Filed electronically with the Securities and Exchange
Commission on December 30, 1998
File No. 2-70639
File 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. 24 / X /
--
And/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 25 / X /
--
KEMPER INTERNATIONAL FUND
-------------------------
(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, Illinois 60606
--------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 537-7000
--------------
Philip J. Collora, Vice President and Secretary
Kemper International Fund
222 South Riverside Plaza
Chicago, Illinois 60606
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a) (1)
/ / 75 days after filing pursuant to paragraph (a) (2)
/ / On __________________ pursuant to paragraph (b)
/ X / On March 1, 1999 pursuant to paragraph (a) (1)
/ / On __________________ pursuant to paragraph (a) (2) of Rule 485.
If Appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>
<PAGE>
Kemper Global and International Funds
Kemper Asian Growth Fund
Kemper Europe Fund
Kemper Global Income Fund
Kemper International Fund
SUPPLEMENT TO PROSPECTUS
DATED MARCH 1, 1999
CLASS I SHARES
The above 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
categories of institutional investors: (1) tax-exempt retirement plans (Profit
Sharing, 401(k), Money Purchase Pension and Defined Benefit Plans) of Scudder
Kemper Investments, Inc. ("Scudder Kemper") and its affiliates and rollover
accounts from those plans; (2) the following investment advisory clients of
Scudder Kemper and its investment advisory affiliates that invest at least $1
million in a Fund: unaffiliated benefit plans, such as qualified retirement
plans (other than individual retirement accounts and self-directed retirement
plans); unaffiliated banks and insurance companies purchasing for their own
accounts; and endowment funds of unaffiliated non-profit organizations; (3)
investment-only accounts for large qualified plans, with a least $50 million in
total plan assets or at least 1000 participants; (4) trust and fiduciary
accounts of trust companies and bank trust departments providing fee based
advisory services that invest at least $1 million in a Fund on behalf of each
trust; (5) policy holders under Zurich-American Insurance Group's collateral
investment program investing at least $200,000 in a Fund; and (6) investment
companies managed by Scudder Kemper that invest primarily in other investment
companies. Class I shares currently are available for purchase only from Kemper
Distributors, Inc. ("KDI"), principal underwriter for the Funds, and, in the
case of category 4 above, selected dealers authorized by KDI. 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 typically be
higher for Class I shares than for Class A, Class B and Class C shares.
<PAGE>
The following information supplements the indicated sections of the prospectus.
Past Performance
Average Annual Total Returns - Class I shares
<TABLE>
<CAPTION>
For periods ended One Year Five Years Ten Years
December 31, 1998
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------
Fund Kemper Asian Growth Fund
------------------------------------------------------------------------------------------------------
Comparative Index
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Fund Kemper Europe Fund
------------------------------------------------------------------------------------------------------
Comparative Index
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Fund Kemper Global Income
Fund
------------------------------------------------------------------------------------------------------
Comparative Index
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Fund Kemper International
Fund
------------------------------------------------------------------------------------------------------
Comparative Index
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
</TABLE>
Expense information
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Shareholder fees: Fees charged directly to your account in the fund for various
transactions.
- ------------------------------------------------------------------------------------------------------------------------
Maximum Maximum Redemption Exchange Maximum
Sales Sales Fee Fee Deferred
Charge on Charge on Sales
Purchases Reinvested Charge (as
(as a % of Dividends a % of
offering redemption
price) proceeds)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Kemper Asian Growth Fund
- ------------------------------------------------------------------------------------------------------------------------
Kemper Europe Fund
- ------------------------------------------------------------------------------------------------------------------------
Kemper Global Income Fund
- ------------------------------------------------------------------------------------------------------------------------
Kemper International Fund
- ------------------------------------------------------------------------------------------------------------------------
Annual fund operating expenses: Paid by the fund before it distributes its net
investment income. These are expressed as a percentage of the fund's average
daily net assets for the year ended _______.
- ----------------------------------------------------------------------------------------------------------------------------
Investment Rule 12b-1 fees Other expenses Total fund
management fee operating
expenses
- --------------------------------------------------------------------------------------------------------------------------
Kemper Asian Growth Fund
- --------------------------------------------------------------------------------------------------------------------------
Kemper Europe Fund
- --------------------------------------------------------------------------------------------------------------------------
Kemper Global Income Fund
- --------------------------------------------------------------------------------------------------------------------------
Kemper International Fund
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
Example
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
Fees and expenses if you sold shares after:
- -------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- -------------------------------------------------------------------------
Kemper Asian Growth
Fund
- -------------------------------------------------------------------------
Kemper Europe Fund
- -------------------------------------------------------------------------
Kemper Global Income
Fund
- -------------------------------------------------------------------------
Kemper International
Fund
- -------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - TO BE UPDATED
Kemper Asian Growth Fund
Kemper Europe Fund
Kemper Global Income Fund
Kemper International Fund
SPECIAL FEATURES
Shareholders of a Fund's Class I shares may exchange their shares for (i) shares
of Zurich Money Funds--Zurich Money Market Fund if the shareholders of Class I
shares have purchased shares because they are participants in tax-exempt
retirement plans of Scudder Kemper and its affiliates and (ii) Class I shares of
any other "Kemper Mutual Fund" listed under "Special Features--Class A
Shares--Combined Purchases" in the prospectus. Conversely, shareholders of
Zurich Money Funds--Zurich Money Market Fund who have purchased shares because
they are participants in tax-exempt retirement plans of Scudder Kemper and its
affiliates may exchange their shares for Class I shares of "Kemper Mutual Funds"
to the extent that they are available through their plan. Exchanges will be made
at the relative net asset values of the shares. Exchanges are subject to the
limitations set forth in the prospectus under "Special Features--Exchange
Privilege--General."
March 1, 1999
3
<PAGE>
LONG TERM
INVESTING
IN A
SHORT TERM
WORLD
March 1, 1999
Prospectus
Mutual funds:
o are not FDIC-insured
o have no bank guarantees
o may lose value
Kemper Global And International Funds
Kemper Asian Growth Fund
Kemper Emerging Markets Growth Fund
Kemper Emerging Markets Income Fund
Kemper Europe Fund
Kemper Global Blue Chip Fund
Kemper Global Discovery Fund
Kemper Global Income Fund
Kemper International Growth and Income Fund
Kemper International Fund
Kemper Latin America Fund
Growth Fund Of Spain
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
<PAGE>
CONTENTS
Global Investing..........................................................3
Investment approach.....................................................3
Principal risk factors..................................................3
ABOUT THE FUNDS..............................................................4
Kemper Asian Growth Fund..................................................4
Kemper Emerging Markets Growth Fund......................................10
Kemper Emerging Markets Income Fund......................................17
Kemper Europe Fund.......................................................24
Kemper Global Blue Chip Fund.............................................30
Kemper Global Discovery Fund.............................................36
Kemper Global Income Fund................................................42
Kemper International Growth and Income Fund..............................48
Kemper International Fund................................................54
Kemper Latin America Fund................................................60
Growth Fund Of Spain.....................................................67
Investment Manager.....................................................73
Portfolio management...................................................74
Year 2000 Readiness....................................................76
Euro Conversion........................................................77
ABOUT YOUR INVESTMENT.......................................................77
Choosing a share class.................................................77
Special features.......................................................79
Buying shares..........................................................81
Selling and exchanging shares..........................................88
Distributions and taxes................................................89
Transaction information................................................91
2
<PAGE>
GLOBAL INVESTING
Investment approach
Although the U.S. market is the single largest in the world, the global market
is three times as large. Each fund has its own goal, investment strategy and
risk profile.
Global funds may offer access to countries and markets that can be very
difficult for investors to invest in on their own. Foreign markets follow their
own economic cycles, so foreign investments can serve to diversify a portfolio
of U.S. investments. At the same time, foreign markets have been more volatile
than the U.S. market. International investments carry additional risks,
including potentially unfavorable currency exchange rates, political
disturbances and incomplete and inaccurate accounting information on companies.
Principal risk factors
There are market and investment risks with any security and the value of an
investment in the funds will fluctuate over time and it is possible to lose
money invested in the funds.
Stock Market. Each stock fund's returns and net asset value will go up and down.
Stock market movements will affect the funds' share prices on a daily basis.
Declines are possible both in the overall stock market or in the types of
securities held by the funds.
Bond Market. Normally the value of a bond fund's investments varies inversely
with changes in interest rates so that in periods of rising interest rates, the
value of a fund's portfolio declines.
Portfolio Strategy. The portfolio management team's skill in choosing
appropriate investments for the funds will determine in large part the funds'
ability to achieve their respective investment objectives.
Foreign Securities. Investing in foreign securities involves other
considerations including limited information, higher brokerage costs, different
accounting standards and thinner trading markets as compared to U.S. markets. In
addition, investing in foreign securities, and to a greater extent emerging
markets, involves special risks including changes in foreign currency exchange
rates and political and economic instability.
3
<PAGE>
ABOUT THE FUNDS
KEMPER ASIAN GROWTH FUND
Investment objective
Kemper Asian Growth Fund seeks long-term capital growth. The fund's investment
objective and policies may be changed without a vote of shareholders.
Investment Strategies
The fund seeks to achieve its investment objective by investing in a diversified
portfolio consisting primarily of equity securities of Asian companies.
Under normal circumstances the fund will invest at least 85% of its total assets
in equity securities of Asian companies. The fund considers an issuer of
securities to be an Asian company if:
o the company is organized under the laws of an Asian country and has a
principal office in an Asian country;
o the company derives 50% or more of its total revenues from business in
Asia; or
o the company's equity securities are traded principally on a stock exchange
in Asia.
Furthermore, the fund will invest at least 65% of its total assets in securities
of Asian companies which possess at least one of the first two criteria
described above.
The fund invests principally in developing or emerging countries. The fund may
invest without limit in emerging Asian countries, such as China, Indonesia,
Korea, Malaysia, Philippines, Thailand and Taiwan. The fund may also invest
without limit in developed Asian countries, such as Hong Kong, Japan and
Singapore. However, the fund will only invest in Japan when warranted by
economic conditions, and then only in limited amounts. From time to time, the
fund may have 40% or more of its assets invested in any major Asian industrial
or developed country which, in the view of the fund's investment manager, poses
no unique investment risk.
The fund's investment manager determines the appropriate distribution of
investments among various Asian countries and geographic regions by considering
numerous factors, including the following:
o prospects for relative economic growth of Asian countries;
o expected levels of inflation;
4
<PAGE>
o relative price levels of the various capital markets;
o government policies influencing business conditions;
o the outlook for currency relationships;
o and the range of individual investment opportunities available to
investors in Asian companies.
Other Investments
The fund may invest in other types of securities including, but not limited to,
equity securities of non-Asian companies, bonds, notes, and other debt
securities of domestic or foreign companies and obligations of domestic or
foreign governments and their political subdivisions. The fund does not
currently intend to invest more than 5% of its net assets in debt securities.
The fund considers Asian equity securities to include shares of closed-end
management investment companies, the assets of which are invested primarily in
equity securities of Asian companies and depository receipts where the
underlying or deposited securities are equity securities of Asian companies.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may invest up to 100% of its assets in
high-grade debt securities, cash and cash equivalents. In such a case, the fund
would not be pursuing its investment objective.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the region and the countries in which the fund is invested. Foreign
investments, particularly investments in emerging markets, carry added risks due
to inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these strategies, the fund will achieve its objective.
5
<PAGE>
KEMPER ASIAN GROWTH FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C MSCI All Country
Asia Free
Ex-Japan Index
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date:
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The Morgan Stanley Combined International All Country Asia Free Japan Index is a
capitalized weighted index that is representative of the equity securities for
the following countries: Hong Kong, Indonesia, Korea (at 20%), Malaysia,
Philippines
6
<PAGE>
free, Singapore free and Thailand. Index returns assume reinvestment of
dividends and unlike the fund's returns, do not reflect any fees or expenses.
7
<PAGE>
KEMPER ASIAN GROWTH FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
KEMPER ASIAN GROWTH FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- -----------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- -----------------------------------------------
3 Years
- -----------------------------------------------
5 Years
- -----------------------------------------------
10 Years
===============================================
- -----------------------------------------------
Fees and expenses if you did not sell your
shares:
Class A Class B Class C
1 Year
- ------------------------------------------------
3 Years
- ------------------------------------------------
5 Years
- ------------------------------------------------
10 Years
================================================
9
<PAGE>
KEMPER EMERGING MARKETS GROWTH FUND
Investment objective
Kemper Emerging Markets Growth Fund seeks long-term growth of capital. The
fund's investment objective and policies may be changed without a vote of
shareholders.
Investment strategy
The fund seeks to achieve its investment objective through equity investment in
emerging markets around the globe. Normally, at least 65% of the fund's total
assets will be invested in the equity securities of emerging market issuers.
The investment manager takes a top-down approach to evaluating investments for
the fund, using extensive fundamental and field research. The process begins
with a study of the economic fundamentals of each country and region, as well as
an examination of regional themes such as growing trade, increases in direct
foreign investment and deregulation of capital markets. Understanding regional
themes allows the investment manager to identify industries and companies that
the investment manager believes are most likely to benefit from the political,
social and economic changes taking place in a given region of the world.
Within a market, the investment manager looks for individual companies with
exceptional business prospects, which may be due to market dominance, unique
franchises, high growth potential, or innovative services, products or
technologies. The investment manager seeks to identify companies with favorable
potential for appreciation through growing earnings or greater market
recognition over time. While these companies may be among the largest in their
local markets, they may be small by the standards of U.S. stock market
capitalization.
The fund considers "emerging markets" to include any country that is defined as
an emerging or developing economy by any of the following: the International
Bank for Reconstruction and Development (i.e., the World Bank), the
International Finance Corporation or the United Nations or its authorities.
The investment manager may pursue investment opportunities in Asia, Africa,
Latin America, the Middle East and the developing countries of Europe, primarily
in Eastern Europe. The fund deems an issuer to be located in an emerging market
if:
o the issuer is organized under the laws of an emerging market country;
o the issuer's principal securities trading market is in an emerging market;
or
10
<PAGE>
o at least 50% of the issuer's non-current assets, capitalization, gross
revenue or profit in any one of the two most recent fiscal years is
derived (directly or indirectly through subsidiaries) from assets or
activities located in emerging markets.
Other investments
The fund may invest up to 35% of its total assets in emerging market and
domestic debt securities if the investment manager determines that capital
appreciation of debt securities is likely to equal or exceed the capital
appreciation of equity securities.
Under normal market conditions, the fund may invest up to 35% of its total
assets in equity securities of issuers in the U.S. and other developed markets.
The fund may invest in closed-end investment companies investing primarily in
the emerging markets. Such closed-end company investments will generally only be
made when market access or liquidity considerations restricts direct investment
in the market.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may hold, without limit, debt instruments,
as well as cash and cash equivalents, including foreign and domestic money
market instruments, short-term government and corporate obligations, and
repurchase agreements. In such a case, the fund would not be pursuing its
investment objective.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the countries in which the fund is invested. Foreign investments,
particularly investments in emerging markets, carry added risks due to
inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
Because it is classified as "non-diversified", the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Accordingly, the
fund's investment returns are more likely to be impacted by changes in the
market value and returns of any one portfolio holding.
11
<PAGE>
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these strategies, the fund will achieve its objective.
12
<PAGE>
KEMPER EMERGING MARKETS GROWTH FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C IFC Emerging
Markets Investable
For periods ended Index
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The IFC Emerging Markets Investable Index is an unmanaged capitalization
weighted measure of stock markets in emerging market countries worldwide. Index
returns
13
<PAGE>
assume reinvestment of dividends and, unlike the fund's returns, do not
reflect any fees or expenses.
14
<PAGE>
KEMPER EMERGING MARKETS GROWTH FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
KEMPER EMERGING MARKETS GROWTH FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
16
<PAGE>
KEMPER EMERGING MARKETS INCOME FUND
Investment objectives
Kemper Emerging Markets Income Fund has dual investment objectives. The fund's
primary investment objective is to provide investors with high current income.
As a secondary investment objective, the fund seeks long-term capital
appreciation. The fund's investment objectives and policies may be changed
without a vote of shareholders.
Investment strategy
In pursuing its investment objectives, the fund invests primarily in
high-yielding debt securities issued by governments and corporations in emerging
markets.
The fund involves above-average bond fund risk and can invest entirely in high
yield/high risk bonds. The fund invests in lower quality securities of emerging
market issuers, some of which have defaulted in the past on certain of their
financial obligations.
Under normal market conditions, the fund invests at least 65% of its total
assets in debt securities issued by governments, government-related entities and
corporations in emerging markets, or in debt securities, the return on which is
derived primarily from emerging markets.
The fund considers "emerging markets" to include any country that is defined as
an emerging or developing economy by any of the following: the International
Bank for Reconstruction and Development (i.e., the World Bank), the
International Finance Corporation or the United Nations or its authorities.
The investment manager may pursue investment opportunities in Asia, Africa,
Latin America, the Middle East and the developing countries of Europe, primarily
in Eastern Europe. The fund deems an issuer to be located in an emerging market
if:
o the issuer is organized under the laws of an emerging market country;
o the issuer's principal securities trading market is in an emerging market;
or
o at least 50% of the issuer's non-current assets, capitalization, gross
revenue or profit in any one of the two most recent fiscal years is
derived (directly or indirectly from subsidiaries) from assets or
activities located in emerging markets.
17
<PAGE>
Other investments
The fund may invest up to 35% of its total assets in securities other than debt
obligations issued in emerging markets. These holdings include debt securities
and money market instruments issued by corporations and governments based in
developed markets.
The fund may invest up to 20% of its total assets in U.S. fixed income
instruments.
The fund may acquire shares of closed-end investment companies that invest
primarily in emerging market debt securities. The fund is authorized to borrow
from banks and other entities in an amount equal to up to 20% of the fund's
total assets (including the amount borrowed), less all liabilities and
indebtedness other than the borrowing, and may use proceeds of the borrowings
for investment purposes. Borrowing creates leverage, which is a speculative
characteristic.
Risk Management Strategies
In an attempt to eliminate currency risk, the fund invests exclusively in U.S.
dollar-denominated debt securities, or in foreign currency denominated debt
securities that are fully hedged back into the U.S. dollar.
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
The fund will not commit more than 40% of its total assets to issuers in a
single country.
Under unusual circumstances, the fund may invest without limit in U.S. debt
securities, including short-term money market securities. In such a case, the
fund would not be pursuing its investment objective.
Main Risks
This fund involves above-average bond risk. As with most bond funds, the most
significant factor affecting this fund's performance is interest rates. When
interest rates rise, the price of bonds (and bond funds) typically falls in
proportion to their duration. Duration is a measurement based on the estimated
pay-back period or duration of a bond (or portfolio of bonds). It is also
possible that bonds in the fund's portfolio could be downgraded in credit rating
or go into default.
Issuers whose bonds are below investment-grade are often in somewhat shaky
financial health and may be affected by stock market shifts. The prices of their
bonds, therefore, tend to change based on stock market movements to a greater
degree than investment-grade bond prices.
18
<PAGE>
Foreign investments, particularly investments in emerging markets, carry added
risks due to inadequate or inaccurate financial information about companies,
potential political disturbances and fluctuations in currency exchange rates.
The investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
Because it is classified as "non-diversified", the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Accordingly, the
fund's investment returns are more likely to be impacted by changes in the
market value and returns of any one portfolio holding.
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these strategies, the fund will achieve its objective.
19
<PAGE>
KEMPER EMERGING MARKETS INCOME FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was ___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C JP Morgan EMBI+
Index
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The unmanaged JP Morgan Emerging Markets Bond Index Plus (EMBI+) tracks total
returns for traded external debt instruments in the emerging markets. Included
in the index are U.S. dollar and other external-currency-denominated Brady
bonds, loans,
20
<PAGE>
Eurobonds, and local market instruments. Index returns assume reinvestment of
dividends and unlike the fund's returns, do not reflect any fees or expenses.
21
<PAGE>
KEMPER EMERGING MARKETS INCOME FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
KEMPER EMERGING MARKETS INCOME FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
23
<PAGE>
KEMPER EUROPE FUND
Investment objective
Kemper Europe Fund seeks long-term capital growth. The fund's investment
objective and policies may be changed without a vote of shareholders.
Investment Strategies
The fund seeks to achieve its investment objective by investing in a diversified
portfolio consisting primarily of equity securities of European companies.
Under normal circumstances the fund will invest at least 85% of its total assets
in securities of European companies. The fund considers an issuer of securities
to be a European company if:
o the company is organized under the laws of a European country and has a
principal office in a European country;
o the company derives 50% or more of its total revenues from business in
Europe; or
o the company's equity securities are traded principally on a stock exchange
in Europe.
Furthermore, the fund will invest at least 65% of its total assets in securities
of European companies which possess at least one of the first two criteria
described above.
The fund invests principally in developed countries, but may invest up to 25% of
its total assets in developing or "emerging" countries. Currently, the developed
European countries in which the fund may invest without limit include Austria,
France, Germany, the Netherlands, Switzerland, Spain, Italy, Luxembourg, United
Kingdom, Ireland, Belgium, Denmark, Sweden, Norway and Finland. The fund may
invest without limit in other European countries in the future if they become
developed countries. From time to time, the fund may have 25% or more of its
assets invested in any major European industrial or developed country which, in
the view of the investment manager, poses no unique investment risk.
The fund's investment manager determines the appropriate distribution of
investments among various European countries and geographic regions by
considering numerous factors, including the following:
o prospects for relative economic growth of European countries;
o expected levels of inflation;
24
<PAGE>
o relative price levels of the various capital markets;
o government policies influencing business conditions;
o the outlook for currency relationships; and
o the range of individual investment opportunities available to investors in
European companies.
Other Investments
The fund may invest in any other type of security including, but not limited to,
equity securities of non-European companies, bonds, notes, and other debt
securities of domestic or foreign companies and obligations of domestic or
foreign governments and their political subdivisions.
The fund considers European equity securities to include shares of closed-end
management investment companies, the assets of which are invested primarily in
equity securities of European companies and depository receipts where the
underlying or deposited securities are equity securities of European companies.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may invest up to 100% of its assets in
high-grade debt securities, cash and cash equivalents. In such a case, the fund
would not be pursuing its investment objective.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the countries in which the fund is invested. Foreign investments,
particularly investments in emerging markets, carry added risks due to
inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these strategies, the fund will achieve its objective.
25
<PAGE>
KEMPER EUROPE FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C FT/S&P World Europe
Index
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The Financial Times/Standard & Poor's Actuaries World Index - Europe is an
unmanaged index that is generally representative of the equity securities of
European
26
<PAGE>
Markets. Index returns assume reinvestment of dividends and unlike the fund's
returns, do not reflect any fees or expenses.
27
<PAGE>
KEMPER EUROPE FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
KEMPER EUROPE FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
29
<PAGE>
KEMPER GLOBAL BLUE CHIP FUND
Investment objective
Kemper Global Blue Chip Fund seeks long-term growth of capital through a
diversified worldwide portfolio of marketable securities, primarily equity
securities, including common stocks, preferred stocks and debt securities
convertible into common stocks. The fund's investment objective and policies may
be changed without a vote of shareholders.
Investment Strategies
In pursuing its investment objective, the fund will emphasize investments in
common stocks of large, well known, high quality companies. Companies of this
general type are often referred to as "blue chip" companies. "Blue Chip"
companies are generally identified by their:
o substantial capitalization;
o established history of earnings and dividends;
o easy access to credit;
o good industry position; and
o superior management structure.
Global "blue chip" companies are believed to generally exhibit less investment
risk and less price volatility, on average, than companies lacking these
characteristics, such as smaller, less seasoned companies. In addition, the
large market of publicly held shares for such companies and the generally high
trading volume in those shares usually results in a relatively high degree of
liquidity for such investments.
In general, the fund will seek to invest in companies that the investment
manager believes will benefit from global economic trends, promising
technologies or products and specific country opportunities resulting from
changing geopolitical, currency or economic relationships.
The fund will invest primarily in developed markets. The fund may be invested
100% in non-U.S. issues, although under normal circumstances, it is expected
that both foreign and U.S. investments will be represented in the fund's
portfolio.
30
<PAGE>
Other Investments
The fund may invest up to 15% of its total assets in developing or emerging
markets. The fund may invest in closed-end investment companies that invest
primarily in emerging market debt securities.
The fund may invest in securities traded over-the-counter. The fund may invest
in high-quality debt securities with credit ratings of Aaa/AAA through Baa/BBB
(and their unrated equivalents) of U.S. and foreign issuers. The fund may also
invest up to 5% of its total assets in debt securities rated Baa/BBB or below
(and their unrated equivalents), often referred to as "junk" bonds of U.S. and
foreign issuers.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may invest up to 100% of its assets in
U.S. issues, high-grade debt securities, cash and cash equivalents. In such a
case, the fund would not be pursuing its investment objective.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the countries in which the fund is invested. Foreign investments,
particularly investments in emerging markets, carry added risks due to
inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
The fund's other investment strategies entail other risks:
o Convertible debt securities are subject to some of the same interest rate
risk as bonds; that is, their prices tend to drop when interest rates
rise.
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these strategies, the fund will achieve its objective.
31
<PAGE>
KEMPER GLOBAL BLUE CHIP FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C MSCI World Index
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The MSCI (Morgan Stanley Capital International) World Index measures performance
of a range of developed country general stock markets, including the United
States,
32
<PAGE>
Canada, Europe, Australia, New Zealand and the Far East. Index returns assume
reinvestment of dividends and unlike the fund's returns, do not reflect any fees
or expenses.
33
<PAGE>
KEMPER GLOBAL BLUE CHIP FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
KEMPER GLOBAL BLUE CHIP FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
35
<PAGE>
KEMPER GLOBAL DISCOVERY FUND
(This prospectus contains information concerning the Kemper Class A, Class B
and Class C shares of Global Discovery Fund)
Investment objective
The fund seeks above-average capital appreciation over the long term by
investing primarily in the equity securities of small companies throughout the
world. The fund's investment objective and strategies may be changed without a
vote of shareholders.
Investment strategies
The fund invests primarily in a diversified portfolio of equity securities of
small rapidly growing companies that the fund's management believes offer the
potential for above-average returns relative to large companies, yet are
frequently overlooked, and thus, undervalued by the market. These companies are
similar in size to the smallest 20% of world market capitalization as
represented by the Salomon Brothers Broad Market Index - typically these
companies have a market value of between approximately $50 million and $2
billion. However, the fund may invest in companies with smaller market values.
The median market capitalization of the companies in which the fund invests will
not exceed $750 million.
The fund has the flexibility to invest in any region of the world. It can invest
in companies based in emerging markets, typically in the Far East, Latin America
and lesser developed countries in Europe, as well as in firms operating in
developed economies, such as some of those of the United States, Japan and
Western Europe.
The fund's investment manager determines what securities to invest in by
evaluating potential investments from both a macroeconomic and microeconomic
perspective, using fundamental analysis, including field research. In evaluating
the growth potential and relative value of a possible investment, the investment
manager takes into consideration numerous factors, including:
o the depth and quality of management;
o a company's product line, business strategy and competitive position;
o research and development efforts;
o financial strength, including degree of leverage;
o cost structure;
o revenue and earnings growth potential ;
o price-earnings ratios and other stock valuation measures; and
36
<PAGE>
o the attractiveness of the country and region in which a company is
located.
Risk Management Strategies
The fund attempts to manage risk by diversifying widely among regions, market
sectors and individual companies.
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may invest, without limit, in cash and
cash equivalents for temporary defensive purposes. In such a case, the fund
would not be pursuing its investment objective.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the countries in which the fund is invested. Small companies can be
especially sensitive to market shifts and isolated business reverses. Securities
of small companies are often thinly traded and could be harder to value or sell
at a fair price. Foreign investments, particularly investments in emerging
markets, carry added risks due to inadequate or inaccurate financial information
about companies, potential political disturbances and fluctuations in currency
exchange rates. In addition, the investment manager's choice of countries,
market sectors or specific investments may not perform as well as expected, and
the fund could underperform its peers or lose money.
The use of certain derivatives could magnify losses.
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these strategies, the fund will achieve its objective.
37
<PAGE>
KEMPER GLOBAL DISCOVERY FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C Salomon Brothers
World Equity EMI
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The Salomon Brothers World Equity Extended Market Index is an unmanaged small
capitalization index made up of holdings selected from a 22 country universe.
Index
38
<PAGE>
returns assume reinvestment of dividends and, unlike fund returns, do not
reflect any fees or expenses.
39
<PAGE>
KEMPER GLOBAL DISCOVERY FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
40
<PAGE>
KEMPER GLOBAL DISCOVERY FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
41
<PAGE>
KEMPER GLOBAL INCOME FUND
Investment objective
Kemper Global Income Fund seeks to provide high current income consistent with
prudent total return asset management. The fund's investment objective and
policies may be changed without a vote of shareholders.
Investment Strategies
The fund seeks to achieve its investment objective by investing primarily in
investment grade foreign and domestic fixed income securities. The investment
manager also seeks 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.
The fund may invest in securities issued by any issuer and in any currency and
may hold foreign currency. 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 Euro.
In managing the fund's portfolio in an effort to reduce volatility and increase
returns, the fund may allocate its assets among securities of various issuers,
geographic regions, and currency denominations in a manner that is consistent
with its investment objective based upon the following:
o relative interest rates among currencies;
o the outlook for changes in these interest rates; and
o 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.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
As an extreme defensive measure, the fund may invest up to 100% of its assets in
high-grade debt securities, cash and cash equivalents. In such a case, the fund
would not be pursuing its investment objective.
42
<PAGE>
Main Risks
As with most bond funds, the most significant factor affecting this fund's
performance is interest rates. When interest rates rise, the price of bonds (and
bond funds) typically fall in proportion to their duration. Duration is a
measurement based on the estimated pay-back period or duration of a bond (or
portfolio of bonds). It is also possible that bonds in the fund's portfolio
could be downgraded in credit rating or go into default.
Foreign investments, particularly investments in emerging markets, carry added
risks due to inadequate or inaccurate financial information about companies,
potential political disturbances and fluctuations in currency exchange rates.
The investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
Because it is classified as "non-diversified", the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Accordingly, the
fund's investment returns are more likely to be impacted by changes in the
market value and returns of any one portfolio holding.
The fund expects to trade securities actively. This strategy could increase
transaction costs and reduce performance.
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these investment strategies, the fund will achieve its objective.
43
<PAGE>
KEMPER GLOBAL INCOME FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C SB World Government
Bond Index
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The Salomon Smith Barney World Government Bond Index is an unmanaged index
comprised of government bonds from eighteen countries (United States, Japan,
United
44
<PAGE>
Kingdom, Germany, France, Canada, the Netherlands, Australia, Switzerland,
Denmark, Austria, Belgium, Finland, Ireland, Italy, Portugal, Spain and Sweden)
with maturities greater than one year. Index returns assume reinvestment of
dividends and, unlike fund returns, do not reflect any fees or expenses.
45
<PAGE>
KEMPER GLOBAL INCOME FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
KEMPER GLOBAL INCOME FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
47
<PAGE>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND
Investment Objective
Kemper International Growth and Income Fund seeks long-term growth of capital
and current income primarily from foreign equity securities. The fund's
investment objective and policies may be changed without a vote of shareholders.
Investment Strategies
The fund seeks to achieve its investment objective by investing generally in
common stocks of established companies listed on foreign exchanges, which offer
prospects for growth of earnings while paying relatively high current dividends.
At least 80% of the fund's net assets will normally be invested in the equity
securities of established non-U.S. companies. The fund focuses its investments
on the developed foreign countries included in the Morgan Stanley Capital
International World ex-US Index.
