
profits, as shown by its last published report. Upon either such
<PAGE> 13
delivery to a successor custodian, Custodian shall have no further
obligations or liabilities under this Agreement. Thereafter such
bank or trust company shall be the successor custodian under this
Agreement and shall be entitled to reasonable compensation for its
services. In the event that no such successor custodian can be
found, Fund will submit to its shareholders, before permitting
delivery of the cash and securities owned by Fund to anyone other
than a successor custodian, the question of whether Fund shall be
liquidated or shall function without a custodian. Notwithstanding
the foregoing requirement as to delivery upon termination of this
Agreement, Custodian may make any other delivery of the securities,
funds and property of Fund which shall be permitted by the 1940 Act
and Fund's Agreement and Declaration of Trust and Bylaws then in
effect. Except as otherwise provided herein, neither this
Agreement nor any portion thereof may be assigned by Custodian
without the consent of Fund, authorized or approved by a resolution
of its Board of Trustees.
8. NOTICES.
Notices, requests, instructions and other writings received by
Fund at 120 South LaSalle Street, Chicago, Illinois 60603 or at
such other address as Fund may have designated by certified
resolution of the Board of Trustees to Custodian and notices,
requests, instructions and other writings received by Custodian at
its offices at 21 West 10th Street, Kansas City, Missouri 64105, or
to such other address as it may have designated to Fund in writing,
shall be deemed to have been properly given hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State
of Missouri and shall be governed by the laws of the State of
Missouri (except as to Section 9.H. hereof which shall be governed
in accordance with the laws of The Commonwealth of Massachusetts).
B. All the terms and provisions of this Agreement shall
be binding upon, inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or
modified in any manner except by a written agreement properly
authorized and executed by both parties hereto.
D. The captions in this Agreement are included for
convenience of reference only, and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or
effect.
E. This Agreement shall become effective at the close of
business on the date hereof.
<PAGE> 14
F. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by
the courts held to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if
the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
H. All parties hereto are expressly put on notice of
Fund's Agreement and Declaration of Trust, which is 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 Fund by its
representatives as such representatives and not individually, and
the obligations of Fund hereunder are not binding upon any of the
Trustees, officers of shareholders of Fund individually but are
binding upon only the assets and property of Fund. With respect to
any claim by Custodian for recovery of that portion of the
compensation (or any other liability of Fund arising hereunder)
allocated to a particular Portfolio, whether in accordance with the
express terms hereof or otherwise, Custodian 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.
I. This Agreement, together with the Fee Schedule, 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 parties have caused this Agreement to
be executed by their respective authorized officers, and their
respective seals to be affixed.
KEMPER INTERNATIONAL FUND
By: /s/ John E. Peters
--------------------------------
Title: Vice President
Attest: /s/ Robert J. Engling
----------------------------
Title: Vice President & Secretary
INVESTORS FIDUCIARY TRUST COMPANY
<PAGE> 15
By: /s/ R.A. Winegar
---------------------------------
Title: EVP
Attest: /s/ Cheryl Naegler
----------------------------
Title: Asst. Secretary
<PAGE> 1
EXHIBIT 99.B8(b)
KEMPER INTERNATIONAL FUND
AGREEMENT dated January 31, 1986 between THE CHASE
MANHATTAN BANK, N.A. ("Bank") and KEMPER INTERNATIONAL FUND (THE
"Fund").
1. Custody Account. The Bank agrees to establish and
maintain (a) a custody account in the name of the Fund ("Custody
Account") for any and all stocks, shares, bonds, debentures, notes,
mortgages or other obligations for the payment of money and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase or subscribe for the same or evidencing
or representing any other rights or interests therein and other
similar property (hereinafter called "Securities") from time to
time received by the Bank or its subcustodian (as defined in the
last sentence of Section 3) for the account of the Fund, and (b) a
deposit account in the name of the Fund ("Deposit Account") for any
and all cash in any currency received by the Bank or its
subcustodian for the account of the Fund, which cash shall not be
subject to withdrawal by draft or check.
2. Maintenance of Securities Abroad. Securities in the
Custody Account shall be held in the country or other jurisdiction
as shall be specified from time to time in Instructions, provided
that such country or other jurisdiction shall be one in which the
principal trading market for such Securities is located or the
country or other jurisdiction in which such Securities are to be
presented for payment or are acquired for the Custody Account and
cash in the Deposit Account shall be credited to an account in such
amounts and in the country or other jurisdiction as shall be
specified from time to time in Instructions, provided that such
country or other jurisdiction shall be one in which such cash is
the legal currency for the payment of public or private debts.
3. Eligible Foreign Custodians and Securities Depositories.
The Fund's Board of Trustees authorizes the Bank to hold the
Securities in the Custody Account and the cash in the Deposit
Account in custody and deposit accounts, respectively, which have
been established by the Bank with one of its branches, a branch
of a qualified U.S. bank, an eligible foreign custodian or an
eligible foreign securities depository; provided, however, that
the Bank has recommended and the Board has approved the use of,
and the Bank's contract with, such eligible foreign custodian
or eligible foreign securities depository by resolution, and a
certified copy of such resolution has been provided to the Bank.
Furthermore, if one of its branches, a branch of a qualified
U.S. bank or an eligible foreign custodian is selected to act
as the Bank's subcustodian to hold any of the Securities or
cash, such entity is authorized to hold such Securities or
cash in its account with any eligible foreign securities
depository in which it participates. For purposes of this
Agreement (a) "qualified U.S. bank" shall mean a qualified U.S.
bank as defined in Rule 17f-5 under the Investment Company
Act of 1940 ("Investment Company
<PAGE> 2
Act"); (b) "eligible foreign custodian" shall mean (i) a banking
institution or trust company incorporated or organized under the
laws of a country other than the United States that is regulated as
such by that country's government or an agency thereof and that has
shareholders' equity in excess of $200 million in U.S. currency (or
a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of
a country other than the United States and that has shareholders'
equity in excess of $100 million in U.S. currency (or a foreign
currency equivalent thereof) or (iii) a banking institution or
trust company incorporated or organized under the laws of a country
other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than
the United States which has such other qualifications as shall be
authorized or permitted by a rule, regulation, interpretation or
exemptive order promulgated by or under the authority of the
Securities and Exchange Commission, specified in Instructions and
approved by the Bank; and (c) "eligible foreign securities
depository" shall mean a securities depository or clearing agency,
incorporated or organized under the laws of a country other than
the United States, which operates (i) the central system for
handling of securities or equivalent book-entries in that country
or (ii) a transnational system for the central handling of
securities or equivalent book-entries.
Hereinafter the term "subcustodian" will refer to any
branch of a qualified U.S. bank, any eligible foreign custodian or
any eligible foreign securities depository with which the Bank has
entered an agreement of the type contemplated hereunder regarding
Securities and/or cash held in or to be acquired for the Custody
Account or the Deposit Account.
4. Use of Subcustodian. With respect to Securities and
other assets which are maintained by the Bank in the physical
custody of a subcustodian pursuant to Section 3 (as used in this
Section 4, the term "Securities" means such Securities and other
assets),
(a) The Bank will identify on its books as belonging to
the Fund any Securities held by such subcustodian.
(b) In the event that a subcustodian permits any of the
Securities placed in its care to be held in an eligible foreign
securities depository, such subcustodian will be required by its
agreement with the Bank to identify on its books such Securities as
being held for the account of the Bank as a custodian for its
customers.
(c) Any Securities in the Custody Account held by a
subcustodian of the Bank will be subject only to the instructions
of the Bank or its agents; and any Securities held in an eligible
<PAGE> 3
foreign securities depository for the account of a subcustodian
will be subject only to the instructions of such subcustodian.
(d) The Bank will only deposit Securities in an account
with a subcustodian which includes exclusively the assets held by
the Bank for its customers, and the Bank will cause such account to
be designated by such subcustodian as a special custody account for
the exclusive benefit of customers of the Bank.
(e) Any agreement the Bank shall enter into with a
subcustodian with respect to the holding of Securities shall
require that (i) the Securities are not subject to any right,
charge, security interest, lien or claim of any kind in favor of
such subcustodian except for their safe custody or administration
and (ii) beneficial ownership of such Securities is freely
transferable without the payment of money or value other than for
safe custody or administration; provided, however, that the
foregoing shall not apply to the extent that any of the
above-mentioned rights, charges, etc. result from any compensation
or other expenses arising with respect to the safekeeping of
Securities pursuant to such agreement or from any arrangements made
by the Fund with any such subcustodian.
(f) The Bank shall allow independent public accountants
of the Fund such reasonable access to the records of the Bank
relating to the Securities held in the Custody Account as is
required by such accountants in connection with their examination
of the books and records pertaining to the affairs of the Fund.
The Bank shall, subject to restrictions under applicable law, also
obtain from any subcustodian with which the Bank maintains the
physical possession of any Securities in the Custody Account an
undertaking to permit independent public accountants of the Fund
such reasonable access to the records of such subcustodian as may
be required in connection with their examination of the books and
records pertaining to the affairs of the Fund. The Bank shall
furnish to the Fund such reports (or portions thereof) of the
Bank's external auditors as relate directly to the Bank's system of
internal accounting controls applicable to the Bank's duties under
this Agreement. The Bank shall use its best efforts to obtain and
furnish the Fund with similar reports with respect to each eligible
foreign custodian and eligible foreign securities depository
holding Securities of the Fund.
