<PAGE> 1
KEMPER EQUITY FUNDS/GROWTH STYLE
Kemper Aggressive Growth Fund
Kemper Blue Chip Fund
Kemper Growth Fund
Kemper Quantitative Equity Fund
Kemper Small Capitalization Equity Fund
Kemper Technology Fund
Kemper Total Return Fund
Kemper Value Plus Growth Fund
SUPPLEMENT TO PROSPECTUS
DATED DECEMBER 31, 1996
-------------------------
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
SUPPLEMENT TO PROSPECTUS
DATED MARCH 1, 1997
-------------------------
KEMPER INCOME FUNDS
Kemper Adjustable Rate U.S. Government Fund
Kemper Diversified Income Fund
Kemper U.S. Government Securities Fund
Kemper High Yield Series
comprised of the following two series:
Kemper High Yield Fund
Kemper High Yield Opportunity Fund
Kemper Income and Capital Preservation Fund
Kemper Portfolios including the following series:
Kemper U.S. Mortgage Fund
Kemper Short-Intermediate Government Fund
SUPPLEMENT TO PROSPECTUS
DATED DECEMBER 30, 1997
-------------------------
KEMPER CASH RESERVES FUND
(A SERIES OF KEMPER PORTFOLIOS)
SUPPLEMENT TO PROSPECTUS
DATED DECEMBER 30, 1997
-------------------------
KEMPER ASIAN GROWTH FUND
SUPPLEMENT TO PROSPECTUS
DATED APRIL 1, 1997
-------------------------
KEMPER TAX-FREE INCOME FUNDS
Kemper National Tax-Free Income Series
comprised of the following two series:
Kemper Municipal Bond Fund
Kemper Intermediate Municipal Bond Fund
Kemper State Tax-Free Income Series
comprised of the following eight series:
Kemper California Tax-Free Income Fund
Kemper Florida Tax-Free Income Fund
Kemper Michigan Tax-Free Income Fund
Kemper New Jersey Tax-Free Income Fund
Kemper New York Tax-Free Income Fund
Kemper Ohio Tax-Free Income Fund
Kemper Pennsylvania Tax-Free Income Fund
Kemper Texas Tax-Free Income Fund
SUPPLEMENT TO PROSPECTUS
DATED NOVEMBER 26, 1997
INVESTMENT MANAGER AND UNDERWRITER
Pursuant to the terms of an agreement, Zurich Insurance Company ("Zurich"), the
parent of the Funds' investment adviser, Zurich Kemper Investments, Inc. ("ZKI")
and Scudder, Stevens & Clark, Inc. ("Scudder") have formed a new global
investment organization by combining Scudder's business with that of ZKI, and
Scudder has changed its name to Scudder Kemper Investments, Inc. ("Scudder
Kemper"). As a result of the transaction, Zurich owns approximately 70% of
Scudder Kemper, with the balance owned by Scudder Kemper's officers and
employees. Scudder Kemper, 280 Park Avenue, 40th floor, New York, New York
10017, now manages in excess of $200 billion.
Because the transaction between Scudder and Zurich resulted in the assignment of
each Fund's investment management agreement between ZKI and each respective
Fund, each of those agreements was deemed to be automatically terminated upon
consummation of the transaction. In anticipation of the transaction, however,
new investment management agreements between each Fund and Scudder Kemper were
approved
<PAGE> 2
by each respective Fund's Board of Trustees. A special meeting of shareholders
(the "Special Meeting") of each Fund was held in December, 1997, at which time
the shareholders also approved the new investment management agreements. The new
investment management agreements (each an "Investment Management Agreement" and,
collectively, the "Investment Management Agreements") are all effective as of
December 31, 1997 and will be in effect for an initial term ending on the same
date as would the corresponding previous investment management agreement.