Stocks are selected for the fund using a disciplined, multi-part investment
approach with four stages as follows:
o Stage 1: The investment manager analyzes the pool of dividend-paying
foreign securities, primarily from the world's more mature markets,
targeting stocks that have high relative yields compared to the average
for their markets.
o Stage 2: The investment manager identifies what it believes are the most
promising stocks for the fund's portfolio.
o Stage 3: The investment manager diversifies the fund's portfolio among
different industry sectors.
o Stage 4: The investment manager diversifies the fund's portfolio among
different countries.
Other Investments
Under normal conditions, the fund may also invest up to 20% of its net assets in
debt securities convertible into common stock and fixed income securities of
governments, governmental agencies, supranational agencies and private issuers
when the investment manager believes the potential for appreciation and income
will equal or exceed that available from investments in equity securities. These
securities will predominantly be "investment grade" securities which are those
rated Aaa/AAA through Baa/BBB (and their unrated equivalents).
48
<PAGE>
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may invest without limit in cash and cash
equivalents which may include domestic and foreign money market instruments,
short-term government and corporate obligations and repurchase agreements. In
such a case, the fund would not be pursuing its investment objective.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the countries in which the fund is invested. Foreign investments,
particularly investments in emerging markets, carry added risks due to
inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
The fund's other investment strategies entail other risks:
o Convertible debt securities are subject to some of the same interest rate
risk as bonds; that is, their prices tend to drop when interest rates
rise.
More information about the fund's investments and strategies is provided in the
Statement of Additional Information. Of course, there can be no guarantee that
by following these investment strategies, the fund will achieve its objective.
49
<PAGE>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C MSCI EAFE+Canada
Index
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
50
<PAGE>
The Morgan Stanley Capital International World+Canada Index is an unmanaged
index of global stock markets, excluding the U.S. Index returns assume
reinvestment of dividends and, unlike fund returns, do not reflect any fees or
expenses.
51
<PAGE>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
KEMPER INTERNATIONAL GROWTH AND INCOME FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
53
<PAGE>
KEMPER INTERNATIONAL FUND
Investment objective
Kemper International Fund seeks total return, a combination of capital growth
and income, principally through an internationally diversified portfolio of
equity securities. The fund's investment objective and policies may be changed
without a vote of shareholders.
Investment Strategies
In pursuing its investment objective, the fund invests primarily in common
stocks of established non-U.S. companies believed to have potential for capital
growth, income or both.
There is no limitation on the percentage or amount of the fund's assets that may
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. 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.
The fund invests primarily in non-U.S. issuers, and under normal circumstances
more than 80% of the fund's total assets will be invested in non-U.S. issuers.
From time to time, the fund may 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.
In determining the appropriate distribution of investments among various
countries and geographic regions, the investment manager ordinarily considers
the following factors:
o prospects for relative economic growth among foreign countries;
o expected levels of inflation;
o relative price levels of the various capital markets;
o government policies influencing business conditions;
o the outlook for currency relationships; and
o the range of individual investment opportunities available to the
international investor.
54
<PAGE>
Other Investments
The fund may invest in debt securities that can be converted into common stocks,
also known as convertibles. The fund may also invest in debt securities,
preferred stocks, bonds, notes and other debt securities of companies and
futures contracts.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may invest up to 100% of its assets in
U.S. Government obligations or securities of companies incorporated in and
having their principal activities in the United States for temporary defensive
purposes. In such cases, the fund would not be pursuing its investment
objective. The fund may also establish and maintain reserves for defensive
purposes and to enable the fund to take advantage of buying opportunities. The
fund's reserves may be invested in domestic as well as foreign short-term money
market instruments.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the countries in which the fund is invested. Foreign investments,
particularly investments in emerging markets, carry added risks due to
inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
The fund's other investment strategies entail other risks:
o Convertible debt securities are subject to some of the same interest rate
risk as bonds; that is, their prices tend to drop when interest rates
rise.
More information about the fund's investments and strategies of the fund is
provided in the Statement of Additional Information. Of course, there can be no
guarantee that by following these investment strategies, the fund will achieve
its objective.
55
<PAGE>
KEMPER INTERNATIONAL FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C MSCI EAFE Index
For periods ended
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The EAFE Index (Morgan Stanley Capital International Europe, Austral-Asia, Far
East Index) is a generally accepted benchmark for performance of major overseas
56
<PAGE>
markets. Index returns assume reinvestment of dividends and, unlike fund
returns, do not reflect any fees or expenses.
57
<PAGE>
KEMPER INTERNATIONAL FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
KEMPER INTERNATIONAL FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
59
<PAGE>
KEMPER LATIN AMERICA FUND
Investment Objective
Kemper Latin America Fund seeks long-term capital appreciation through
investment primarily in the securities of Latin American issuers. The fund's
investment objective and strategies may be changed without a vote of
shareholders.
Investment Strategies
The fund pursues its investment objective by investing at least 65% of its total
assets in Latin American equity securities. Latin America is defined as Mexico,
Central America, South America and the islands of the Caribbean.
The fund defines securities of Latin American issuers as follows:
o Securities of companies organized under the laws of a Latin American
country or for which the principal trading market is in Latin America;
o Securities issued or guaranteed by the government of a Latin American
country, its agencies or instrumentalities, political subdivisions or the
central bank of such country;
o Securities of companies, wherever organized, when at least 50% of an
issuer's non-current assets, capitalization, gross revenue or profit in
any one of the two most recent fiscal years represents assets or
activities located in Latin America; or
o Securities of Latin American issuers, as defined above, in the form of
depositary shares.
In managing its portfolio, the investment manager seeks out investment
opportunities created from changing economic and political trends in Latin
America. These trends are supported by governmental initiatives designed to
promote freer trade and market-oriented economies. The investment manager
believes that active management, based on disciplined fundamental research, will
yield promising investment opportunities for long-term capital appreciation.
In selecting companies for investment, the fund typically evaluates industry
trends, a company's financial strength, its competitive position in domestic and
export markets, technology, recent developments and profit ability, together
with overall growth prospects. Other considerations generally include quality
and depth of management, government regulation, and availability and cost of
labor and raw materials.
Presently, the fund expects to focus its investments in Argentina, Brazil,
Chile, Colombia, Mexico and Peru.
60
<PAGE>
Other Investments
The fund may invest in debt securities when the investment manager determines
that the capital appreciation of debt securities is likely to equal or exceed
that of equity securities. The fund may also invest in debt securities which are
rated below investment grade (commonly referred to as "junk bonds").
In addition, the fund may invest up to 35% of its total assets in the equity
securities of U.S. and other non-Latin American issuers. In evaluating non-Latin
American investments, the investment manager generally seeks investments where
an issuer's Latin American business activities and the impact of developments in
Latin America may have a positive and significant effect on the issuer's
business results.
The fund may invest in closed-end investment companies investing primarily in
Latin America.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may invest without limit in cash or cash
equivalents and money market instruments, or invest all or a portion of its
assets in securities of U.S. or other non-Latin American issuers. In such a
case, the fund would not be pursuing its investment objective.
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the region and the countries in which the fund is invested. Foreign
investments, particularly investments in emerging markets, carry added risks due
to inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of countries, market sectors or specific
investments may not perform as well as expected, and the fund could underperform
its peers or lose money.
Because it is classified as "non-diversified", the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Accordingly, the
fund's investment returns are more likely to be impacted by changes in the
market value and returns of any one portfolio holding.
The fund's other investment strategies entail other risks:
o Convertible debt securities are subject to some of the same interest rate
risk as bonds; that is, their prices tend to drop when interest rates
rise.
o The use of certain derivatives could magnify losses.
61
<PAGE>
More information about the fund's investments and strategies of the fund is
provided in the Statement of Additional Information. Of course, there can be no
guarantee that by following these investment strategies, the fund will achieve
its objective.
62
<PAGE>
KEMPER LATIN AMERICA FUND
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C IFC Latin America
Investable Return
For periods ended Index
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
The IFC Latin America Investable Return Index is prepared by the International
Finance Corporation. It is an unmanaged, market capitalization-weighted
63
<PAGE>
representation of stock performance in seven Latin American markets, and
measures the returns of stocks that are legally and practically available to
investors. Index returns assume reinvestment of dividends and, unlike fund
returns, do not reflect any fees or expenses.
64
<PAGE>
KEMPER LATIN AMERICA FUND
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) None None None
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE>
KEMPER LATIN AMERICA FUND
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
66
<PAGE>
GROWTH FUND OF SPAIN
Investment Objective
Growth Fund Of Spain seeks long-term capital appreciation. The fund's investment
objective is fundamental and cannot be changed without the approval of a
majority of the fund's outstanding voting securities.
Investment Strategies
The fund seeks to achieve its objective by investing primarily in equity
securities of Spanish companies. A company is deemed Spanish if it is:
o organized under the laws of Spain; or
o traded in the Spanish securities markets and doing business in Spain.
Under normal market conditions, at least 65% of the fund's total assets will be
invested in equity securities of Spanish companies. The fund may invest up to
25% of its total assets in unlisted equity and debt securities, including
convertible debt securities, and in other securities which are not readily
marketable, a significant portion of which may be considered illiquid. The fund
may invest up to 35% of total assets in investment-grade fixed income securities
denominated in Pesetas or U.S. dollars. As an operating policy the investment
manager intends to evaluate investment opportunities throughout the Iberian
Peninsula (i.e., Spain and Portugal).
As a matter of non-fundamental policy, the fund may invest up to 35% of total
assets in equity securities of companies other than Spanish companies, and may
concentrate such investments in whole or in part in equity securities of
companies organized under the laws of Portugal or traded in the Portuguese
securities markets and doing business in Portugal.
Risk Management Strategies
The fund may use certain derivatives (investments whose value is based on
indices or other securities).
Under unusual circumstances, the fund may vary from its investment objective and
may invest, without limit, in high quality debt instruments, such as U.S. and
Spanish government securities. The fund may also at any time invest funds in
U.S. dollar-denominated money market instruments as reserves for expenses and
dividend and other distributions to shareholders. In such a case, the fund would
not be pursuing its investment objective.
67
<PAGE>
Main Risks
The primary factor affecting this fund's performance is stock market movements
in the two primary countries in which the fund is invested. Foreign investments,
particularly investments in emerging markets, carry added risks due to
inadequate or inaccurate financial information about companies, potential
political disturbances and fluctuations in currency exchange rates. In addition,
the investment manager's choice of market sectors or specific investments may
not perform as well as expected, and the fund could underperform its peers or
lose money.
Because it is classified as "non-diversified", the fund may invest a relatively
high percentage of its assets in a limited number of issuers. Accordingly, the
fund's investment returns are more likely to be impacted by changes in the
market value and returns of any one portfolio holding.
The fund's other investment strategies entail other risks:
o Convertible debt securities are subject to some of the same interest rate
risk as bonds; that is, their prices tend to drop when interest rates
rise.
More information about the fund's investments and strategies of the fund is
provided in the Statement of Additional Information. Of course, there can be no
guarantee that by following these investment strategies, the fund will achieve
its objective.
68
<PAGE>
GROWTH FUND OF SPAIN
Past performance
The chart and table below provide some indication of the risks of investing in
the fund by illustrating how the fund has performed and comparing this
information to a broad measure of market performance. Of course, past
performance is not necessarily an indication of future performance.
Total returns for years ended December 31
- --------------------------------------------------------------------------------
BAR CHART
- --------------------------------------------------------------------------------
For the period included in the bar chart, the fund's highest return for a
calendar quarter was ___% (cite quarter), and the fund's lowest return for a
calendar quarter was -___% (cite quarter).
Average Annual Total Returns
Class A Class B Class C Madrid Stock
Exchange General
For periods ended Index
December 31, 1998
One Year __.__% __.__% __.__% __.__%
Five Years __.__% __.__% __.__% __.__%
Ten Years __.__% __.__% __.__% __.__%
Since Class Inception __.__% __.__% __.__% *
Inception Date
- -------------
* Index returns for the life of each class: ___, ___, and ___ for Class A, B,
and C, respectively.
Performance of the Madrid Stock Exchange General Index is based on the return of
the most frequently traded stocks in the Madrid market and represents 85% of the
total
69
<PAGE>
Madrid market capitalization. Index returns assume reinvestment of dividends
and, unlike fund returns, do not reflect any fees or expenses.
70
<PAGE>
GROWTH FUND OF SPAIN
Fee and Expense information
This information is designed to help you understand the costs of investing in
the fund. Each class of shares has a different set of transaction fees, which
will vary based on the length of time you hold shares in the fund and the amount
of your investment. You will find details about fee discounts and waivers in the
Buying shares and Choosing a share class -- Special features sections of this
prospectus.
<TABLE>
<CAPTION>
===============================================================================================
Shareholder fees: Fees paid directly from your investment.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a % 5.75% None None
of offering price)
- -----------------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of redemption None(1) 4% 1%
proceeds)
- -----------------------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Dividends/Distributions
- -----------------------------------------------------------------------------------------------
Redemption Fee (as % of amount redeemed, if applicable) 2.00% 2.00% 2.00%
- -----------------------------------------------------------------------------------------------
Exchange Fee None None None
===============================================================================================
</TABLE>
(1) The redemption of Class A shares purchased at net asset value under the
Large Order NAV Purchase Privilege may be subject to a contingent deferred
sales charge of 1% during the first year and 0.50% during the second year.
<TABLE>
<CAPTION>
===============================================================================================
Annual fund operating expenses: (expenses that are deducted from fund assets)
expressed as a % of the fund's average daily net assets for the year ended _______.
- -----------------------------------------------------------------------------------------------
Class A Class B Class C
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Management Fee
- -----------------------------------------------------------------------------------------------
Distribution (12b-1) Fees
- -----------------------------------------------------------------------------------------------
Other Expenses
- ---------------------------------------------------============================================
Total Annual Fund Operating Expenses
- -----------------------------------------------------------------------------------------------
</TABLE>
71
<PAGE>
GROWTH FUND OF SPAIN
Example
This example is to help you compare the cost of investing in a fund with the
cost of investing in other mutual funds.
This example illustrates the impact of the above fees and expenses on an account
with an initial investment of $10,000, based on the expenses shown above. It
assumes a 5% annual return, the reinvestment of all dividends and distributions
and "annual fund operating expenses" remaining the same each year. The example
is hypothetical: actual fund expenses and return vary from year to year, and may
be higher or lower than those shown.
- --------------------------------------------------
Fees and expenses if you sold shares after:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
- --------------------------------------------------
Fees and expenses if you did not sell your shares:
Class A Class B Class C
1 Year
- --------------------------------------------------
3 Years
- --------------------------------------------------
5 Years
- --------------------------------------------------
10 Years
==================================================
72
<PAGE>
Investment Manager
The funds retain the investment management firm of Scudder Kemper Investments,
Inc., Two International Place, Boston, MA, to manage their daily investment and
business affairs subject to the policies established by the funds' Boards.
Scudder Kemper Investments, Inc. actively manages the funds' investments.
Professional management can be an important advantage for investors who do not
have the time or expertise to invest directly in individual securities. Scudder
Kemper Investments, Inc. is one of the largest and most experienced investment
management organizations worldwide, managing more than $230 billion in assets
globally for mutual fund investors, retirement and pension plans, institutional
and corporate clients, and private family and individual accounts.
Scudder Investments (U.K.) Limited, 1 South Place, London, U.K., an affiliate of
Scudder Kemper Investments, Inc., is the sub-adviser for Kemper Europe Fund,
Kemper Global Income Fund, and Kemper International Fund. Scudder Investments
(U.K.) Limited has served as sub-adviser for mutual funds since December, 1996
and investment adviser for certain institutional accounts since August, 1998.
Each fund pays the investment manager a (graduated) monthly investment
management fee. Fees paid for each fund's most recently completed fiscal year
are shown below:
Kemper Asian Growth Fund 0.__%
Kemper Emerging Markets Growth Fund 0.__%
Kemper Emerging Markets Income Fund 0.__%
Kemper Europe Fund 0.__%
Kemper Global Blue Chip Fund 0.__%
Kemper Global Discovery Fund 0.__%
Kemper Global Income Fund 0.__%
Kemper International Growth and Income Fund 0.__%
Kemper International Fund 0.__%
Growth Fund Of Spain 0.__%
Kemper Latin America Fund 0.__%
[* Add footnotes as needed for expense caps.]
73
<PAGE>
Portfolio management
The funds are managed by teams of investment professionals who each plays an
important role in a fund's management process. Team members work together to
develop investment strategies and select securities for a fund's portfolio. They
are supported by the investment manager's large staff of economists, research
analysts, traders and other investment specialists who work in the investment
manager's offices across the United States and abroad. The investment manager
believes its team approach benefits fund investors by bringing together many
disciplines and leveraging its extensive resources.
The following investment professionals are associated with the funds as
indicated:
[TO BE COMPLETED]
Kemper Asian Growth Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Theresa Gusman - 19 Joined Scudder Kemper in 19. She began
Lead Manager her investment career in 19.
- --------------------------------------------------------------------------------
Elizabeth J. Allan - 19 Joined Scudder Kemper in 19. She began
Manager her investment career in 19.
Kemper Emerging Markets Growth Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Joyce E. Cornell - 19 Joined Scudder Kemper in 19. She began
Lead Manager her investment career in 19.
- --------------------------------------------------------------------------------
Tara C. Kenney - 19 Joined Scudder Kemper in 19. She began
Manager her investment career in 19.
- --------------------------------------------------------------------------------
Theresa Gusman - 19 Joined Scudder Kemper in 19. She began
Manager her investment career in 19.
- --------------------------------------------------------------------------------
Andre J. DeSimone- 19 Joined Scudder Kemper in 19. She/He
Manager began her/his investment career in 19.
Kemper Emerging Markets Income Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
M. Isabel Saltzman - 19 Joined Scudder Kemper in 19. She began
Lead Manager her/his investment career in 19.
- --------------------------------------------------------------------------------
Susan E. Gray - 19 Joined Scudder Kemper in 19. She began
Manager her/his investment career in 19.
74
<PAGE>
Kemper Europe Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Marc Slendebrock - 19 Joined Scudder Kemper in 19. He began
Lead Manager his investment career in 19.
Kemper Global Blue Chip Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Diego Espinosa - 19 Joined Scudder Kemper in 19. He began
Lead Manager his investment career in 19.
- --------------------------------------------------------------------------------
William E. Holzer - 19 Joined Scudder Kemper in 19. He began
Manager his investment career in 19.
- --------------------------------------------------------------------------------
Nicholas Bratt - 19 Joined Scudder Kemper in 19. He began
Manager his investment career in 19.
Kemper Global Discovery Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Gerald J. Moran - 1991 Joined Scudder Kemper in 1968. He
Lead Manager began his investment career in 1968.
- --------------------------------------------------------------------------------
Sewall Hodges - 1996 Joined Scudder Kemper in 1995. He
Manager began his investment career in 1985.
Kemper Global Income Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Pankaj Shah - Lead 19 Joined Scudder Kemper in 19. He began
Manager his investment career in 19.
- --------------------------------------------------------------------------------
Terence C. Prideaux - 19 Joined Scudder Kemper in 19. He began
Manager his investment career in 19.
Kemper International Growth and Income Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Sheridan Reilly - 19 Joined Scudder Kemper in 19. He began
Lead Manager his investment career in 19.
- --------------------------------------------------------------------------------
Irene Cheng - Manager 19 Joined Scudder Kemper in 19. She began
her investment career in 19.
75
<PAGE>
Kemper International Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Stephen P. Dexter - 19 Joined Scudder Kemper in 19. He began
Co-Lead Manager his investment career in 19.
- --------------------------------------------------------------------------------
Marc J. Slendebroeck - 19 Joined Scudder Kemper in 19. He began
Co-Lead Manager his investment career in 19.
- --------------------------------------------------------------------------------
Dennis H. Ferro - 19 Joined Scudder Kemper in 19. He began
Manager his investment career in 19.
Growth Fund Of Spain
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Joan R. Gregory - 19 Joined Scudder Kemper in 19. She began
Lead Manager her investment career in 19.
- --------------------------------------------------------------------------------
Nicholas Bratt - 19 Joined Scudder Kemper in 19. He began
Manager his investment career in 19.
Kemper Latin America Fund
Name & Title Joined the Fund Background
- --------------------------------------------------------------------------------
Tara C. Kenney - 19 Joined Scudder Kemper in 19. She began
Lead Manager her investment career in 19.
- --------------------------------------------------------------------------------
Edmund B. Games, Jr. - 19 Joined Scudder Kemper in 19. He began
Manager his investment career in 19.
- --------------------------------------------------------------------------------
Paul Rogers - Manager 19 Joined Scudder Kemper in 19. He began
his investment career in 19.
Year 2000 Readiness
Like other mutual funds and financial and business organizations worldwide, the
funds could be adversely affected if computer systems on which a fund relies,
which primarily include those used by the investment manager, its affiliates or
other service providers, are unable to correctly process date-related
information on and after January 1, 2000. This risk is commonly called the Year
2000 Issue. Failure to successfully address the Year 2000 Issue could result in
interruptions to and other material adverse effects on the funds' business and
operations, such as problems with calculating net asset value and difficulties
in implementing a fund's purchase and redemption procedures. The investment
manager has commenced a review of the Year
76
<PAGE>
2000 Issue as it may affect the funds and is taking steps it believes are
reasonably designed to address the Year 2000 Issue, although there can be no
assurances that these steps will be sufficient. In addition, there can be no
assurances that the Year 2000 Issue will not have an adverse effect on the
issuers whose securities are held by a fund or on global markets or economies
generally.
Euro Conversion
The planned introduction of a new European currency, the Euro, may result in
uncertainties for European securities in the markets in which they trade and
with respect to the operation of the Fund's portfolio. Currently, the Euro is
expected to be introduced on January 1, 1999 by eleven European countries that
are members of the European Economic and Monetary Union (EMU). The introduction
of the Euro will require the redenomination of European debt and equity
securities over a period of time, which may result in various accounting
differences and/or tax treatments that otherwise would not likely occur.
Additional questions are raised by the fact that certain other EMU members,
including the United Kingdom, will not officially be implementing the Euro on
January 1, 1999. If the introduction of the Euro does not take place as planned,
there could be negative effects, such as severe currency fluctuations and market
disruptions.
Scudder Kemper is actively working to address Euro-related issues and
understands that other key service providers are taking similar steps. At this
time, however, no one knows precisely what the degree of impact will be. To the
extent that the market impact or effect on a portfolio holding is negative, it
could hurt the portfolio's performance.
ABOUT YOUR INVESTMENT
Choosing a share class
Each fund provides investors with the option of purchasing shares in the
following ways:
77
<PAGE>
Class A Shares(1) Offered at net asset value plus a maximum sales charge
of 5.75% of the offering price, or 4.5% of the offering
price in the cases of Kemper Global Income Fund and
Kemper Emerging Markets Income Fund.
Reduced sales charges apply to purchases of $50,000 or
more for all funds except Kemper Global Income Fund and
Kemper Emerging Markets Income Fund. Reduced sales
charges apply to purchases of $100,000 or more for
Kemper Global Income Fund and Kemper Emerging Markets
Income Fund. 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 if
redeemed within one year of purchase and a 0.50%
contingent deferred sales change if redeemed during the
second year of purchase.
Class B Shares(1) Offered at net asset value without an initial sales
charge, but subject to a 0.75% 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(1) Offered at net asset value without an initial sales
charge, but subject to a 0.75% Rule 12b-1 distribution
fee and a 1% contingent deferred sales charge on
redemptions made within one year of purchase. Class C
shares do not convert into another class.
(1) Class A, B and C shares of Growth Fund of Spain are subject to a 2%
redemption fee on shares redeemed or exchanged within one year after purchase,
with limited exceptions.
When placing purchase orders, investors must specify whether the order is for
Class A, Class B or Class C shares. Each class of shares represents interests in
the same portfolio of investments of a fund.
The decision as to which class to choose depends on a number of factors,
including the amount and intended length of the investment. Investors 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. For
78
<PAGE>
more information about these sales arrangements, consult your financial
representative or the Shareholder Service Agent. Be aware that financial
services firms may receive different compensation depending upon which class of
shares they sell.
Rule 12b-1 plan
Each fund has adopted a plan under Rule 12b-1 that provides for fees payable as
an expense of the Class B shares and the Class C shares that are used by the
transfer agent to pay for distribution and services for those classes. Because
12b-1 fees are paid out of fund assets on an ongoing basis, they will, over
time, increase the cost of investment and may cost more than other types of
sales charges. 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 Kemper Distributors, Inc. believes that it is
unlikely, in the case of Class B shares, because of the automatic conversion
feature of the shares.
Special features
Class A Shares -- Combined Purchases. Each fund's Class A shares (or the
equivalent) may be purchased at the rate applicable to the discount bracket
attained by combining concurrent investments in Class A shares of most Kemper
Funds.
Class A Shares -- Letter of Intent. The same reduced sales charges for Class A
shares also apply to the aggregate amount of purchases made by any purchaser
within a 24-month period under a written Letter of Intent ("Letter") provided by
Kemper Distributors. 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.
Class A Shares -- Cumulative Discount. Class A shares of a fund may also be
purchased at the rate applicable to the discount bracket attained by adding to
the cost of shares of a fund being purchased, the value of all Class A shares of
the above mentioned Kemper Funds (computed at the maximum offering price at the
time of the purchase for which the discount is applicable) already owned by the
investor.
Exchange Privilege -- General. Shareholders of Class A, Class B and Class C
shares may exchange their shares for shares of the corresponding class of Kemper
Mutual Funds. Shares of a Kemper Fund with a value in excess of $1,000,000
(except Kemper Cash Reserves Fund) acquired by exchange from another Kemper
Fund, or from a Money Market Fund, may not be exchanged thereafter until they
have been owned for 15 days (the "15 Day Hold Policy").
79
<PAGE>
For purposes of determining any 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.
80
<PAGE>
Buying shares
Class A Shares -- All funds, except Kemper Global Income Fund and Kemper
Emerging Markets Income Fund
<TABLE>
<CAPTION>
Public Amount of Purchase
Offering Price. Sales Charge Sales Charge as a
Including Sales as a % of % of Net Asset
Charge Offering Price Value*
-------------- -----
<S> <C> <C>
Less than $50,000 5.75% 6.10%
$50,000 but less than $100,000 4.50 4.71
$100,000 but less than $250,000 3.50 3.63
$250,000 but less than $500,000 2.60 2.67
$500,000 but less than $1 million 2.00 2.04
$1 million and over 0.00** 0.00
</TABLE>
* Rounded to nearest one hundredth percent.
**Redemption of shares may be subject to a contingent deferred
sales charge as discussed below.
Class A Shares - Kemper Global Income Fund and Kemper Emerging Markets Income
Fund
<TABLE>
<CAPTION>
Public Amount of Purchase
Offering Price. Sales Charge Sales Charge as a
Including Sales as a % of % of Net Asset
Charge Offering Price Value*
-------------- -----
<S> <C> <C>
Less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.50 3.63
$250,000 but less than $500,000 2.60 2.67
$500,000 but less than $1 million 2.00 2.04
$1 million and over 0.00** 0.00
</TABLE>
* Rounded to nearest one hundredth percent.
**Redemption of shares may be subject to a contingent deferred
sales charge as discussed below.
NAV Purchases
Class A shares of a fund may be purchased at net asset value
by:
o shareholders in connection with the investment or
reinvestment of income and capital gain dividends
o a participant-directed qualified retirement plan or a
participant-directed non-qualified deferred compensation
plan or a participant-directed qualified retirement plan
which is not sponsored by a K-12 school district,
provided in each case that such plan has not less than
200 eligible employees
o any purchaser with Kemper Funds investment totals of at
least $1,000,000
o unitholders of unit investment trusts sponsored by
Ranson & Associates, Inc. or its predecessors through
reinvestment programs described in the prospectuses of
such trusts that have such programs
81
<PAGE>
o officers, trustees, directors, employees (including
retirees) and sales representatives of a fund, its
investment manager, its principal underwriter or certain
affiliated companies, for themselves or members of their
families
82
<PAGE>
Class A Shares (cont.)
o persons who purchase shares through bank trust
departments that process such trades through an
automated, integrated mutual fund clearing program
provided by a third party clearing firm
o registered representatives and employees of
broker-dealers having selling group agreements with
Kemper Distributors
o officers, directors, and employees of service agents of
the funds
o members of the plaintiff class in the proceeding known
as Howard and Audrey Tabankin, et al. v. Kemper
Short-Term Global Income Fund, et. al., Case No. 93 C
5231 (N.D.IL)
o selected employees (including their spouses and
dependent children) of banks and other financial
services firms that provide administrative services
related to the funds pursuant to an agreement with
Kemper Distributors or one of its affiliates
o certain professionals who assist in the promotion of
Kemper Funds pursuant to personal services contracts
with Kemper Distributors, for themselves or members of
their families
o in connection with the acquisition of the assets of or
merger or consolidation with another investment company
o shareholders who owned shares of Kemper Value Series,
Inc. ("KVS") on September 8, 1995, and have continuously
owned shares of KVS (or a Kemper Fund acquired by
exchange of KVS shares) since that date, for themselves
or members of their families
o any trust, pension, profit-sharing or other benefit plan
for only such persons.
o Persons who purchase shares of the fund through Kemper
Distributors as part of an automated billing and wage
deduction program administered by RewardsPlus of America
o through certain investment advisers registered under the
Investment Advisers Act of 1940 and other financial
services firms that adhere to certain standards
established by Kemper Distributors, including a
requirement that such shares be sold for the benefit of
their clients participating in an investment advisory
program under which such clients pay a fee to the
investment advisor or other firm for portfolio
management and other services. Such shares are sold for
investment purposes and on the condition that they will
not be resold except through redemption or repurchase by
the funds
83
<PAGE>
Class A Shares (cont.)
Contingent A contingent deferred sales charge may be imposed upon
Deferred Sales redemption of Class A shares purchased under the Large Order
Charge NAV Purchase Privilege as follows: 1% if they are redeemed
within one year of purchase and .50% if redeemed during the
second year following purchase. The charge will not be imposed
upon redemption of reinvested dividends or share appreciation.
The contingent deferred sales charge will be waived in the
event of:
o redemptions under a fund's Systematic Withdrawal Plan at
a maximum of 10% per year of the net asset value of the
account
o redemption of shares of a shareholder (including a
registered joint owner) who has died
o 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)
o redemptions by a participant-directed qualified
retirement plan or a participant-directed non-qualified
deferred compensation plan or a participant-directed
qualified retirement plan which is not sponsored by a
K-12 school district
o redemptions by employer sponsored employee benefit plans
using the subaccount record keeping system made
available through the Shareholder Service Agent
o redemptions of shares whose dealer of record at the time
of the investment notifies Kemper Distributors that the
dealer waives the commission applicable to such Large
Order NAV Purchase
Rule 12b-1 Fee None
Exchange Class A shares may be exchanged for each other at their
Privilege relative net asset values. Shares of Money Market Funds and
Kemper Cash Reserves Fund acquired by purchase (not including
shares acquired by dividend reinvestment) are subject to the
applicable sales charge on exchange
Class A shares purchased under the Large Order NAV Purchase
Privilege may be exchanged for Class A shares of any Kemper
Fund or a Money Market Fund without paying any contingent
deferred sales charge. If the Class A shares received on
exchange are redeemed thereafter, a contingent deferred sales
charge may be imposed
84
<PAGE>
Class B Shares
Public Offering Net asset value per share without any sales charge at the time
Price of purchase
Contingent A contingent deferred sales charge may be imposed upon
Deferred Sales redemption of Class B shares. There is no such charge upon
Charge redemption of any share appreciation or reinvested dividends.