(g) The Bank will supply to the Fund from time to time
as mutually agreed upon a statement in respect to any Securities in
the Custody Account held by a subcustodian, including an
identification of the entity having possession of the Securities,
and the Bank will send to the Fund an advice or notification of any
transfers of Securities to or from the Custody Account, indicating,
as to Securities acquired for the Fund, the identity of the entity
having physical possession of such Securities. In the absence of
the filing in writing with the Bank by the Fund of exceptions or
objections to any such statement within sixty (60) days following
receipt of the statement, the Fund shall be deemed to have approved
<PAGE> 4
such statement; and in such case or upon written approval of the
Fund of any such statement the Bank shall, to the extent permitted
by law, be released, relieved and discharged with respect to all
matters and things set forth in such statement as though such
statement had been settled by the decree of a court of competent
jurisdiction in an action in which the Fund and all persons having
any equity interest in the Fund were parties.
(h) The Bank hereby warrants to the Fund that in its
opinion, after due inquiry, the established procedures to be
followed by each of its branches, each branch of a qualified U.S.
bank, each eligible foreign custodian and each eligible foreign
securities depository holding the Fund's Securities pursuant to
this Agreement afford protection for such Securities at least equal
to that afforded by the Bank's established procedures with respect
to similar securities held by the Bank (and its securities
depositories) in New York.
5. Deposit Account Payments. Subject to the provisions
of Section 7, the Bank shall make, or cause its subcustodians to
make, payments of cash credited to the Deposit Account only
(a) in connection with the purchase of Securities for
the Fund and the delivery of such Securities to, or the crediting
of such Securities to the account of, the Bank of its subcustodian,
each such payment to be made at prices as confirmed by Instructions
(as defined in Section 9 hereof) from Authorized Persons (as
defined in Section 10 hereof);
(b) for the purchase or redemption of shares of the
capital stock of the Fund and the delivery to, or crediting to the
account of, the Bank or its subcustodian of such shares to be so
purchased or redeemed;
(c) for the payment for the account of the Fund of
dividends, interest, taxes, management or supervisory fees, capital
distributions or operating expenses;
(d) for the payments to be made in connection with the
conversion, exchange or surrender of Securities held in the Custody
Account;
(e) for transmittal to United Missouri Bank of Kansas
City, National Association, as Custodian for the Fund;
(f) for other proper corporate purposes of the Fund; or
(g) upon the termination of this Custody Agreement as
hereinafter set forth.
All payments of cash for a purpose permitted by subsection (a),
(b), (c), (d) or (e) of this Section 5 will be made only upon
receipt by the Bank of Instructions from Authorized Persons which
shall specify the purpose for which the payment is to be made and
<PAGE> 5
the applicable subsection of this Section 5. In the case of any
payment to be made for the purpose permitted by subsection (f) of
this Section 5, the Bank must first receive a certified copy of a
resolution of the Board adequately describing such payment,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made. Any payment
pursuant to subsection (g) of this Section 5 will be made in
accordance with Section 17.
In the event that any payment made under this Section 5
exceeds the funds available in the Deposit Account, the Bank may,
in its discretion, advance the Fund an amount equal to such excess
and such advance shall be deemed a loan from the Bank to the Fund,
payable on demand, bearing interest at the rate of interest
customarily charged by the Bank on similar loans.
If the Bank causes the Deposit Account to be credited on
the payable date for interest, dividends or redemptions, the Fund
will promptly return to the Bank any such amount or property so
credited upon oral or written notification that neither the Bank
nor its subcustodian can collect such amount or property in the
ordinary course of business. The Bank or its subcustodian, as the
case may be, shall have no duty or obligation to institute legal
proceedings, file a claim or proof of claim in any insolvency
proceeding or take any other action with respect to the collection
of such amount or property beyond its ordinary collection
procedures.
6. Custody Account Transactions. Subject to the
provisions of Section 7, Securities in the Custody Account will be
transferred, exchanged or delivered by the Bank or its
subcustodians only
(a) upon sale of such Securities for the Fund and
receipt by the Bank or its subcustodian only of payment therefor,
each such payment to be in the amount confirmed by Instructions
from Authorized Persons;
(b) when such Securities are called, redeemed or
retired, or otherwise become payable;
(c) in exchange for or upon conversion into other
Securities alone or other Securities and cash pursuant to any plan
or merger, consolidation, reorganization, recapitalization or
readjustment;
(d) upon conversion of such Securities pursuant to their
terms into other Securities;
(e) upon exercise of subscription, purchase or other
similar rights represented by such Securities;
(f) for the purpose of exchanging interim receipts or
temporary Securities for definitive Securities;
<PAGE> 6
(g) for the purpose of delivery to United Missouri Bank
of Kansas City, National Association, as Custodian for the Fund;
(h) for the purpose of redeeming in kind shares of the
Fund against delivery to the Bank or its subcustodian of such
shares to be so redeemed;
(i) for other proper trust purposes of the Fund;
(j) upon the termination of this Custody Agreement as
hereinafter set forth.
All transfers, exchanges or deliveries of Securities in the Custody
Account for a purpose permitted by either subsection (a), (b), (c),
(d), (e), (f) or (g) of this Section 6 will be made, except as
provided in Section 8, only upon receipt by the Bank of
Instructions from Authorized Persons which shall specify the
purpose of the transfer, exchange or delivery to be made and the
applicable subsection of this Section 6. In the case of any
transfer or delivery to be made for the purpose permitted by
subsection (h) of this Section 6, the Bank must first receive
Instructions from Authorized Persons specifying the shares held by
the Bank or its subcustodian to be so transferred or delivered and
naming the person or persons to whom transfers or delivery of such
shares shall be made. In the case of any transfer, exchange or
delivery to be made for the purpose permitted by subsection (i) of
this Section 6, the Bank must first receive a certified copy of a
resolution of the Board adequately describing such transfer,
exchange or delivery, declaring such purpose to be a proper trust
purpose, and naming the person or persons to whom delivery of such
Securities shall be made. Any transfer or delivery pursuant to
subsection (j) of this Section 6 will be made in accordance with
Section 17.
7. Custody Account Procedures. With respect to any
transaction involving Securities held in or to be acquired for the
Custody Account, the Bank in its discretion may cause the Deposit
Account to be credited on the contractual settlement date with the
proceeds of any sale or exchange of Securities from the Custody
Account and to be debited on the contractual settlement date for
the cost of Securities purchased or acquired for the Custody
Account. The Bank may reverse any such credit or debit if the
transaction with respect to which such credit or debit were made
fails to settle within a reasonable period, determined by the Bank
in its discretion, after the contractual settlement date, except
that if any Securities delivered pursuant to this Section 7 are
returned by the recipient thereof, the Bank may cause any such
credits and debits to be reversed at any time. With respect to any
transactions as to which the Bank does not determine so to credit
or debit the Deposit Account, the proceeds from the sale or
exchange of Securities will be credited and the cost of such
Securities purchased or acquired will be debited to the Deposit
Account on the date such proceeds or Securities are received by the
Bank.
<PAGE> 7
Notwithstanding the preceding paragraph, settlement and
payment for Securities received for, and delivery of Securities out
of, the Custody Account may be effected in accordance with the
customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such
Securities from such purchaser or dealer.
8. Actions of the Bank. Until the Bank receives
Instructions from Authorized Persons to the contrary, the Bank
will, or will instruct its subcustodian, to
(a) present for payment any Securities in the
Custody Account which are called, redeemed or retired or otherwise
become payable and all coupons and other income items which call
for payment upon presentation to the extent that the Bank or
subcustodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance
with the provisions of Section 2, 3 and 4 of this Agreement;
(b) in respect of Securities in the Custody Account,
execute in the name of the Fund such ownership and other
certificates as may be required to obtain payments in respect
thereof;
(c) exchange interim receipts or temporary
Securities in the Custody Account for definitive Securities;
(d) covert moneys received with respect to
Securities of foreign issue into United States dollars or any other
currency necessary to effect any transaction involving the
Securities whenever it is practicable to do so through customary
banking channels, using any methods or agency available, including,
but not limited to, the facilities of the Bank, its subsidiaries,
affiliates or subcustodians; and
(e) in the event of any loss of Securities or Cash,
use its best efforts to ascertain the circumstances relating to
such loss and promptly report the same to the Fund.
9. Instructions. As used in this Agreement, the term
"Instructions" means instructions of the Fund received by the Bank,
via telephone, telex, TWX, facsimile transmission, bank wire or
other teleprocess or electronic instruction system acceptable to
the Bank which the Bank reasonably believes in good faith to have
been given by Authorized Persons or which are transmitted with
proper testing or authentication pursuant to terms and conditions
which the Bank may specify.
Any Instructions delivered to the Bank by telephone shall
promptly thereafter be confirmed in writing by an Authorized Person
<PAGE> 8
(which confirmation may bear the facsimile signature of such
Person), but the Fund will hold the Bank harmless for its failure
to send such confirmation in writing, the failure of such
confirmation to conform to the telephone instructions received or
the Bank's failure to produce such confirmation at any subsequent
time provided that the Bank has timely advised the Fund of its
failure to send such confirmation in writing or the failure of such
confirmation to conform to the telephone instructions received.
Unless otherwise expressly provided, all Instructions shall
continue in full force and effect until cancelled or superseded.
If the Bank requires test arrangements, authentication methods or
other security devices to be used with respect to Instructions, any
Instructions given by the Fund thereafter shall be given and
processed in accordance with such terms and conditions for the use
of such arrangements, methods or devices as the Bank may put into
effect and modify from time to time. The Fund shall safeguard any
testkeys, identification codes or other security devices which the
Bank shall make available to it. The Bank may electronically
record any Instructions given by telephone, and any other telephone
discussions, with respect to the Custody Agreement.