Each Fund's Investment Management Agreement is substantially similar to the
corresponding investment management agreement terminated by the transaction,
except that Scudder Kemper is the new investment adviser to each Fund, the
management fee (except with respect to Kemper Small Capitalization Equity Fund
and Kemper Aggressive Growth Fund) is calculated monthly at 1/12 of the
applicable annual rate based upon the average daily net assets for such month,
and, for each Fund except Kemper Municipal Bond Fund, Kemper U.S. Government
Securities Fund and Kemper California Tax-Free Income Fund, the expense
limitation has been deleted because there are no longer any state expense
limitations in effect. In addition, for Funds investing in foreign securities,
except for Kemper International Fund, Kemper Global Income Fund, and Kemper
Asian Growth Fund, each Fund's respective sub-advisory agreement with Zurich
Investment Management Limited ("ZIML") has been terminated and Scudder Kemper
has assumed the duties previously performed by ZIML under each such Fund's
respective sub-advisory agreement. For Kemper Value Plus Growth Fund, the Fund's
sub-advisory agreement with Zurich Kemper Value Advisors, Inc. ("ZKVA") has been
terminated and Scudder Kemper has assumed the duties previously performed by
ZKVA under the Fund's sub-advisory agreement.
In addition, under a separate agreement between each Fund and Scudder Fund
Accounting Corporation ("SFAC"), a subsidiary of Scudder Kemper, SFAC, rather
than each Fund's investment manager, will compute the net asset value for each
Fund. SFAC does not charge the Funds for this service; however, subject to Board
approval, at some time in the future, SFAC may seek payment for its services
under this agreement.
CAPITAL STRUCTURE
Pending shareholder approval, except for Kemper Technology Fund, Kemper U.S.
Government Securities Fund, Kemper High Yield Opportunity Fund, Kemper Municipal
Bond Fund, Kemper California Tax-Free Income Fund, Kemper Florida Tax-Free
Income Fund, Kemper Michigan Tax-Free Income Fund, Kemper New Jersey Tax-Free
Income Fund, Kemper New York Tax-Free Income Fund, Kemper Ohio Tax-Free Income
Fund, and Kemper Pennsylvania Tax-Free Income Fund, which have obtained
shareholder approval, rather than invest in securities directly, each of the
Funds 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 each 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.
<PAGE> 3
SUMMARY OF EXPENSES
The "Example" in the prospectus for Class B Shares and Class C Shares of certain
of the Funds is amended in part as follows:
CLASS B SHARES
<TABLE>
<CAPTION>
EXAMPLE(1) FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
You would pay the following Aggressive Growth $64 $103 $145 $224
expenses on a $1,000 Blue Chip 61 95 132 201
investment, assuming Growth 61 94 130 189
(1) 5% annual return and Quantitative Equity 63 101 141 222
(2) redemption at the end of Small Capitalization Equity 62 97 135 196
each time period: Technology 59 89 121 170
Total Return 60 92 127 185
Value Plus Growth 65 106 150 237
Global Income 62 97 135 215
International 66 109 155 245
Asian Growth 67 113 162 259
Municipal Bond 56 79 104 139
Intermediate Municipal Bond 58 85 115 167
California Tax-Free Income 56 81 108 150
Florida Tax-Free Income 57 82 110 153
Michigan Tax-Free Income 58 85 115 167
New Jersey Tax-Free Income 58 85 115 167
New York Tax-Free Income 57 83 111 155
Ohio Tax-Free Income 52 84 112 160
Pennsylvania Tax-Free Income 58 84 114 166
Texas Tax-Free Income 58 84 114 163
You would pay the following Aggressive Growth $43 $ 73 $125 $224
expenses on the same Blue Chip 21 65 112 201
investment, assuming no Growth 21 64 110 189
redemption: Quantitative Equity 23 71 121 222
Small Capitalization Equity 22 67 115 196
Technology 19 59 101 170
Total Return 20 62 107 185
Value Plus Growth 25 76 130 237
Global Income 22 67 115 215
International 26 79 135 245
Asian Growth 27 83 142 259
Municipal Bond 16 49 84 139
Intermediate Municipal Bond 18 55 95 167
California Tax-Free Income 16 51 88 150
Florida Tax-Free Income 17 52 90 153
Michigan Tax-Free Income 18 55 95 168
New Jersey Tax-Free Income 18 55 95 168
New York Tax-Free Income 17 53 91 155
Ohio Tax-Free Income 17 54 92 160
Pennsylvania Tax-Free Income 18 54 94 166
Texas Tax-Free Income 18 54 94 163
</TABLE>
(1) Assumes conversion to Class A shares six years after purchase. The
contingent deferred sales charge was applied as follows: 1 year (4%), 3
years (3%), 5 years (2%) and 10 years (0%). See "Redemption or Repurchase of
Shares -- Contingent Deferred Sales Charge -- Class B Shares" in the
prospectus for more information regarding the calculation of the contingent
deferred sales charge.