The charge is computed at the following rates applied to the
value of the shares redeemed excluding amounts not subject to
the charge.
Year of Redemption First Second Third Fourth Fifth Sixth
After Purchase:
---------------------------------------------------------------
Contingent Deferred 4% 3% 3% 2% 2% 1%
Sales Charge:
---------------------------------------------------------------
The contingent deferred sales charge will be waived:
o 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)
o 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 Code Section
72(t)(2)(A)(iv) prior to age 59 1/2
o for redemptions made pursuant to a systematic withdrawal
plan (see "Special Features -- Systematic Withdrawal
Plan" below)
o 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
o in the event of the death of the shareholder (including
a registered joint owner)
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 the
Shareholder Service Agent:
o 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)
o redemptions in connection with retirement distributions
(limited at any one time to 10% of the total value of
plan assets invested in a fund
o redemptions in connection with distributions qualifying
under the hardship provisions of the Code
o redemptions representing returns of excess contributions
to such plans
Rule 12b-1 Fee 0.75%
Conversion Class B shares of a fund will automatically convert to Class A
Feature shares of the same fund six years after issuance on the basis
of the relative net asset value per share. 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.
Exchange Class B shares of a fund and Class B shares of most Kemper
Privilege Funds may be exchanged for each other at their relative net
asset values without a contingent
85
<PAGE>
deferred sales charge.
86
<PAGE>
Class C Shares
Public Offering Net asset value per share without any sales charge at the time
Price of purchase
Contingent o A contingent deferred sales charge of 1% may be imposed
Deferred upon redemption of Class C shares redeemed within one
Sales Charge year of purchase. The charge will not be imposed upon
redemption of reinvested dividends or share
appreciation. The contingent deferred sales charge will
be waived in the event of:
o 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
o redemptions by employer sponsored employee benefit plans
(or their participants) using the subaccount record
keeping system made available through the Shareholder
Service Agent
o redemption of shares of a shareholder (including a
registered joint owner) who has died
o 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)
o redemptions under a fund's Systematic Withdrawal Plan at
a maximum of 10% per year of the net asset value of the
account
o redemption of shares by an employer sponsored employee
benefit plan that offers funds in addition to Kemper
Funds and whose dealer of record has waived the advance
of the first year administrative service and
distribution fees applicable to such shares and agrees
to receive such fees quarterly
o redemption of shares purchased through a
dealer-sponsored asset allocation program maintained on
an omnibus record-keeping system provided the dealer of
record has waived the advance of the first year
administrative services and distribution fees applicable
to such shares and has agreed to receive such fees
quarterly
Rule 12b-1 Fee 0.75%
Conversion None
Feature
Exchange Class C shares of a fund and Class C shares of most Kemper
Privilege Funds may be exchanged for each other at their relative net
asset values. Class C shares may be exchanged without a
contingent deferred sales charge.
87
<PAGE>
Selling and exchanging shares
General
Any shareholder may require a fund to redeem his or her shares. When shares are
held for the account of a shareholder by the funds' transfer agent, the
shareholder may redeem them by sending a written request with signatures
guaranteed to Kemper Mutual Funds, Attention: Redemption Department, P.O. Box
419557, Kansas City, Missouri 64141-6557.
Share certificates
When certificates for shares have been issued, they must be mailed to or
deposited with the Shareholder Service Agent, along with a duly endorsed stock
power and accompanied by a written request for redemption. Redemption requests
and a stock power must be endorsed by the account holder with signatures
guaranteed. The redemption request and stock power must be signed exactly as the
account is registered including any special capacity of the registered owner.
Additional documentation may be requested, and a signature guarantee is normally
required, from institutional and fiduciary account holders, such as
corporations, custodians (e.g., under the Uniform Transfers to Minors Act),
executors, administrators, trustees or guardians.
Repurchases (confirmed redemptions)
A request for repurchase may be communicated by a shareholder through a
securities dealer or other financial services firm to Kemper Distributors, which
each fund has authorized to act as its agent. There is no charge by Kemper
Distributors with respect to repurchases; however, dealers or other firms may
charge customary commissions for their services. 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.
88
<PAGE>
Reinvestment privilege
Under certain circumstances, a shareholder who has redeemed Class A shares may
reinvest up to the full amount redeemed at net asset value at the time of the
reinvestment. 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. The reinvestment privilege may be terminated or modified at any
time.
Distributions and taxes
Dividends and capital gains distributions
Each fund normally distributes dividends of net investment income as follows:
annually for Kemper Asian Growth Fund, Kemper Emerging Markets Growth Fund,
Kemper Europe Fund, Kemper Global Blue Chip Fund, Kemper Global Discovery Fund,
Growth Fund Of Spain, Kemper International Fund, and Kemper Latin America Fund;
semi-annually for Kemper International Growth and Income Fund; monthly for
Kemper Emerging Markets Income Fund and Kemper Global Income Fund. Each fund
distributes any net realized short-term and long-term capital gains at least
annually.
Income and capital gains 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 on the reinvestment date, 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 gains dividends in cash and
long-term capital gains dividends in shares of the same class at net asset
value; or
(2) To receive income and capital gains dividends in cash.
89
<PAGE>
Any dividends of a fund that are reinvested will normally be reinvested in
shares of the same class of that same fund. However, by writing to the
Shareholder Service Agent, you may choose to have dividends of a fund invested
in shares of the same class of another Kemper fund at the net asset value of
that class and fund. To use this privilege, you must maintain a minimum account
value of $1,000 in the fund distributing the dividends. The funds will reinvest
dividend checks (and future dividends) in shares of that same fund and class if
checks are returned as undeliverable. Dividends and other distributions in the
aggregate amount of $10 or less are automatically reinvested in shares of the
same fund unless you request that such policy not be applied to your account.
Taxes
Generally, dividends from net investment income are taxable to you as ordinary
income. Long-term capital gains distributions, if any, are taxable to you as
long-term capital gains, regardless of how long you have owned your shares.
Short-term capital gains and any other taxable income distributions are taxable
to you as ordinary income. A portion of dividends from ordinary income may
qualify for the dividends-received deduction for corporations.
Any dividends or capital gains distributions declared in October, November or
December with a record date in such month and paid during the following January
are taxable to you as if paid on December 31 of the calendar year in which they
were declared.
A sale or exchange of your shares is a taxable event and may result in a capital
gain or loss which may be long-term or short-term, generally depending on how
long you owned the shares.
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, is taxable to you.
Each fund sends you detailed tax information about the amount and type of its
distributions by January 31 of the following year. 976378246In certain years,
you may be able to claim a credit or deduction on your income tax return for
your share of foreign taxes paid by a fund.
Each fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to you if you fail to provide the fund with
your correct taxpayer identification number or to make required certifications,
or if you have been notified by the IRS that you are subject to backup
withholding. Any such withheld amounts may be credited against your U.S. federal
income tax liability.
90
<PAGE>
Shareholders of a fund may be subject to state, local and foreign taxes on fund
distributions and dispositions of fund shares. You should consult your tax
advisor regarding the particular tax consequences of an investment in a fund.
Transaction information
Share price
Scudder Fund Accounting Corporation determines the net asset value per share of
the funds as of the close of regular trading on the New York Stock Exchange,
normally 4:00 p.m. eastern time, on each day the New York Stock Exchange is open
for trading. Market prices are used to determine the value of the funds' assets,
but when reliable market quotations are unavailable, a fund may use procedures
established by its Board of Directors/Trustees.
The net asset value per share of each fund is the value of one share and is
determined separately for each class by dividing the value of a 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
the fund will generally be lower than that of the Class A shares of a fund
because of the higher annual expenses borne by the Class B and Class C shares.
To the extent that the funds invest in foreign securities, these securities may
be listed on foreign exchanges that trade on days when the funds do not price
their shares. As a result, the net asset value per share of the funds may change
at a time when shareholders are not able to purchase or redeem their shares.
Redemption Fee
Upon the redemption of exchange of any class of shares of Growth Fund of Spain
held for less than one year, a fee of 2% of the current net asset value of the
shares will be assessed and retained by the fund for the benefit of the
remaining shareholders. The fee is waived for all shares purchase through
certain retirement plans, including 401(k) plans, 403(b) plans, 457 plans, Keogh
accounts, and other pension, profit-sharing and employee benefit plans. However,
if such shares are purchased through a broker, financial institution or
recordkeeper maintaining an omnibus account for the shares, such waiver may not
apply. In addition this waiver does not apply to any IRA or SEP-IRA accounts.
This fee is intended to encourage long-term investment in the fund, to avoid
transaction and other expenses caused by early redemptions, and to facilitate
portfolio management. The fee is not a deferred sales charge, is not a
commission paid to the investment manager or its subsidiaries, and does not
benefit
91
<PAGE>
the investment manager in any way. The fund reserves the right to modify the
terms of or terminate this fee at any time.
The fee applies to redemptions from the fund and exchanges to other Kemper
Funds, but not to dividend or capital gains distributions which have been
automatically reinvested in the fund. The fee is applied to the shares being
redeemed or exchanges in the order in which they were purchased. In the event
that a shareholder has acquired shares of the fund in connection with the fund's
acquisition of the assets of or merger or consolidation with another investment
company, the shareholder will generally be permitted to add the period he or she
held shares of the acquired fund to the time he or she has held Class A shares
of the fund in determining the applicability of the redemption fee. In such a
case, the shareholder bears the burden of demonstrating to the fund the period
of ownership of the acquired fund. Proof of ownership for the required period
may be demonstrated by providing copies of brokerage account statements or other
appropriate share records in connection with a redemption under cover of the
redemption and certification form attached to this prospectus.
Processing time
All requests to buy and sell shares that are received in good order by the
funds' transfer agent by the close of regular trading on the New York Stock
Exchange are executed at the net asset value per share calculated at the close
of trading that day (subject to any applicable sales load or contingent deferred
sales charge). Orders received by dealers or other financial services firms
prior to the determination of net asset value and received by the funds'
transfer agent prior to the close of its business day will be confirmed at a
price based on the net asset value effective on that day. If an order is
accompanied by a check drawn on a foreign bank, funds must normally be collected
before shares will be purchased.
Signature guarantees
A signature guarantee is required when you sell more than $100,000 worth of
shares. You can obtain a guarantee from most brokerage houses and financial
institutions, although not from a notary public. The funds will normally send
you the proceeds within one business day following your request, but may take up
to seven business days (or longer in the case of shares recently purchased by
check).
Purchase restrictions
Purchases and sales should be made for long-term investment purposes only. The
funds and their transfer agent each reserves the right to reject purchases of
fund shares (including exchanges) for any reason including when there is
evidence of a pattern of
92
<PAGE>
frequent purchases and sales made in response to short-term fluctuations in a
fund's share price.
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, each
fund may temporarily suspend the offering of its shares or a class of its shares
to new investors. During the period of such suspension, persons who are already
shareholders normally are permitted to continue to purchase additional shares
and to have dividends reinvested.
Minimum balances
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.
Because of the high cost of maintaining small accounts, the funds may assess a
quarterly fee of $9 on an account with a balance below $1,000 for the quarter.
The fee will not apply to accounts enrolled in an automatic investment program,
Individual Retirement Accounts or employer sponsored employee benefit plans
using the subaccount record keeping system made available through the
Shareholder Service Agent.
Third party transactions
If you buy and sell shares of a fund through a member of the National
Association of Securities Dealers, Inc. (other than the funds' transfer agent),
that member may charge a fee for that service. This prospectus should be read in
connection with such firms' material regarding their fees and services.
Redemption-in-kind
Each fund reserves the right to honor any request for redemption or repurchase
order by making payment in whole or in part in readily marketable securities
("redemption in kind"). These securities will be chosen by the fund and valued
as they are for purposes of computing the fund's net asset value. A shareholder
may incur transaction expenses in converting these securities to cash.
93
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below are intended to help you understand the funds' financial
performance for the period reflected below. Certain information reflects the
financial results for a single fund share. The total return figures show what an
investor in a fund would have earned (or lost) assuming reinvestment of all
distributions. This information had been audited by Ernst & Young LLP whose
report, along with the funds' financial statements, are included in the funds'
annual reports, which are available upon request by calling Kemper at
1-800-621-1048.
[TO BE COMPLETED]
94
<PAGE>
Additional information about the funds may be found in each fund's respective
Statement of Additional Information, the Shareholder Services Guide and in
shareholder reports. Shareholder inquiries may be made by calling the toll-free
telephone number listed below. The Statements of Additional Information contain
information on fund investments and operations. The Shareholder Services Guide
contains information about purchases and sales of fund shares. The semiannual
and annual shareholder reports contain a discussion of the market conditions and
the investment strategies that significantly affected the funds' performance
during the last fiscal year, as well as a listing of portfolio holdings and
financial statements. These and other fund documents may be obtained without
charge from the following sources:
==========================================================================
By Phone: In Person:
- --------------------------------------------------------------------------
Call Kemper at: Public Reference Room
1-800-621-1048 Securities and Exchange Commission,
Washington, D.C.
(Call 1-800-SEC-0330
for more information).
- --------------------------------------------------------------------------
By Mail: By Internet:
- --------------------------------------------------------------------------
Kemper Distributors, Inc. http://www.sec.gov
222 South Riverside Plaza http://www.kemper.com
Chicago, IL 60606-5808
Or
Public Reference Section,
Securities and Exchange Commission,
Washington, D.C. 20549-6009
(a duplication fee is charged)
==========================================================================
The Statement of Additional Information is incorporated by reference into this
prospectus (is legally a part of this prospectus).
Investment Company Act file numbers:
Kemper Asian Growth Fund 811-7731
Kemper Emerging Markets Growth Fund 811-08395
Kemper Emerging Markets Income Fund 811-08395
Kemper Europe Fund 811-7479
Kemper Global Blue Chip Fund 811-08395
Kemper Global Discovery Fund 811-4670
Kemper Global Income Fund 811-5829
Kemper International Growth and Income Fund 811-08395
Kemper International Fund 811-3136
Growth Fund Of Spain 811-08395
Kemper Latin America Fund 811-08395
Printed with SOYINK Printed on recycled paper
xx-xx-xx
(codes)
95
STATEMENT OF ADDITIONAL INFORMATION
March 1, 1999
KEMPER ASIAN GROWTH FUND (the "Asian Fund")
KEMPER EUROPE FUND (the "Europe Fund")
KEMPER GLOBAL INCOME FUND (the "Global Fund")
KEMPER INTERNATIONAL FUND (the "International Fund")
222 South Riverside Plaza, Chicago, Illinois 60606
1-800-621-1048
This Statement of Additional Information is not a prospectus. It is the combined
Statement of Additional Information for the Asian, Europe, Global and
International Funds (the "Funds"). It should be read in conjunction with the
combined prospectus of the Funds dated March 1, 1999. The prospectus may be
obtained without charge from the Funds and is also available along with other
related materials on the SEC's Internet web site (http://www.sec.gov).
--------------------
TABLE OF CONTENTS
[TO BE UPDATED]
Page
Investment Restrictions.......................................
Investment Policies and Techniques............................
Dividends and Taxes...........................................
Performance...................................................
Investment Manager and Underwriter............................
Portfolio Transactions........................................
Purchase, Repurchase and Redemption of Shares.................
Officers and Trustees.........................................
Shareholder Rights............................................
Appendix--Ratings of Investments..............................
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-13 3/99 printed on recycled paper
<PAGE>
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 Asian Growth, Europe, and International Funds are classified as diversified
open-end management investment companies. The Global Income Fund is a
non-diversified open-end management company.
The Asian Fund may not, as a fundamental policy:
1. Make loans except as permitted under the Investment Company Act of 1940,
as amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
2. Borrow money, except as permitted under the Investment Company Act of
1940, as amended, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time.
3. Concentrate its investments in a particular industry, as that term is used
in the Investment Company Act of 1940, as amended, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
2
<PAGE>
4. Purchase physical commodities or contracts relating to physical
commodities.
5. Engage in the business of underwriting securities issued by others, except
to the extent that a Fund may be deemed to be an underwriter in connection
with the disposition of portfolio securities.
6. Issue senior securities except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
7. Purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities.
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 Fund has
adopted the following non-fundamental restrictions, which may be changed by the
Board of Trustees without shareholder approval. The Fund may not:
i. Invest for the purpose of exercising control or management of
another issuer.
ii. 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 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; except that all or substantially all of
the assets of the Fund may be invested in another registered
investment company having the same investment objective and
substantially similar investment policies as the Fund.
iii. Invest more than 15% of its net assets in illiquid securities.
iv. Purchase more than 10% of any class of voting securities of any
issuer, except that all or substantially all of the assets of the
Fund may be invested in another registered investment company having
the same investment objective and substantially similar investment
policies as the Fund.
v. Pledge, hypothecate, mortgage or otherwise encumber more than 15% of
its total assets and then only to secure borrowings. (The collateral
arrangements with respect to options and financial futures
transactions and any margin payments in connection therewith are not
deemed to be pledges or other encumbrances.)
3
<PAGE>
vi. 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 options and financial futures
transactions.
vii. 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.
The Europe Fund may not, as a fundamental policy:
1. Make loans except as permitted under the Investment Company Act of 1940,
as amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
2. Borrow money, except as permitted under the Investment Company Act of
1940, as amended, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time.
3. Concentrate its investments in a particular industry, as that term is used
in the Investment Company Act of 1940, as amended, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
4
<PAGE>
4. Purchase physical commodities or contracts relating to physical
commodities.
5. Purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities.
6. Engage in the business of underwriting securities issued by others, except
to the extent that a Fund may be deemed to be an underwriter in connection
with the disposition of portfolio securities.
7. Issue senior securities except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
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 Fund has
adopted the following non-fundamental restrictions, which may be changed by the
Board of Trustees without shareholder approval. The Fund may not:
i. Invest for the purpose of exercising control or management of
another issuer.
ii. 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 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.
iii. Invest more than 15% of its net assets in illiquid securities.
iv. Purchase more than 10% of any class of voting securities of any
issuer.
v. Pledge, hypothecate, mortgage or otherwise encumber more than 15% of
its total assets and then only to secure borrowings. (The collateral
arrangements with respect to options and financial futures
transactions and any margin payments in connection therewith are not
deemed to be pledges or other encumbrances.)
vi. 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 options and financial futures
transactions.
vii. 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.
5
<PAGE>
The Global Fund may not, as a fundamental policy:
1. Make loans except as permitted under the Investment Company Act of 1940,
as amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
2. Borrow money, except as permitted under the Investment Company Act of
1940, as amended, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time.
3. Concentrate its investments in a particular industry, as that term is used
in the Investment Company Act of 1940, as amended, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
6
<PAGE>
4. Purchase physical commodities or contracts relating to physical
commodities.
5. Purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities.
6. Engage in the business of underwriting securities issued by others, except
to the extent that a Fund may be deemed to be an underwriter in connection
with the disposition of portfolio securities.
7. Issue senior securities except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
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. Invest for the purpose of exercising control or management of
another issuer.
ii. Invest more than 15% of its net assets in illiquid securities.
iii. Purchase securities of other open-end investment companies, except
in connection with a merger, consolidation, reorganization or
acquisition of assets; except that all or substantially all of the
assets of the Fund may be invested in another registered investment
company having the same investment objective and substantially
similar investment policies as the Fund.
iv. Purchase more than 10% of any class of voting securities of any
issuer, except that all or substantially all of the assets of the
Fund may be invested in another registered investment company having
the same investment objective and substantially similar investment
policies as the Fund.
v. Pledge, hypothecate, mortgage or otherwise encumber more than 15% of
its total assets and then only to secure borrowings. (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.)
7
<PAGE>
vi. 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.
vii. 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.
viii. 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.
The International Fund may not, as a fundamental policy:
1. 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.
2. Make loans except as permitted under the Investment Company Act of 1940,
as amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time.
3. Borrow money, except as permitted under the Investment Company Act of
1940, as amended, and as interpreted or modified by regulatory authority
having jurisdiction, from time to time.
4. Concentrate its investments in a particular industry, as that term is used
in the Investment Company Act of 1940, as amended, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
5. Purchase physical commodities or contracts relating to physical
commodities.
8
<PAGE>
6. Purchase or sell real estate, which term does not include securities of
companies which deal in real estate or mortgages or investments secured by
real estate or interests therein, except that the Fund reserves freedom of
action to hold and to sell real estate acquired as a result of the Fund's
ownership of securities.
7. Engage in the business of underwriting securities issued by others, except
to the extent that a Fund may be deemed to be an underwriter in connection
with the disposition of portfolio securities.
8. Issue senior securities except as permitted under the Investment Company
Act of 1940, as amended, and as interpreted or modified by regulatory
authority having jurisdiction, from time to time.
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 for the purpose of exercising control or management of
another issuer.
ii. 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 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.
iii. Invest more than 15% of its net assets in illiquid securities.
iv. 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.
v. 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.
vi. 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.
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vii. 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.
INVESTMENT POLICIES AND TECHNIQUES
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.
ASIAN FUND. The objective of the Asian Fund is long-term capital growth. The
Fund seeks to achieve its objective by investing in a diversified portfolio
consisting primarily of equity securities of Asian companies ("Asian Equity
Securities"). Asian Equity Securities include common stocks, preferred stocks,
securities convertible into or exchangeable for common or preferred stocks,
equity investments in partnerships, joint ventures and other forms of
non-corporate investment and warrants, options and rights exercisable for equity
securities that are issued by Asian companies as defined below.
The Fund considers an issuer of securities to be an Asian company if: (i) it is
organized under the laws of an Asian country and has a principal office in an
Asian country; (ii) it derives 50% or more of its total revenues from business
in Asia; or (iii) its equity securities are traded principally on a stock
exchange in Asia. Under normal circumstances, the Fund will invest at least 85%
of its total assets in Asian Equity Securities and will invest at least 65% of
its total assets in Asian Equity Securities of issuers meeting at least one of
the first two criteria described in the preceding sentence. For purposes of the
foregoing policies, the Fund also considers Asian Equity Securities to include:
(i) shares of closed-end management investment companies, the assets of which
are invested primarily in Asian Equity Securities and (ii) depository receipts
(such as American Depository Receipts) where the underlying or deposited
securities are Asian Equity Securities.
Currently, the Fund invests principally in developing or "emerging" countries
(see "Special Risk Factors -- Emerging Markets" below). Some examples of
emerging countries in which the Fund may invest without limit include China,
Indonesia, Korea, Malaysia, Philippines, Thailand and Taiwan. The Fund may, in
the discretion of the Fund's investment manager, invest without limit in
developed Asian countries such as Hong Kong, Japan and Singapore, however, the
Fund will only invest in Japan when economic conditions warrant and then only in
limited amounts.
In pursuing its objective, the Fund invests primarily in Asian Equity Securities
believed to have potential for capital growth. However, there is no requirement
that the Fund invest exclusively in Asian Equity Securities. Subject to limits
described above, the Fund may invest in any other type of security including,
but not limited to, equity securities of non-Asian companies, bonds, notes and
other debt securities of domestic or foreign companies (including Asian-currency
instruments and securities) and obligations of domestic or foreign governments
and their political subdivisions. Currently, the Fund does not intend to invest
more than 5% of its net assets in debt securities (except for temporary
defensive investments described below).
The Fund makes investments in various Asian countries. Under normal
circumstances, business activities in not less than four different Asian
countries will be represented in the Fund's portfolio. The Fund may, from time
to time, have 40% or more of its assets invested in any major Asian industrial
or developed country which, in the view of the Fund's investment manager, poses
no unique investment risk. Investments may include securities issued by
enterprises that have undergone or are currently undergoing privatization.
In determining the appropriate distribution of investments among various Asian
countries and geographic regions, the Fund's investment manager ordinarily
considers such factors as prospects for relative economic growth among Asian
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 investors in Asian companies.
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When the investment manager deems it appropriate to invest for temporary
defensive purposes, such as during periods of adverse market conditions, up to
100% 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 temporary defensive purposes the Fund's assets may be
invested without limitation in U.S. Dollar-denominated obligations to reduce the
risks inherent in non-U.S. Dollar-denominated assets.
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 and may lend its portfolio securities. See
"Additional Investment Information" below.
EUROPE FUND. The objective of the Europe Fund is long-term capital growth. The
Fund seeks to achieve its objective by investing in a diversified portfolio
consisting primarily of equity securities of European companies ("European
Equity Securities"). European Equity Securities include common stocks, preferred
stocks, securities convertible into or exchangeable for common or preferred
stocks, equity investments in partnerships, joint ventures and other forms of
non-corporate investments and warrants, options and rights exercisable for
equity securities that are issued by European companies as defined below.
The Fund considers an issuer of securities to be a European company if: (i) it
is organized under the laws of a European country and has a principal office in
a European country; (ii) it derives 50% or more of its total revenues from
business in Europe; or (iii) its equity securities are traded principally on a
stock exchange in Europe. Under normal circumstances, the Fund will invest at
least 85% of its total assets in European Equity Securities and will invest at
least 65% of its total assets in European Equity Securities of issuers meeting
at least one of the first two criteria described in the preceding sentence. For
purposes of the foregoing policies, the Fund also considers European Equity
Securities to include: (i) shares of closed-end management investment companies,
the assets of which are invested primarily in European Equity Securities and
(ii) depository receipts (such as American Depository Receipts and European
Depository Receipts) where the underlying or deposited securities are European
Equity Securities.
The Fund invests principally in developed countries, but it may invest up to 25%
of its total assets in developing or "emerging" countries (see "Special Risk
Factors -- Emerging Markets" below). Currently, the developed European countries
in which the Fund may invest without limit include Austria, France, Germany, the
Netherlands, Switzerland, Spain, Italy, Luxembourg, United Kingdom, Ireland,
Belgium, Denmark, Sweden, Norway and Finland. The Fund may, in the discretion of
the Fund's investment manager, invest without limit in other European countries
in the future if they become developed countries. Some examples of emerging
European countries are Portugal, Greece, Turkey, Hungary, Poland and the Czech
Republic.
In pursuing its objective, the Fund invests primarily in European Equity
Securities believed to have potential for capital growth. However, there is no
requirement that the Fund invest exclusively in European Equity Securities.
Subject to limits described above, the Fund may invest in any other type of
security including, but not limited to, equity securities of non-European
companies, bonds, notes and other debt securities of domestic or foreign
companies (including Euro-currency instruments and securities) and obligations
of domestic or foreign governments and their political subdivisions. Currently,
the Fund does not intend to invest more than 5% of its net assets in debt
securities during the coming year (except for temporary defensive investments
described below).
The Fund makes investments in various European countries. Under normal
circumstances, business activities in not less than five different European
countries will be represented in the Fund's portfolio. The Fund may, from time
to time, have 25% or more of its assets invested in any major European
industrial or developed country which, in the view of the Fund's investment
manager, poses no unique investment risk. Investments may include securities
issued by enterprises that have undergone or are currently undergoing
privatization.
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In determining the appropriate distribution of investments among various
European countries and geographic regions, the Fund's investment manager
ordinarily considers such factors as prospects for relative economic growth
among European 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 investors in European companies.
When the investment manager deems it appropriate to invest for temporary
defensive purposes, such as during periods of adverse market conditions, up to
100% 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 temporary defensive purposes the Fund's assets may be
invested without limitation in U.S. Dollar-denominated obligations to reduce the
risks inherent in non-U.S. Dollar-denominated assets.
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 and may lend its portfolio securities. See
"Additional Investment Information" below.
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
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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 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.
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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
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, approximately 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
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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 upon the exchange rate at the time of disbursement or payment, and
restrictions on capital flows 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.
Because the Asian Fund concentrates its investments in Asian companies, the
performance of the Asian Fund is closely tied to economic and political
conditions within Asia. The current economies and political structures of many
of the countries the Asian Fund may invest in do not compare favorably with the
United States or other mature economies in terms of wealth and stability. As a
result, such investments will be subject to more risk and erratic and abrupt
price movements; particularly in the emerging Asian countries. Concentration of
the Asian Fund's investments in Asian companies presents greater risk than
investment in a more diversified portfolio of foreign securities.
Because the Europe Fund concentrates its investments in European companies, the
performance of the Europe Fund is closely tied to economic and political
conditions within Europe. Some European countries, particularly those in Eastern
Europe, have less stable economies than those in Western Europe. The movement of
many Eastern European countries toward market economies and the movement toward
a unified common market may significantly affect European economies and markets.
Economic growth transformation and renewal are currently taking place in
different areas and different ways including: a trend toward privatizations and
corporate restructurings, deregulation and modernization of securities markets;
reduction in trade barriers and currency restrictions; global expansion by major
European companies of both exports and production; steps toward the broadening
of the European Community; economic reform and modernization of the former
communist countries of Eastern Europe; expected further growth of an already
large middle class and a general increase in consumer spending; and anticipated
labor market restructuring. There can be no assurance, of course, that these
trends and conditions will continue or that anticipated economic benefits will
be realized. Concentration of the Europe Fund's investments in European
companies may present greater risk than investment in a more diversified
portfolio of foreign securities.
EMERGING MARKETS. While the Europe, Global and International Funds' investments
in foreign securities will principally be in developed countries, a Fund may,
and in the case of the Asian Fund will principally, invest in countries
considered by the Fund's investment manager to be developing or "emerging"
markets. The Europe Fund may invest up to 25% of its total assets in such
countries and, while no specific limits apply, it is currently anticipated that
less than 25% of the total assets for each of the Global and International Funds
will be invested in such countries. Developing or emerging markets 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.
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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 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 its 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 upon the investment
manager's analysis without relying on published ratings. Since such investments
will be based upon the investment manager's analysis rather than upon published
ratings, achievement of a Fund's goals may depend more upon the abilities of the
investment manager 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.
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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. Investments in foreign securities may include securities
issued by enterprises that have undergone or are currently undergoing
privatization. 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 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. Each Fund may invest in securities of foreign issuers in
the form of American Depository Receipts ("ADRs"). 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
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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 securities of foreign issuers
in the form of Global Depository Receipts ("GDRs"), and European Depository
Receipts ("EDRs") for the Europe, Global and International Funds, which are
receipts evidencing an arrangement with a bank, similar to that for ADRs, and
are designed for use in other foreign securities markets. EDRs and GDRs 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.
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, 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 "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. The Asian, Europe and Global Funds may each lend their portfolio
securities and the Global Fund may engage in delayed delivery transactions. For
a description of special risks associated with these investment techniques, see
"Additional Investment Information" below.
ADDITIONAL INVESTMENT INFORMATION. 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. See
"Dividends and Taxes" below.
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).
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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. If the Fund holds a material percentage of its assets in
illiquid securities, there may be a question concerning the ability of the Fund
to make payment within seven days of the date its shares are tendered for
redemption. SEC guidelines provide that the usual limit on aggregate holdings by
an open-end investment company of illiquid assets is 15% of its net assets. See
"Investment Policies and Techniques -- Over-the-Counter Options" 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. A Fund may invest in securities eligible for resale pursuant to Rule
144A under the Securities Act of 1933. This rule permits otherwise restricted
securities to be sold to certain institutional buyers, such as the Funds. Such
securities may be illiquid and subject to a Fund's limitation on illiquid
securities. A "Rule 144A" security may be treated as liquid, however, if so
determined pursuant to procedures adopted by the Board of Trustees. Investing in
Rule 144A securities could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers become
uninterested for a time in purchasing Rule 144A securities.
Each Fund has adopted certain fundamental investment restrictions, which are
presented above and that, together with the investment objective and any
policies of the Fund specifically designated in this statement of additional
information 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 ("1940 Act"), 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 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.