10. Authorized Persons. As used in this Agreement, the
term "Authorized Persons" means such officers or such agents of the
Fund as have been designated by a resolution of the Board, a
certified copy of which has been provided to the Bank, to act on
behalf of the Fund in the performance of any acts which Authorized
Persons may do under this Agreement. Such persons shall continue
to be Authorized Persons until such time as the Bank receives
Instructions from Authorized Persons that any such officer or agent
is no longer an Authorized Person.
11. Nominees. Securities in the Custody Account which
are ordinarily held in registered form may be registered in the
name of the Bank's nominee or, as to any Securities in the
possession of an entity other than the Bank, in the name of such
entity's nominee. The Fund agrees to hold any such nominee
harmless from any liability as a holder of record of such
Securities. The Bank may without notice to the Fund cause any such
Securities to cease to be registered in the name of any such
nominee and to be registered in the name of the Fund. In the event
that any Securities registered in the name of the Bank's nominee or
held by one of its subcustodians and registered in the name of such
subcustodian's nominee are called for partial redemption by the
issuer of such Security, the Bank may allot, or cause to be
allotted, the called portion to the respective beneficial holders
of such class of security in any manner the Bank deems to be fair
and equitable.
12. Standard of Care. The Bank shall be responsible for
the performance of only such duties as are set forth herein or
contained in Instructions given to the Bank by Authorized Persons
which are not contrary to the provisions of this Agreement. The
Bank will use reasonable care with respect to the safekeeping of
Securities in the Custody Account. The Bank shall be liable to the
<PAGE> 9
Fund for any loss which shall occur as the result of the failure of
a subcustodian or an eligible foreign securities depository engaged
by such subcustodian to exercise reasonable care with respect to
the safekeeping of such Securities and other assets to the same
extent that the Bank would be liable to the Fund if the Bank were
holding such Securities and other assets in New York. In the event
of any loss to the Fund by reason of the failure of the Bank or its
subcustodian or an eligible foreign securities depository engaged
by such subcustodian to utilize reasonable care, the Bank shall be
liable to the Fund to the extent of the Fund's damages, to be
determined based on the market value of the property which is the
subject of the loss at the date of discovery of such loss and
without reference to any special conditions or circumstances. The
Bank shall be held to the exercise of reasonable care in carrying
out this Agreement but shall be indemnified by, and shall be
without liability to, the Fund for any action taken or omitted by
the Bank in good faith without negligence. The Bank shall be
entitled to rely, and may act, on advice of counsel (who may be
counsel for the Fund) on all matters and shall be without liability
for any action reasonably taken or omitted pursuant to such advice.
The Bank need not maintain any insurance for the benefit
of the Fund. However, the Bank represents and warrants that it
presently maintains a bankers' blanket bond ("Bond") which provides
standard fidelity and non-negligent loss coverage with respect to
securities which may be held by the Bank and securities which may
be held in the offices of foreign banks and foreign securities
depositories which may be utilized by the Bank pursuant to this
Agreement. The Bank agrees that if at any time the Bank for any
reason discontinues such coverage, it shall immediately notify the
Fund in writing. The Bank represents that only the named insured
on the Bond, which includes the Bank but not any of the Bank's
customers, is directly protected against loss. The Bank represents
that while it might resist a claim of one of its customers to
recover for a loss not covered by the Bond, as a practical matter,
where a claim is brought and loss is possibly covered by the Bond,
the Bank would give notice of the claim to its insurer, and the
insurer would normally determine whether to defend the claim
against the Bank or to pay the claim on behalf of the Bank.
All collections of funds or other property paid or
distributed in respect of Securities in the Custody Account shall
be made at the risk of the Fund. The Bank shall have no liability
for any loss occasioned by delay in the actual receipt of notice by
the Bank or by its subcustodian of any payment, redemption or other
transaction regarding Securities in the Custody Account in respect
of which the Bank has agreed to take action as provided in Section
8 hereof. The Bank shall not be liable for any action taken in
good faith upon Instructions or upon any certified copy of any
resolution of the Board an may rely on the genuineness of any such
documents which it may in good faith believe to be validly
executed. The Bank shall not be liable for any loss resulting
from, or caused by, the direction of the Fund to maintain custody
of any Securities or cash in a foreign country including, but not
<PAGE> 10
limited to, losses resulting from nationalization, expropriation,
currency restrictions, acts of war or terrorism, insurrection,
revolution, nuclear fusion, fission or radiation, or acts of God.
13. Compliance with Securities and Exchange Commission
Rules and Orders. To the extent that a condition of a rule,
regulation, interpretation or exemptive order promulgated by or
under the authority of the Securities and Exchange Commission
applies to the Bank or the Fund each shall be solely responsible to
assure that this Agreement and the maintenance of Securities and
cash under this Agreement complies with any such rule, regulation,
interpretation or exemptive order.
14. Corporate Action. The Bank or its subcustodian is to
forward promptly to the Fund all communications relative to the
Securities in the Custody Agreement. Such communications as call
for voting or the exercise of rights or other specific action
(including material relative to legal proceedings intended to be
transmitted to security holders) shall be transmitted to the Fund
by means which will permit the Fund to take timely action. The
Bank or its subcustodian will cause its nominee to execute and
deliver to the Fund proxies relating to Securities in the Custody
Account registered in the name of such nominee but without
indicating the manner in which such proxies are to be voted.
Proxies relating to bearer Securities will be delivered in
accordance with written instructions from Authorized Persons.
Bank hereby agrees that Bank shall create, maintain, and
retain all records relating to its activities and obligations under
this Agreement in such manner as will meet the obligations of the
Fund under the Investment Company Act, particularly Section 31
thereof and Rules 31a-1 and 31a-2 thereunder, and applicable
Federal, state and foreign tax laws and other laws or
administrative rules or procedures, in each case as currently in
effect, which may be applicable to the Fund. All records so
maintained in connection with the performance of its duties under
this Agreement shall remain the property of the Fund and, in the
event of termination of the Agreement, shall be delivered in
accordance with the provisions of Section 17 hereunder.
15. Fees and Expenses. The Fund agrees to pay to the
Bank from time to time such compensation for its services pursuant
to this Agreement as may be mutually agreed upon in writing from
time to time including reimbursement of the Bank's reasonable
out-of-pocket or incidental expenses, including legal fees. The
Fund hereby agrees to hold the Bank harmless from any liability or
loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed, or assessed
with respect to the Custody Account or any Securities in the
Custody Account and also agrees to hold the Bank, its
subcustodians, and their respective nominees harmless from any
liability as a record holder of Securities in the Custody Account.
The Bank is authorized to charge any account of the Fund for such
items and the Bank shall have a lien on Securities in the Custody
<PAGE> 11
Account and on cash in the Deposit Account for any amount owing to
the Bank from time to time under this Agreement.
16. Effectiveness. This Agreement shall be effective on
the date first noted above; provide, however, that the Board has
provided the Bank a certified copy of a resolution that (i)
approves each of the subcustodians listed in Appendix A hereto and
the terms of the custody agreement between the Bank and each such
subcustodian attached as Exhibits 1 through 15 hereof, and (ii)
states that the Board has determined that the use of each such
subcustody agreement are consistent with the best interests of the
Fund and its shareholders.
17. Termination. This Agreement may be terminated by the
Fund or the Bank by 60 days written notice to the other, sent by
registered mail, provided that any termination by the Fund shall be
authorized by a resolution of its Board, a certified copy of which
shall accompany such notice of termination, and provided further,
that such resolution shall specify the names of the persons to whom
the Bank shall deliver the Securities in the Custody Account and to
whom the cash in the Deposit Account shall be paid. If notice of
termination is given by the Bank, the Fund shall, within 60 days
following the giving of such notice, deliver to the Bank a
certified copy of a resolution of its Board specifying the names of
the persons to whom the Bank shall deliver the Securities in the
Custody Account and to whom the cash in the Deposit Account shall
be paid. In either case the Bank will deliver such Securities and
cash to the persons so specified, after deducting therefrom any
amounts which the Bank determines to be owed to it under Section
15. If within 60 days following the giving of a notice of
termination by the Bank, the Bank does not receive from the Fund a
certified copy of a resolution of the Board specifying the names of
the persons to whom the Bank shall deliver the Securities in the
Custody Account and to whom the cash in the Deposit Account shall
be paid, the Bank, at its election, may deliver such Securities and
pay such cash to a bank or trust company doing business in the
State of New York to be held and disposed of pursuant to the
provisions of this Agreement, or to Authorized Persons, or may
continue to hold such Securities and cash until a certified copy of
one or more resolutions as aforesaid is delivered to the Bank.
Concurrently with the delivery of such Securities, the Bank shall
deliver to the Company, or such other person as the Company shall
instruct, the records referred to in Section 14 hereof which are in
the possession or control of the Bank. The obligations of the
parties hereto regarding the use of reasonable care, indemnities
and payment of fees and expenses shall survive the termination of
this Agreement.
18. Notices. Any notice or other communication from the
Fund to the Bank is to be sent to the office of the Bank at 1211
Avenue of the Americas (33rd floor), New York, New York, 10036,
Attention Global Custody Division, or such other address as may
hereafter be given to the Company in accordance with the notice
provisions hereunder, and any notice from the Bank to the Fund is
<PAGE> 12
to be mailed postage prepaid, addressed to the Fund at the address
appearing below, or as it may hereafter be changed on the Bank's
records in accordance with notice hereunder from the Fund.
19. Governing Law and Successors and Assigns. This
Agreement shall be governed by the law of the State of New York and
shall not be assignable by either party, but shall bind the
successors and assigns of the Fund and the Bank.