<PAGE> 4
CLASS C SHARES
<TABLE>
<CAPTION>
EXAMPLE(2) FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
You would pay the following Aggressive Growth $33 $72 $123 $264
expenses on a $1,000 Blue Chip 31 64 110 238
investment, assuming (1) 5% Growth 30 61 105 227
annual return and Quantitative Equity 33 70 119 256
(2) redemption at the end of Small Capitalization Equity 32 67 115 248
each time period: Technology 28 57 99 214
Total Return 29 59 102 221
Value Plus Growth 34 73 126 269
Global Income 31 65 111 239
International 35 78 133 284
Asian Growth 37 82 140 297
Municipal Bond 26 48 83 182
Intermediate Municipal Bond 28 54 94 204
California Tax-Free Income 26 50 87 190
Florida Tax-Free Income 27 52 89 194
Michigan Tax-Free Income 28 54 94 204
New Jersey Tax-Free Income 28 54 94 204
New York Tax-Free Income 27 52 90 195
Ohio Tax-Free Income 27 53 91 199
Pennsylvania Tax-Free Income 27 54 93 202
Texas Tax-Free Income 27 54 93 202
You would pay the following Aggressive Growth $23 $72 $123 $264
expenses on the same Blue Chip 21 64 110 238
investment, assuming no Growth 20 61 105 227
redemption: Quantitative Equity 23 70 119 256
Small Capitalization Equity 22 67 115 248
Technology 18 57 99 214
Total Return 19 59 102 221
Value Plus Growth 24 73 126 269
Global Income 21 65 111 239
International 25 78 133 284
Asian Growth 27 82 140 297
Municipal Bond 16 48 83 182
Intermediate Municipal Bond 18 54 94 204
California Tax-Free Income 16 50 87 190
Florida Tax-Free Income 17 52 89 194
Michigan Tax-Free Income 18 54 94 204
New Jersey Tax-Free Income 18 54 94 204
New York Tax-Free Income 17 52 90 195
Ohio Tax-Free Income 17 53 91 199
Pennsylvania Tax-Free Income 17 54 93 202
Texas Tax-Free Income 17 54 93 202
</TABLE>
(2) The contingent deferred sales charge was applied as follows: 1 year (1%), 3
years (0%), 5 years (0%) and 10 years (0%). See "Redemption or Repurchase of
Shares -- Contingent Deferred Sales Charge -- Shares" in the prospectus.