GENERAL. Each Fund may engage in futures, options and other derivatives
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 for the Funds 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 financial futures
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 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 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 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
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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 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, from the point of view of speculators, the 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 or other liquid securities ("eligible securities") to the
extent required by applicable regulation in connection with 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 or at the end of 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 or
at the end of 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 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 that is
used as a bench mark. 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 buyer of a put who also owns the related security is protected
by ownership of a put option against any decline in that 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
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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 security decline in value. For the covered call writer, substantial
appreciation in the value of the underlying asset would result in the security
being "called away." For the secured put writer, substantial depreciation in the
value of the underlying security would result in the security being "put to" the
writer. If a covered call option expires unexercised, the writer realizes a gain
in the amount of the premium received. If the covered call option writer has to
sell the underlying security because of the exercise of a call option, it
realizes a gain or loss from the sale of the underlying security, with the
proceeds being increased by the amount of the premium.
If a secured put option expires unexercised, the writer realizes a gain from the
amount of the premium. If the secured put writer has to buy the underlying
security 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 security is less than the exercise price of the put option. However,
this would be offset in whole or in part by gain from the premium received.
OVER-THE-COUNTER OPTIONS. As indicated herein (see "Investment Objectives,
Policies and Risk Factors"), 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 security 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 security 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
securities 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 securities 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.
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
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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 securities 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 value 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.
When a Fund writes an option on a securities index, it will segregate and
mark-to-market eligible securities to the extent required by applicable
regulation. In addition, where 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 sell options on other appropriate indices, as
available, such as foreign currency indices. Options on a securities index
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.
FOREIGN CURRENCY OPTIONS. Each Fund may engage in foreign currency options
transactions. 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
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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. Each Fund may engage in forward
foreign currency transactions. 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 in order to meet such needs as Fund expenses and
redemption requests. 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.
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 securities or other assets
denominated in that currency. See "Foreign Currency Transactions" under
"Investment Objectives, Policies and Risk Factors--Additional Investment
Information" herein. 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; each of the Asian, Europe and International Funds 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
eligible securities to the extent required by applicable regulation in
connection with 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.
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
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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. The Fund reserves
the right to sell these securities before the settlement date if deemed
advisable.
DERIVATIVES. In addition to options and financial futures transactions,
consistent with its objective, a Fund may invest in a broad array of financial
instruments and securities in which the value of the instrument or security is
"derived" from the performance of an underlying asset or a "benchmark" such as a
security index, an interest rate or a foreign currency ("derivatives").
Derivatives are most often used to manage investment risk, to increase or
decrease exposure to an asset class or benchmark (as a hedge or to enhance
return), or to create an investment position directly (often because it is more
efficient or less costly than direct investment). There is no guarantee that
these results can be achieved through the use of derivatives. The types of
derivatives used by a Fund and the techniques employed by the investment manager
may change over time as new derivatives and strategies are developed or
regulatory changes occur.
REGULATORY RESTRICTIONS. To the extent required to comply with applicable
regulation, 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 eligible securities in a segregated account. 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. Each of the Asian, Europe and Global Funds may make
short sales against-the-box for the purpose of, but not limited to, deferring
realization of loss when deemed advantageous 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 sold short or securities convertible into or
exchangeable for, without payment of any further consideration, securities 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.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, each of the Asian, Europe and Global Funds 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 other liquid
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<PAGE>
securities) equal to no less than the market value, determined daily, of the
securities loaned. A 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 a Fund's total assets.
DIVIDENDS AND TAXES
DIVIDENDS. The Global Fund normally distributes monthly dividends of net
investment income, the Asian, Europe and International Funds normally distribute
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").
Income dividends and capital gain dividends, if any, of a Fund will be credited
to shareholder accounts in full and fractional Fund shares of the same class 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.
Any dividends of a Fund that are reinvested normally will be reinvested in Fund
shares of the same class. 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. The Funds reinvest dividend checks (and future
dividends) in shares of that same class of the Fund and class if checks are
returned as undeliverable. Dividends and other distributions in the aggregate
amount of $10 or less are automatically reinvested in shares of the same Fund
unless the shareholder requests that such policy not be applied to the
shareholder's account..
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. Such
qualification does not involve governmental supervision or management of
investment practices or policy.
A regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90% of its investment
company taxable income (including net short-term capital gain) and generally is
not subject to federal income tax to the extent that it distributes annually its
investment company taxable income and net realized capital gains in the manner
required under the Code.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
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at a maximum rate of 20% on gains realized by a Fund from securities held more
than 18 months and at a maximum rate of 28% on gains realized by a Fund from
securities held more than 12 months but not more than 18 months. 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. A portion of the dividends paid by
the Funds may 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.
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.
The mark-to-market rules of the Code may require a Fund to recognize unrealized
gains and losses on certain options and futures held by the Fund at the end of
the fiscal year. Under these provisions, 60% of any capital gain or loss
recognized will generally be treated as long-term and 40% as short-term.
However, although certain forward contracts on foreign currency are
marked-to-market, the gain or loss is generally ordinary under Section 988 of
the Code. In addition, the straddle rules of the Code would require deferral of
certain losses realized on positions of a straddle to the extent that the Fund
had unrealized gains in offsetting positions at year end.
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. If any net realized long-term
capital gains in excess of net realized short-term capital losses are retained
by a Fund for reinvestment, requiring federal income taxes to be paid thereon by
a Fund, the Fund intends to elect to treat such capital gains as having been
distributed to shareholders. As a result, each shareholder will report such
capital gains as long-term capital gains, will be able to claim a relative share
of federal income taxes paid by the Fund on such gains as a credit against
personal federal income tax liability, and will be entitled to increase the
adjusted tax basis on Fund shares by the difference between a pro rata share of
such gains owned and the individual tax credit.
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 herein
under "Special Features--Class A Shares--Combined Purchases" (other than shares
of Kemper Cash Reserves Fund not acquired by exchange from another Kemper Mutual
Fund) 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 herein under "Redemption or
Repurchase of Shares--Reinvestment Privilege." If redeemed shares were held less
than 91 days, then the lesser of (a) the sales charge waived on the reinvested
shares, or (b) the sales charge incurred on the redeemed shares, is included in
the basis of the reinvested shares and is not included in the basis of the
redeemed shares. 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
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<PAGE>
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.
A Fund may invest in shares of certain foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFICs"). If
a Fund receives a so-called "excess distribution" with respect to PFIC stock,
the Fund itself may be subject to a tax on a portion of the excess distribution.
Certain distributions from a PFIC as well as gains from the sale of the PFIC
shares are treated as "excess distributions." In general, under the PFIC rules,
an excess distribution is treated as having been realized ratably over the
period during which the Fund held the PFIC shares. The Fund will be subject to
tax on the portion, if any, of an excess distribution that is allocated to prior
Fund taxable years and an interest factor will be added to the tax, as if the
tax had been payable in such prior taxable years. Excess distributions allocated
to the current taxable year are characterized as ordinary income even though,
absent application of the PFIC rules, certain excess distributions might have
been classified as capital gain.
A Fund may make an election to mark to market its shares of these foreign
investment companies in lieu of being subject to U.S. federal income taxation.
At the end of each taxable year to which the election applies, the Fund would
report as ordinary income the amount by which the fair market value of the
foreign company's stock exceeds the Fund's adjusted basis in these shares; any
mark to market losses and any loss from an actual disposition of shares would be
deductible as ordinary loss to the extent of any net mark to market gains
included in income in prior years. The effect of the election would be to treat
excess distributions and gain on dispositions as ordinary income which is not
subject to a fund level tax when distributed to shareholders as a dividend.
Alternatively, a Fund may elect to include as income and gain its share of the
ordinary earnings and net capital gain of certain foreign investment companies
in lieu of being taxed in the manner described above.
Equity options (including covered call options on portfolio stock) and
over-the-counter options on debt securities written or purchased by a Fund will
be subject to tax under Section 1234 of the Code. In general, no loss is
recognized by a Fund upon payment of a premium in connection with the purchase
of a put or call option. The character of any gain or loss recognized (i.e.,
long-term or short-term) will generally depend, in the case of a lapse or sale
of the option, on the Fund's holding period for the option, and in the case of
an exercise of a put option, on the Fund's holding period for the underlying
stock. The purchase of a put option may constitute a short sale for federal
income tax purposes, causing an adjustment in the holding period of the
underlying stock or substantially identical stock in the Fund's portfolio. If a
Fund writes a put or call option, no gain is recognized upon its receipt of a
premium. If the option lapses or is closed out, any gain or loss is treated as a
short-term capital gain or loss. If a call option is exercised, any resulting
gain or loss is a short-term or long-term capital gain or loss depending on the
holding period of the underlying stock. The exercise of a put option written by
a Fund is not a taxable transaction for the Fund.
Many futures contracts and certain foreign currency forward contracts entered
into by a Fund and all listed non-equity options written or purchased by a Fund
(including options on futures contracts and options on broad-based stock
indices) will be governed by Section 1256 of the Code. Absent a tax election to
the contrary, gain or loss attributable to the lapse, exercise or closing out of
any such position generally will be treated as 60% long-term and 40% short-term
capital gain or loss, and on the last trading day of the Fund's fiscal year, all
outstanding Section 1256 positions will be marked to market (i.e. treated as if
such positions were closed out at their closing price on such day), with any
resulting gain or loss recognized as 60% long-term and 40% short-term. Under
Section 988 of the Code, discussed below, foreign currency gain or loss from
foreign currency-related forward contracts and similar financial instruments
entered into or acquired by a Fund will be treated as ordinary income. Under
certain circumstances, entry into a futures contract to sell a security may
constitute a short sale for federal income tax purposes, causing an adjustment
in the holding period of the underlying security or a substantially identical
security in the Fund's portfolio.
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Positions of a Fund which consist of at least one stock and at least one other
position with respect to a related security which substantially diminishes a
Fund's risk of loss with respect to such stock could be treated as a "straddle"
which is governed by Section 1092 of the Code, the operation of which may cause
deferral of losses, adjustments in the holding periods of stock or securities
and conversion of short-term capital losses into long-term capital losses. An
exception to these straddle rules exists for certain "qualified covered call
options" on stock written by the Fund.
Positions of a Fund which consist of at least one position not governed by
Section 1256 and at least one futures or forward contract or non-equity option
governed by Section 1256 which substantially diminishes a Fund's risk of loss
with respect to such other position will be treated as a "mixed straddle."
Although mixed straddles are subject to the straddle rules of Section 1092 of
the Code, certain tax elections exist for them which reduce or eliminate the
operation of these rules. The Fund intends to monitor its transactions in
options and futures and may make certain tax elections in connection with these
investments.
Notwithstanding any of the foregoing, recent tax law changes may require a Fund
to recognize gain (but not loss) from a constructive sale of certain
"appreciated financial positions" if a Fund enters into a short sale, offsetting
notional principal contract, futures or forward contract transaction with
respect to the appreciated position or substantially identical property.
Appreciated financial positions subject to this constructive sale treatment are
interests (including options, futures and forward contracts and short sales) in
stock, partnership interests, certain actively traded trust instruments and
certain debt instruments. Constructive sale treatment of appreciated financial
positions does not apply to certain transactions closed in the 90-day period
ending with the 30th day after the close of the Fund's taxable year, if certain
conditions are met.
Similarly, if a Fund enters into a short sale of property that becomes
substantially worthless, the Fund will be required to recognize gain at that
time as though it had closed the short sale. Future regulations may apply
similar treatment to other strategic transactions with respect to property that
becomes substantially worthless.
Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time a Fund accrues receivables or liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency, and on disposition of certain options, futures contracts and
forward contracts, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition are also treated as ordinary gain or loss. These gains
or losses, referred to under the Code as "Section 988" gains or losses, may
increase or decrease the amount of a Fund's investment company taxable income to
be distributed to its shareholders as ordinary income
Dividends from domestic corporations are expected to comprise a substantial part
of each Fund's gross income. To the extent that such dividends constitute a
portion of a Fund's gross income, a portion of the income distributions of the
Fund may be eligible for the deduction for dividends received by corporations.
Shareholders will be informed of the portion of dividends which so qualify. The
dividends-received deduction is reduced to the extent the shares of a Fund with
respect to which the dividends are received are treated as debt-financed under
federal income tax law, and is eliminated if either those shares or the shares
of the Fund are deemed to have been held by a Fund or the shareholder, as the
case may be, for less than 46 days during the 90-day period beginning 45 days
before the shares become ex-dividend.
Properly designated distributions of the excess of net long-term capital gain
over net short-term capital loss are taxable to shareholders as long-term
capital gain, regardless of the length of time the shares of the Fund have been
held by such shareholders. Such distributions are not eligible for the
dividends-received deduction. Any loss realized upon the redemption of shares
held at the time of redemption for six months or less will be treated as a
long-term capital loss to the extent of any amounts treated as distributions of
long-term capital gain during such six-month period.
Distributions of investment company taxable income and net realized capital
gains will be taxable as described above, whether received in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the net asset value of a share on the reinvestment date.
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All distributions of investment company taxable income and net realized capital
gain, whether received in shares or in cash, must be reported by each
shareholder on his or her federal income tax return. Dividends and capital gains
distributions declared in October, November or December and payable to
shareholders of record in such a month will be deemed to have been received by
shareholders on December 31 if paid during January of the following year.
Redemptions of shares, including exchanges for shares of another Scudder fund,
may result in tax consequences (gain or loss) to the shareholder and are also
subject to these reporting requirements.
The Funds will be required to report to the Internal Revenue Service all
distributions of taxable income and capital gains as well as gross proceeds from
the redemption or exchange of Fund shares, except in the case of certain exempt
shareholders. Under the backup withholding provisions of Section 3406 of the
Code, distributions of taxable income and capital gains and proceeds from the
redemption or exchange of the shares of a regulated investment company may be
subject to withholding of federal income tax at the rate of 31% in the case of
non-exempt shareholders who fail to furnish the investment company with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. Withholding may also be required if the
Fund is notified by the IRS or a broker that the taxpayer identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding provisions are
applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.
Shareholders of a Fund may be subject to state and local taxes on distributions
received from a Fund and on redemptions of the Fund's shares. Each distribution
is accompanied by a brief explanation of the form and character of the
distribution. In January of each year the Fund issues to each shareholder a
statement of the federal income tax status of all distributions.
Each Fund is organized as a Massachusetts business trust and is not liable for
any income or franchise tax in the Commonwealth of Massachusetts, provided that
it qualifies as a regulated investment company for federal income tax purposes.
An individual may make a deductible IRA contribution for any taxable year only
if (i) the individual is not an active participant in an employer's retirement
plan, or (ii) the individual has an adjusted gross income below a certain level
($50,000 for married individuals filing a joint return, with a phase-out of the
deduction for adjusted gross income between $50,000 and $60,000; $30,000 for a
single individual, with a phase-out for adjusted gross income between $30,000
and $40,000). An individual is not considered an active participant in an
employer's retirement plan if the individual's spouse is an active participant
in such a plan. However, in the case of a joint return, the amount of the
deductible contribution by the individual who is not an active participant (but
whose spouse is) is phased out for adjusted gross income between $150,000 and
$160,000. However, an individual not permitted to make a deductible contribution
to an IRA for any such taxable year may nonetheless make nondeductible
contributions up to $2,000 to an IRA (up to $2,000 per individual for married
couples if only one spouse has earned income) for that year. There are special
rules for determining how withdrawals are to be taxed if an IRA contains both
deductible and nondeductible amounts. In general, a proportionate amount of each
withdrawal will be deemed to be made from nondeductible contributions; amounts
treated as a return of nondeductible contributions will not be taxable. Also,
annual contributions may be made to a spousal IRA even if the spouse has
earnings in a given year if the spouse elects to be treated as having no
earnings (for IRA contribution purposes) for the year.
Distributions by a Fund result in a reduction in the net asset value of the
Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution would nevertheless be taxable to the
shareholder as ordinary income or capital gain as described above, even though,
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should consider the tax implications of buying shares just
prior to a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will then receive a partial return of capital upon the
distribution, which will nevertheless be taxable to them.
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. Each Fund
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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 Advisors regarding the 20% withholding requirement.
After each transaction, shareholders will receive a confirmation statement
giving complete details of the transaction except that statements will be sent
quarterly for transactions involving reinvestment of dividends and periodic
investment and redemption programs. Information for income tax purposes,
including, when appropriate, information regarding any foreign taxes and
credits, 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.
When more than one shareholder resides at the same address, certain reports and
communications to be delivered to such shareholders may be combined in the same
mailing package, and certain duplicate reports and communications may be
eliminated. Similarly, account statements to be sent to such shareholders may be
combined in the same mailing package or consolidated into a single statement.
However, a shareholder may request that the foregoing policies not be applied to
the shareholder's account.
The foregoing discussion of U.S. federal income tax law relates solely to the
application of that law to U.S. persons, i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each shareholder who is not
a U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under an
applicable income tax treaty) on amounts constituting ordinary income received
by him or her, where such amounts are treated as income from U.S. sources under
the Code.
Dividend and interest income received by a Fund from sources outside the U.S.
may be subject to withholding and other taxes imposed by such foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes, however, and foreign countries generally do
not impose taxes on capital gains respecting investments by foreign investors.
Shareholders should consult their tax advisors about the application of the
provisions of tax law described in this Statement of Additional Information in
light of their particular tax situations.
NET ASSET VALUE
The net asset value per share of a Fund is the value of one share and is
determined separately for each class by dividing the value of a Fund's net
assets attributable to the class by the number of shares of that class
outstanding. The per share net asset value of each of Class B and Class C shares
of the Fund will generally be lower than that of the Class A shares of a Fund
because of the higher expenses borne by the Class B and Class C shares. The net
asset value of shares of a Fund is computed as of the close of regular trading
(the "value time") on the New York Stock Exchange (the "Exchange") on each day
the Exchange is open for trading. The Exchange is scheduled to be closed on the
following holidays: New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
Portfolio securities for which market quotations are readily available are
generally valued at market value as of the value time in the manner described
below. All other securities may be valued at fair value as determined in good
faith by or under the direction of the Board.
With respect to the Funds with securities listed primarily on foreign exchanges,
such securities may trade on days when the Fund's net asset value is not
computed; and therefore, the net asset value of a Fund may be significantly
affected on days when the investor has no access to the Fund.
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An exchange-traded equity security is valued at its most recent sale price.
Lacking any sales, the security is valued at the calculated mean between the
most recent bid quotation and the most recent asked quotation (the "Calculated
Mean"). Lacking a Calculated Mean, the security is valued at the most recent bid
quotation. An equity security which is traded on The Nasdaq Stock Market Inc.
("Nasdaq") is valued at its most recent sale price. Lacking any sales, the
security is valued at the most recent bid quotation. The value of an equity
security not quoted on Nasdaq, but traded in another over-the-counter market, is
its most recent sale price. Lacking any sales, the security is valued at the
Calculated Mean. Lacking a Calculated Mean, the security is valued at the most
recent bid quotation.
Debt securities are valued at prices supplied by a pricing agent(s) which
reflect broker/dealer supplied valuations and electronic data processing
techniques. Money market instruments purchased with an original maturity of
sixty days or less, maturing at par, shall be valued at amortized cost, which
the Board believes approximates market value. If it is not possible to value a
particular debt security pursuant to these valuation methods, the value of such
security is the most recent bid quotation supplied by a bona fide marketmaker.
If it is not possible to value a particular debt security pursuant to the above
methods, the investment manager of the particular fund may calculate the price
of that debt security, subject to limitations established by the Board.
An exchange-traded options contract on securities, currencies, futures and other
financial instruments is valued at its most recent sale price on such exchange.
Lacking any sales, the options contract is valued at the Calculated Mean.
Lacking any Calculated Mean, the options contract is valued at the most recent
bid quotation in the case of a purchased options contract, or the most recent
asked quotation in the case of a written options contract. An options contract
on securities, currencies and other financial instruments traded
over-the-counter is valued at the most recent bid quotation in the case of a
purchased options contract and at the most recent asked quotation in the case of
a written options contract. Futures contracts are valued at the most recent
settlement price. Foreign currency exchange forward contracts are valued at the
value of the underlying currency at the prevailing exchange rate on the
valuation date.
If a security is traded on more than one exchange, or upon one or more exchanges
and in the over-the-counter market, quotations are taken from the market in
which the security is traded most extensively.
If, in the opinion of the Valuation Committee of the Board of Trustees, the
value of a portfolio asset as determined in accordance with these procedures
does not represent the fair market value of the portfolio asset, the value of
the portfolio asset is taken to be an amount which, in the opinion of the
Valuation Committee, represents fair market value on the basis of all available
information. The value of other portfolio holdings owned by a Fund is determined
in a manner which, in the discretion of the Valuation Committee, most fairly
reflects market value of the property on the valuation date.
Following the valuations of securities or other portfolios assets in terms of
the currency in which the market quotation used is expressed ("Local Currency"),
the value of these portfolio assets in terms of U.S. dollars is calculated by
converting the Local Currency into U.S. dollars at the prevailing currency
exchange rate on the valuation date.
PERFORMANCE
A Fund may advertise several types of performance information for a class of
shares, including "yield" and "average annual total return" and "total return."
Performance information will be computed separately for each class. Each of
these figures is based upon historical results and is not representative of the
future performance of any class of a Fund. A Fund with fees or expenses being
waived or absorbed by Scudder Kemper may also advertise performance information
before and after the effect of the fee waiver or expense absorption.
Aherein 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.
31
<PAGE>
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 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, Class B and Class C shares' yields based upon the one-month period ended
December 31, 1997 were 3.71%, 3.17%, and 3.26%, respectively. 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:
YIELD = 2[((a - b)/cd + 1)^6 - 1]
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 or Class C 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
may also be calculated without deducting the maximum sales charge.
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 and prospectus. Total return performance for a specific
period is calculated by first taking a hypothetical investment ("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 and Class C 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 would be
reduced if such charge were included.
32
<PAGE>
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 referenced, assuming the reinvestment of all dividends.
Thus, these figures reflect the change in the value of an investment in a 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 for performance purposes). 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 figures are based upon historical results and are not
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
each of the Asian, Europe and International Funds' 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. Redemption of Class C shares may be
subject to a 1% contingent deferred sales charge in the first year following
purchase. 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 and Class C shares that may be imposed at the end of the period in
question. Performance figures for the Class B shares and Class C shares not
including the effect of the applicable contingent deferred sales charge would be
reduced if it were included. 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.
A Fund's performance may be compared to that of the Consumer Price Index or
various unmanaged bond indexes including, but not limited to, the Salomon
Brothers High Grade Corporate Bond Index, the Lehman Brothers Adjustable Rate
Index, the Lehman Brothers Aggregate Bond Index, the Lehman Brothers Government/
Corporate Bond Index, the Salomon Brothers Long-Term High Yield Index, the
Salomon Brothers 30 Year GNMA Index and the Merrill Lynch Market Weighted Index
and may also be compared to the performance of other mutual funds or mutual fund
indexes with similar objectives and policies 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.
Information may be quoted from publications such as Morningstar, Inc., The Wall
Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago Tribune,
USA Today, Institutional Investor and Registered Representative. 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 and other bank products, money market
funds and U.S. Treasury obligations. Bank product performance may be based upon,
among other things, the BANK RATE MONITOR National Index(TM) 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. Economic indicators
may include, without limitation, indicators of market rate trends and cost of
funds, such as Federal Home Loan Bank Board 11th District Cost of Funds Index
("COFI").
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. A Fund may also describe its
portfolio holdings and depict its size or relative size compared to other mutual
funds, the number and make-up of its shareholder base and other descriptive
factors concerning the Fund.
Each 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 and Class C shares may
be subject to a contingent deferred sales charge as described above. Additional
information about each
33
<PAGE>
Fund's performance also appears in its Annual Report to Shareholders, which is
available without charge from the applicable Fund.
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
Austral-Asia 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 Financial
Times/Standard & Poor's Actuaries World Index--Europe(TM) is a managed index
that is generally representative of the equity securities of European markets.
The Morgan Stanley Capital International Asia Combined Far East Free Excluding
Japan Index is a capitalized weighted index that is representative of the equity
securities for the following countries: Hong Kong, Indonesia, Korea (at 20%),
Malaysia, Philippines free, Singapore free and Thailand. 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.
34
<PAGE>
ASIAN FUND--November 30, 1998 [To be updated]
<TABLE>
<CAPTION>
Initial Capital Income Ending Percentage Ending Percentage
TOTAL $10,000 Gain Dividends Value Increase Value Increase
RETURN Investment Dividends Reinvested (adjusted) (adjusted) (unadjusted (unadjusted
TABLE (1) Reinvested (2) (1) (1) (1) (1)
----- --- ---------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Shares
Life of 6,597 0 0 6,597 (34.0) 7,000 (30.0)
Fund(+)
One Year 6,244 0 0 6,244 (37.6 6,624 (33.8)
Class B Shares
Life of 6,926 0 0 6,718 (32.8) 6,926 (30.7)
Fund(+)
One year 6,560 0 0 6363 (36.4) 6,560 (34.4)
Class C Shares
Life of 6,947 0 0 * * 6,947 (30.5)
Fund(+)
One year 6,580 0 0 * * 6,580 (34.2)
<CAPTION>
COMPARED TO
-------------------------------------------
M.S.C.I.
AC Far
Dow Jones East Free
TOTAL Industrial Standard & Consumer Excluding
RETURN Average Poor's 500 Price Japan
TABLE (9) (10) Index (3) Index (6)
----- --- ---- --------- ---------
<S> <C> <C> <C> <C>
Life of 32.7 38.4 2.0 -38.8
Fund(+)
One Year 22.2 28.5 1.8 -42.1
Life of 32.7 38.4 2.0 -38.8
Fund(+)
One year 22.2 28.5 1.8 -42.1
Life of 32.7 38.4 2.0 -38.8
Fund(+)
One year 22.2 28.5 1.8 -42.1
</TABLE>
<TABLE>
<CAPTION>
M.S.C.I. AC
Fund Fund Fund Dow Jones Standard & Consumer Far East Free
AVERAGE ANNUAL Class A Class B Class C Industrial Poor's Price Excluding
TOTAL RETURN TABLE Shares Shares Shares Average (4) 500 (5) Index (3) Japan Index (6)
------------------ ------ ------ ------ ----------- ------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) (31.3) (30.1) (28.0) 29.0 34.0 1.8 -36.4
One Year (37.6) (36.4) (34.2) 22.2 28.5 1.8 -42.1
</TABLE>
- --------------------
(+) Since October 21, 1996.
* Does not apply
35
<PAGE>
EUROPE FUND--NOVEMBER 30, 1998 [To be updated]
<TABLE>
<CAPTION>
Initial Capital Income Ending Percentage Ending Percentage
TOTAL $10,000 Gain Dividends Value Increase Value Increase
RETURN Investment Dividends Reinvested (adjusted) (adjusted) (unadjusted) (unadjusted)
TABLE (1) Reinvested (2) (1) (1) (1) (1)
----- --- ---------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Shares
Life of 12,332 0 151 12,483 24.8 13,245 32.5
Fund(+)
One Year 10,633 0 131 10,764 7.6 11,418 14.2
Class B Shares
Life of 12,916 0 159 12,775 27.8 13,075 30.8
Fund(+)
One year 11,185 0 138 11,023 10.2 11,323 13.2
Class C Shares
Life of 12,927 0 159 * * 13,086 30.9
Fund(+)
One year 11,194 0 138 * * 11,332 13.3
<CAPTION>
COMPARED TO
-------------------------------------------
Dow Jones
TOTAL Industrial Standard & Consumer Fin. Times/
RETURN Average Poor's 500 Price S&P Index
TABLE (9) (10) Index (3) (7)
----- --- ---- --------- ---------
<S> <C> <C> <C> <C>
Life of 45.0 50.7 3.3 39.8
Fund(+)
One Year 22.2 28.5 1.8 22.3
Life of 45.0 50.7 3.3 39.8
Fund(+)
One year 22.2 28.5 1.8 22.3
Life of 45.0 50.7 3.3 39.8
Fund(+)
One year 22.2 28.5 1.8 22.3
</TABLE>
<TABLE>
<CAPTION>
Fund Fund Fund Dow Jones Standard & Consumer Fin. Times/
AVERAGE ANNUAL Class A Class B Class C Industrial Poor's Price S&P
TOTAL RETURN TABLE Shares Shares Shares Average (4) 500 (5) Index (3) Index (6)
------------------ ------ ------ ------ ----------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) 15.0 16.7 18.4 26.4 29.4 2.1 23.6
One Year 7.6 10.2 13.3 22.2 28.5 1.8 22.3
</TABLE>
- --------------------
(+) Since May 1, 1996.
* Does not apply
36
<PAGE>
GLOBAL FUND--DECEMBER 31, 1998- [To be updated]
<TABLE>
<CAPTION>
Initial Capital Income Ending Percentage Ending Percentage
TOTAL $10,000 Gain Dividends Value Increase Value Increase
RETURN Investment Dividends Reinvested (adjusted) (adjusted) (unadjusted) (unadjusted)
TABLE (1) Reinvested (2) (1) (1) (1) (1)
----- --- ---------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Shares
Life of 9,108 28 9,647 18,783 87.8 19,659 96.6
Fund(+)
Five Years 8,994 0 4,403 13,397 34.0 14,029 40.3
One Year 9,137 0 588 9,725 (2.8) 10,180 1.8
Class B Shares
Life of 9,885 0 3,008 12,696 27.0 12,893 28.9
Fund(+)
One year 9,556 0 547 9,816 (1.8) 10,103 1.03
Class C Shares
Life of 9,908 0 3,027 * * 12,935 29.4
Fund(+)
One year 9,556 0 553 * * 10,109 1.1
<CAPTION>
COMPARED TO
----------------------------------------------
Salomon Salomon Lehman
TOTAL Consumer Bros. World Bros. High Brothers
RETURN Price Govt. Grade Corp. Govt./Corp
TABLE Index (3) Index (4) Index (5) Index (8)
----- --------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Life of 29.0 102.0 125.4 102.2
Fund(+)
Five Years 13.7 43.3 55.5 44.3
One Year 1.7 0.2 13.0 9.8
Life of 9.4 27.5 46.4 35.5
Fund(+)
One year 1.7 0.2 13.0 9.8
Life of 9.4 27.5 46.4 35.5
Fund(+)
One year 1.7 0.2 13.0 9.8
</TABLE>
<TABLE>
<CAPTION>
Salomon Salomon Lehman
Fund Fund Fund Consumer Bros. World Bros. High Brothers
AVERAGE ANNUAL Class A Class B Class C Price Govt. Grade Corp. Govt./Corp
TOTAL RETURN TABLE Shares Shares Shares Index (3) Index (4) Index (5) Index (8)
------------------ ------ ------ ------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) 7.9 * * 3.1 8.9 10.4 8.9
Life of Fund(++) * 6.9 7.4 2.5 7.0 121.2 8.8
Five Years 6.0 * * 2.6 7.50 9.2 7.6
Three Years 7.3 7.6 8.3 2.5 7.3 213.4 10.4
One Year (2.8) 1.8 1.1 1.7 0.2 13.0 9.8
</TABLE>
- --------------------
(+) Since October 1, 1989 for Class A shares.
(++) Since May 31, 1994 for Class B and Class C shares.