20. Headings. The headings of the paragraphs hereof are
included for convenience of reference only and do not form a part
of this Agreement.
21. Additional Portfolios. If Fund shall issue shares of
more than one Portfolio during the term hereof, Bank agrees that
all securities and other assets of the fund shall be segregated by
Portfolio and all books and records, account values or actions
shall be maintained, held, made or taken, as the case may be,
separately for each Portfolio.
22. Disclaimer. All parties hereto are expressly put on
notice of the Fund's Agreement and Declaration of Trust dated
October 24, 1985 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 Bank for recovery of
that portion of the compensation (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 Bank 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.
KEMPER INTERNATIONAL FUND
By: /s/ Charles M. Kierscht
-------------------------
Title(s) President
Address for record 120 So LaSalle St
------------------------
Chicago, Illinois 60603
------------------------
<PAGE> 13
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Catherine A. Lee
--------------------------
Title Vice President
<PAGE> 1
EXHIBIT 99.B9(a)
AGENCY AGREEMENT
AGREEMENT dated the 1st day of January, 1989, by and between KEMPER
INTERNATIONAL FUND, a Massachusetts business trust having its
principal place of business at 120 South LaSalle Street, Chicago,
IL 60603 ("Fund"), and INVESTORS FIDUCIARY TRUST COMPANY, a state
chartered trust company organized and existing under the laws of
the State of Missouri having its principal place of business at 127
West 10th Street, Kansas City, Missouri 64105 ("IFTC").
WHEREAS, Fund wants to appoint IFTC as Transfer Agent and
Dividend Disbursing Agent, and IFTC wants to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of IFTC as Transfer
Agent and Dividend Disbursing Agent for Fund, there will be filed
with IFTC the following documents:
A. A certified copy of the resolutions of the Board of
Trustees of Fund appointing IFTC as Transfer Agent and Dividend
Disbursing Agent, approving the form of this Agreement, and
designating certain persons to give written instructions and
requests on behalf of Fund.
B. A certified copy of the Agreement and Declaration of
Trust of Fund and any amendments thereto.
C. A certified copy of the Bylaws of Fund.
D. Copies of Registration Statements filed with the
Securities and Exchange Commission.
E. Specimens of all forms of outstanding share
certificates as approved by the Board of Trustees of Fund, with a
certificate of the Secretary of Fund as to such approval.
F. Specimens of the signatures of the officers of the
Fund authorized to sign share certificates and individuals
authorized to sign written instructions and requests on behalf of
the Fund.
G. An opinion of counsel for Fund:
(1) With respect to Fund's organization and
existence under the laws of The Commonwealth of Massachusetts.
<PAGE> 2
(2) With respect to the status of all shares of Fund
covered by this appointment under the Securities Act of 1933, and
any other applicable federal or state statute.
(3) To the effect that all issued shares are, and
all unissued shares will be when issued, validly issued, fully paid
and non-assessable.
2. Certain Representations and Warranties of IFTC. IFTC
represents and warrants to Fund that:
A. It is a trust company duly organized and existing and
in good standing under the laws of the State of Missouri.
B. It is duly qualified to carry on its business in the
State of Missouri.
C. It is empowered under applicable laws and by its
Articles of Incorporation and Bylaws to enter into and perform the
services contemplated in this Agreement.
D. All requisite corporate proceedings have been taken
to authorize it to enter into and perform this Agreement.
E. It has and will continue to have and maintain the
necessary facilities, equipment and personnel to perform its duties
and obligations under this Agreement.
F. It is, and will continue to be, registered as a
transfer agent under the Securities Exchange Act of 1934.
3. Certain Representations and Warranties of Fund. Fund
represents and warrants to IFTC that:
A. It is a business trust duly organized and existing
and in good standing under the laws of The Commonwealth of
Massachusetts.
B. It is an investment company registered under the
Investment Company Act of 1940.
C. A registration statement under the Securities Act of
1933 has been filed and will be effective with respect to all
shares of Fund being offered for sale at any time and from time to
time.
D. All requisite steps have been or will be taken to
register Fund's shares for sale in all applicable states, including
the District of Columbia.
E. Fund and its Trustees are empowered under applicable
laws and by the Fund's Agreement and Declaration of Trust and
Bylaws to enter into and perform this Agreement.
<PAGE> 3
4. Scope of Appointment.
A. Subject to the conditions set forth in this
Agreement, Fund hereby employs and appoints IFTC as Transfer Agent
and Dividend Disbursing Agent effective the date hereof.
B. IFTC hereby accepts such employment and appointment
and agrees that it will act as Fund's Transfer Agent and Dividend
Disbursing Agent. IFTC agrees that it will also act as agent in
connection with Fund's periodic withdrawal payment accounts and
other open-account or similar plans for shareholders, if any.
C. IFTC agrees to provide the necessary facilities,
equipment and personnel to perform its duties and obligations
hereunder in accordance with industry practice.
D. Fund agrees to use all reasonable efforts to deliver
to IFTC in Kansas City, Missouri, as soon as they are available,
all its shareholder account records.
E. Subject to the provisions of Sections 20 and 21
hereof, IFTC agrees that it will perform all the usual and ordinary
services of Transfer Agent and Dividend Disbursing Agent and as
agent for the various shareholder accounts, including, without
limitation, the following: issuing, transferring and cancelling
share certificates, maintaining all shareholder accounts, preparing
shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing shareholder reports and prospectuses,
withholding federal income taxes, preparing and mailing checks for
disbursement of income and capital gains dividends, preparing and
filing all required U.S. Treasury Department information returns
for all shareholders, preparing and mailing confirmation forms to
shareholders and dealers with respect to all purchases and
liquidations of Fund shares and other transactions in shareholder
accounts for which confirmations are required, recording
reinvestments of dividends and distributions in Fund shares,
recording redemptions of Fund shares and preparing and mailing
checks for payments upon redemption and for disbursements to
systematic withdrawal plan shareholders.
5. Compensation and Expenses.
A. In consideration for the services provided hereunder
by IFTC as Transfer Agent and Dividend Disbursing Agent, Fund will
pay to IFTC from time to time compensation as agreed upon for all
services rendered as Agent, and also, all its reasonable
out-of-pocket expenses and other disbursements incurred in
connection with the agency. Such compensation will be set forth in
a separate schedule to be agreed to by Fund and IFTC. The initial
agreement regarding compensation is attached as Exhibit A.
B. Fund agrees to promptly reimburse IFTC for all
reasonable out-of-pocket expenses or advances incurred by IFTC in
connection with the performance of services under this Agreement
<PAGE> 4
including, but not limited to, postage (and first class mail
insurance in connection with mailing share certificates),
envelopes, check forms, continuous forms, forms for reports and
statements, stationery, and other similar items, telephone and
telegraph charges incurred in answering inquiries from dealers or
shareholders, microfilm used each year to record the previous
year's transactions in shareholder accounts and computer tapes used
for permanent storage of records and cost of insertion of materials
in mailing envelopes by outside firms. IFTC may, at its option,
arrange to have various service providers submit invoices directly
to the Fund for payment of out-of-pocket expenses reimbursable
hereunder.
6. Efficient Operation of IFTC System.
A. In connection with the performance of its services
under this Agreement, IFTC is responsible for the accurate and
efficient functioning of its system at all times, including:
(1) The accuracy of the entries in IFTC's records
reflecting purchase and redemption orders and other instructions
received by IFTC from dealers, shareholders, Fund or its principal
underwriter.
(2) The timely availability and the accuracy of
shareholder lists, shareholder account verifications, confirmations
and other shareholder account information to be produced from
IFTC's records or data.
(3) The accurate and timely issuance of dividend and
distribution checks in accordance with instructions received from
Fund.
(4) The accuracy of redemption transactions and
payments in accordance with redemption instructions received from
dealers, shareholders or Fund or other authorized persons.
(5) The deposit daily in Fund's appropriate special
bank account of all checks and payments received from dealers or
shareholders for investment in shares.
(6) The requiring of proper forms of instructions,
signatures and signature guarantees and any necessary documents
supporting the rightfulness of transfers, redemptions and other
shareholder account transactions, all in conformance with IFTC's
present procedures with such changes as may be deemed reasonably
appropriate by IFTC or as may be reasonably approved by or on
behalf of Fund.
(7) The maintenance of a current duplicate set of
Fund's essential or required records, as agreed upon from time to
time by Fund and IFTC, at a secure distant location, in form
available and usable forthwith in the event of any breakdown or
disaster disrupting its main operation.
<PAGE> 5
7. Indemnification.
A. Fund shall indemnify and hold IFTC harmless from and
against any and all claims, actions, suits, losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to any action or omission by IFTC pursuant
to this Agreement or in connection with the agency relationship
created by this Agreement, provided that IFTC has acted in good
faith, without negligence and without willful misconduct.
B. IFTC shall indemnify and hold Fund harmless from and
against any and all claims, actions, suits, losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to any action or omission by IFTC pursuant
to this Agreement or in connection with the agency relationship
created by this Agreement, provided that IFTC has not acted in good
faith, without negligence and without willful misconduct.
C. In order that the indemnification provisions
contained in this Section 7 shall apply, upon the assertion of a
claim for which either party (the "Indemnifying Party") may be
required to provide indemnification hereunder, the party seeking
indemnification (the "Indemnitee") shall promptly notify the
Indemnifying Party of such assertion, and shall keep such party
advised with respect to all developments concerning such claim.