December 31, 1997
KMF-1Q (LOGO)PRINTED ON RECYCLED PAPER
<PAGE> 5
<TABLE>
<S> <C>
KEMPER EQUITY FUNDS/GROWTH STYLE KEMPER INCOME FUNDS
Kemper Aggressive Growth Fund ("KAGGF") Kemper Adjustable Rate U.S. Government Fund ("KARGF")
Kemper Blue Chip Fund ("KBCF") Kemper Diversified Income Fund ("KDIF")
Kemper Growth Fund ("KGF") Kemper U.S. Government Securities Fund ("KGSF")
Kemper Quantitative Equity Fund ("KQEF") Kemper High Yield Series ("KHYS")
Kemper Small Capitalization Equity Fund ("KSCF") comprised of the following two series:
Kemper Technology Fund ("KTEC") Kemper High Yield Fund ("KHYF")
Kemper Total Return Fund ("KTRF") Kemper High Yield Opportunity Fund ("KHYOF")
Kemper Value+Growth Fund ("KVGF") Kemper Income and Capital Preservation Fund ("KICPF")
SUPPLEMENT TO STATEMENT OF Kemper Portfolios ("KP") including the following
ADDITIONAL INFORMATION series:
DATED DECEMBER 31, 1996 Kemper U.S. Mortgage Fund ("KUSMF")
Kemper Short-Intermediate Government Fund ("KSIGF")
------------------------- SUPPLEMENT TO STATEMENT OF
ADDITIONAL INFORMATION
DATED DECEMBER 30, 1997
KEMPER GLOBAL INCOME FUND ("KGIF") -------------------------
KEMPER INTERNATIONAL FUND ("KIF") KEMPER CASH RESERVES FUND ("KCRF")
SUPPLEMENT TO STATEMENT OF (A SERIES OF KEMPER PORTFOLIOS)
ADDITIONAL INFORMATION SUPPLEMENT TO STATEMENT OF
DATED MARCH 1, 1997 ADDITIONAL INFORMATION
------------------------- DATED DECEMBER 30, 1997
-------------------------
KEMPER ASIAN GROWTH FUND ("KAGF")
SUPPLEMENT TO STATEMENT OF
ADDITIONAL INFORMATION
DATED APRIL 1, 1997
-------------------------
</TABLE>
KEMPER TAX-FREE INCOME FUNDS
Kemper National Tax-Free Income Series ("KNTIS")
comprised of the following two series:
Kemper Municipal Bond Fund ("KMBF")
Kemper Intermediate Municipal Bond Fund ("KIMBF")
Kemper State Tax-Free Income Series ("KSTIS")
comprised of the following eight series:
Kemper California Tax-Free Income Fund ("KCATF")
Kemper Florida Tax-Free Income Fund ("KFLTF")
Kemper Michigan Tax-Free Income Fund ("KMITF")
Kemper New Jersey Tax-Free Income Fund ("KNJTF")
Kemper New York Tax-Free Income Fund ("KNYTF")
Kemper Ohio Tax-Free Income Fund ("KOHTF")
Kemper Pennsylvania Tax-Free Income Fund ("KPATF")
Kemper Texas Tax-Free Income Fund ("KTXTF")
SUPPLEMENT TO STATEMENT OF
ADDITIONAL INFORMATION
DATED NOVEMBER 26, 1997
INVESTMENT RESTRICTIONS--MASTER/FEEDER FUND STRUCTURE
Certain Series, Portfolios or Funds have amended their fundamental policies to
permit a master/feeder fund structure. Following is a list of each Series',
Portfolio's or Fund's fundamental policies that were so
<PAGE> 6
amended. Where necessary, the number identifying each Fund's policies that were
amended is indicated in brackets following each Series', Portfolio's or Fund's
name, as applicable. As a matter of fundamental policy, each Series, Portfolio
or Fund will not:
KTEC[(1)], KGSF[(2)], KMBF[(3)]:
Purchase securities of any issuer (other than obligations of, or guaranteed by,
the United States Government, its agencies or instrumentalities) if, as a
result, more than 5% of the Fund's total assets would be invested in securities
of that issuer, except that 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.
KSTIS (EXCEPT KCATF AND KTXTF):
(11) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States Government, its agencies or instrumentalities) if, as a
result, more than 5% of the total value of the Fund's assets would be invested
in securities of that issuer, except that, with respect to 50% of the Fund's
total assets, the Fund may invest up to 25% of its total assets in securities of
any one issuer, and except that all or substantially all of the assets of the
Fund may be invested in another registered investment company having the same
investment objective and substantially similar investment policies as the Fund.