* Does not apply
37
<PAGE>
INTERNATIONAL FUND--OCTOBER 31, 1998 [To be updated]
<TABLE>
<CAPTION>
Initial Capital Income Ending Percentage Ending Percentage
TOTAL $10,000 Gain Dividends Value Increase Value Increase
RETURN Investment Dividends Reinvested (adjusted) (adjusted) (unadjusted) (unadjusted)
TABLE (1) Reinvested (2) (1) (1) (1) (1)
----- --- ---------- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Shares
Life of $19,213 $30,831 $16,348 $66,392 563.9% $70,448 604.5%
Fund(+)
Ten Years 13,005 8,212 4,390 25,607 156.1 27,167 171.7
Five Years 14,625 1,972 1,249 17,846 78.5 18,938 89.4
One Year 9,992 577 127 10,696 7.0 11,349 13.5
Year to Date 10,120 0 0 10,120 1.2 10,737 7.4
Class B Shares
Life of $11,814 $ 1,231 $ 441 $13,286 32.9% $13,486 34.9%
Fund(++)
One year 10,584 614 34 10,932 9.3 11,232 12.3
Class C Shares
Life of $11,824 $ 1,232 $ 445 * * $13,501 35.0%
Fund(++)
One year 10,593 615 37 * * 11,245 12.5
<CAPTION>
COMPARED TO
------------------------------------------------------
Dow Jones Standard
TOTAL Industrial & Consumer EAFE Lipper
RETURN Average Poor's 500 Price Index International
TABLE (9) (10) Index (3) (11) Fund (12)
----- --- ---- --------- ---- ---------
<S> <C> <C> <C> <C> <C>
Life of 1,289.7% 1,130.4% 80.0% 681.4% *
Fund(+)
Ten Years 407.3 386.9 40.2 90.9 167.2%
Five Years 161.4 147.1 14.0 74.3 90.0
One Year 25.8 32.1 2.1 4.6 13.4
Year to Date 17.2 25.3 1.9 1.9 7.3
Life of 114.6% 116.9% 9.6% 20.8% 32.3%
Fund(++)
One year 25.8 32.1 2.1 4.6 13.4
Life of 114.6% 116.9% 9.6% 20.8% 32.3%
Fund(++)
One year 25.8 32.1 2.1 4.6 13.4
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL Fund Fund Fund Dow Jones Standard & Consumer Lipper
TOTAL RETURN Class A Class B Class C Industrial Poor's Price EAFE International
TABLE Shares Shares Shares Average (9) 500 (10) Index (3) Index (11) Fund (12)
----- ------ ------ ------ ----------- -------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) 12.2% * * 17.4% 16.5% 3.6% 13.3% *
Life of Fund(++) * 8.7% 9.2% 25.0 25.4 2.7 5.7 8.5%
Ten Years 9.9 * * 17.6 17.2 3.4 6.7 10.3
Five Years 12.3 * * 21.2 19.8 2.7 11.8 13.7
Three Years 7.7 8.2 8.8 26.8 27.5 2.6 4.8 8.3
One Year 7.0 9.3 12.5 25.8 32.1 2.1 4.6 13.4
</TABLE>
- --------------------
(+) Since May 21, 1981 for Class A shares.
(++) Since May 31, 1994 for Class B and Class C shares.
* Does not apply.
FOOTNOTES FOR BOTH 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 Asian, Europe and International Funds 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" herein. No adjustments were made to Class C
shares.
(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 Towers Data Systems.
(6) Morgan Stanley Capital International Asia Combined Far East Free Excluding
Japan Index is a capitalized weighted index that is representative of the
equity securities for the following countries: Hong Kong, Indonesia, Korea
(at 20%), Malaysia, Philippines free, Singapore free and Thailand. Assume
reinvestment of dividends. Source: Datastream.
38
<PAGE>
(7) The Financial Times/Standard & Poor's Actuaries World Index--Europe(TM) is
a managed index that is generally representative of the equity securities
of European Markets. Assumes reinvestment of dividends. Source is
Datastream.
(8) 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 Towers Data Systems.
(9) The Dow Jones Industrial Average is an unmanaged unweighted average of
thirty blue chip industrial corporations listed on the New York Stock
Exchange. Assumes reinvestment of dividends. Source is Towers Data
Systems.
(10) The Standard & Poor's 500 Stock Index is an unmanaged weighted 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.
(11) The EAFE Index (Morgan Stanley Capital International Europe, Austral-Asia,
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.
(12) 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
Towers Data Systems.
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 each of the Asian, Europe and International Funds, 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, 1997.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ASIAN FUND (10/21/96)
DIVIDENDS CUMULATIVE VALUE OF SHARES ACQUIRED
ANNUAL ANNUAL
INCOME CAPITAL GAIN REINVESTED REINVESTED
YEAR DIVIDENDS DIVIDENDS INITIAL INCOME CAPITAL GAIN
ENDED 12/31 REINVESTED* REINVESTED INVESTMENT DIVIDENDS* DIVIDENDS TOTAL VALUE
- ------------------ ---------------- --------------- ----------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1996 $ 0 $ 0 $10,010 $ 0 $ 0 $10,010
1997 77 0 6,468 78 0 6,546
1998 To be
updated
</TABLE>
* Includes short-term capital gain dividends.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
EUROPE FUND (5/1/96)
DIVIDENDS CUMULATIVE VALUE OF SHARES ACQUIRED
ANNUAL ANNUAL
INCOME CAPITAL GAIN REINVESTED REINVESTED
YEAR DIVIDENDS DIVIDENDS INITIAL INCOME CAPITAL GAIN
ENDED 12/31 REINVESTED* REINVESTED INVESTMENT DIVIDENDS* DIVIDENDS TOTAL VALUE
- ------------------ ---------------- --------------- ----------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
1996 $129 $ 0 $10,903 $134 $ 0 $11,037
1997 110 90 12,431 265 92 12,788
1998 To be
updated
</TABLE>
* Includes short-term capital gain dividends.
- --------------------------------------------------------------------------------
39
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GLOBAL FUND (10/1/89)
DIVIDENDS CUMULATIVE VALUE OF SHARES ACQUIRED
ANNUAL ANNUAL
INCOME CAPITAL GAIN REINVESTED REINVESTED
YEAR DIVIDENDS DIVIDENDS INITIAL INCOME CAPITAL GAIN
ENDED 12/31 REINVESTED* REINVESTED INVESTMENT DIVIDENDS* DIVIDENDS TOTAL 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
1995 1,178 0 10,128 7,273 31 17,432
1996 2,043 0 9,523 8,898 29 18,450
1997 1,143 0 9,108 9,647 28 18,783
1998 To be
updated
</TABLE>
* Includes short-term capital gain dividends.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL FUND (5/21/81)
DIVIDENDS CUMULATIVE VALUE OF SHARES ACQUIRED
ANNUAL ANNUAL
INCOME CAPITAL GAIN REINVESTED REINVESTED
YEAR DIVIDENDS DIVIDENDS INITIAL INCOME CAPITAL GAIN
ENDED 12/31 REINVESTED* REINVESTED INVESTMENT DIVIDENDS* DIVIDENDS TOTAL VALUE
<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
1995 554 241 16,364 13,254 23,210 52,828
1996 709 3,228 17,894 15,227 28,716 61,837
1997 406 2,880 18,531 16,184 32,689 67,404
1998 To be
updated
</TABLE>
* Includes short-term capital gain dividends.
- --------------------------------------------------------------------------------
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 and Class C 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.
40
<PAGE>
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 12/31/98) [To be updated]
<TABLE>
<CAPTION>
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
----- ------ ------ -------
<S> <C> <C> <C> <C>
Salomon Non-U.S. Bond Index(1)........................ (4.26)% 19.12% 45.36% 101.70%
Salomon High Yield 10+ Year Index(2).................. 17.74 64.28 89.60 239.85
Salomon High Grade Corp. Bond Index(3)................ 12.96 45.69 55.46 180.09
Merrill Lynch Govt./Corp. Bond Index(4)............... 9.78 34.50 44.49 140.51
Lehman Brothers Govt./Corp. Bond Index(5)............. 9.76 34.68 44.29 139.88
</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 High Yield 10+ Year 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 Towers Data Systems.
(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 Towers Data Systems.
The following table depicts the best performing world government bond market for
each year during the period 1983-1998. 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
1983-1998
Long-Term U.S.**
Year Top Foreign Government Returns* Govt. Returns
- ---- ------------------------------- -------------
1983.................... Japan 12.56% 1.66%
41
<PAGE>
1984.................... Canada 8.82 15.02
1985.................... France 52.78 31.52
1986.................... Japan 43.55 24.18
1987.................... United Kingdom 47.57 (2.79)
1988.................... Australia 30.34 9.35
1989.................... Canada 17.97 19.16
1990.................... United Kingdom 29.16 6.35
1991.................... Australia 26.70 18.66
1992.................... Japan 11.96 8.06
1993.................... Japan 27.58 17.49
1994.................... Belgium 12.22 (7.70)
1995.................... Sweden 34.83 30.92
1996.................... Italy 27.19 (.83)
1997.................... United Kingdom 10.34 15.09
1998 To be updated
* Source: Salomon Brothers International Bond Market Performance Indexes.
** Source: Salomon Brothers Treasury/Govt Sponsored Long Term Index
The following table depicts the available yields from various global markets as
of January __, 1999 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
Long-Term Gov'ts. Long-Term Corp.
----------------- ---------------
Australia.................. [To be updated]
Belgium....................
Canada.....................
France.....................
Germany....................
Italy......................
Japan......................
Spain......................
Sweden.....................
Switzerland................
Britain....................
United States..............
- --------------------
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 1998, the U.S. stock market ranked [To be updated] in U.S. Dollar total
return out of 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.
stock market is measured by the Standard & Poor's 500 Stock Index ("S&P 500"),
which is an unmanaged, weighted 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
42
<PAGE>
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.
ASIAN FUND [TO BE UPDATED]
Lipper Mutual Fund
Performance Analysis
Pacific Ex-Japan Funds
One Year (Period ended 12/31/98). ...................
The Lipper Pacific Ex-Japan Fund category includes
funds that concentrate their investments in equity
securities with primary trading markets or
operations concentrated in the Pacific region
(including Asian countries) and that specifically
does not invest in Japan.
EUROPE FUND [TO BE UPDATED]
Lipper Mutual Fund
Performance Analysis
European Region Funds
One Year (Period ended 12/31/98).......................
The Lipper European Region Fund category includes
funds that concentrate their investments in equity
securities whose primary trading markets or
operations are concentrated in the European region
or a single country within this region.
GLOBAL FUND [TO BE UPDATED]
Lipper Mutual Fund
Performance Analysis
Global Income Funds
Five Years (Period ended 12/31/98)
Three Years (Period ended 12/31/98)....................
One Year (Period ended 12/31/98).......................
The Lipper Global Income Fund category includes funds which by prospectus or
portfolio practice invest primarily in U.S. Dollar and non-U.S. Dollar debt
instruments of issuers located in at least 3 countries, one of which may be in
the United States. 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 [TO BE UPDATED]
43
<PAGE>
Lipper Mutual Fund
Performance Analysis
International Funds
Ten Years (Period ended 12/31/98)
Five Years (Period ended 12/31/98).....................
One Year (Period ended 12/31/98).......................
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. Scudder Kemper Investments, Inc. ("Scudder Kemper" or "the
Adviser"), 345 Park Avenue, New York, New York, is each Fund's investment
manager. Scudder Kemper is approximately 70% owned by Zurich Financial Services,
a newly formed global insurance and financial services company. The balance of
the Adviser is owned by its officers and employees. Pursuant to investment
management agreements, Scudder Kemper acts as each Fund's investment adviser,
manages its investments, administers its business affairs, furnishes office
facilities and equipment, provides clerical and administrative services, and
permits any of its officers or employees to serve without compensation as
trustees or officers of a 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 fees and expenses of the trustees (except those
who are affiliated with officers or employees of Scudder Kemper), 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 and maintaining all
accounting records related thereto, taxes and membership dues. Each Fund bears
the expenses of registration of its shares with the Securities and Exchange
Commission, while Kemper Distributors, Inc., ("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.
The investment management agreements provide that Scudder Kemper 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
Scudder Kemper 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 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 by the
shareholders of the Fund subject thereto or the Board of Trustees. 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 subject thereto, 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.
Responsibility for overall management of each Fund rests with its Board of
Trustees and officers. Professional investment supervision is provided by
Scudder Kemper. The investment management agreements provide that Scudder Kemper
shall act as each Fund's investment Advisor, manage its investments and provide
it with various services and facilities.
On December 31, 1997, pursuant to the terms of an agreement, Scudder, Stevens &
Clark, Inc. ("Scudder") and Zurich Insurance Company ("Zurich") formed a new
global organization by combining Scudder with Zurich Kemper Investments, Inc., a
former subsidiary of Zurich and the former investment manager to each Fund, and
Scudder changed its name to Scudder Kemper Investments, Inc. As a result of the
transaction, Zurich owned approximately 70% of the Advisor, with the balance
owned by the Advisor's officers and employees.
44
<PAGE>
On September 7, 1998, the businesses of Zurich (including Zurich's 70% interest
in Scudder Kemper) and the financial services businesses of B.A.T Industries
p.l.c. ("B.A.T") were combined to form a new global insurance and financial
services company known as Zurich Financial Services, Inc. By way of a dual
holding company structure, former Zurich shareholders initially owned
approximately 57% of Zurich Financial Services, Inc., with the balance initially
owned by former B.A.T shareholders.
Upon consummation of this transaction, each Fund's existing investment
management agreement with Scudder Kemper was deemed to have been assigned and,
therefore, terminated. The Board has approved a new investment management
agreement with Scudder Kemper, which is substantially identical to the current
investment management agreement, except for the date of execution and
termination. This agreement became effective upon the termination of the then
current investment management agreement and was approved by shareholders at a
special meeting which concluded in December 1998.
Each Fund pays Scudder Kemper an investment management fee, payable monthly, at
1/12 of the annual rates shown below:
Annual Management Fee Rates
---------------------------
Europe, Global and
Average Daily Net Assets of the Fund International Asian
- ------------------------------------ ------------- -----
$0 - $250 million 0.75% 0.85%
$250 million - $1 billion 0.72 0.82
$1 billion - $2.5 billion 0.70 0.80
$2.5 billion - $5 billion 0.68 0.78
$5 billion - $7.5 billion 0.65 0.75
$7.5 billion - $10 billion 0.64 0.74
$10 billion - $12.5 billion 0.63 0.73
Over $12.5 billion 0.62 0.72
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.
The investment management fees incurred by each Fund for its last three fiscal
years are shown in the table below.
Fund Fiscal 1998 Fiscal 1997 Fiscal 1996
- ---- ----------- ----------- -----------
Asian...................... To be updated $ 45,000 $ 1,000
Europe..................... $ 95,000 $ 7,000
45
<PAGE>
Global..................... $858,000 $1,050,000
International.............. $4,131,000 $3,177,000
Fund Sub-Adviser. Scudder Investments U.K., Limited ("Scudder UK"), 1 South
Place, London, U.K. EC42M 2ZS, an affiliate of Scudder Kemper, is the
sub-adviser for the Europe, Global Income, and International Funds. Scudder UK
acts as sub-adviser pursuant to the terms of the sub-advisory agreement between
it and Scudder Kemper for each Fund. Scudder UK is subject to regulations by the
Investment Management Regulatory Organization (IMRO) in England as well as the
U.S. Securities and Exchange Commission.
Under the terms of the sub-advisory agreement for a Fund, Scudder UK renders
investment advisory and management services with regard to that portion of the
Fund's portfolio as may be allocated to Scudder UK by the Adviser from time to
time for management, including services related to foreign securities, foreign
currency transactions and related investments. Scudder UK may, under the terms
of each sub-advisory agreement, render similar services to others including
other investment companies. For its services, Scudder UK will receive from the
Adviser a monthly fee at the annual rate of 0.30% for the Global Income Fund and
0.35% for each of the Europe and International Funds of the portion of the
average daily net assets of each Fund allocated by the Adviser to Scudder UK for
management. Scudder UK permits any of its officers or employees to serve without
compensation as trustees or officers of the Fund if elected to such positions.
Each sub-advisory agreement provides that Scudder UK will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which the sub-advisory agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of Scudder UK in the performance of its duties or from reckless disregard
by Scudder UK of its obligations and duties under the sub-advisory agreement.
Each sub-advisory agreement continues in effect from year to year so long as its
continuation is approved at least annually by a majority of the trustees who are
not parties to such agreement or interested persons of any such party except in
their capacity as trustees of the Fund and by the shareholders of the Fund
subject thereto or the Board of Trustees. Each sub-advisory agreement may be
terminated at any time for a Fund upon 60 days notice by Scudder Kemper, Scudder
UK or the Board of Trustees, or by a majority vote of the outstanding shares of
the Fund subject thereto, and will terminate automatically upon assignment or
upon the termination of the Fund's investment management agreement. If
additional Funds become subject to a sub-advisory 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. No sub-advisory
fees were paid by the Adviser to Scudder UK for periods prior to the 1997 fiscal
year, although in such periods the Adviser has paid Scudder UK for its services
to Scudder Kemper with respect to foreign securities investments of the Funds.
The sub-advisory fees paid by each Fund for its last fiscal year are shown
below.
Fund [To be updated] Fiscal 1998
Europe......................................................
Global......................................................
International...............................................
FUND ACCOUNTING AGENT. Scudder Fund Accounting Corporation ("SFAC"), Two
International Place, Boston, Massachusetts 02110, a subsidiary of Scudder
Kemper, is responsible for determining the daily net asset value per share of
the Funds and maintaining all accounting records related thereto. Currently,
SFAC receives no fee for its services to the Funds; however, subject to Board
approval, some time in the future. SFAC may seek payment for its services under
this agreement.
PRINCIPAL UNDERWRITER. Pursuant to separate underwriting and distribution
services agreements ("distribution agreements"), Kemper Distributors, Inc.
("KDI"), 222 South Riverside Plaza, Chicago, Illinois,
46
<PAGE>
60606, an affiliate of Scudder Kemper, 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.
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
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.
47
<PAGE>
CLASS A SHARES. KDI receives no compensation from the Funds as principal
underwriter for Class A shares and pays all expenses of distribution of each
Fund's Class A shares under the distribution agreements 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 each Fund's 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 Commissions Paid
Retained By Underwriter Paid To To Kemper
Fund Fiscal Year Underwriter All Firms Affiliated Firms
- ---- ----------- ----------- --------- ----------------
<S> <C> <C> <C> <C>
1998
Asian................... 1997 $ 14,000 59,000 --
1996* $1,000 3,000 --
1998
Europe.................. 1997 $ 20,000 99,000 --
1996** $5,000 24,000 1,000
1998
Global.................. 1997 $9,000 49,000 --
1996 $ 31,000 72,000 1,000
1998
International........... 1997 $ 96,000 959,000 --
1996 $ 95,000 714,000 26,000
</TABLE>
- -------------------
* For the period October 21, 1996 (commencement of operations) to November
30, 1996.
** For the period May 1, 1996 (commencement of operations) to November 30,
1996.
Class B Shares. For its services under the distribution agreement, KDI receives
a fee from each Fund under a Rule 12b-1 Plan, payable monthly, at the annual
rate of 0.75% of average daily net assets of each Fund attributable to Class B
shares. This 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 under a Rule 12b-1 Plan, payable monthly, at the annual
rate of 0.75% 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
advances to firms the first year distribution fee at a rate of 0.75% of the
purchase price of Class C shares. For periods after the first year, KDI
currently pays firms for sales of Class C shares a distribution fee, payable
quarterly, at an annual rate of 0.75% of net assets attributable to Class C
shares maintained and serviced by the firm and the fee continues until
terminated by KDI or a Fund. KDI also receives any contingent deferred sales
charges. See "Redemption or Repurchase of Shares--Contingent Deferred Sales
Charges--Class C Shares".
CLASS B SHARES AND CLASS C SHARES. Each Fund has adopted a plan under Rule 12b-1
that provides for fees payable as an expense of the Class B shares and Class C
shares that are used by KDI to pay for distribution and services for those
classes. Because 12b-1 fees are paid out of fund assets on an ongoing basis,
they will, over time, increase the cost of an investment and cost more than
other types of sales charges.
48
<PAGE>
Expenses of the Funds and of KDI, 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>
Other Distribution Expenses Paid By
Underwriter
----------------------------------------------------------
Commissions
Contingent Total Paid By
Distribution Deferred Commissions Underwriter
Fees Paid Sales Paid By To Advertising Marketing Misc. Interest
Fund Class Fiscal By Fund To Charges To Underwriter Affiliated and Prospectus and Sales Operating Fund
B Shares Year Underwriter Underwriter To Firms Firms Literature Printing Expenses Expenses Expenses
- -------- ---- ----------- ----------- -------- ----- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998
Asian..... 1997 $ 18,000 7,000 103,000 -- 12,000 1,000 25,000 4,000 9,000
1996* $ -- -- 2,000 -- 1,000 -- 2,000 3,000 --
1998
Europe.... 1997 $ 41,000 15,000 253,000 -- 19,000 1,000 56,000 21,000 18,000
1996** $ 3,000 -- 29,000 -- 3,000 -- 7,000 6,000 1,000
1998
Global.... 1997 $270,000 62,000 147,000 -- 22,000 2,000 64,000 25,000 --
1996 $347,000 84,000 173,000 1,000 39,000 3,000 83,000 27,000 --
1998
International 1997 $970,000 227,000 1,709,000 -- 219,000 15,000 595,000 94,000 395,000
1996 $541,000 127,000 972,000 15,000 229,000 22,000 463,000 98,000 212,000
</TABLE>
<TABLE>
<CAPTION>
Other Distribution Expenses Paid By
Underwriter
----------------------------------------------------------
Commissions
Contingent Total Paid By
Distribution Deferred Commissions Underwriter
Fees Paid Sales Paid By To Advertising Marketing Misc. Interest
Fund Class Fiscal By Fund To Charges To Underwriter Affiliated and Prospectus and Sales Operating Fund
C Shares Year Underwriter Underwriter To Firms Firms Literature Printing Expenses Expenses Expenses
- -------- ---- ----------- ----------- -------- ----- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998
Asian..... 1997 $ 2,000 -- 3,000 -- 2,000 0 4,000 10,000 1,000
1996* $ -- -- -- -- 0 0 1,000 1,000 --
1998
Europe.... 1997 $ 4,000 -- 6,000 -- 2,000 0 5,000 8,000 2,000
1996** $ 1,000 -- 1,000 -- 1,000 0 3,000 2,000 --
1998
Global.... 1997 $ 9,000 1,000 8,000 -- 4,000 0 11,000 4,000 6,000
1996 $ 4,000 -- 8,000 -- 5,000 -- 11,000 3,000 3,000
1998
International 1997 $96,000 3,000 117,000 -- 45,000 3,000 118,000 4,000 26,000
1996 $32,000 -- 46,000 -- 30,000 3,000 53,000 7,000 11,000
- -------------------
</TABLE>
* For the period October 21, 1996 (commencement of operations) to November
30, 1996.
** For the period May 1, 1996 (commencement of operations) to November 30,
1996.
<TABLE>
<CAPTION>
Distribution Distribution Deferred Sales
Expenses Incurred Fees Paid by Charges Paid
by Underwriter Fund to Underwriter to Underwriter
-------------- ------------------- --------------
Fund Class B Class C Class B Class C Class B Class C
- ---- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Asian Growth to be updated
Europe
Global Income
International
</TABLE>
49
<PAGE>
If a Rule 12b-1 Plan (the "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 for its expenses incurred.
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. For
the services under the administrative agreement, each Fund pays KDI an
administrative services fee, payable monthly, at the annual rate of up to 0.25%
of average daily net assets of Class A, B and C shares of the Fund.
KDI enters into related arrangements with various broker-dealers and other
service or administrative firms ("firms"), that provide services and facilities
for their customers or clients who are investors 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 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, normally payable quarterly, at an
annual rate of (a) up to 0.15% of the net assets for the Global and 0.25% of the
net assets for the International Fund of these accounts in the fund that it
maintains and services that are attributable to Class A shares acquired prior to
October 1, 1993, and (b) up to 0.25% 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 currently advances to firms
the first-year service fee at a rate of up to 0.25% of the purchase price of
such shares. For periods after the first year, KDI currently intends to pay
firms a service fee at an annual rate of up to 0.25% (calculated monthly and
normally paid quarterly) of the net assets attributable to Class B and Class C
shares maintained and serviced by the firm and the fee continues until
terminated by KDI or the Fund. 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 Paid Service Fees Paid By
----------------------------------- By Administrator Administrator
Fund Fiscal Period Class A Class B Class C To Firms To Affiliated Firms
---- ------------- ------- ------- ------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C>
1998
Asian 1997*** $ 1,000 5,000 1,000 19,000 --
1996* $ -- -- -- -- --
1998
Europe 1997*** $ 7,000 13,000 -- 37,000 --
1996** $ 1,000 1,000 -- 4,000 --
1998
Global 1997 $149,000 86,000 3,000 239,000 --
1996 $173,000 113,000 1,000 291,000 12,000
1998
International 1997 $926,000 322,000 32,000 1,301,000 --
1996 $772,000 179,000 11,000 984,000 16,000
</TABLE>
- ----------------
* For the period October 21, 1996 (commencement of operations) to November
30, 1996.
50
<PAGE>
** For the period May 1, 1996 (commencement of operations) to November 30,
1996.
*** Amounts shown after expense waiver.
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 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
Scudder Kemper, Scudder UK or KDI as indicated under "Officers and Trustees."
CUSTODIAN, TRANSFER AGENT AND SHAREHOLDER SERVICE AGENT. The Chase Manhattan
Bank, 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"), 801 Pennsylvania Avenue, Kansas
City, Missouri 64105, as custodian, and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, as sub-custodian, have custody of
all securities and cash of 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 Scudder Kemper, serves as
"Shareholder Service Agent" of each Fund and, as such, performs all of IFTC's
duties as transfer agent and dividend paying agent. IFTC receives as transfer
agent, and pays to KSvC, annual account fees of $6 per account plus account set
up, transaction, maintenance 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.
The following shows for each Fund's 1998 fiscal year the shareholder service
fees IFTC remitted to KSvC.
Fees IFTC
Fund Paid to KSVC
- ---- ------------
Asian
Europe
Global
International
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.
LEGAL COUNSEL. Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601, serves as legal counsel to the Funds.
PORTFOLIO TRANSACTIONS
Brokerage
Allocation of brokerage is supervised by the Adviser (which also includes
Scudder UK for purposes of the following disclosure).
51
<PAGE>
The primary objective of the Adviser in placing orders for the purchase and sale
of securities for a Fund's portfolio is to obtain the most favorable net results
taking into account such factors as price, commission where applicable, size of
order, difficulty of execution and skill required of the executing
broker/dealer. The Adviser seeks to evaluate the overall reasonableness of
brokerage commissions paid (to the extent applicable) through the familiarity of
the Distributor with commissions charged on comparable transactions, as well as
by comparing commissions paid by a Fund to reported commissions paid by others.
The Adviser reviews on a routine basis commission rates, execution and
settlement services performed, making internal and external comparisons.
The Funds' purchases and sales of fixed-income securities are generally placed
by the Advisor with primary market makers for these securities on a net basis,
without any brokerage commission being paid by a Fund. Trading does, however,
involve transaction costs. Transactions with dealers serving as primary market
makers reflect the spread between the bid and asked prices. Purchases of
underwritten issues may be made, which will include an underwriting fee paid to
the underwriter.
When it can be done consistently with the policy of obtaining the most favorable
net results, it is the Adviser's practice to place such orders with
broker/dealers who supply research, market and statistical information to a
Fund. The term "research, market and statistical information" includes advice as
to the value of securities; the advisability of investing in, purchasing or
selling securities; the availability of securities or purchasers or sellers of
securities; and analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
The Adviser is authorized when placing portfolio transactions for a Fund to pay
a brokerage commission in excess of that which another broker might charge for
executing the same transaction solely on account of the receipt of research,
market or statistical information. The Adviser may place orders with
broker/dealers on the basis that the broker/dealer has or has not sold shares of
a Fund. In effecting transactions in over-the-counter securities, orders are
placed with the principal market makers for the security being traded unless,
after exercising care, it appears that more favorable results are available
elsewhere.
To the maximum extent feasible, it is expected that the Adviser will place
orders for portfolio transactions through Scudder Investor Services, Inc.
("SIS"), a corporation registered as a broker-dealer and a subsidiary of the
Adviser. SIS will place orders on behalf of the Funds with issuers, underwriters
or other brokers and dealers. SIS will not receive any commission, fee or other
remuneration from the Funds for this service.
Although certain research, market and statistical information from
broker/dealers may be useful to a Fund and to the Adviser, it is the opinion of
the Adviser that such information only supplements its own research effort since
the information must still be analyzed, weighed and reviewed by the Adviser's
staff. Such information may be useful to the Adviser in providing services to
clients other than the Funds and not all such information is used by the Adviser
in connection with a Fund. Conversely, such information provided to the Adviser
by broker/dealers through whom other clients of the Adviser effect securities
transactions may be useful to the Adviser in providing services to a Fund.
The Board members review from time to time whether the recapture for the benefit
of a Fund of some portion of the brokerage commissions or similar fees paid by a
Fund on portfolio transactions is legally permissible and advisable.
Each Fund's average portfolio turnover rate is the ratio of the lesser of sales
or purchases to the monthly average value of the portfolio securities owned
during the year, excluding all securities with maturities or expiration dates at
the time of acquisition of one year or less. A higher rate involves greater
brokerage transaction expenses to a Fund and may result in the realization of
net capital gains, which would be taxable to shareholders when distributed.
Purchases and sales are made for a Fund's portfolio whenever necessary, in
management's opinion, to meet a Fund's objective.
52
<PAGE>
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.
Allocated to
Firms Based on
Research in
Fiscal 1998 Fiscal 1998 Fiscal 1997 Fiscal 1996
----------- ----------- ----------- -----------
Asian............... $ 142,000 $ 15,000*
Europe.............. $ 89,000 $ 9,000**
Global.............. $ 0 $ 0
International....... $2,339,000 $2,982,000
- --------------------
* For the period October 21, 1996 (commencement of operations) to November
30, 1996.
** For the period May 1, 1996 (commencement of operations) to November 30,
1996.
PURCHASE, REPURCHASE AND REDEMPTION OF SHARES
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 sales charge but are subject to
higher ongoing expenses than Class A shares, are subject to a contingent
deferred sales charge payable upon certain redemptions within the first year
following purchase 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 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
Sales Charge Average Daily 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) reduced for certain purchases
and5.75% (for each of the Asian,
Europe and International Funds)
of the public offering price
Class B Maximum contingent deferred 0.75% Shares convert to Class A
sales charge of 4% of redemption shares six years after issuance
proceeds; declines to zero after
six years
Class C Contingent deferred sales charge 0.75% No conversion feature
of 1% of redemption proceeds for
redemptions made during first
year after purchase
</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
53
<PAGE>
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 and may not be
available for certain types of account registrations. 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 price 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
---------------------------------------------------------------------------------
As A Percentage As A Percentage Allowed To Dealers As A
Amount of Purchase Of Offering Price of Net Asset Value* Percentage Of Offering 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** ***
</TABLE>
- ---------------
* 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.
The public offering price of Class A shares for purchasers of the Asian, Europe
or International Fund choosing the initial sales charge alternative is the net
asset value plus a sales charge, as set forth below.
<TABLE>
<CAPTION>
Asian, Europe And International Funds -- Sales Charge
---------------------------------------------------------------------------------
As A Percentage As A Percentage Allowed To Dealers As A
Amount of Purchase Of Offering Price of Net Asset Value* Percentage Of Offering 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................ 0.00** 0.00** ***
</TABLE>
* 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.
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.
54
<PAGE>
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 Scudder Kemper or an affiliate 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. KDI may in its
discretion compensate firms for sales of Class A shares under this privilege at
a commission rate of .50% of the amount of Class A shares purchased.