The Indemnifying Party shall be entitled to assume control of the
defense and the negotiations, if any, regarding settlement of the
claim. If the Indemnifying Party assumes control, the Indemnitee
shall have the option to participate in the defense and
negotiations of such claim at its own expense. The Indemnitee
shall in no event confess, admit to, compromise, or settle any
claim for which the Indemnifying Party may be required to indemnify
it except with the prior written consent of the Indemnifying Party,
which shall not be unreasonably withheld.
8. Certain Covenants of IFTC and Fund.
A. All requisite steps will be taken by Fund from time
to time when and as necessary to register the Fund's shares for
sale in all states in which Fund's shares shall at the time be
offered for sale and require registration. If at any time Fund
receives notice of any stop order or other proceeding in any such
state affecting such registration or the sale of Fund's shares, or
of any stop order or other proceeding under the Federal securities
laws affecting the sale of Fund's shares, Fund will give prompt
notice thereof to IFTC.
B. IFTC hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to Fund for
safekeeping of share certificates, check forms, and facsimile
signature imprinting devices, if any; and for the preparation or
use, and for keeping account of, such certificates, forms and
devices. Further, IFTC agrees to carry insurance, as specified in
Exhibit B hereto, with insurers reasonably acceptable to Fund and
<PAGE> 6
in minimum amounts that are reasonably acceptable to Fund, which
will not be changed without the consent of Fund, which consent
shall not be unreasonably withheld, and which will be expanded in
coverage or increased in amounts from time to time if and when
reasonably requested by Fund. If IFTC determines that it is unable
to obtain any such insurance upon commercially reasonable terms, it
shall promptly so advise Fund in writing. In such event, Fund
shall have the right to terminate this Agreement upon 30 days
notice.
C. To the extent required by Section 31 of the
Investment Company Act of 1940 and Rules thereunder, IFTC agrees
that all records maintained by IFTC relating to the services to be
performed by IFTC under this Agreement are the property of Fund and
will be preserved and will be surrendered promptly to Fund on
request.
D. IFTC agrees to furnish Fund semi-annual reports of
its financial condition, consisting of a balance sheet, earnings
statement and any other reasonably available financial information
reasonably requested by Fund. The annual financial statements will
be certified by IFTC's certified public accountants.
E. IFTC represents and agrees that it will use all
reasonable efforts to keep current on the trends of the investment
company industry relating to shareholder services and will use all
reasonable efforts to continue to modernize and improve its system
without additional cost to Fund.
F. IFTC will permit Fund and its authorized
representatives to make periodic inspections of its operations at
reasonable times during business hours.
G. If IFTC is prevented from complying, either totally
or in part, with any of the terms or provisions of this Agreement,
by reason of fire, flood, storm, strike, lockout or other labor
trouble, riot, war, rebellion, accidents, acts of God, equipment,
utility or transmission failure or damage, and/or any other cause
or casualty beyond the reasonable control of IFTC, whether similar
to the foregoing matters or not, then upon written notice to Fund,
the requirements of this Agreement that are affected by such
disability, to the extent so affected, shall be suspended during
the period of such disability; provided, however, that IFTC shall
make reasonable effort to remove such disability as soon as
possible. During such period, Fund may seek alternate sources of
service without liability hereunder; and IFTC will use all
reasonable efforts to assist Fund to obtain alternate sources of
service. IFTC shall have no liability to Fund for nonperformance
because of the reasons set forth in this Section 8.G; but if a
disability that, in Fund's reasonable belief, materially affects
IFTC's ability to perform its obligations under this Agreement
continues for a period of 30 days, then Fund shall have the right
to terminate this Agreement upon 10 days written notice to IFTC.
<PAGE> 7
9. Adjustment.
In case of any recapitalization, readjustment or other
change in the structure of Fund requiring a change in the form of
share certificates, IFTC will issue or register certificates in the
new form in exchange for, or in transfer of, the outstanding
certificates in the old form, upon receiving the following:
A. Written instructions from an officer of Fund.
B. Certified copy of any amendment to the Agreement and
Declaration of Trust or other document effecting the change.
C. Certified copy of any order or consent of each
governmental or regulatory authority required by law for the
issuance of the shares in the new form, and an opinion of counsel
that no order or consent of any other government or regulatory
authority is required.
D. Specimens of the new certificates in the form
approved by the Board of Trustees of Fund, with a certificate of
the Secretary of Fund as to such approval.
E. Opinion of counsel for Fund:
(1) With respect to the status of the shares of Fund
in the new form under the Securities Act of 1933, and any other
applicable federal or state laws.
(2) To the effect that the issued shares in the new
form are, and all unissued shares will be when issued, validly
issued, fully paid and non-assessable.
10. Share Certificates.
Fund will furnish IFTC with a sufficient supply of blank
share certificates and from time to time will renew such supply
upon the request of IFTC. Such certificates will be signed manually
or by facsimile signatures of the officers of Fund authorized by
law and Fund's Bylaws to sign share certificates and, if required,
will bear the trust seal or facsimile thereof.
11. Death, Resignation or Removal of Signing Officer.
Fund will file promptly with IFTC written notice of any
change in the officers authorized to sign share certificates,
written instructions or requests, together with two signature cards
bearing the specimen signature of each newly authorized officer,
all as certified by an appropriate officer of the Fund. In case
any officer of Fund who will have signed manually or whose
facsimile signature will have been affixed to blank share
certificates will die, resign, or be removed prior to the issuance
of such certificates, IFTC may issue or register such share
certificates as the share certificates of Fund notwithstanding such
<PAGE> 8
death, resignation, or removal, until specifically directed to the
contrary by Fund in writing. In the absence of such direction,
Fund will file promptly with IFTC such approval, adoption, or
ratification as may be required by law.
12. Future Amendments of Agreement and Declaration of
Trust and Bylaws.
Fund will promptly file with IFTC copies of all material
amendments to its Agreement and Declaration of Trust and Bylaws and
Registration Statement made after the date of this Agreement.
13. Instructions, Opinion of Counsel and Signatures.
At any time IFTC may apply to any officer of Fund for
instructions, and may consult with legal counsel for Fund at the
expense of Fund, or with its own legal counsel at its own expense,
with respect to any matter arising in connection with the agency;
and it will not be liable for any action taken or omitted by it in
good faith in reliance upon such instructions or upon the opinion
of such counsel. IFTC is authorized to act on the orders,
directions or instructions of such persons as the Board of Trustees
of Fund shall from time to time designate by resolution. IFTC will
be protected in acting upon any paper or document, including any
orders, directions or instructions, reasonably believed by it to be
genuine and to have been signed by the proper person or persons;
and IFTC will not be held to have notice of any change of authority
of any person so authorized by Fund until receipt of written notice
thereof from Fund. IFTC will also be protected in recognizing
share certificates that it reasonably believes to bear the proper
manual or facsimile signatures of the officers of Fund, and the
proper countersignature of any former Transfer Agent or Registrar,
or of a Co-Transfer Agent or Co-Registrar.
14. Papers Subject to Approval of Counsel.
The acceptance by IFTC of its appointment as Transfer
Agent and Dividend Disbursing Agent, and all documents filed ln
connection with such appointment and thereafter in connection with
the agencies, will be subject to the approval of legal counsel for
IFTC, which approval will not be unreasonablY withheld.
15. Certification of Documents.
The required copy of the Agreement and Declaration of
Trust of Fund and copies of all amendments thereto will be
certified by the appropriate official of The Commonwealth of
Massachusetts; and if such Agreement and Declaration of Trust and
amendments are required by law to be also filed with a county, city
or other officer or official body, a certificate of such filing
will appear on the certified copy submitted to IFTC. A copy of the
order or consent of each governmental or regulatory authority
required by law for the issuance of Fund shares will be certified
<PAGE> 9
by the Secretary or Clerk of such governmental or regulatory
authority, under proper seal of such authority. The copy of the
Bylaws and copies of all amendments thereto and copies of
resolutions of the Board of Trustees of Fund will be certified by
the Secretary or an Assistant Secretary of Fund.
16. Records.
IFTC will maintain customary records in connection with
its agency, and particularly will maintain those records required
to be maintained pursuant to sub-paragraph (2)(iv) of paragraph (b)
of Rule 31a-1 under the Investment Company Act of 1940, if any.
17. Disposition of Books, Records and Cancelled Certificates.
IFTC will send periodically to Fund, or to where
designated by the Secretary or an Assistant Secretary of Fund, all
books, documents, and all records no longer deemed needed for
current purposes and share certificates which have been cancelled
in transfer or ln exchange, upon the understanding that such books,
documents, records, and share certificates will not be destroyed by
Fund without the consent of IFTC (which consent will not be
unreasonably withheld), but will be safely stored for possible
future reference.
18. Provisions Relating to IFTC as Transfer Agent.
A. IFTC will make original issues of share certificates
upon written request of an officer of Fund and upon being furnished
with a certified copy of a resolution of the Board of Trustees
authorizing such original issue, an opinion of counsel as outlined
in Section 1.G or 9.E of this Agreement, the certificates required
by Section 10 of this Agreement and any other documents required by
Section 1 or 9 of this Agreement.
B. Before making any original issue of certificates,
Fund will furnish IFTC with sufficient funds to pay any taxes
required on the original issue of the shares. Fund will furnish
IFTC such evidence as may be required by IFTC to show the actual
value of the shares. If no taxes are payable, IFTC will upon -
request be furnished with an opinion of outside counsel to that
effect.