KCATF:
(3) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States Government, its agencies or instrumentalities) if, as a
result, more than 5% of the total value of the Fund's assets would be invested
in securities of that issuer, except that, with respect to 50% of the Fund's
total assets, the Fund may invest up to 25% of its total assets in securities of
any one issuer, and except that all or substantially all of the assets of the
Fund may be invested in another registered investment company having the same
investment objective and substantially similar investment policies as the Fund.
KHYOF:
(1) With respect to 75% of the Fund's total assets, purchase securities of any
issuer (other than securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Fund's total assets would be invested in securities of that issuer, or (b) the
Fund would hold more than 10% of the outstanding voting securities of that
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.
KTEC:
(2) Purchase more than 10% of any class of 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. All debt securities and
all preferred stocks are each considered as one class.
KSTIS (EXCEPT KCATF AND KTXTF):
(2) Purchase securities (other than securities of the United States Government,
its agencies or instrumentalities, or of a state or its political subdivisions)
if as a result of such purchase 25% or more of its total assets would be
invested in any industry, except that all or substantially all of the assets of
the Fund may be
<PAGE> 7
invested in another registered investment company having the same investment
objective and substantially similar investment policies as the Fund.
KTEC:
(7) Invest 25% of more of its total assets in any one industry, except that all
or substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund. Water, communications,
electric and gas utilities shall each be considered a separate industry.
KHYOF:
(7) Concentrate more than 25% of the value of its assets in any one industry,
except that all or substantially all of the assets of the Fund may be invested
in another registered investment company having the same investment objective
and substantially similar investment policies as the Fund. Water,
communications, electric and gas utilities shall each be considered a separate
industry.
KMBF:
(2) With respect to temporary investments, purchase securities (other than
securities of the United States Government, its agencies or instrumentalities)
if as a result of such purchase more than 25% of the Fund's total assets would
be invested in any industry, except that all or substantially all of the assets
of the Fund may be invested in another registered investment company having the
same investment objective and substantially similar investment policies as the
Fund.
KCATF:
(2) Purchase securities (other than securities of the United States Government,
its agencies or instrumentalities, or the State of California or its political
subdivisions) if as a result of such purchase more than 25% of the Fund's total
assets would be invested in any one industry, except that all or substantially
all of the assets of the Fund may be invested in another registered investment
company having the same investment objective and substantially similar
investment policies as the Fund.
KGSF:
(1) Purchase any securities other than obligations issued or guaranteed by the
United States Government or its agencies, some of which may be subject to
repurchase agreements, except that the Fund may engage in options and financial
futures transactions, and except that all or substantially all of the assets of
the Fund may be invested in another registered investment company having the
same investment objective and substantially similar investment policies as the
Fund.
KTEC[(9)], KHYOF[(9)], KMBF[(10)], KSTIS (EXCEPT KTXTF)[(7)], KCATF [(10)]:
Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities, and except that all or
substantially all of the assets of the Fund may be invested in another
registered investment company having the same investment objective and
substantially similar investment policies as the Fund.
KGSF:
(7) Act as an underwriter of securities, except to the extent the Fund may be
deemed to be an underwriter in connection with the disposition of portfolio
securities, and except that all or substantially all of the assets
<PAGE> 8
of the Fund may be invested in another registered investment company having the
same investment objective and substantially similar investment policies as the
Fund.
KCATF:
(1) Purchase securities or make investments other than in accordance with its
investment objective and policies, 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.
KMBF, KSTIS (EXCEPT KCATF AND KTXTF):
(1) Make investments other than in accordance with its investment objective and
policies, 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.
In addition, with respect to Kemper Equity Funds/Growth Style, the following
non-fundamental investment restrictions are deleted:
INVESTMENT RESTRICTIONS--DELETIONS
(with respect to all Kemper Equity Funds/Growth Style except KAGGF and KSCF)
Each Fund may not:
Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
(with respect to all Kemper Equity Funds/Growth Style except KAGGF) Each Fund
may not:
(i) Invest in interests in oil, gas, or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
(ii) Invest in oil, gas and other mineral leases.