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 or a
participant-directed qualified retirement plan described in Code Section
403(b)(7) which is not sponsored by a K-12 school district provided in each case
that such plan has not less than 200 eligible employees (the "Large Order NAV
Purchase Privilege"). Redemption within two years 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 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, .50% on the next $45 million and .25% on amounts over $50 million.
The commission schedule will be reset on a calendar year basis for sales of
shares pursuant to the Large Order NAV Purchase Privilege to employer sponsored
employee benefit plans using the subaccount recordkeeping system made available
through KSvC. For purposes of determining the appropriate commission percentage
to be applied to a particular sale, 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 also applies.
Class A shares of a Fund or any other Kemper Mutual Fund listed under "Special
Features -- Class A Shares -- Combined Purchases" may be purchased at net asset
value in any amount by members of the plaintiff class in the proceeding known as
HOWARD AND AUDREY TABANKIN, ET AL. V. KEMPER SHORT-TERM GLOBAL INCOME FUND, ET
AL., Case No. 93 C 5231 (N.D.IL). This privilege is generally non-transferrable
and continues for the lifetime of individual class members and for a ten year
period for non-individual class members. To make a purchase at net asset value
under this privilege, the investor must, at the time of purchase, submit a
written request that the purchase be processed at net asset value pursuant to
this privilege specifically identifying the purchaser as a member of the
"Tabankin Class." Shares purchased under this privilege will be maintained in a
separate account that includes only shares purchased under this privilege. For
more details concerning this privilege, class members should refer to the Notice
of (1) Proposed Settlement with Defendants; and (2) Hearing to Determine
Fairness of Proposed Settlement dated August 31, 1995, issued in connection with
the aforementioned court proceeding. For sales of Fund shares at net asset value
pursuant to this privilege, KDI may in its discretion pay investment dealers and
other financial services firms a concession, payable quarterly, at an annual
rate of up to .25% of net assets attributable to such shares maintained and
serviced by the firm. A firm becomes eligible for the concession based upon
assets in accounts attributable to shares purchased under this privilege in the
month after the month of purchase and the concession continues until terminated
by KDI. The privilege of purchasing Class A shares of the Fund at net asset
value under this privilege is not available if another net asset value purchase
privilege also applies.
Class A shares may be sold at net asset value in any amount to: (a) officers,
trustees, directors, employees (including retirees) and sales representatives of
the Fund, its investment manager, its principal underwriter or certain
affiliated
55
<PAGE>
companies, for themselves or members of their families; (b) 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; (c) shareholders who
owned shares of Kemper Value Series, Inc. ("KVS") on September 8, 1995, and have
continuously owned shares of KVS (or a Kemper Fund acquired by exchange of KVS
shares) since that date, for themselves or members of their families; and (d)
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 sponsored by Ranson &
Associates, Inc. In addition, unitholders of unit investment trusts sponsored by
Ranson & Associates, Inc. or its predecessors may purchase Fund Class A shares
at net asset value through reinvestment programs described hereines of such
trusts that have such programs. Class A shares of a Fund may be sold at net
asset value through certain investment advisers registered under the 1940 Act
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 an investment advisory program under which such
clients pay a fee to the investment adviser or other firm for portfolio
management and other services. 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.
Class A shares of a Fund may be purchased at net asset value by persons who
purchase such shares through bank trust departments that process such trades
through an automated, integrated mutual fund clearing program provided by a
third party clearing firm.
Class A shares of a Fund may be purchased at net asset value in any amount by
certain professionals who assist in the promotion of Kemper Funds pursuant to
personal services contracts with KDI, for themselves or members of their
families. KDI in its discretion may compensate financial services firms for
sales of Class A shares under this privilege at a commission rate of .50% of the
amount of Class A shares purchased.
Class A shares of a Fund may be purchased at net asset value by persons who
purchase shares of the Fund through KDI as part of an automated billing and wage
deduction program administered by RewardsPlus of America for the benefit of
employees of participating employer groups.
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."
56
<PAGE>
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."
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 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. A contingent deferred sales charge may be imposed upon the
redemption of Class C shares if they are redeemed within one year of purchase.
See "Redemption or Repurchase of Shares -- Contingent Deferred Sales Charge --
Class C Shares." KDI currently advances to firms the first year distribution fee
at the rate of .75% of the purchase price of such shares. For periods after the
first year, KDI currently intends to pay firms for sales of Class C shares a
distribution fee, payable quarterly, at an annual rate of .75% of net assets
attributable to Class C shares maintained and serviced by the firm. KDI is
compensated by each Fund for services 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 the Shareholder
Service Agent 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 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. KDI does not believe that termination of a
relationship with a bank would result in any material adverse consequences to
the Fund.
KDI may, from time to time, pay or allow to firms a 1% commission on the amount
of shares of a Fund sold by the firm under the following conditions: (i) the
purchased shares are held in a Kemper IRA account, (ii) the shares are purchased
as a direct "roll over" of a distribution from a qualified retirement plan
account maintained on a participant subaccount record keeping system provided by
KSvC, (iii) the registered representative placing the trade is a member of
ProStar, a group of persons designated by KDI in acknowledgement of their
dedication to the employee benefit plan area and (iv) the purchase is not
otherwise subject to a commission.
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
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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 ("trade date"). 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 bank, funds
must normally be collected before shares will be purchased.
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, repurchase 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.
Each Fund reserves the right to withdraw all or any part of the offering made by
the prospectus and this statement of additional information 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 KSvC, 811 Main Street, Kansas
City, Missouri 64105-2005 or to the firm from which they received this statement
of additional information.
As described herein, 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. 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. The amount received
by a shareholder upon redemption or repurchase may be more or less than the
amount paid for such shares depending on the market value of the Fund's
portfolio securities at the time.
The Funds have authorized certain members of the National Association of
Securities Dealers, Inc. ("NASD"), other than Kemper Distributors, Inc. ("KDI")
to accept purchase and redemption orders for the Fund's shares. Those brokers
may also designate other parties to accept purchase and redemption orders on the
Fund's behalf. Orders for purchase or redemption will be deemed to have been
received by the Fund when such brokers or their authorized designees accept the
orders. Subject to the terms of the contract between the Fund and the broker,
ordinarily orders will be priced as the Fund's net asset value next computed
after acceptance by such brokers or their authorized
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designees. Further, if purchases or redemptions of the Fund's shares are
arranged and settlement is made at an investor's election through any other
authorized NASD member, that member may, at its discretion, charge a fee for
that service. The Board of Trustees or Directors as the case may be ("Board") of
the Fund and KDI each has the right to limit the amount of purchases by, and to
refuse to sell to, any person. The Board and KDI may suspend or terminate the
offering of shares of the Fund at any time for any reason.
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 (i.e., purchases by check, EXPRESS-Transfer or Bank Direct
Deposit), 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 10 days from receipt by the Fund of the purchase
amount. The redemption within two years of Class A shares purchased at net asset
value under the Large Order NAV Purchase Privilege may be subject to a
contingent deferred sales charge (see "Purchase of Shares -- Initial Sales
Charge Alternative -- Class A Shares") and the redemption of Class B shares
within six years may be subject to a contingent deferred sales charge (see
"Contingent Deferred Sales Charge -- Class B Shares" below) and the redemption
of Class C shares within the first year following purchase may be subject to a
contingent deferred sales charge (see "Contingent Deferred Sales Charge -- Class
C Shares" below).
Because of the high cost of maintaining small accounts, the Funds may assess a
quarterly fee of $9 on an account with a balance below $1,000 for the quarter.
The fee will not apply to accounts enrolled in an automatic investment program,
Individual Retirement Accounts or employer sponsored employee benefit plans
using the subaccount record keeping system made available through the
Shareholder Service Agent.
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. A Fund or its agents may be liable for
any losses, expenses or costs arising out of fraudulent or unauthorized
telephone requests pursuant to these privileges unless the Fund or its agents
reasonably believe, based upon reasonable verification procedures, that the
telephone instructions are genuine. The shareholder will bear the risk of loss
including loss resulting from fraudulent or unauthorized transactions, so long
as the reasonable verification procedures are followed. The verification
procedures include recording instructions, requiring certain identifying
information before acting upon instructions and sending written confirmations.
TELEPHONE REDEMPTIONS. If the proceeds of the redemption (prior to the
imposition of any contingent deferred sales charge) 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
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sufficient for redemptions by individual or joint account holders, and trust,
executor and guardian account holders (excluding custodial accounts for gifts
and transfers to minors), provided the trustee, executor or guardian is named in
the account registration. Other institutional account holders and guardian
account holders of custodial accounts for gifts and transfers to minors may
exercise this special privilege of redeeming shares by telephone request or
written request without signature guarantee subject to the same conditions as
individual account holders and subject to the limitations on liability described
under "General" above, provided that this privilege has been pre-authorized by
the institutional account holder or guardian account holder by written
instruction to the Shareholder Service Agent with signatures guaranteed.
Telephone requests may be made by calling 1-800-621-1048. 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 10 days. This privilege of redeeming shares by
telephone request or by written request without a signature guarantee may not be
used to redeem shares held in certificated form and may not be used if the
shareholder's account has had an address change within 30 days of the redemption
request. During periods when it is difficult to contact the Shareholder Service
Agent by telephone, it may be difficult to use the telephone redemption
privilege, although investors can still redeem by mail. The 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 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 Scudder
Kemper 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 10
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
wire transfer 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 may be imposed upon redemption of Class A
shares that are purchased under the Large Order NAV Purchase Privilege as
follows: 1% if they are redeemed within one year of purchase and .50% if they
are redeemed during the second year following 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 or a
participant-directed qualified retirement plan described in Code Section
403(b)(7) which is not sponsored by a K-12 school district; (b) redemptions by
employer sponsored employee benefit plans using the subaccount record keeping
system made
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available through the Shareholder Service Agent; (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); (e) redemptions
under a Fund's Systematic Withdrawal Plan at a maximum of 10% per year of the
net asset value of the account; and (f) redemptions of shares whose dealer of
record at the time of the investment notifies KDI that the dealer waives the
commission applicable to such Large Order NAV Purchase.
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.
Contingent Deferred
Year Of Redemption After Purchase Sales Charge
- --------------------------------- ------------
First................................................. 4%
Second................................................ 3%
Third................................................. 3%
Fourth................................................ 2%
Fifth................................................. 2%
Sixth................................................. 1%
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 the Shareholder Service Agent: (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.
CONTINGENT DEFERRED SALES CHARGE -- CLASS C SHARES. A contingent deferred sales
charge of 1% may be imposed upon redemption of Class C shares 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: (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 (limited to 10% of the
net asset value of the account during the first year, see "Special Features --
Systematic Withdrawal Plan"), (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, (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), (f) for any participant-directed redemption
of shares held by employer sponsored employee benefit plans maintained on the
subaccount record keeping system made available by the Shareholder Service Agent
and (g) redemption of shares by an employer sponsored employee benefit plan that
offers funds in addition to Kemper Funds and whose dealer of
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record has waived the advance of the first year administrative service and
distribution fees applicable to such shares and agrees to receive such fees
quarterly.
CONTINGENT DEFERRED SALES CHARGE -- GENERAL. 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 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. For example, an investment made in March
1998 will be eligible for the second year's charge if redeemed on or after March
1, 1999. In the event no specific order is requested, the redemption will be
made first from shares representing reinvested dividends and then from the
earliest purchase of shares. KDI receives any contingent deferred sales charge
directly.
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" (other than shares of Kemper Cash Reserves Fund purchased
directly at net asset value) 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 Class A shares purchased under the Large Order
NAV Purchase Privilege (see "Purchase of Shares -- Initial Sales Charge
Alternative -- Class A Shares"), Class B shares or Class C 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, Class B
shares or Class C 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 Mutual
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 in the same Fund 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 (or the
equivalent) 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 Series, Kemper U.S. Government Securities Fund, Kemper
International Fund, Kemper State Tax-Free Income Series, Kemper Adjustable Rate
U.S. Government Fund, Kemper Blue Chip Fund, Kemper Global Income Fund, Kemper
Target Equity Fund (series are subject to a limited offering period), Kemper
Intermediate Municipal Bond Fund, Kemper Cash Reserves Fund, Kemper U.S.
Mortgage Fund, Kemper Short-Intermediate Government Fund Kemper Value Fund,
Inc., Kemper Value Plus Growth Fund, Kemper Quantitative Equity Fund, Kemper
Horizon Fund, Kemper Europe Fund, Kemper Asian Growth Fund, Kemper Aggressive
Growth Fund, Kemper Global/International Series, Inc. and Kemper Securities
Trust ("Kemper Mutual Funds"). Except as noted below, there is no combined
purchase credit for direct purchases of shares of Zurich Money Funds, Cash
Equivalent Fund, Tax-Exempt California Money Market Fund, Cash Account Trust,
Investors Municipal Cash Fund or Investors Cash Trust ("Money Market Funds"),
which are not
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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
the Shareholder Service Agent 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 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 the Shareholder Service Agent
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 and Kemper Cash Reserves Fund that were
acquired by purchase (not including shares acquired by dividend reinvestment)
are subject to the applicable sales charge on exchange. Series of Kemper Target
Equity Fund are available on exchange only during the offering period for such
series as described in the applicable prospectus or statement of additional
information. Cash Equivalent Fund, Tax-Exempt California Money Market Fund, Cash
Account Trust, Investors Municipal Cash Fund and Investors Cash Trust are
available on exchange but only through a financial services firm having a
services agreement with KDI.
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
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time of exchange. For purposes of the contingent deferred sales charge that may
be imposed upon the redemption of the Class B 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.
Class C shares may be exchanged without a contingent deferred sales charge being
imposed at the time of exchange. For determining whether there is a contingent
deferred sales charge that may be imposed upon the redemption of the Class C
shares received by exchange, the cost and purchase date of the shares that were
originally purchased and exchanged are retained.
GENERAL. Shares of a Kemper Mutual Fund with a value in excess of $1,000,000
(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 "15 Day Hold Period"). For purposes of
determining whether the 15 Day Hold Policy applies to a particular exchange, the
value of the shares to be exchanged shall be computed by aggregating the value
of shares being exchanged for all accounts under common control, direction or
advice, including without limitation, accounts administered by a financial
services firm offering market timing, asset allocation or similar services. The
total value of shares being exchanged must at least equal the minimum investment
requirement of the Kemper Fund into which they are being exchanged. Exchanges
are made based on relative dollar values of the shares involved in the exchange.
There is no service fee for an exchange; however, 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 KSvC, 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. Exchanges may only be made for
Kemper 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 the portfolios of Investors Municipal Cash Fund are available for
sale only in certain states.
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 other
Kemper Fund. Exchanges are subject to the terms and conditions described above
under "Exchange Privilege," except that the $1,000 minimum investment
requirement for the Kemper Fund acquired on exchange is not applicable. 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 $5,000) from a
shareholder's bank, savings and loan, or credit union account to purchase shares
in the Fund. Shareholders can also redeem shares (minimum $100 and maximum
$50,000) from their Fund account and transfer the proceeds to their bank,
savings and loan, or credit union checking account. Shares purchased by check or
through EXPRESS-Transfer or Bank Direct Deposit may not be redeemed under this
privilege until such shares have been owned for at least 10 days. 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 KSvC, P.O. Box 419415, Kansas City, Missouri
64141-6415. Termination will become effective as soon as the Shareholder Service
Agent has had a
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<PAGE>
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,
investments are made automatically (minimum $50, maximum $50,000) 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 KSvC, 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 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 up to $50,000 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 (and Class A shares purchased under the Large Order NAV
Purchase Privilege and Class C shares in their first year following the
purchase) 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 A shares purchased under the Large Order NAV Purchase Privilege, Class
B shares and Class C 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. The Shareholder Service Agent provides
retirement plan services and documents and KDI can establish investor accounts
in any of the following types of retirement plans:
o Traditional, Roth and Education Individual Retirement Accounts ("IRAs")
with IFTC as custodian. This includes Savings Incentive Match Plan for
Employees of Small Employers ("SIMPLE") IRA accounts and Simplified
Employee Pension Plan ("SEP") IRA accounts and prototype documents.
o 403(b)(7) Custodial Accounts also with IFTC as custodian. This type of
plan is available to employees of most non-profit organizations.
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<PAGE>
o 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, SIMPLE 401(k) plans and materials
for establishing them are available from the Shareholder Service Agent upon
request. The brochures for plans with IFTC as custodian describe the current
fees payable to IFTC for its services as custodian. Investors should consult
with their own tax advisers before establishing a retirement plan.
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.
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 or Class C shares by certain classes of persons or
through certain types of transactions as described herein are provided because
of anticipated 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 each of the Asian, Europe and Global Funds' 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. Each of the Asian, Europe and
Global Funds 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 herein.
OFFICERS AND TRUSTEES
The officers and trustees of each Fund, their birthdates, their principal
occupations and their affiliations, if any, with Scudder Kemper, the investment
manager, Scudder UK, the sub-adviser of the Funds, and KDI, principal
underwriter, are listed below. All persons named as trustees also serve in
similar capacities for other funds advised by Scudder Kemper.
TRUSTEES--ASIAN, GLOBAL AND INTERNATIONAL FUNDS [To be updated]
DAVID W. BELIN (6/20/28), Trustee, 2000 Financial Center, 7th and Walnut, Des
Moines, Iowa; Member, Belin Lamson McCormick Zumbach Flynn, P.C. (attorneys).
66
<PAGE>
LEWIS A. BURNHAM (1/8/33), Trustee, 16410 Avila Boulevard, Tampa, Florida;
Retired; formerly, Partner, Business Resources Group; formerly, Executive Vice
President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY (3/8/37), Trustee, 7515 Pelican Bay Blvd., Naples, Florida;
Retired; formerly, Executive Vice President, A. O. Smith Corporation
(diversified manufacturer).
ROBERT B. HOFFMAN (12/11/36), Trustee, 800 N. Lindbergh Boulevard, St. Louis,
Missouri; Vice Chairman and Chief Financial Officer, Monsanto Company
(agricultural, pharmaceutical and nutritional/food products); prior thereto,
Vice President, Head of International Operations, FMC Corporation (manufacturer
of machinery and chemicals).
DONALD R. JONES (1/17/30), Trustee, 182 Old Wick Lane, Inverness, Illinois;
Retired; Director, Motorola, Inc. (manufacturer of electronic equipment and
components); formerly, Executive Vice President and Chief Financial Officer,
Motorola, Inc.
SHIRLEY D. PETERSON (9/3/41), Trustee, 401 Rosemont Avenue, Frederick, Maryland;
President, Hood College, Maryland; formerly, Partner, Steptoe & Johnson
(attorneys); prior thereto, Commissioner, Internal Revenue Service; prior
thereto, Assistant Attorney General, U.S. Department of Justice; Director;
Bethlehem Steel Corp.
DANIEL PIERCE (3/18/34), Trustee*, 345 Park Avenue, New York, New York; Chairman
of the Board and Managing Director, Scudder Kemper; Director, Fiduciary Trust
Company and Fiduciary Company Incorporated.
WILLIAM P. SOMMERS (7/22/33), Trustee, 333 Ravenswood Avenue, Menlo Park,
California; President and Chief Executive Officer, SRI International (research
and development); formerly, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton, Inc. (management consulting
firm) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
EDMOND D. VILLANI (3/4/47), Trustee*, 345 Park Avenue, New York, New York;
President, Chief Executive Officer and Managing Director, Scudder Kemper.
Trustees--Europe Fund [To be updated]
JAMES E. AKINS (10/15/26), Trustee, 2904 Garfield Terrace N.W., Washington,
D.C.; Consultant on International, Political and Economic Affairs; formerly, a
career United States Foreign Service Officer; Energy Adviser for the White
House; United States Ambassador to Saudi Arabia, 1973-1976.
ARTHUR R. GOTTSCHALK (2/13/25), Trustee, 10642 Brookridge Drive, Frankfort,
Illinois; Retired; formerly, President, Illinois Manufacturers Association;
Trustee, Illinois Masonic Medical Center; Member, Board of Governors, Heartland
Institute/Illinois; formerly, Illinois State Senator; formerly, Vice President,
The Reuben H. Donnelley Corp.
FREDERICK T. KELSEY (4/25/27), Trustee, 738 York Court, Northbrook, Illinois;
Retired; formerly, consultant to Goldman, Sachs & Co.; formerly, President,
Treasurer and Trustee of Institutional Liquid Assets and its affiliated mutual
funds; Trustee of the Benchmark Funds; formerly, Trustee of the Pilot Funds.
DANIEL PIERCE (3/18/34), Trustee*, 345 Park Avenue, New York, New York; Chairman
of the Board and Managing Director, Scudder Kemper; Director, Fiduciary Trust
Company and Fiduciary Company Incorporated.
FRED B. RENWICK (2/1/30), Trustee, 3 Hanover Square, New York, New York;
Professor of Finance, New York University, Stern School of Business; Director;
TIFF Industrial Program, Inc.; Director, The Wartburg Home Foundation; Chairman,
Investment Committee of Morehouse College Board of Trustees; Chairman, American
Bible Society Investment Committee; formerly, member of the Investment Committee
of Atlanta University Board of Trustees; formerly, Director of Board of Pensions
Evangelical Lutheran Church in America.
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<PAGE>
JOHN B. TINGLEFF (5/4/35), Trustee, 2015 South Lake Shore Drive, Harbor Springs,
Michigan; Retired; formerly, President, Tingleff & Associates (management
consulting firm); formerly, Senior Vice President, Continental Illinois National
Bank & Trust Company.
EDMOND D. VILLANI (3/4/47), Trustee*, 345 Park Avenue, New York, New York;
President, Chief Executive Officer and Managing Director, Scudder Kemper.
JOHN G. WEITHERS (8/8/33), Trustee, 311 Spring Lake, Hinsdale, Illinois;
Retired; formerly, Chairman of the Board and Chief Executive Officer, Chicago
Stock Exchange; Director, Federal Life Insurance Company; President of the
Members of the Corporation and Trustee, DePaul University; Director, Systems
Imagineering, Inc.
Officers -- All Funds [To be updated]
MARK S. CASADY (9/21/60), President*, 345 Park Avenue, New York, New York;
Managing Director, Scudder Kemper.
PHILIP J. COLLORA (11/15/45), Vice President, Secretary and Treasurer*, 222
South Riverside Plaza, Chicago, Illinois; Attorney, Senior Vice President and
Assistant Secretary, Scudder Kemper.
JERALD K. HARTMAN (3/1/33), Vice President*, 345 Park Avenue, New York, New
York; Managing Director, Scudder Kemper.
THOMAS W. LITTAUER (4/26/55), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.
ANN M. McCREARY (11/6/56), Vice President*, 345 Park Avenue, New York, New York;
Senior Vice President, Scudder Kemper.
KATHRYN L. QUIRK (12/3/52), Vice President*, 345 Park Avenue, New York, New
York; Managing Director, Scudder Kemper.
LINDA J. WONDRACK (9/12/64), Vice President*, Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.
JOHN R. HEBBLE (6/27/58), Assistant Treasurer*, Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.
CAROLINE PEARSON (4/1/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Vice President, Scudder Kemper.
MAUREEN E. KANE (2/14/62), Assistant Secretary*, Two International Place,
Boston, Massachusetts; Vice President, Scudder Kemper.
ELIZABETH C. WERTH (10/1/47), Assistant Secretary* (31), 222 South Riverside
Plaza, Chicago, Illinois; Vice President, Scudder Kemper; Vice President and
Director of State Registrations, KDI.
Global Fund: [To be updated]
ROBERT C. PECK, JR., (10/1/46) Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper; formerly, Executive Vice
President and Chief Investment Officer with an unaffiliated investment
management firm from 1988 to June 1997.
Asian, Europe and International Funds: [To be updated]
STEVEN H. REYNOLDS, (9/11/43), Vice President*, 222 South Riverside Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper.
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<PAGE>
* Interested persons of the Fund as defined in the Investment Company Act of
1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds. The tables below shows amounts paid or
accrued to those trustees who are not designated "interested persons" during
each Fund's 1998 fiscal year except that the information in the last column is
for calendar year 1998.
Trustees -- Asian, Global and International Funds
<TABLE>
<CAPTION>
Aggregate Compensation From Funds Total Compensation
From Funds and Kemper
Fund Complex
Name of Trustee Asian Global International Paid To Trustees**
- --------------- ----- ------ ------------- ------------------
<S> <C> <C> <C> <C>
David W. Belin*.............. [To be
updated]
Lewis A. Burnham.............
Donald L. Dunaway*...........
Robert B. Hoffman............
Donald R. Jones..............
Shirley D. Peterson..........
William P. Sommers...........
</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 Zurich Money Funds -- Zurich Money
Market Fund. Total deferred fees and interest accrued for the latest and
all prior fiscal years are $0, $20,100 and $33,100 for Mr. Belin and $0,
$20,100 and $21,500 for Mr. Dunaway from Asian, Global and International
Funds, respectively.
** Includes compensation for service on the boards of 25 Kemper funds with 41
fund portfolios. Each trustee currently serves as a trustee of 26 Kemper
Funds with 46 fund portfolios.
Trustees -- Europe Fund
<TABLE>
<CAPTION>
Aggregate Total Compensation From Kemper
Compensation Fund Complex Paid
Name Of Trustee From Fund To Board Members(2)
--------------- --------- -------------------
<S> <C> <C>
James E. Akins............................... [To be
updated]
Arthur R. Gottschalk(1)......................
Frederick T. Kelsey(1).......................
Fred B. Renwick..............................
John B. Tingleff.............................
John G. Weithers.............................
</TABLE>
- --------------------
(1) Includes deferred fees and interest thereon pursuant to deferred
compensation agreements with certain Kemper funds. Deferred amounts accrue
interest monthly at a rate equal to the yield of Zurich Money
Funds--Zurich Money Market Fund. Total deferred amounts and interest
accrued for the latest and all prior fiscal years are $2,000 for Mr.
Gottschalk.
(2) Includes compensation for service on the Boards of 13 Kemper Funds with 39
fund portfolios. Each trustee currently serves as a board member of 14
Kemper funds with 44 fund portfolios.
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<PAGE>
As of February 4, 1999, 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 any class of either Fund, except as shown
below: [To be updated]
<TABLE>
<CAPTION>
Fund Name And Address Class Percentage
- ---- ---------------- ----- ----------
<S> <C> <C> <C>
[To be updated]
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
Fund Name And Address Class Percentage
- ---- ---------------- ----- ----------
<S> <C> <C> <C>
</TABLE>
- --------------------
* Record and beneficial owner.
** Record owner only.
SHAREHOLDER RIGHTS
The Funds are open-end management investment companies, organized as separate
business trusts under the laws of Massachusetts. The Asian and Europe Funds were
each organized as a business trust under the laws of Massachusetts on June 12,
1995. 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.
The Asian Fund and the Global Fund each may in the future seek to achieve its
investment objective by pooling its assets with assets of other mutual funds for
investment in another investment company having the same investment objective
and substantially the same investment policies and restrictions as such Fund.
The purpose of such an arrangement is to achieve greater operational
efficiencies and to reduce costs. It is expected that any such investment
company will be managed by Scudder Kemper in substantially the same manner as
the corresponding Fund. Shareholders of a Fund will be given at least 30 days'
prior notice of any such investment, although they will not be entitled to vote
on the action. Such investment would be made only if the Trustees determine it
to be in the best interests of the respective Fund and its shareholders.
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. While only shares of a single
Portfolio are presently being offered by each Fund, the Board of Trustees of
each Fund 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."
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<PAGE>
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 have
different expenses, which may affect performance, and that are available for
purchase exclusively by the following investors: (a) tax-exempt retirement plans
of Scudder Kemper and its affiliates; and (b) the following investment advisory
clients of Scudder Kemper 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. 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.
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
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.
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<PAGE>
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 Scudder Kemper 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.
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<PAGE>
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.
74
<PAGE>
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.
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.
75
<PAGE>
KEMPER INTERNATIONAL FUND
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
Item 23. Exhibits.
-------- ---------
<S> <C> <C>
(a) (1) Amended and Restated Agreement and Declaration of Trust, incorporated by
reference to Post-Effective Amendment No. 20 to the Registrant's
Registration Statement on Form N-1A; filed with the SEC on February 28,
1995.
(b) By-laws, incorporated by reference to Post-Effective Amendment No. 21 to
the Registrant's Registration Statement on Form N-1A; filed with the SEC
on February 27, 1996.
(c) (1) Text of Share Certificate, incorporated by reference to Post-Effective
Amendment No. 20 to the Registrant's Registration Statement on Form
N-1A; filed with the SEC on February 28, 1995.
(c) (2) Amended and Restated Written Instrument Establishing and Designating
Separate Classes of Shares, incorporated by reference to Post-
Effective Amendment No. 22 to the Registrant's Registration Statement on
Form N-1A; filed with the SEC on February 21, 1997.
(d) (1) Investment Management Agreement, incorporated by reference to Post-
Effective Amendment No. 23 to the Registrant's Registration Statement on
Form N-1A; filed with the SEC on February 26, 1998.
(d) (2) Investment Management Agreement between the Registrant and Scudder
Kemper Investments, Inc., dated September 7, 1998; filed herein.
(d) (3) Sub-Advisory Agreement, incorporated by reference to Post-Effective
Amendment No. 23 to the Registrant's Registration Statement on Form
N-1A; filed with the SEC on February 26, 1998.
(d) (4) Sub-Advisory Agreement between Scudder Kemper Investments, Inc., on
behalf of Kemper International Fund, and Scudder Investments (U.K.)
Limited, dated May 21, 1998; filed herein.
(d) (5) Sub-Advisory Agreement between Scudder Kemper Investments, Inc., on
behalf of Kemper International Fund, and Scudder Investments (U.K.)
Limited, dated September 7, 1998; filed herein.
(e) (1) Underwriting and Distribution Services Agreement, incorporated by
reference to Post-Effective Amendment No. 23 to the Registrant's
Registration Statement on Form N-1A; filed with the SEC on February 26,
1998.
(e) (2) Underwriting and Distribution Services Agreement between the Registrant
and Kemper Distributors, Inc., dated August 1, 1998; filed herein.
(e) (3) Underwriting and Distribution Services Agreement between the Registrant
and Kemper Distributors, Inc., dated September 7, 1998; filed herein.
(e) (4) Selling Group Agreement; to be filed by amendment.
Part C - Page 1
<PAGE>
(f) Inapplicable.
(g) (1) Custody Agreement (Form 1), incorporated by reference to Post-Effective
Amendment No. 21 to the Registrant's Registration Statement on Form
N-1A; filed with the SEC on February 27, 1996.
(2) Foreign Custody Agreement (Form 2), incorporated by reference to Post-
Effective Amendment No. 20 to the Registrant's Registration Statement on
Form N-1A; filed with the SEC on February 28, 1995.
(h) (1) Agency Agreement, incorporated by reference to Post-Effective
Amendment No. 20 to the Registrant's Registration Statement on Form
N-1A; filed with the SEC on February 28, 1995.
(h) (2) Supplement to Agency Agreement, incorporated by reference to Post-
Effective Amendment No. 23 to the Registrant's Registration Statement on
Form N-1A; filed with the SEC on February 26, 1998.
(h) (3) Administrative Services Agreement, incorporated by reference to Post-
Effective Amendment No. 23 to the Registrant's Registration Statement on
Form N-1A; filed with the SEC on February 26, 1998.
(h) (4) Fund Accounting Agreement, incorporated by reference to Post- Effective
Amendment No. 23 to the Registrant's Registration Statement on Form N-1A;
filed with the SEC on February 26, 1998.
(i) Inapplicable.
(j) Report and Consent of Independent Auditors; to be filed by amendment.
(k) Inapplicable.
(l) Inapplicable.