C. Shares will be transferred and new certificates
issued in transfer, or shares accepted for redemption and funds
remitted therefor, upon surrender of the old certificates in form
deemed by IFTC properly endorsed for transfer or redemption
accompanied by such documents as IFTC may deem necessary to
evidence the authority of the person making the transfer or
redemption, and bearing satisfactory evidence of the payment of any
applicable share transfer taxes. IFTC reserves the right to refuse
to transfer or redeem shares until it is satisfied that the
endorsement or signature on the certificate or any other document
is valid and genuine, and for that purpose it may require a
<PAGE> 10
guarantee of signature by such persons as may from time to time be
specified ln the prospectus related to such shares or otherwise
authorized by Fund. IFTC also reserves the right to refuse to
transfer or redeem shares until it is satisfied that the requested
transfer or redemption is legally authorized, and lt will incur no
liability for the refusal in good faith to make transfers or
redemptions which, in its judgment, are improper, unauthorized, or
otherwise not rightful. IFTC may, in effecting transfers or
redemptions, rely upon Simplification Acts or other statutes which
protect it and Fund ln not requiring complete fiduciary
documentation.
D. When mail is used for delivery of share certificates,
IFTC will forward share certificates in "nonnegotiable" form as
provided by Fund by first class mail, all such mail deliveries to
be covered while in transit to the addressee by insurance arranged
for by IFTC.
E. IFTC will issue and mall subscription warrants and
certificates provided by Fund and representing share dividends,
exchanges or split-ups, or act as Conversion Agent upon receiving
written instructions from any officer of Fund and such other
documents as IFTC deems necessary.
F. IFTC will issue, transfer, and split-up certificates
upon receiving written instructions from an officer of Fund and
such other documents as IFTC may deem necessary.
G. IFTC may issue new certificates in place of
certificates represented to have been lost, destroyed, stolen or
otherwise wrongfully taken, upon receiving indemnity satisfactory
to IFTC, and may issue new certificates in exchange for, and upon
surrender of, mutilated certificates. Any such issuance shall be
in accordance with the Provisions of law governing such matter and
any procedures adopted by the Board of Trustees of the Fund of
which IFTC has notice.
H. IFTC will supply a shareholder's list to Fund
properly certified by an officer of IFTC for any shareholder
meeting upon receiving a request from an officer of Fund. It will
also supply lists at such other times as may be reasonably
requested by an officer of Fund.
I. Upon receipt of written instructions of an officer of
Fund, IFTC will address and mail notices to shareholders.
J. In case of any request or demand for the inspection
of the share books of Fund or any other books of Fund in the
possession of IFTC, IFTC will endeavor to notify Fund and to secure
instructions as to permitting or refusing such inspection. IFTC
reserves the right, however, to exhibit the share books or other
books to any person ln case lt is advised by its counsel that it
may be held responsible for the failure to exhibit the share books
or other books to such person.
<PAGE> 11
19. Provisions Relating to Dividend Disbursing Agency.
A. IFTC will, at the expense of Fund, provide a special
form of check containing the imprint of any device or other matter
desired by Fund. Said checks must, however, be of a form and size
convenient for use by IFTC.
B. If Fund wants to include additional printed matter,
financial statements, etc., with the dividend checks, the same will
be furnished to IFTC within a reasonable time prior to the date of
mailing of the dividend checks, at the expense of Fund.
C. If Fund wants its distributions mailed in any special
form of envelopes, sufficient supply of the same will be furnished
to IFTC but the size and form of said envelopes will be subject to
the approval of IFTC. If stamped envelopes are used, they must be
furnished by Fund; or, if postage stamps are to be affixed to the
envelopes, the stamps or the cash necessary for such stamps must be
furnished by Fund.
D. IFTC will maintain one or more deposit accounts as
Agent for Fund, into which the funds for payment of dividends,
distributions, distributions, redemptions or other disbursements
provided for hereunder will be deposited, and against which checks
will be drawn.
20. Termination of Agreement.
A. This Agreement may be terminated by either party upon
sixty (60) days prior written notice to the other party.
B. Fund, in addition to any other rights and remedies,
shall have the right to terminate this Agreement forthwith upon the
occurrence at any time of any of the following events:
(1) Any interruption or cessation of operations by
IFTC or its assigns which materially interferes with the business
operation of Fund.
(2) The bankruptcy of IFTC or its assigns or the
appointment of a receiver for IFTC or its assigns.
(3) Any merger, consolidation or sale of
substantially all the assets of IFTC or its assigns.
(4) The acquisition of a controlling interest in
IFTC or its assigns, by any broker, dealer, investment adviser or
investment company except as may presently exist.
(5) Failure by IFTC or its assigns to perform its
duties in accordance with this Agreement, which failure materially
adversely affects the business operations of Fund and which failure
continues for thirty (30) days after written notice from Fund.
<PAGE> 12
(6) The registration of IFTC or its assigns as a
transfer agent under the Securities Exchange Act of 1934 is
revoked, terminated or suspended for any reason.
C. In the event of termination, Fund will promptly pay
IFTC all amounts due to IFTC hereunder. Upon termination of this
Agreement, IFTC shall deliver all shareholder and account records
pertaining to Fund either to Fund or as directed in writing by
Fund.
21. Assignment.
A. Except for the assignment of responsibilities
pursuant to the Services Agreement ("Services Agreement") between
IFTC and Kemper Service Company ("KSVC"), which Fund has approved,
neither this Agreement nor any rights or obligations hereunder may
be assigned by IFTC without the written consent of Fund; provided,
however, no assignment will relieve IFTC of any of its obligations
hereunder.
B. This Agreement including, without limitation, the
provisions of Section 7 will inure to the benefit of and be binding
upon the parties and their respective successors and assigns
including KSVC pursuant to the aforesaid Services Agreement.
C. KSVC is authorized by Fund to use the system services
of DST Systems, Inc.
22. Confidentiality.
A. Except as provided in the last sentence of Section
18.J hereof, or as otherwise required by law, IFTC will keep
confidential all records of and information in its possession
relating to Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or
with the consent of Fund.
B. Except as otherwise required by law, Fund will keep
confidential all financial statements and other financial records
(other than statements and records relating solely to Fund's
business dealings with IFTC) and all manuals, systems and other
technical information and data, not publicly disclosed, relating to
IFTC's operations and programs furnished to it by IFTC pursuant to
this Agreement and will not disclose the same to any person except
at the request or with the consent of IFTC. Notwithstanding
anything to the contrary in this Section 22.B, if an attempt is
made pursuant to subpoena or other legal process to require Fund to
disclose or produce any of the aforementioned manuals, systems or
other technical information and data, Fund shall give IFTC prompt
notice thereof prior to disclosure or production so that IFTC may,
at its expense, resist such attempt.
23. Survival of Representations and Warranties.
<PAGE> 13
All representations and warranties by either party herein
contained will survive the execution and delivery of this
Agreement.
24. Miscellaneous.
A. This Agreement is executed and delivered in the State
of Illinois and shall be governed by the laws of said state (except
as to Section 24.G hereof which shall be governed by the laws of
The Commonwealth of Massachusetts).
B. No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly
authorized and executed by both parties hereto.
C. The captions in this Agreement are included for
convenience of reference only, and in no way define or limit any of
the provisions hereof or otherwise affect their construction or
effect.
D. This Agreement shall become effective as of the date
hereof.
E. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
F. If any part, term or provision of this Agreement is
held by the courts to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if
the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
G. All parties hereto are expressly put on notice of
Fund's Agreement and Declaration of Trust which is 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 Fund by its
representatives as such representatives and not individually, and
the obligations of 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 Fund. With respect to
any claim by IFTC for recovery of that portion of the compensation
and expenses (or any other liability of Fund arising hereunder)
allocated to a particular Portfolio, whether in accordance with the
express terms hereof or otherwise, IFTC 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.
H. This Agreement, together with the Fee Schedule, is
the entire contract between the parties relating to the subject
<PAGE> 14
matter hereof and supersedes all prior agreements between the
parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officer as of the day
and year first set forth above.
KEMPER INTERNATIONAL FUND
By /s/ Charles M. Kierscht
------------------------------
Title: President
ATTEST:
/s/ Robert J. Engling
- ------------------------------
Title: Secretary
INVESTORS FIDUCIARY TRUST COMPANY
By /s/ Larry W. Rinne
------------------------------
Title: President
ATTEST:
/s/ Cheryl J. Naegler
- ------------------------------
Title: Assistant Secretary
<PAGE> 15
EXHIBIT A
FEE SCHEDULE
<TABLE>
<CAPTION>
Transfer Agency Function Fee Payable by Fund
- ------------------------ -------------------
<S> <C>
1. Maintenance of open shareholder $6.00 per year per account
account.
2. Maintenance of closed shareholder $6.00 per year per account
account.
3. Establishment of new shareholder $4.00 per new account
account.
4. Payment of dividend. $.25 per dividend payment
per account
5. Dividend reinvestment from Kemper $.50 per transaction
Unit Investment Trusts.
6. Process purchase or redemption of $1.00 per transaction
shares transaction.
7. All other shareholder account $1.00 per transaction
transactions.
</TABLE>
The out-of-pocket expenses of IFTC will be reimbursed by Fund in
accordance with the provisions of paragraph 5 of the Agency
Agreement. All fees will be subject to offset by earnings
allowances under the Custody Agreement between Fund and IFTC.
<PAGE> 16
EXHIBIT B
IFTC INSURANCE COVERAGE
DESCRIPTION OF POLICY:
Brokers Blanket Bond, Standard Form 14
Covering losses caused by dishonesty of employees,
physical loss of securities on or outside of premises while in
possession of authorized person, loss caused by forgery or
alteration of checks or similar instruments.
Errors and Omissions Insurance
Covering replacement of destroyed records and computer
errors and omissions.