(m) (1) Amended and Restated 12b-1 Plan (Class B Shares) between the Registrant
and Kemper Distributors, Inc., dated August 1, 1998; filed herein.
(m) (2) Amended and Restated 12b-1 Plan (Class C Shares) between the Registrant
and Kemper Distributors, Inc., dated August 1, 1998; filed herein.
(n) Financial Data Schedule; to be filed by amendment.
(o) Multi-Distribution System Plan, incorporated by reference to Post-Effective
Amendment No. 22 to the Registrant's Registration Statement on Form
N-1A; filed with the SEC on February 21, 1997.
</TABLE>
Item 24. Persons Controlled by or under Common Control with Fund.
- -------- --------------------------------------------------------
None
Item 25. Indemnification.
- -------- ----------------
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
Part C - Page 2
<PAGE>
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding
Corp. ("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens &
Clark, Inc. ("Scudder") and the representatives of the beneficial owners of the
capital stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich became the majority
stockholder in Scudder with an approximately 70% interest, and ZKI was combined
with Scudder ("Transaction"). In connection with the trustees' evaluation of the
Transaction, Zurich agreed to indemnify the Registrant and the trustees who were
not interested persons of ZKI or Scudder (the "Independent Trustees") for and
against any liability and expenses based upon any action or omission by the
Independent Trustees in connection with their consideration of and action with
respect to the Transaction. In addition, Scudder has agreed to indemnify the
Registrant and the Independent Trustees for and against any liability and
expenses based upon any misstatements or omissions by Scudder to the Independent
Trustees in connection with their consideration of the Transaction.
Item 26. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
Scudder Kemper Investments, Inc. has stockholders and
employees who are denominated officers but do not as such have
corporation-wide responsibilities. Such persons are not
considered officers for the purpose of this Item 26.
<TABLE>
<CAPTION>
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
---- ------------------------------------
<S> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer, Scudder Kemper Investments, Inc.**
Vice President and Treasurer, Scudder Fund Accounting Corporation*
Director, Scudder Stevens & Clark Corporation**
Director and Chairman, Scudder Defined Contribution Services, Inc.**
Director and President, Scudder Capital Asset Corporation**
Director and President, Scudder Capital Stock Corporation**
Director and President, Scudder Capital Planning Corporation**
Director and President, SS&C Investment Corporation**
Director and President, SIS Investment Corporation**
Director and President, SRV Investment Corporation**
Lynn S. Birdsong Director and Vice President, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark (Luxembourg) S.A.#
William H. Bolinder Director, Scudder Kemper Investments, Inc.**
Member, Group Executive Board, Zurich Financial Services, Inc.##
Chairman, Zurich-American Insurance Company o
Part C - Page 3
<PAGE>
Laurence W. Cheng Director, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, ZKI Holding Corporation xx
Gunther Gose Director, Scudder Kemper Investments, Inc.**
CFO and Member, Group Executive Board, Zurich Financial Services, Inc.##
CEO/Branch Offices, Zurich Life Insurance Company##
Rolf Huppi Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
Member, Corporate Executive Board, Zurich Insurance Company of Switzerland##
Director, Chairman of the Board, Zurich Holding Company of America o
Director, ZKI Holding Corporation xx
Kathryn L. Quirk Chief Legal Officer, Chief Compliance Officer and Secretary, Scudder Kemper
Investments, Inc.**
Director, Senior Vice President & Assistant Clerk, Scudder Investor Services, Inc.*
Director, Vice President & Secretary, Scudder Fund Accounting Corporation*
Director, Vice President & Secretary, Scudder Realty Holdings Corporation*
Director & Assistant Clerk, Scudder Service Corporation*
Director, SFA, Inc.*
Vice President, Director & Assistant Secretary, Scudder Precious Metals, Inc.***
Director, Scudder, Stevens & Clark Japan, Inc.***
Director, Vice President and Secretary, Scudder, Stevens & Clark of Canada, Ltd.***
Director, Vice President and Secretary, Scudder Canada Investor Services Limited***
Director, Vice President and Secretary, Scudder Realty Advisers, Inc. x
Director and Secretary, Scudder, Stevens & Clark Corporation**
Director and Secretary, Scudder, Stevens & Clark Overseas Corporation oo
Director and Secretary, SFA, Inc.*
Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
Director, Vice President and Secretary, Scudder Capital Asset Corporation**
Director, Vice President and Secretary, Scudder Capital Stock Corporation**
Director, Vice President and Secretary, Scudder Capital Planning Corporation**
Director, Vice President and Secretary, SS&C Investment Corporation**
Director, Vice President and Secretary, SIS Investment Corporation**
Director, Vice President and Secretary, SRV Investment Corporation**
Director, Vice President and Secretary, Scudder Brokerage Services, Inc.*
Director, Korea Bond Fund Management Co., Ltd.+
Cornelia M. Small Director and Vice President, Scudder Kemper Investments, Inc.**
Edmond D. Villani Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
Director, Scudder, Stevens & Clark Japan, Inc.###
President and Director, Scudder, Stevens & Clark Overseas Corporation oo
President and Director, Scudder, Stevens & Clark Corporation**
Director, Scudder Realty Advisors, Inc.x
Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
# Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
*** Toronto, Ontario, Canada
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
Part C - Page 4
<PAGE>
xx 222 S. Riverside, Chicago, IL
o Zurich Towers, 1400 American Ln., Schaumburg, IL
+ P.O. Box 309, Upland House, S. Church St., Grand Cayman, British West Indies
## Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland
</TABLE>
Item 27. Principal Underwriters.
- -------- -----------------------
(a)
Kemper Distributors, Inc. acts as principal underwriter of the
Registrant's shares and acts as principal underwriter of the Kemper
Funds.
(b)
Information on the officers and directors of Kemper Distributors, Inc.,
principal underwriter for the Registrant is set forth below. The
principal business address is 222 South Riverside Plaza, Chicago,
Illinois 60606.
<TABLE>
<CAPTION>
(1) (2) (3)
Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
<S> <C> <C>
James L. Greenawalt President None
Thomas W. Littauer Director, Chief Executive Officer Vice President
Kathryn L. Quirk Director, Secretary, Chief Legal Vice President
Officer and Vice President
James J. McGovern Chief Financial Officer and Vice None
President
Linda J. Wondrack Vice President and Chief Compliance None
Officer
Paula Gaccione Vice President None
Michael E. Harrington Vice President None
Robert A. Rudell Vice President None
William M. Thomas Vice President None
Elizabeth C. Werth Vice President Assistant Secretary
Todd N. Gierke Assistant Treasurer None
Philip J. Collora Assistant Secretary Vice President and Secretary
Paul J. Elmlinger Assistant Secretary None
Diane E. Ratekin Assistant Secretary None
Daniel Pierce Director, Chairman Trustee
Part C - Page 5
<PAGE>
Positions and Offices with Positions and
Name Kemper Distributors, Inc. Offices with Registrant
---- ------------------------- -----------------------
Mark S. Casady Director, Vice Chairman President
Stephen R. Beckwith Director None
(c) Not applicable
</TABLE>
Item 28. Location of Accounts and Records
- -------- --------------------------------
Accounts, books and other documents are maintained at the offices of
the Registrant, the offices of Registrant's investment adviser, Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at the
offices of the Registrant's principal underwriter, Kemper Distributors, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606 or, in the case of records
concerning custodial functions, at the offices of the custodian, Investors
Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue, Kansas City, Missouri
64105 or, in the case of records concerning transfer agency functions, at the
offices of IFTC and of the shareholder service agent, Kemper Service Company,
811 Main Street, Kansas City, Missouri 64105.
Item 29. Management Services.
- -------- --------------------
Inapplicable.
Item 30. Undertakings.
- -------- -------------
Inapplicable.
Part C - Page 6
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 23rd day of
December, 1998.
KEMPER INTERNATIONAL FUND
By: /s/Mark S. Casady
---------------------------------
Mark S. Casady, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on December 23, 1998, on behalf of
the following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Daniel Pierce December 23, 1998
- ----------------------------------------
Daniel Pierce* Chairman and Trustee
/s/David W. Belin December 23, 1998
- ----------------------------------------
David W. Belin* Trustee
/s/Lewis A. Burnham December 23, 1998
- ----------------------------------------
Lewis A. Burnham* Trustee
/s/Donald L. Dunaway December 23, 1998
- ----------------------------------------
Donald L. Dunaway* Trustee
/s/Robert B. Hoffman December 23, 1998
- ----------------------------------------
Robert B. Hoffman* Trustee
/s/Donald R. Jones December 23, 1998
- ----------------------------------------
Donald R. Jones* Trustee
<PAGE>
/s/Shirley D. Peterson December 23, 1998
- ----------------------------------------
Shirley D. Peterson* Trustee
/s/William P. Sommers December 23, 1998
- ----------------------------------------
William P. Sommers* Trustee
/s/Edmond D. Villani December 23, 1998
- ----------------------------------------
Edmond D. Villani* Trustee
December 23, 1998
/s/John R. Hebble
- ----------------------------------------
John R. Hebble Treasurer (Principal Financial and
Accounting Officer)
By: /s/Philip J. Collora
-----------------------------------
Philip J. Collora**
**Philip J. Collora signs this document pursuant to powers of attorney contained in Post-Effective
Amendment No. 23 to the Registration Statement, filed February 26, 1998.
</TABLE>
2
<PAGE>
File No. 2-70639
File No. 811-3136
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 24
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 25
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
KEMPER INTERNATIONAL FUND
<PAGE>
KEMPER INTERNATIONAL FUND
EXHIBIT INDEX
23(d)(2)
23(d)(4)
23(d)(5)
23(e)(2)
23(e)(3)
23(m)(1)
23(m)(2)
Exhibit 23(d)(2)
INVESTMENT MANAGEMENT AGREEMENT
Kemper International Fund
222 South Riverside Plaza
Chicago, Illinois 60606
September 7, 1998
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, New York 10154
Investment Management Agreement
Kemper International Fund
Ladies and Gentlemen:
KEMPER INTERNATIONAL FUND (the "Trust") has been established as a Massachusetts
business Trust to engage in the business of an investment company. Pursuant to
the Trust's Declaration of Trust, as amended from time-to-time (the
"Declaration"), the Board of Trustees is authorized to issue the Trust's shares
of beneficial interest, (the "Shares"), in separate series, or funds. The Board
of Trustees has authorized Kemper International Fund (the "Fund"). Series may be
abolished and dissolved, and additional series established, from time to time by
action of the Trustees.
The Trust, on behalf of the Fund, has selected you to act as the investment
manager of the Fund and to provide certain other services, as more fully set
forth below, and you have indicated that you are willing to act as such
investment manager and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Trust on behalf of the Fund agrees with
you as follows:
1. Delivery of Documents. The Trust engages in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") relating to the Fund included in the Trust's Registration Statement
on Form N-1A, as amended from time to time, (the "Registration Statement") filed
by the Trust under the Investment Company Act of 1940, as amended, (the "1940
Act") and the Securities Act of 1933, as amended. Copies of the documents
referred to in the preceding sentence have been furnished to you by the Trust.
The Trust has also furnished you with copies properly certified or authenticated
of each of the following additional documents related to the Trust and the Fund:
(a) The Declaration, as amended to date.
(b) By-Laws of the Trust as in effect on the date hereof (the "By-
Laws").
(c) Resolutions of the Trustees of the Trust and the shareholders
of the Fund selecting you as investment manager and approving
the form of this Agreement.
(d) Establishment and Designation of Series of Shares of
Beneficial Interest relating to the Fund, as applicable.
The Trust will furnish you from time to time with copies, properly certified or
authenticated, of all amendments of or supplements, if any, to the foregoing,
including the Prospectus, the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing
<PAGE>
investment management of the assets of the Fund in accordance with the
investment objectives, policies and restrictions set forth in the Prospectus and
SAI; the applicable provisions of the 1940 Act and the Internal Revenue Code of
1986, as amended, (the "Code") relating to regulated investment companies and
all rules and regulations thereunder; and all other applicable federal and state
laws and regulations of which you have knowledge; subject always to policies and
instructions adopted by the Trust's Board of Trustees. In connection therewith,
you shall use reasonable efforts to manage the Fund so that it will qualify as a
regulated investment company under Subchapter M of the Code and regulations
issued thereunder. The Fund shall have the benefit of the investment analysis
and research, the review of current economic conditions and trends and the
consideration of long-range investment policy generally available to your
investment advisory clients. In managing the Fund in accordance with the
requirements set forth in this section 2, you shall be entitled to receive and
act upon advice of counsel to the Trust. You shall also make available to the
Trust promptly upon request all of the Fund's investment records and ledgers as
are necessary to assist the Trust in complying with the requirements of the 1940
Act and other applicable laws. To the extent required by law, you shall furnish
to regulatory authorities having the requisite authority any information or
reports in connection with the services provided pursuant to this Agreement
which may be requested in order to ascertain whether the operations of the Trust
are being conducted in a manner consistent with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement. You shall determine what portion of
the Fund's portfolio shall be invested in securities and other assets and what
portion, if any, should be held uninvested.
You shall furnish to the Trust's Board of Trustees periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
3. Administrative Services. In addition to the portfolio management services
specified above in section 2, you shall furnish at your expense for the use of
the Fund such office space and facilities in the United States as the Fund may
require for its reasonable needs, and you (or one or more of your affiliates
designated by you) shall render to the Trust administrative services on behalf
of the Fund necessary for operating as an open end investment company and not
provided by persons not parties to this Agreement including, but not limited to,
preparing reports to and meeting materials for the Trust's Board of Trustees and
reports and notices to Fund shareholders; supervising, negotiating contractual
arrangements with, to the extent appropriate, and monitoring the performance of,
accounting agents, custodians, depositories, transfer agents and pricing agents,
accountants, attorneys, printers, underwriters, brokers and dealers, insurers
and other persons in any capacity deemed to be necessary or desirable to Fund
operations; preparing and making filings with the Securities and Exchange
Commission (the "SEC") and other regulatory and self-regulatory organizations,
including, but not limited to, preliminary and definitive proxy materials,
post-effective amendments to the Registration Statement, semi-annual reports on
Form N-SAR and notices pursuant to Rule 24f-2 under the 1940 Act; overseeing the
tabulation of proxies by the Fund's transfer agent; assisting in the preparation
and filing of the Fund's federal, state and local tax returns; preparing and
filing the Fund's federal excise tax return pursuant to Section 4982 of the
Code; providing assistance with investor and public relations matters;
monitoring the valuation of portfolio securities and the calculation of net
asset value; monitoring the registration of Shares of the Fund under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, records and reports and any other information required under
the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the Fund; assisting
in the resolution of accounting issues that may arise with respect to the Fund's
operations and consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith; establishing
and monitoring the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by an authorized person;
assisting the Fund in determining the amount of
2
<PAGE>
dividends and distributions available to be paid by the Fund to its
shareholders, preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required for
such parties to effect the payment of dividends and distributions; and otherwise
assisting the Trust as it may reasonably request in the conduct of the Fund's
business, subject to the direction and control of the Trust's Board of Trustees.
Nothing in this Agreement shall be deemed to shift to you or to diminish the
obligations of any agent of the Fund or any other person not a party to this
Agreement which is obligated to provide services to the Fund.
4. Allocation of Charges and Expenses. Except as otherwise specifically provided
in this section 4, you shall pay the compensation and expenses of all Trustees,
officers and executive employees of the Trust (including the Fund's share of
payroll taxes) who are affiliated persons of you, and you shall make available,
without expense to the Fund, the services of such of your directors, officers
and employees as may duly be elected officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by law. You shall
provide at your expense the portfolio management services described in section 2
hereof and the administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 4. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Trustees and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund: organization expenses of the
Fund (including out of-pocket expenses, but not including your overhead or
employee costs); fees payable to you and to any other Fund advisors or
consultants; legal expenses; auditing and accounting expenses; maintenance of
books and records which are required to be maintained by the Fund's custodian or
other agents of the Trust; telephone, telex, facsimile, postage and other
communications expenses; taxes and governmental fees; fees, dues and expenses
incurred by the Fund in connection with membership in investment company trade
organizations; fees and expenses of the Fund's accounting agent for which the
Trust is responsible pursuant to the terms of the Fund Accounting Services
Agreement, custodians, subcustodians, transfer agents, dividend disbursing
agents and registrars; payment for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates and, except as provided below in this section 4,
other expenses in connection with the issuance, offering, distribution, sale,
redemption or repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering or qualifying
Shares of the Fund for sale; interest charges, bond premiums and other insurance
expense; freight, insurance and other charges in connection with the shipment of
the Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Trust business) of Trustees, officers and
employees of the Trust who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Trustees and officers of the Trust; and costs of
shareholders' and other meetings.
You shall not be required to pay expenses of any activity which is primarily
intended to result in sales of Shares of the Fund if and to the extent that (i)
such expenses are required to be borne by a principal underwriter which acts as
the distributor of the Fund's Shares pursuant to an underwriting agreement which
provides that the underwriter shall assume some or all of such expenses, or (ii)
the Trust on behalf of the Fund shall have adopted a plan in conformity with
Rule 12b-1 under the 1940 Act providing that the Fund (or some other party)
shall assume some or all of such expenses. You shall be required to pay such of
the foregoing sales expenses as are not required to be paid by the principal
underwriter pursuant to the underwriting agreement or are not permitted to be
paid by the Fund (or some other party) pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3, and 4 hereof, the Trust
on behalf of the Fund shall pay you in United States Dollars on the last day of
each month the unpaid balance of a fee equal to the excess of (a) 1/12 of .75 of
1 percent of the average
3
<PAGE>
daily net assets as defined below of the Fund for such month; provided that, for
any calendar month during which the average of such values exceeds $250,000,000,
the fee payable for that month based on the portion of the average of such
values in excess of $250,000,000 shall be 1/12 of .72 of 1 percent of such
portion; provided that, for any calendar month during which the average of such
values exceeds $1,000,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $1,000,000,000 shall be 1/12
of .70 of 1 percent of such portion; provided that, for any calendar month
during which the average of such values exceeds $2,500,000,000, the fee payable
for that month based on the portion of the average of such values in excess of
$2,500,000,000 shall be 1/12 of .68 of 1 percent of such portion; provided that,
for any calendar month during which the average of such values exceeds
$5,000,000,000, the fee payable for that month based on the portion of the
average of such values in excess of $5,000,000,000 shall be 1/12 of .65 of 1
percent of such portion; provided that, for any calendar month during which the
average of such values exceeds $7,500,000,000, the fee payable for that month
based on the portion of the average of such values in excess of $7,500,000,000
shall be 1/12 of .64 of 1 percent of such portion; provided that, for any
calendar month during which the average of such values exceeds $10,000,000,000,
the fee payable for that month based on the portion of the average of such
values in excess of $10,000,000,000 shall be 1/12 of .63 of 1 percent of such
portion; and provided that, for any calendar month during which the average of
such values exceeds $12,500,000,000, the fee payable for that month based on the
portion of the average of such values in excess of $12,500,000,000 shall be 1/12
of .62 of 1 percent of such portion; over any compensation waived by you from
time to time (as more fully described below). You shall be entitled to receive
during any month such interim payments of your fee hereunder as you shall
request, provided that no such payment shall exceed 75 percent of the amount of
your fee then accrued on the books of the Fund and unpaid.
The "average daily net assets" of the Fund shall mean the average of the values
placed on the Fund's net assets as of 4:00 p.m. (New York time) on each day on
which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Declaration and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 5.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive. In connection
with purchases or sales of portfolio securities and other investments for the
account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and services to others. In acting under this Agreement, you shall be an
independent contractor and not an agent of the Trust. Whenever the Fund and one
or more other accounts or investment companies advised by you have available
funds for investment, investments suitable and appropriate for each shall be
allocated in accordance with procedures believed by you to be equitable to each
entity. Similarly, opportunities to sell securities shall be allocated in a
manner believed by you to be equitable. The Fund recognizes
4
<PAGE>
that in some cases this procedure may adversely affect the size of the position
that may be acquired or disposed of for the Fund.
7. Limitation of Liability of Manager. As an inducement to your undertaking to
render services pursuant to this Agreement, the Trust agrees that you shall not
be liable under this Agreement for any error of judgment or mistake of law or
for any loss suffered by the Fund in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect you against any liability to the Trust, the Fund
or its shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.
8. Duration and Termination of This Agreement. This Agreement shall remain in
force until March 1, 1998, and continue in force from year to year thereafter,
but only so long as such continuance is specifically approved at least annually
(a) by the vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by the
Trustees of the Trust, or by the vote of a majority of the outstanding voting
securities of the Fund. The aforesaid requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations thereunder and
any applicable SEC exemptive order therefrom.
This Agreement may be terminated with respect to the Fund at any time, without
the payment of any penalty, by the vote of a majority of the outstanding voting
securities of the Fund or by the Trust's Board of Trustees on 60 days' written
notice to you, or by you on 60 days' written notice to the Trust. This Agreement
shall terminate automatically in the event of its assignment.
This Agreement may be terminated with respect to the Fund at any time without
the payment of any penalty by the Board of Trustees or by vote of a majority of
the outstanding voting securities of the Fund in the event that it shall have
been established by a court of competent jurisdiction that you or any of your
officers or directors has taken any action which results in a breach of your
covenants set forth herein.
9. Amendment of this Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder and any applicable SEC exemptive order therefrom.
10. Limitation of Liability for Claims. The Declaration, a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, provides that the name "KEMPER
INTERNATIONAL FUND refers to the Trustees under the Declaration collectively as
Trustees and not as individuals or personally, and that no shareholder of the
Fund, or Trustee, officer, employee or agent of the Trust, shall be subject to
claims against or obligations of the Trust or of the Fund to any extent
whatsoever, but that the Trust estate only shall be liable.
You are hereby expressly put on notice of the limitation of liability as set
forth in the Declaration and you agree that the obligations assumed by the Trust
on behalf of the Fund pursuant to this Agreement shall be limited in all cases
to the Fund and its assets, and you shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Fund or any other
series of the Trust, or from any Trustee, officer, employee or agent of the
Trust. You understand that the rights and obligations of each Fund, or series,
under the Declaration are separate and distinct from those of any and all other
series.
11. Miscellaneous. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement
5
<PAGE>
may be executed simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
In interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts, provided that nothing herein shall be construed
in a manner inconsistent with the 1940 Act, or in a manner which would cause the
Fund to fail to comply with the requirements of Subchapter M of the Code. This
Agreement shall supersede all prior investment advisory or management agreements
entered into between you and the Trust on behalf of the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly,
KEMPER INTERNATIONAL FUND, on behalf of
Kemper International Fund
By: /s/Mark S. Casady
------------------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/S. R. Beckwith
-----------------------------------
Treasurer
6
EXHIBIT 23(d)(4)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 21st day of May, 1998, by and between SCUDDER KEMPER
INVESTMENTS, INC., a Delaware corporation (the "Adviser") and SCUDDER
INVESTMENTS (U.K.) LIMITED, an English corporation (the "Sub-Adviser").
WHEREAS, KEMPER INTERNATIONAL FUND, a Massachusetts business trust (the "Fund")
is a management investment company registered under the Investment Company Act
of 1940;
WHEREAS, the Fund has retained the Adviser to render to it investment advisory
and management services with regard to the Fund's sole series (the "initial
series") pursuant to an Investment Management Agreement (the "Management
Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to render
investment advisory and management services with respect to that portion of the
portfolio of the Fund's initial series allocated to the Sub-Adviser by the
Adviser for management, including services related to foreign securities,
foreign currency transactions and related investments, and the Sub-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 Adviser hereby employs the Sub-Adviser to manage the investment and
reinvestment of the assets of the initial series of the Fund allocated by the
Adviser in its sole discretion to the Sub-Adviser for management, including
services related to foreign securities, foreign currency transactions and
related investments, in accordance with the applicable investment objectives,
policies and limitations and subject to the supervision of the Adviser and 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 the Sub-Adviser; and, in
connection therewith, the Sub-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
Sub-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 and subject to
satisfying the requirements of Section 28(e) of the Securities Exchange Act of
1934, the Sub-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 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
Sub-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 Sub-Adviser's overall responsibilities with respect to the
clients of the Sub-Adviser as to which the Sub-Adviser exercises investment
discretion. The Adviser recognizes that all research services and research
that the Sub-Adviser receives are available for all clients of the Sub-Adviser,
and that the Fund and other clients of the Sub-Adviser 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 Sub-Adviser accepts such employment and agrees during such period to render
such investment management services, to furnish related 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
Sub-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 or the Adviser in any
way or otherwise be deemed an agent of the Fund or the Adviser. It is understood
and agreed that the Sub-Adviser, by separate agreements with the Fund, may also
serve the Fund in other capacities.
<PAGE>
The Sub-Adviser will keep the Fund and the Adviser informed of developments
materially affecting the Fund and shall, on the Sub-Adviser's own initiative and
as reasonably requested by the Adviser or the Fund, furnish to the Fund and the
Adviser from time to time whatever information the Adviser reasonably believes
appropriate for this purpose. The Sub-Adviser agrees that, in the performance of
the duties required of it by this Agreement, it will comply with the Investment
Advisers Act of 1940 and the Investment Company Act of 1940, and all rules and
regulations thereunder, and all applicable laws and regulations and with any
applicable procedures adopted by the Fund's Board of Trustees and identified in
writing to the Sub-Adviser.
The Sub-Adviser shall provide the Adviser with such investment portfolio
accounting and shall maintain and provide such detailed records and reports as
the Adviser may from time to time reasonably request, including without
limitation, daily processing of investment transactions and cash positions,
periodic valuations of investment portfolio positions as required by the
Adviser, monthly reports of the investment portfolio and all investment
transactions and the preparation of such reports and compilation of such data as
may be required by the Adviser to comply with the obligations imposed upon it
under Management Agreement.
The Sub-Adviser shall provide adequate security with respect to all materials,
records, documents and data relating to any of its responsibilities pursuant to
this Agreement including any means for the effecting of securities transactions.
The Sub-Adviser agrees that it will make available to the Adviser and the Fund
promptly upon their request copies of all of its investment records and ledgers
with respect to the Fund to assist the Adviser and the Fund in monitoring
compliance with the Investment Company Act of 1940 and the Investment Advisers
Act of 1940, as well as other applicable laws. The Sub-Adviser will furnish the
Fund's Board of Trustees such periodic and special reports with respect to the
Fund's portfolio as the Adviser or the Board of Trustees may reasonably request.
In compliance with the requirements of Rule 31a-3 under the Investment Company
Act of 1940, the Sub-Adviser hereby agrees that any records that it maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to the Fund copies of any such records upon the
Fund's request. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the Investment Company Act of 1940 any records
with respect to the Sub-Adviser's duties hereunder required to be maintained by
Rule 31a-1 under such Act to the extent that the Sub-Adviser prepares and
maintains such records pursuant to this Agreement and to preserve the records
required by Rule 204-2 under the Investment Advisers Act of 1940 for the period
specified in that Rule.
The Sub-Adviser agrees that it will immediately notify the Adviser and the Fund
in the event that the Sub-Adviser: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from serving as an investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an administrative proceeding or enforcement action by the United States
Securities and Exchange Commission, the Investment Management Regulatory
Organization ("IMRO") or other regulatory authority.
The Sub-Adviser represents that it is an investment adviser registered under the
Investment Advisers Act of 1940 and other applicable laws and it is regulated by
IMRO and will treat the Fund as a Non-Private Customer as defined by IMRO. The
Sub-Adviser agrees to maintain the completeness and accuracy of its registration
on Form ADV in accordance with all legal requirements relating to that Form. The
Sub-Adviser acknowledges that it is an "investment adviser" to the Fund within
the meaning of the Investment Company Act of 1940 and the Investment Advisers
Act of 1940.
The Sub-Adviser shall be responsible for maintaining an appropriate compliance
program to ensure that the services provided by it under this Agreement are
performed in a manner consistent with applicable laws and the terms of this
Agreement. Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser. Sub-Adviser
agrees to provide such reports and certifications regarding its compliance
program as the Adviser or the Fund shall reasonably request from time to time.
2
<PAGE>
2. In the event that there are, from time to time, one or more additional series
of the Fund with respect to which the Adviser desires to retain the Sub-Adviser
to render investment advisory and management services hereunder, the Adviser
shall notify the Sub-Adviser in writing. If the Sub-Adviser is willing to render
such services, it shall notify the Adviser in writing whereupon such additional
series shall become subject to this Agreement.
3. For the services and facilities described in Section 1, the Adviser will pay
to the Sub-Adviser, at the end of each calendar month, a sub-advisory fee
computed at an annual rate of .35% of that portion of the average daily net
assets of the initial series of the Fund that is allocated by the Adviser to the
Sub-Adviser for management.
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 Sub-Adviser under this Agreement are not to be deemed
exclusive, and the Sub-Adviser shall be free to render similar services or other
services to others so long as its services hereunder are not impaired thereby.
5. The Sub-Adviser shall arrange, if desired by the Fund, for officers or
employees of the Sub-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.
6. The net asset value for each series of the Fund subject to this Agreement
shall be calculated as the Board of Trustees of the Fund may determine from time
to time 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
series shall be deemed to be the net asset value of such series as of the close
of business on the last day on which such calculation was made for the purpose
of the foregoing computations.
7. Subject to applicable statutes and regulations, it is understood that certain
trustees, officers or agents of the Fund are or may be interested in the
Sub-Adviser as officers, directors, agents, shareholders or otherwise, and that
the officers, directors, shareholders and agents of the Sub-Adviser may be
interested in the Fund otherwise than as a trustee, officer or agent.
8. The Sub-Adviser shall not be liable for any error of judgment or of law or
for any loss suffered by the Fund or the Adviser 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 Sub-Adviser in the performance
of its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
9. This Agreement shall become effective with respect to the initial series of
the Fund on the date hereof and shall remain in full force until March 1, 1999,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in force from year to year thereafter with respect to each such series, but only
as long as such continuance is specifically approved for each series 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 series, the Sub-Adviser may continue to
serve in such capacity for such series 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 or
in the event of the termination of the Management Agreement and may be
terminated at any time with respect to any series subject to this Agreement
without the payment of any penalty by the Adviser or by the Sub-Adviser on sixty
(60) days' written notice to the other party. The Fund may effect termination
with respect to any such series without payment of any penalty by action of the
Board of Trustees or by vote of a majority of the outstanding voting securities
of such series on sixty (60) days' written notice to the Adviser and the
Sub-Adviser.
3
<PAGE>
This Agreement may be terminated with respect to any series at any time without
the payment of any penalty by the Board of Trustees of the Fund, by vote of a
majority of the outstanding voting securities of such series or by the Adviser
in the event that it shall have been established by a court of competent
jurisdiction that the Sub-Adviser or any officer or director of the Sub-Adviser
has taken any action which results in a breach of the covenants of the
Sub-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 Sub-Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
11. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
12. This Agreement shall be construed in accordance with applicable federal law
and the laws of the Commonwealth of Massachusetts.
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 Adviser and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.
SCUDDER KEMPER INVESTMENTS, INC.
By: /s/Cornelia M. Small
------------------------------
Title: Managing Director
------------------------------
SCUDDER INVESTMENTS (U.K.) LIMITED
By: /s/Dennis H. Ferro
------------------------------
Title: Managing Director
------------------------------
Exhibit 23(d)(5)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 7th day of September, 1998, by and between SCUDDER KEMPER
INVESTMENTS, INC., a Delaware corporation (the "Adviser") and SCUDDER
INVESTMENTS (U.K.) LIMITED, an English corporation (the "Sub-Adviser").
WHEREAS, KEMPER INTERNATIONAL FUND, a Massachusetts business trust (the "Fund")
is a management investment company registered under the Investment Company Act
of 1940;
WHEREAS, the Fund has retained the Adviser to render to it investment advisory
and management services with regard to the Fund's sole series (the "initial
series") pursuant to an Investment Management Agreement (the "Management
Agreement"); and
WHEREAS, the Adviser desires at this time to retain the Sub-Adviser to render
investment advisory and management services with respect to that portion of the
portfolio of the Fund's initial series allocated to the Sub-Adviser by the
Adviser for management, including services related to foreign securities,
foreign currency transactions and related investments, and the Sub-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 Adviser hereby employs the Sub-Adviser to manage the investment and
reinvestment of the assets of the initial series of the Fund allocated by the
Adviser in its sole discretion to the Sub-Adviser for management, including
services related to foreign securities, foreign currency transactions and
related investments, in accordance with the applicable investment objectives,
policies and limitations and subject to the supervision of the Adviser and 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 the Sub-Adviser; and, in
connection therewith, the Sub-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
Sub-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 and subject to
satisfying the requirements of Section 28(e) of the Securities Exchange Act of
1934, the Sub-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 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
Sub-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 Sub-Adviser's overall responsibilities with respect to the
clients of the Sub-Adviser as to which the Sub-Adviser exercises investment
discretion. The Adviser recognizes that all research services and research that
the Sub-Adviser receives are available for all clients of the Sub-Adviser, and
that the Fund and other clients of the Sub-Adviser 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 Sub-Adviser accepts such employment and agrees during such period to render
such investment management services, to furnish related 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
Sub-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 or the Adviser in any
way or otherwise
<PAGE>
be deemed an agent of the Fund or the Adviser. It is understood and agreed that
the Sub-Adviser, by separate agreements with the Fund, may also serve the Fund
in other capacities.
The Sub-Adviser will keep the Fund and the Adviser informed of developments
materially affecting the Fund and shall, on the Sub-Adviser's own initiative and
as reasonably requested by the Adviser or the Fund, furnish to the Fund and the
Adviser from time to time whatever information the Adviser reasonably believes
appropriate for this purpose. The Sub-Adviser agrees that, in the performance of
the duties required of it by this Agreement, it will comply with the Investment
Advisers Act of 1940 and the Investment Company Act of 1940, and all rules and
regulations thereunder, and all applicable laws and regulations and with any
applicable procedures adopted by the Fund's Board of Trustees and identified in
writing to the Sub-Adviser.
The Sub-Adviser shall provide the Adviser with such investment portfolio
accounting and shall maintain and provide such detailed records and reports as
the Adviser may from time to time reasonably request, including without
limitation, daily processing of investment transactions and cash positions,
periodic valuations of investment portfolio positions as required by the
Adviser, monthly reports of the investment portfolio and all investment
transactions and the preparation of such reports and compilation of such data as
may be required by the Adviser to comply with the obligations imposed upon it
under Management Agreement.
The Sub-Adviser shall provide adequate security with respect to all materials,
records, documents and data relating to any of its responsibilities pursuant to
this Agreement including any means for the effecting of securities transactions.
The Sub-Adviser agrees that it will make available to the Adviser and the Fund
promptly upon their request copies of all of its investment records and ledgers
with respect to the Fund to assist the Adviser and the Fund in monitoring
compliance with the Investment Company Act of 1940 and the Investment Advisers
Act of 1940, as well as other applicable laws. The Sub-Adviser will furnish the
Fund's Board of Trustees such periodic and special reports with respect to the
Fund's portfolio as the Adviser or the Board of Trustees may reasonably request.
In compliance with the requirements of Rule 31a-3 under the Investment Company
Act of 1940, the Sub-Adviser hereby agrees that any records that it maintains
for the Fund are the property of the Fund and further agrees to surrender
promptly to the Fund copies of any such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the Investment Company Act of 1940 any records with respect to the
Sub-Adviser's duties hereunder required to be maintained by Rule 31a-1 under
such Act to the extent that the Sub-Adviser prepares and maintains such records
pursuant to this Agreement and to preserve the records required by Rule 204-2
under the Investment Advisers Act of 1940 for the period specified in that Rule.
The Sub-Adviser agrees that it will immediately notify the Adviser and the Fund
in the event that the Sub-Adviser: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from serving as an investment
adviser pursuant to this Agreement; or (ii) is or expects to become the subject
of an administrative proceeding or enforcement action by the United States
Securities and Exchange Commission, the Investment Management Regulatory
Organization ("IMRO") or other regulatory authority.
The Sub-Adviser represents that it is an investment adviser registered under the
Investment Advisers Act of 1940 and other applicable laws and it is regulated by
IMRO and will treat the Fund as a Non-Private Customer as defined by IMRO. The
Sub-Adviser agrees to maintain the completeness and accuracy of its registration
on Form ADV in accordance with all legal requirements relating to that Form. The
Sub-Adviser acknowledges that it is an "investment adviser" to the Fund within
the meaning of the Investment Company Act of 1940 and the Investment Advisers
Act of 1940.
2
<PAGE>
The Sub-Adviser shall be responsible for maintaining an appropriate compliance
program to ensure that the services provided by it under this Agreement are
performed in a manner consistent with applicable laws and the terms of this
Agreement. Furthermore, the Sub-Adviser shall maintain and enforce a Code of
Ethics that is in form and substance satisfactory to the Adviser. Sub-Adviser
agrees to provide such reports and certifications regarding its compliance
program as the Adviser or the Fund shall reasonably request from time to time.
2. In the event that there are, from time to time, one or more additional series
of the Fund with respect to which the Adviser desires to retain the Sub-Adviser
to render investment advisory and management services hereunder, the Adviser
shall notify the Sub-Adviser in writing. If the Sub-Adviser is willing to render
such services, it shall notify the Adviser in writing whereupon such additional
series shall become subject to this Agreement.
3. For the services and facilities described in Section 1, the Adviser will pay
to the Sub-Adviser, at the end of each calendar month, a sub-advisory fee
computed at an annual rate of .35% of that portion of the average daily net
assets of the initial series of the Fund that is allocated by the Adviser to the
Sub-Adviser for management.
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 Sub-Adviser under this Agreement are not to be deemed
exclusive, and the Sub-Adviser shall be free to render similar services or other
services to others so long as its services hereunder are not impaired thereby.
5. The Sub-Adviser shall arrange, if desired by the Fund, for officers or
employees of the Sub-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.
6. The net asset value for each series of the Fund subject to this Agreement
shall be calculated as the Board of Trustees of the Fund may determine from time
to time 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
series shall be deemed to be the net asset value of such series as of the close
of business on the last day on which such calculation was made for the purpose
of the foregoing computations.
7. Subject to applicable statutes and regulations, it is understood that certain
trustees, officers or agents of the Fund are or may be interested in the
Sub-Adviser as officers, directors, agents, shareholders or otherwise, and that
the officers, directors, shareholders and agents of the Sub-Adviser may be
interested in the Fund otherwise than as a trustee, officer or agent.
8. The Sub-Adviser shall not be liable for any error of judgment or of law or
for any loss suffered by the Fund or the Adviser 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 Sub-Adviser in the performance
of its obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
9. This Agreement shall become effective with respect to the initial series of
the Fund on the date hereof and shall remain in full force until March 1, 1999,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in force from year to year thereafter with respect to each such series, but only
as long as such continuance is specifically approved for each series 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 series, the Sub-Adviser may
3
<PAGE>
continue to serve in such capacity for such series 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 or
in the event of the termination of the Management Agreement and may be
terminated at any time with respect to any series subject to this Agreement
without the payment of any penalty by the Adviser or by the Sub-Adviser on sixty
(60) days' written notice to the other party. The Fund may effect termination
with respect to any such series without payment of any penalty by action of the
Board of Trustees or by vote of a majority of the outstanding voting securities
of such series on sixty (60) days' written notice to the Adviser and the
Sub-Adviser.
This Agreement may be terminated with respect to any series at any time without
the payment of any penalty by the Board of Trustees of the Fund, by vote of a
majority of the outstanding voting securities of such series or by the Adviser
in the event that it shall have been established by a court of competent
jurisdiction that the Sub-Adviser or any officer or director of the Sub-Adviser
has taken any action which results in a breach of the covenants of the
Sub-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 Sub-Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
10. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
11. Any notice under this Agreement shall be in writing, addressed and delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate for the receipt of such notice.
12. This Agreement shall be construed in accordance with applicable federal law
and the laws of the Commonwealth of Massachusetts.
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 Adviser and the Sub-Adviser have caused this Agreement
to be executed as of the day and year first above written.
SCUDDER KEMPER INVESTMENTS, INC.
/s/Stephen R. Beckwith
----------------------------------
By:
Title:
SCUDDER INVESTMENTS (U.K.) LIMITED
/s/Dennis H. Ferro
----------------------------------
By:
Title: Managing Director
4
Exhibit 23(e)(2)
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 1st day of August, 1998 between KEMPER INTERNATIONAL FUND, a
Massachusetts business trust (the "Fund"), and KEMPER DISTRIBUTORS, INC., a
Delaware corporation ("KDI")., a Massachusetts business trust (the "Fund"), and
KEMPER DISTRIBUTORS, INC., a Delaware corporation ("KDI").
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KDI to act as agent for distribution of
shares of beneficial interest (hereinafter called "shares") of the Fund in
jurisdictions wherein shares of the Fund may legally be offered for sale;
provided, however, that the Fund in its absolute discretion may (a) issue or
sell shares directly to holders of shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; or (b) issue or
sell shares at net asset value to the shareholders of any other investment
company, for which KDI shall act as exclusive distributor, who wish to exchange
all or a portion of their investment in shares of such other investment company
for shares of the Fund. KDI shall appoint various 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. KDI may also provide some of the above services for the
Fund.
KDI 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. KDI 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. KDI, by separate agreement with the Fund, may
also serve the Fund in other capacities. The services of KDI to the Fund under
this Agreement are not to be deemed exclusive, and KDI shall be free to render
similar services or other services to others so long as its services hereunder
are not impaired thereby.
In carrying out its duties and responsibilities hereunder, KDI will,
pursuant to separate 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 KDI and not the Fund.
KDI shall use its best efforts with reasonable promptness to sell such
part of the
<PAGE>
authorized shares of the Fund remaining unissued as from time to time shall be
effectively registered under the Securities Act of 1933 ("Securities Act"), at
prices determined as hereinafter provided and on terms hereinafter set forth,
all subject to applicable federal and state laws and regulations and to the
Fund's organizational documents.
2. KDI shall sell shares of the Fund to or through qualified Firms in
such manner, not inconsistent with the provisions hereof and the then effective
registration statement (and related prospectus) of the Fund under the Securities
Act, as KDI 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
prior consent of the Fund. In addition to sales made by it as agent of the Fund,
KDI may, in its discretion, also sell shares of the Fund as principal to persons
with whom it does not have selling group agreements.
Shares of any class of any series of the Fund offered for sale or sold
by KDI shall be so offered or sold at a price per share determined in accordance
with the then current prospectus. 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 KDI as
agent shall be retained by KDI as a commission for its services hereunder. KDI
may compensate Firms for sales of shares at the commission levels provided in
the Fund's prospectus from time to time. KDI may pay other commissions, fees or
concessions to Firms, any may pay them to others in its discretion, in such
amounts as KDI shall determine from time to time. KDI shall be entitled to
receive and retain any applicable contingent deferred sales charge as described
in the Fund's prospectus. KDI shall also receive any distribution services fee
payable by the Fund as provided in the Fund's Amended and Restated 12b-1 Plan,
as amended from time to time (the "Plan").
KDI will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the public offering price or net asset value, as
applicable, of the Fund's shares, and neither KDI nor any such Firms shall
withhold the placing of purchase orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered
under the Securities Act for sale as herein contemplated such shares as KDI
shall reasonably request and as the Securities and Exchange Commission shall
permit to be so registered. Notwithstanding any other provision hereof, the Fund
may terminate, suspend or withdraw the offering of shares whenever, in its sole
discretion, it deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any and all
information that may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as KDI may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to KDI from time to time such information
with respect to the Fund and its
<PAGE>
shares as KDI may reasonably request for use in connection with the sale of
shares of the Fund.
5. KDI shall issue and deliver or shall arrange for various Firms to
issue and deliver on behalf of the Fund such confirmations of sales made by it
pursuant to this Agreement as may be required. At or prior to the time of
issuance of shares, KDI will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
KDI may specify.
6. KDI shall order shares of the Fund from the Fund only to the extent
that it shall have received purchase orders therefor. KDI will not make, or
authorize Firms or others to make (a) any short sales of shares of the Fund; or
(b) any sales of such shares to any Board member or officer of the Fund or to
any officer or Board member of KDI 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. KDI, as
agent of and for the account of the Fund, may repurchase the shares of the Fund
at such prices and upon such terms and conditions as shall be specified in the
current prospectus of the Fund. In selling or reacquiring shares of the Fund for
the account of the Fund, KDI will in all respects conform to the requirements of
all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., relating to such sale or reacquisition,
as the case may be, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by KDI or any employee,
representative or agent of KDI. KDI will observe and be bound by all the
provisions of the Fund's organizational documents (and of any fundamental
policies adopted by the Fund pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), notice of which shall have been given to KDI) which
at the time in any way require, limit, restrict, prohibit or otherwise regulate
any action on the part of KDI hereunder.
7. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by KDI under
this Agreement or the Plan. 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. KDI will pay
all expenses (other than expenses which one or more Firms may bear pursuant to
any agreement with KDI) incident to the sale and distribution of the shares
issued or sold hereunder, including, without limiting the generality of the
foregoing, all (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
<PAGE>
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 KDI under the conditions
herein specified. No transfer taxes, if any, which may be payable in connection
with the issue or delivery or shares sold as herein contemplated or of the
certificates for such shares shall be borne by the Fund, and KDI will indemnify
and hold harmless the Fund against liability for all such transfer taxes.
8. This Agreement shall become effective on the date hereof and shall
continue until March 1, 1999; and shall continue from year to year thereafter
only so long as such continuance is approved in the manner required by the
Investment Company Act.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by KDI on 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 members who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan, this Agreement, or in any other agreement related to the
Plan, or (ii) a majority of the outstanding voting securities of such series or
class. Without prejudice to any other remedies of the Fund, the Fund may
terminate this Agreement at any time immediately upon KDI's failure to fulfill
any of its obligations hereunder.
All material amendments to this Agreement must be approved by a vote of
a majority of the Board, and of the Board members who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan, this Agreement or in any other agreement related to the
Plan, cast in person at a meeting called for such purpose.
The terms "assignment," "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act and the rules and regulations thereunder.
KDI shall receive such compensation for its distribution services as
set forth in the Plan. Termination of this Agreement shall not affect the right
of KDI to receive payments on any unpaid balance of the compensation earned
prior to such termination, as set forth in the Plan.
9. KDI will not use or distribute, or authorize the use, distribution
or dissemination by Firms or others in connection with the sale of Fund shares
any statements other than those contained in the Fund's current prospectus,
except such supplemental literature or advertising as shall be lawful under
federal and state securities laws and regulations. KDI will furnish the Fund
with copies of all such material.
10. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
<PAGE>
11. 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.
12. All parties hereto are expressly put on notice of the Fund's
Agreement and Declaration of Trust, and all amendments thereto, all of which are
on file with the Secretary of The Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund. With respect to any claim by KDI for recovery of any liability of the Fund
arising hereunder allocated to a particular series or class, whether in
accordance with the express terms hereof or otherwise, KDI 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.
13. This Agreement shall be construed in accordance with applicable
federal law and with the laws of The Commonwealth of Massachusetts.
14. This Agreement is the entire contract between the parties relating
to the subject matter hereof and supersedes all prior agreements between the
parties relating to the subject matter hereof.
[SIGNATURES APPEAR ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the Fund and KDI have caused this Agreement to be
executed as of the day and year first above written.
KEMPER INTERNATIONAL FUND
By: /s/Mark S. Casady
------------------------------------
Title: President
---------------------------------
ATTEST:
/s/Maureen Kane
- ----------------------------------
Title: Ass't Secretary
---------------------------
KEMPER DISTRIBUTORS, INC.
By: /s/James L. Greenawalt
------------------------------------
Title: President
---------------------------------
ATTEST:
/s/Joan V. Pearson
- ----------------------------------
Title: Executive Assistant
---------------------------
Exhibit 23(e)(3)
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 7th day of September, 1998 between KEMPER INTERNATIONAL
FUND, a Massachusetts business trust (the "Fund"), and KEMPER DISTRIBUTORS,
INC., a Delaware corporation ("KDI")., a Massachusetts business trust (the
"Fund"), and KEMPER DISTRIBUTORS, INC., a Delaware corporation ("KDI").
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KDI to act as agent for distribution of
shares of beneficial interest (hereinafter called "shares") of the Fund in
jurisdictions wherein shares of the Fund may legally be offered for sale;
provided, however, that the Fund in its absolute discretion may (a) issue or
sell shares directly to holders of shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; or (b) issue or
sell shares at net asset value to the shareholders of any other investment
company, for which KDI shall act as exclusive distributor, who wish to exchange
all or a portion of their investment in shares of such other investment company
for shares of the Fund. KDI shall appoint various 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. KDI may also provide some of the above services for the
Fund.
KDI 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. KDI 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. KDI, by separate agreement with the Fund, may
also serve the Fund in other capacities. The services of KDI to the Fund under
this Agreement are not to be deemed exclusive, and KDI shall be free to render
similar services or other services to others so long as its services hereunder
are not impaired thereby.
In carrying out its duties and responsibilities hereunder, KDI will,
pursuant to separate 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 KDI and not the Fund.
KDI shall use its best efforts with reasonable promptness to sell such
part of the
<PAGE>
authorized shares of the Fund remaining unissued as from time to time shall be
effectively registered under the Securities Act of 1933 ("Securities Act"), at
prices determined as hereinafter provided and on terms hereinafter set forth,
all subject to applicable federal and state laws and regulations and to the
Fund's organizational documents.
2. KDI shall sell shares of the Fund to or through qualified Firms in
such manner, not inconsistent with the provisions hereof and the then effective
registration statement (and related prospectus) of the Fund under the Securities
Act, as KDI 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
prior consent of the Fund. In addition to sales made by it as agent of the Fund,
KDI may, in its discretion, also sell shares of the Fund as principal to persons
with whom it does not have selling group agreements.
Shares of any class of any series of the Fund offered for sale or sold
by KDI shall be so offered or sold at a price per share determined in accordance
with the then current prospectus. 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 KDI as
agent shall be retained by KDI as a commission for its services hereunder. KDI
may compensate Firms for sales of shares at the commission levels provided in
the Fund's prospectus from time to time. KDI may pay other commissions, fees or
concessions to Firms, any may pay them to others in its discretion, in such
amounts as KDI shall determine from time to time. KDI shall be entitled to
receive and retain any applicable contingent deferred sales charge as described
in the Fund's prospectus. KDI shall also receive any distribution services fee
payable by the Fund as provided in the Fund's Amended and Restated 12b-1 Plan,
as amended from time to time (the "Plan").
KDI will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the public offering price or net asset value, as
applicable, of the Fund's shares, and neither KDI nor any such Firms shall
withhold the placing of purchase orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered
under the Securities Act for sale as herein contemplated such shares as KDI
shall reasonably request and as the Securities and Exchange Commission shall
permit to be so registered. Notwithstanding any other provision hereof, the Fund
may terminate, suspend or withdraw the offering of shares whenever, in its sole
discretion, it deems such action to be desirable.
4. The Fund will execute any and all documents and furnish any and all
information that may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund as
a dealer where necessary or advisable) in such states as KDI may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to KDI from time to time such information
with respect to the Fund and its
<PAGE>
shares as KDI may reasonably request for use in connection with the sale of
shares of the Fund.
5. KDI shall issue and deliver or shall arrange for various Firms to
issue and deliver on behalf of the Fund such confirmations of sales made by it
pursuant to this Agreement as may be required. At or prior to the time of
issuance of shares, KDI will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
KDI may specify.
6. KDI shall order shares of the Fund from the Fund only to the extent
that it shall have received purchase orders therefor. KDI will not make, or
authorize Firms or others to make (a) any short sales of shares of the Fund; or
(b) any sales of such shares to any Board member or officer of the Fund or to
any officer or Board member of KDI 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. KDI, as
agent of and for the account of the Fund, may repurchase the shares of the Fund
at such prices and upon such terms and conditions as shall be specified in the
current prospectus of the Fund. In selling or reacquiring shares of the Fund for
the account of the Fund, KDI will in all respects conform to the requirements of
all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., relating to such sale or reacquisition,
as the case may be, and will indemnify and save harmless the Fund from any
damage or expense on account of any wrongful act by KDI or any employee,
representative or agent of KDI. KDI will observe and be bound by all the
provisions of the Fund's organizational documents (and of any fundamental
policies adopted by the Fund pursuant to the Investment Company Act of 1940 (the
"Investment Company Act"), notice of which shall have been given to KDI) which
at the time in any way require, limit, restrict, prohibit or otherwise regulate
any action on the part of KDI hereunder.
7. The Fund shall assume and pay all charges and expenses of its
operations not specifically assumed or otherwise to be provided by KDI under
this Agreement or the Plan. 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. KDI will pay
all expenses (other than expenses which one or more Firms may bear pursuant to
any agreement with KDI) incident to the sale and distribution of the shares
issued or sold hereunder, including, without limiting the generality of the
foregoing, all (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
<PAGE>
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 KDI under the conditions
herein specified. No transfer taxes, if any, which may be payable in connection
with the issue or delivery or shares sold as herein contemplated or of the
certificates for such shares shall be borne by the Fund, and KDI will indemnify
and hold harmless the Fund against liability for all such transfer taxes.
8. This Agreement shall become effective on the date hereof and shall
continue until March 1, 1999; and shall continue from year to year thereafter
only so long as such continuance is approved in the manner required by the
Investment Company Act.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by KDI on 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 members who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan, this Agreement, or in any other agreement related to the
Plan, or (ii) a majority of the outstanding voting securities of such series or
class. Without prejudice to any other remedies of the Fund, the Fund may
terminate this Agreement at any time immediately upon KDI's failure to fulfill
any of its obligations hereunder.
All material amendments to this Agreement must be approved by a vote of
a majority of the Board, and of the Board members who are not interested persons
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan, this Agreement or in any other agreement related to the
Plan, cast in person at a meeting called for such purpose.
The terms "assignment," "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act and the rules and regulations thereunder.
KDI shall receive such compensation for its distribution services as
set forth in the Plan. Termination of this Agreement shall not affect the right
of KDI to receive payments on any unpaid balance of the compensation earned
prior to such termination, as set forth in the Plan.
9. KDI will not use or distribute, or authorize the use, distribution
or dissemination by Firms or others in connection with the sale of Fund shares
any statements other than those contained in the Fund's current prospectus,
except such supplemental literature or advertising as shall be lawful under
federal and state securities laws and regulations. KDI will furnish the Fund
with copies of all such material.
10. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
<PAGE>
11. 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.
12. All parties hereto are expressly put on notice of the Fund's
Agreement and Declaration of Trust, and all amendments thereto, all of which are
on file with the Secretary of The Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund. With respect to any claim by KDI for recovery of any liability of the Fund
arising hereunder allocated to a particular series or class, whether in
accordance with the express terms hereof or otherwise, KDI 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.
13. This Agreement shall be construed in accordance with applicable
federal law and with the laws of The Commonwealth of Massachusetts.
14. This Agreement is the entire contract between the parties relating
to the subject matter hereof and supersedes all prior agreements between the
parties relating to the subject matter hereof.
[SIGNATURES APPEAR ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the Fund and KDI have caused this Agreement to be
executed as of the day and year first above written.
KEMPER INTERNATIONAL FUND
By: /s/Mark S. Casady
------------------------------------
Title: President
---------------------------------
ATTEST:
/s/Maureen Kane
- ----------------------------------
Title: Ass't Secretary
---------------------------
KEMPER DISTRIBUTORS, INC.
By: /s/James L. Greenawalt
------------------------------------
Title: President
---------------------------------
ATTEST:
/s/Joan V. Pearson
- ----------------------------------
Title: Executive Assistant
---------------------------
Exhibit 23(m)(1)
Fund: Kemper International Fund (the "Fund")
-------------------------
Class: Class B (the "Class")
-------
AMENDED AND RESTATED 12b-1 PLAN
Pursuant to the provisions of Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"), this Amended and Restated 12b-1 Plan (the "Plan") has
been adopted for the Fund and for the Class (as noted and defined above) by a
majority of the members of the Fund's Board (the "Board"), including a majority
of the Board members who are not "interested persons" of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan (the "Qualified Board Members") at a meeting
called for the purpose of voting on this Plan.
1. Compensation. The Fund will pay to Kemper Distributors, Inc. ("KDI")
at the end of each calendar month a distribution services fee computed at the
annual rate of .75% of average daily net assets attributable to the Class
shares. KDI may compensate various financial service firms appointed by KDI
("Firms") in accordance with the provisions of the Fund's Underwriting and
Distribution Agreement (the "Distribution Agreement") for sales of shares at the
fee levels provided in the Fund's prospectus from time to time. KDI may pay
other commissions, fees or concessions to Firms, and may pay them to others in
its discretion, in such amounts as KDI shall determine from time to time. The
distribution services fee for the Class shall be based upon average daily net
assets of the Fund attributable to the Class and such fee shall be charged only
to the Class. For the month and year in which this Plan becomes effective or
terminates, there shall be an appropriate proration of the distribution services
fee set forth in Paragraph 1 hereof on the basis of the number of days that the
Plan and any agreements related to the Plan are in effect during the month and
year, respectively. The distribution services fee shall be in addition to and
shall not be reduced or offset by the amount of any contingent deferred sales
charge received by KDI.
2. Periodic Reporting. KDI shall prepare reports for the Board on a
quarterly basis for the Class showing amounts paid to the various Firms and such
other information as from time to time shall be reasonably requested by the
Board.
3. Continuance. This Plan shall continue in effect indefinitely,
provided that such continuance is approved at least annually by a vote of a
majority of the Board, and of the Qualified Board Members, cast in person at a
meeting called for such purpose or by vote of at least a majority of the
outstanding voting securities of the Class.
4. Termination. This Plan may be terminated at any time without penalty
with respect to the Class by vote of a majority of the Qualified Board Members
or by vote of the majority of the outstanding voting securities of the Class.
<PAGE>
5. Amendment. This Plan may not be amended to increase materially the
amount to be paid to KDI by the Fund for distribution services with respect to
the Class without the vote of a majority of the outstanding voting securities of
the Class. All material amendments to this Plan must in any event be approved by
a vote of a majority of the Board, and of the Qualified Board Members, cast in
person at a meeting called for such purpose.
6. Selection of Non-Interested Board Members. So long as this Plan is
in effect, the selection and nomination of those Board members who are not
interested persons of the Fund will be committed to the discretion of Board
members who are not themselves interested persons.
7. Recordkeeping. The Fund will preserve copies of this Plan, the
Distribution Agreement, and all reports made pursuant to Paragraph 2 above for a
period of not less than six (6) years from the date of this Plan, the
Distribution Agreement, or any such report, as the case may be, the first two
(2) years in an easily accessible place.
8. Limitation of Liability. Any obligation of the Fund hereunder shall
be binding only upon the assets of the Class and shall not be binding on any
Board member, officer, employee, agent, or shareholder of the Fund. Neither the
authorization of any action by the Board members or shareholders of the Fund nor
the adoption of the Plan on behalf of the Fund shall impose any liability upon
any Board member or upon any shareholder.
9. Definitions. The terms "interested person" and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in the
Act and the rules and regulations thereunder.
10. Severability; Separate Action. If any provision of this Plan shall
be held or made invalid by a court decision, rule or otherwise, the remainder of
this Plan shall not be affected thereby. Action shall be taken separately for
the Class as the Act or the rules thereunder so require.
(Amended and restated August 1, 1998)
Exhibit 23(m)(2)
Fund: Kemper International Fund (the "Fund")
Class: Class C (the "Class")
AMENDED AND RESTATED 12b-1 PLAN
Pursuant to the provisions of Rule 12b-1 under the Investment Company
Act of 1940 (the "Act"), this Amended and Restated 12b-1 Plan (the "Plan") has
been adopted for the Fund and for the Class (as noted and defined above) by a
majority of the members of the Fund's Board (the "Board"), including a majority
of the Board members who are not "interested persons" of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan (the "Qualified Board Members") at a meeting
called for the purpose of voting on this Plan.
1. Compensation. The Fund will pay to Kemper Distributors, Inc. ("KDI")
at the end of each calendar month a distribution services fee computed at the
annual rate of .75% of average daily net assets attributable to the Class
shares. KDI may compensate various financial service firms appointed by KDI
("Firms") in accordance with the provisions of the Fund's Underwriting and
Distribution Agreement (the "Distribution Agreement") for sales of shares at the
fee levels provided in the Fund's prospectus from time to time. KDI may pay
other commissions, fees or concessions to Firms, and may pay them to others in
its discretion, in such amounts as KDI shall determine from time to time. The
distribution services fee for the Class shall be based upon average daily net
assets of the Fund attributable to the Class and such fee shall be charged only
to the Class. For the month and year in which this Plan becomes effective or
terminates, there shall be an appropriate proration of the distribution services
fee set forth in Paragraph 1 hereof on the basis of the number of days that the
Plan and any agreements related to the Plan are in effect during the month and
year, respectively. The distribution services fee shall be in addition to and
shall not be reduced or offset by the amount of any contingent deferred sales
charge received by KDI.
2. Periodic Reporting. KDI shall prepare reports for the Board on a
quarterly basis for the Class showing amounts paid to the various Firms and such
other information as from time to time shall be reasonably requested by the
Board.
3. Continuance. This Plan shall continue in effect indefinitely,
provided that such continuance is approved at least annually by a vote of a
majority of the Board, and of the Qualified Board Members, cast in person at a
meeting called for such purpose or by vote of at least a majority of the
outstanding voting securities of the Class.
4. Termination. This Plan may be terminated at any time without penalty
with respect to the Class by vote of a majority of the Qualified Board Members
or by vote of the majority of the outstanding voting securities of the Class.
<PAGE>
5. Amendment. This Plan may not be amended to increase materially the
amount to be paid to KDI by the Fund for distribution services with respect to
the Class without the vote of a majority of the outstanding voting securities of
the Class. All material amendments to this Plan must in any event be approved by
a vote of a majority of the Board, and of the Qualified Board Members, cast in
person at a meeting called for such purpose.
6. Selection of Non-Interested Board Members. So long as this Plan is
in effect, the selection and nomination of those Board members who are not
interested persons of the Fund will be committed to the discretion of Board
members who are not themselves interested persons.
7. Recordkeeping. The Fund will preserve copies of this Plan, the
Distribution Agreement, and all reports made pursuant to Paragraph 2 above for a
period of not less than six (6) years from the date of this Plan, the
Distribution Agreement, or any such report, as the case may be, the first two
(2) years in an easily accessible place.
8. Limitation of Liability. Any obligation of the Fund hereunder shall
be binding only upon the assets of the Class and shall not be binding on any
Board member, officer, employee, agent, or shareholder of the Fund. Neither the
authorization of any action by the Board members or shareholders of the Fund nor
the adoption of the Plan on behalf of the Fund shall impose any liability upon
any Board member or upon any shareholder.
9. Definitions. The terms "interested person" and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in the
Act and the rules and regulations thereunder.
10. Severability; Separate Action. If any provision of this Plan shall
be held or made invalid by a court decision, rule or otherwise, the remainder of
this Plan shall not be affected thereby. Action shall be taken separately for
the Class as the Act or the rules thereunder so require.
(Amended and restated August 1, 1998)