Special Forgery Bond
Covering losses through forgery or alteration of checks
or drafts of customers processed by insured but drawn on or against
them.
Mail Insurance (applies to all full service operations)
Provides indemnity for the following types of securities
lost in the mails:
Non-negotiable securities mailed to domestic
locations via registered mail.
Non-negotiable securities mailed to domestic
locations via first-class or certified mail.
Non-negotiable securities mailed to foreign
locations via registered mail.
Negotiable securities mailed to all locations via
registered mail.
<PAGE> 1
EXHIBIT 99.B9(b)
Supplement to Agency Agreement
Supplement to Agency Agreement ("Supplement") made as of May
31, 1994 by and between the registered investment company executing
this document (the "Fund") and Investors Fiduciary Trust Company
("Agent").
WHEREAS, the Fund and Agent are parties to an Agency Agreement
("Agency Agreement") dated January 1, 1989, as supplemented from
time to time;
WHEREAS, Section 5.A. of the Agency Agreement provides that
the fees payable by the Fund to Agent thereunder shall be as set
forth in a separate schedule to be agreed to by the Fund and Agent;
and
WHEREAS, the parties desire to reflect in this Supplement the
revised fee schedule for the Agency Agreement as in effect as of
the date hereof;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein provided, the parties agree as follows:
1. The revised fee schedule for services provided by Agent to
the Fund under the Agency Agreement as in effect as of the date
hereof is set forth in Exhibit A attached hereto.
2. This Supplement shall become a part of the Agency
Agreement and subject to its terms and shall supersede all previous
fee schedules under such agreement as of the date hereof.
IN WITNESS WHEREOF, the Fund and Agent have duly executed this
Supplement as of the day and year first set forth above.
KEMPER INTERNATIONAL FUND
By: /s/ John E. Peters
-------------------------------
Title: Vice President
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Joseph F. Smith
----------------------------------
Title: EVP
<PAGE> 2
EXHIBIT A
FEE SCHEDULE (Multiple Classes of Shares)
<TABLE>
<CAPTION>
Transfer Agency Function Fee Payable by Fund
------------------------ -------------------
Class A, C and I Class B
---------------- -------
<S> <C> <C> <C>
1. Annual open shareholder account
fee (per year per account).
a. Non-daily dividend series. $6.00 $6.00
b. Daily dividend series. $8.00 $8.00
2. Annual closed shareholder account
fee (per year per account). $6.00 $6.00
3. Contingent deferred sales charge
account fee (per year per open Not
account). Applicable $2.25
4. Establishment of new shareholder
account (per new account). $4.00 $4.00
5. Payment of dividend (per dividend
per account). $.40 $.40
6. Automated transaction (per
transaction).** $.50 $.50
7. Non-monetary transactions fee
(per year per open account). $2.00 $2.00
8. All other shareholder inquiry,
correspondence and research
transactions (per transaction). $1.25 $1.25
9. Disaster recovery fee (per year
per open and closed account). $.40 $.40
</TABLE>
The out-of-pocket expenses of IFTC will be reimbursed by Fund in
accordance with the provisions of Section 5 of the Agency
Agreement. All fees will be subject to offset by earnings
allowances under the Custody Agreement between Fund and IFTC.
<PAGE> 3
______________________
* The new shareholder account fee is not applicable to Class A
Share accounts established in connection with a conversion from
Class B Shares.
** Automated transaction includes, without limitation, money
market series purchases and redemptions, ACH purchases, systematic
exchanges and conversions from Class B Shares to Class A Shares.
<PAGE> 1
EXHIBIT 99.B9(c)
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT dated this 1st day of August, 1990, by and between KEMPER
INTERNATIONAL FUND, a Massachusetts business trust (the "Fund"),
and KEMPER FINANCIAL SERVICES, INC., a Delaware corporation
("KFS").
In consideration of the mutual covenants hereinafter contained, it
is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KFS to provide information and
administrative services for the benefit of the Fund and its
shareholders. In this regard, KFS shall appoint various
broker-dealer firms and other financial services firms ("Firms") to
provide related services and facilities for their clients who are
shareholders of the Fund ("clients"). The Firms shall provide such
office space and equipment, telephone facilities and personnel as
is necessary or beneficial for providing information and services
to shareholders of the Fund. Such services and assistance may
include, but are not limited to, establishing and maintaining
shareholder accounts and records, processing purchase and
redemption transactions, answering routine client inquiries
regarding the Fund and its special features, assistance to clients
in changing dividend and investment options, account designations
and addresses, and such other services as the Fund or KFS may
reasonably request. KFS may also provide some of the above
services for the Fund directly.
KFS accepts such appointment and agrees during such period to
render such services and to assume the obligations herein set forth
for the compensation herein provided. KFS shall for all purposes
herein provided be deemed to be an independent contractor and,
unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund. KFS, by separate agreement with
the Fund, may also serve the Fund in other capacities. In carrying
out its duties and responsibilities hereunder, KFS will appoint
various Firms to provide administrative and other services
described herein directly to or for the benefit of shareholders of
the Fund who may be clients of such Firms. Such Firms shall at all
times be deemed to be independent contractors retained by KFS and
not the Fund. KFS and not the Fund will be responsible for the
payment of compensation to such Firms for such services.
2. For the services and facilities described in Section 1, the
Fund will pay to KFS at the end of each calendar month an
administrative service fee computed at an annual rate of up to 0.25
of 1% of the average daily net assets of the Fund. The current fee
schedule is set forth as Appendix I hereto. 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 such month and year,
respectively. The services of KFS to the Fund under this Agreement
<PAGE> 2
are not to be deemed exclusive, and KFS shall be free to render
similar services or other services to others.
The net asset value for each share of the Fund shall be calculated
in accordance with the provisions of the Fund's current prospectus.
On each day when net asset value is not calculated, the net asset
value of a share of the Fund 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.
3. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by
KFS under this Agreement.
4. This Agreement may be terminated at any time without the
payment of any penalty by the Fund or by KFS on sixty (60) days
written notice to the other party. Termination of this Agreement
shall not affect the right of KFS to receive payments on any unpaid
balance of the compensation described in Section 2 hereof earned
prior to such termination. This Agreement may not be amended to
increase the amount to be paid to KFS for services hereunder above
.25 of 1% of the average daily net assets of the Fund without the
vote of a majority of the outstanding voting securities of the
Fund. All material amendments to this Agreement must in any event
be approved by vote of the Board of Trustees of the Fund.
5. 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.
6. 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.
7. All parties hereto are expressly put on notice of the Fund's
Agreement and Declaration of Trust and all amendments thereto, all
of which are on file with the Secretary of The Commonwealth of
Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by
and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the
Fund hereunder are not binding upon any of the trustees, officers
or shareholders of the Fund individually but are binding upon only
the assets and property of the Fund.
8. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 7 hereof which
shall be construed in accordance with the laws of The Commonwealth
of Massachusetts) the laws of the State of Illinois.
IN WITNESS WHEREOF, the Fund and KFS have caused this Agreement to
be executed as of the day and year first above written.
<PAGE> 3
KEMPER INTERNATIONAL FUND KEMPER FINANCIAL SERVICES, INC
By: /s/ Charles M. Kierscht By: /s/ John E. Peters
--------------------------- ------------------------------
Title: President Title: Executive Vice President
<PAGE> 4
APPENDIX I
KEMPER INTERNATIONAL FUND
FEE SCHEDULE FOR ADMINISTRATIVE
SERVICES AGREEMENT
Pursuant to Section 2 of the Administrative Services Agreement to
which this Appendix is attached, the Fund and KFS agree that the
initial administrative service fee will be computed at an annual
rate of .25 of 1% (the "Fee Rate"). For purposes of computing the
fee due KFS, the Fee Rate shall be applied against the amount of
assets of the Fund for which a broker-dealer or other financial
services firm is listed on the records of the Fund as "dealer of
record," which shall not include KFS.
Dated: August 1, 1990
KEMPER INTERNATIONAL FUND KEMPER FINANCIAL SERVICES, INC.
By: /s/ Charles M. Kierscht By: /s/ John E. Peters
-------------------------- -----------------------------
Title: President Title: Executive Vice President
<PAGE> 1
EXHIBIT 99.B9(d)
AMENDMENT TO ADMINISTRATIVE
SERVICES AGREEMENT
(Class A, B, C and I Shares)
Amendment to Administrative Services Agreement ("Amendment")
made as of May 31, 1994 by and between the registered investment
company executing this document (the "Fund") and Kemper Financial
Services, Inc. ("KFS").
WHEREAS, The Fund and KFS are parties to an Administrative
Services Agreement ("ASF Agreement") dated August 1, 1990, as
supplemented and amended from time to time;
WHEREAS, The Fund currently issues shares in four separate
classes for each series of the Fund, if there is more than one,
being designated as Class A Shares, Class B Shares, Class C Shares
and Class I Shares; and
WHEREAS, The parties want to reflect in this Amendment the
effect upon the fee schedule under the ASF Agreement of the
division of the shares of the Fund into separate classes;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein provided, the parties agree as follows:
1. The administrative services fee under the ASF Agreement
will be calculated separately for each class of each series of the
Fund as an expense of such class at the annual rates and in
accordance with the procedures specified in the ASF Agreement;
provided, however, that no administrative services fee shall be
payable with respect to the Class I Shares.
2. This Amendment shall become a part of the ASF Agreement.
IN WITNESS WHEREOF, the Fund and KFS have duly executed this
Amendment as of the day and year first set forth above.
KEMPER INTERNATIONAL FUND
By: /s/ John E. Peters
---------------------------
Title: Vice President
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
--------------------------------
Title: Senior Vice President
<PAGE> 1
EXHIBIT 99.B9(e)
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION ("Assignment and Assumption") made
and entered into as of February 1, 1995 by and between Kemper
Financial Services, Inc., a Delaware corporation ("Assignor"), and
Kemper Distributors, Inc., a Delaware corporation ("Assignee").
WHEREAS, Assignor serves as administrator for Kemper
International Fund, a Massachusetts business trust (the "Fund"),
pursuant to that certain Administrative Services Agreement dated
August 1, 1990 by and between Assignor and the Fund, as may have
been amended, (the "Agreement");
WHEREAS, Assignee is a wholly-owned subsidiary of Assignor;
WHEREAS, It has been proposed that the rights, duties and
responsibilities of Assignor under the Agreement be transferred to
and assumed by Assignee;
WHEREAS, The Fund has determined that such transfer of rights,
duties and responsibilities is reasonable and in the best interests
of the Fund and the Fund's shareholders; and
NOW, THEREFORE, in consideration of the covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as
follows:
1. Assignment and Assumption. Assignor assigns and
transfers to Assignee all of Assignor's rights, interests,
liabilities, duties and obligations under the Agreement ("Assigned
Rights and Obligations"). Assignee accepts the foregoing
assignment and transfer of the Assigned Rights and Obligations and
agrees to assume, pay, perform and otherwise be fully responsible
for the same.
2. Further Assurances. From time to time, at the request
of either party, the other party will execute and deliver such
further instruments of assignment, transfer and assumption and take
such further action as may be required to assign, transfer and
assume the Assigned Rights and Obligations.
3. Applicable Law. This Assignment and Assumption shall
be governed by the laws of the State of Illinois.
4. Amendments. This Assignment and Assumption may only be
amended by the written agreement of the parties.
<PAGE> 2
IN WITNESS WHEREOF, the parties have each caused this
Assignment and Assumption to be executed on its behalf by a duly
authorized officer as of the date first written above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-----------------------------
Its: Senior Vice President
KEMPER DISTRIBUTORS, INC.
By: /s/ James L. Greenawalt
----------------------------
Its: Executive Vice President
The undersigned hereby acknowledges and consents to the foregoing
Assignment and Assumption as of February 1, 1995.
KEMPER INTERNATIONAL FUND
By: /s/ John E. Peters
- -------------------------
Its: Vice President
<PAGE> 1
EXHIBIT 99.B11
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Kemper International Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Kemper International Fund as of October 31,
1994, and the related statements of operations for the year then ended and
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the fiscal periods since 1985. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of October 31, 1994, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Kemper International Fund at October 31, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended and the financial highlights for each of the
fiscal periods since 1985, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
November 28, 1994
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors and Reports to Shareholders" and to the
use of our report dated November 28, 1994 in the Registration Statement (Form
N-1A) and its incorporation by reference in the related Prospectus of Kemper
International Fund, filed with the Securities and Exchange Commission in this
Post-Effective Amendment No. 20 to the Registration Statement under the
Securities Act of 1933 (File No. 2-70639) and in this Amendment No. 21 to the
Registration Statment under the Investment Company Act of 1940 (File No.
811-3136).
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
February 22, 1995
<PAGE> 1
EXHIBIT 99.B24
POWER OF ATTORNEY
The person whose signature appears below hereby appoints
Charles F. Custer, Charles M. Kierscht and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as his attorney-in-fact to sign and file on his behalf
individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and
Exchange Commission or any other regulatory authority as may be
desirable or necessary in connection with the public offering
of shares of Kemper International Fund.
Signature Title Date
/s/ David W. Belin Trustee December 8, 1994
- ------------------------
<PAGE> 2
POWER OF ATTORNEY
The person whose signature appears below hereby appoints
Charles F. Custer, Charles M. Kierscht and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as his attorney-in-fact to sign and file on his behalf
individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and
Exchange Commission or any other regulatory authority as may be
desirable or necessary in connection with the public offering
of shares of Kemper International Fund.
Signature Title Date
/s/ Lewis A. Burnham Trustee December 8, 1994
- ------------------------
<PAGE> 3
POWER OF ATTORNEY
The person whose signature appears below hereby appoints
Charles F. Custer, Charles M. Kierscht and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as his attorney-in-fact to sign and file on his behalf
individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and
Exchange Commission or any other regulatory authority as may be
desirable or necessary in connection with the public offering
of shares of Kemper International Fund.
Signature Title Date
/s/ Donald L. Dunaway Trustee December 8, 1994
- ------------------------
<PAGE> 4
POWER OF ATTORNEY
The person whose signature appears below hereby appoints
Charles F. Custer, Charles M. Kierscht and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as his attorney-in-fact to sign and file on his behalf
individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and
Exchange Commission or any other regulatory authority as may be
desirable or necessary in connection with the public offering
of shares of Kemper International Fund.
Signature Title Date
/s/ Robert B. Hoffman Trustee December 8, 1994
- ------------------------
<PAGE> 5
POWER OF ATTORNEY
The person whose signature appears below hereby appoints
Charles F. Custer, Charles M. Kierscht and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as his attorney-in-fact to sign and file on his behalf
individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and
Exchange Commission or any other regulatory authority as may be
desirable or necessary in connection with the public offering
of shares of Kemper International Fund.
Signature Title Date
/s/ Donald R. Jones Trustee December 8, 1994
- ------------------------
<PAGE> 6
POWER OF ATTORNEY
The person whose signature appears below hereby appoints
Charles F. Custer, Charles M. Kierscht and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as his attorney-in-fact to sign and file on his behalf
individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and
Exchange Commission or any other regulatory authority as may be
desirable or necessary in connection with the public offering
of shares of Kemper International Fund.
Signature Title Date
/s/ William P. Sommers Trustee 12/20/94
- ------------------------
<PAGE> 7
POWER OF ATTORNEY
The person whose signature appears below hereby appoints
Charles F. Custer, Charles M. Kierscht and Philip J. Collora and
each of them, any of whom may act without the joinder of the
others, as his attorney-in-fact to sign and file on his behalf
individually and in the capacity stated below such registration
statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and
Exchange Commission or any other regulatory authority as may be
desirable or necessary in connection with the public offering
of shares of Kemper International Fund.
Signature Title Date
/s/ Stephen B. Timbers Trustee December 8, 1994
- ------------------------
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT TO SHAREHOLDERS OF KEMPER INTERNATIONAL FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO
INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR
ALL CLASSES.
</LEGEND>
<CIK> 0000350562
<NAME> KEMPER INTERNATIONAL FUND
<SERIES>
<NUMBER> 0
<NAME> COMBINED FOR ALL CLASSES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 387,139
<INVESTMENTS-AT-VALUE> 433,671
<RECEIVABLES> 1,909
<ASSETS-OTHER> 731
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 436,311
<PAYABLE-FOR-SECURITIES> 16,623
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,406
<TOTAL-LIABILITIES> 18,029
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 347,767
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 763
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,240
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46,512
<NET-ASSETS> 0
<DIVIDEND-INCOME> 4,806
<INTEREST-INCOME> 813
<OTHER-INCOME> 0
<EXPENSES-NET> (5,612)
<NET-INVESTMENT-INCOME> 7
<REALIZED-GAINS-CURRENT> 27,668
<APPREC-INCREASE-CURRENT> 2,606
<NET-CHANGE-FROM-OPS> 27,675
<EQUALIZATION> 641
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (8,297)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 128,384
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (2,666)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (5,612)
<AVERAGE-NET-ASSETS> 356,085
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT TO SHAREHOLDERS OF KEMPER INTERNATIONAL FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO
INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR
ALL CLASSES.
</LEGEND>
<RESTATED>
<CIK> 0000350562
<NAME> KEMPER INTERNATIONAL FUND
<SERIES>
<NUMBER> 01
<NAME> CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 34,937
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 388,972
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20,528
<NUMBER-OF-SHARES-REDEEMED> (13,841)
<SHARES-REINVESTED> 774
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.56
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .86
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.29)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.13
<EXPENSE-RATIO> .015
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT TO SHAREHOLDERS OF KEMPER INTERNATIONAL FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO
INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR
ALL CLASSES.
</LEGEND>
<RESTATED>
<CIK> 0000350562
<NAME> KEMPER INTERNATIONAL FUND
<SERIES>
<NUMBER> 02
<NAME> CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2,571
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 28,524
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,185
<NUMBER-OF-SHARES-REDEEMED> (600)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.58
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> .55
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.09
<EXPENSE-RATIO> .026
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT TO SHAREHOLDERS OF KEMPER INTERNATIONAL FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO
INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR
ALL CLASSES.
</LEGEND>
<CIK> 0000350562
<NAME> KEMPER INTERNATIONAL FUND
<SERIES>
<NUMBER> 03
<NAME> CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-END> OCT-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 71
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 786
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 76
<NUMBER-OF-SHARES-REDEEMED> (5)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 10.58
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> .55
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.09
<EXPENSE-RATIO> .025
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
[VEDDER, PRICE, KAUFMAN & KAMMHOLZ LETTERHEAD] EXHIBIT 99.485(b)Letter
February 23, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kemper International Fund
-------------------------
To The Commission:
We are counsel to the above-referenced investment company (the "Fund")
and as such have participated in the preparation and review of Post-Effective
Amendment No. 20 to the Fund's registration statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485, we hereby represent that such amendment does not contain
disclosures which would render it ineligible to become effective pursuant to
paragraph (b) thereof.
Very truly yours,
/s/ VEDDER, PRICE, KAUFMAN & KAMMHOLZ
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
COK:km