(with respect to all Kemper Equity Funds/Growth Style except KAGGF and KBCF)
Each Fund may not:
(i) Invest more than 5% of the Fund's total assets in securities of issuers
which with their predecessors have a record of less than three years
continuous operation and equity securities of issuers which are not readily
marketable.
(ii) Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of
the Fund's net assets, may be warrants not listed on the New York or
American Stock Exchanges. Warrants acquired in units or attached to
securities may be deemed to be without value for such purposes.
(iii) Invest more than 5% of its total assets in restricted securities,
excluding restricted securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 that have been determined to be liquid
pursuant to procedures adopted by the Board of Trustees, provided that the
total amounts of Fund assets invested in restricted securities and
securities of issuers which with their predecessors have a record of less
than three years continuous operation will not exceed 15% of total assets.
(iv) Purchase or sell real property (including limited partnership
interests but excluding readily marketable interests in real estate
investment trusts and readily marketable securities of companies which
invest in real estate).
<PAGE> 9
(with respect to all Kemper Equity Funds/Growth Style except KAGGF and KTRF)
Each Fund may not:
Invest more than 10% of its total assets in securities of real estate
investment trusts. (The Quantitative Fund currently does not intend to
invest more than 5% of its net assets in securities of real estate
investment trusts).
(with respect to KBCF) The Fund may not:
Invest more than 5% of the Fund's total assets in securities of issuers
(other than obligations of, or guarantees by, the U.S. Government, its
agencies or instrumentalities) which with their predecessors have a record
of less than three years continuous operation and equity securities of
issuers which are not readily marketable.
(with respect to KSCF) The Fund may not:
Purchase or retain the securities of any issuer if any of the officers or
trustees of the Fund or its investment adviser owns beneficially more than
1/2 of 1% of the securities of such issuer and together own more than 5% of
the securities of such issuer.
(with respect to KTRF) The Fund may not:
Invest more than 10% of its total assets in securities of real estate
investment funds.
With respect to KGIF and KIF, the following non-fundamental investment
restrictions are deleted:
(with respect to KGIF and KIF) Each Fund may not:
(i) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
(ii) Invest in oil, gas and other mineral leases.
(iii) Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of
the Fund's net assets, may be warrants not listed on the New York or
American Stock Exchanges. Warrants acquired in units or attached to
securities may be deemed to be without value for such purposes.
(iv) Invest more than 5% of its total assets in restricted securities,
excluding restricted securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 that have been determined to be liquid
pursuant to procedures adopted by the Board of Trustees, provided that the
total amount of Fund assets invested in restricted securities and
securities of issuers which with their predecessors have a record of less
than three years continuous operation will not exceed 15% of total assets.
(v) Invest more than 10% of its total assets in securities of real estate
investment trusts.
(with respect to KIF only) The Fund may not:
(i) Invest in interests in oil, gas, or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
(ii) Invest more than 5% of the Fund's total assets in securities of
issuers which with their predecessors have a record of less than three
years continuous operation and equity securities of issuers which are not
readily marketable.
(iii) Purchase or sell real property (including limited partnership
interests but excluding readily marketable interests in real estate
investment trusts and readily marketable securities of companies which
invest in real estate).
<PAGE> 10
(with respect to KGIF only) The Fund may not:
(i) Invest in interests in oil or gas exploration or development programs,
although it may invest in the securities of issuers which invest in or
sponsor such programs.
(ii) Invest more than 5% of the Fund's total assets in securities of
issuers (other than obligations of, or guaranteed by, the U.S. Government,
its agencies or instrumentalities) which with their predecessors have a
record of less than three years continuous operation and equity securities
of issuers which are not readily marketable.
With respect to Kemper Income Funds and KCRF, the following non-fundamental
investment restrictions are deleted:
(with respect to KARGF, KDIF, KHYF, KICPF, KSIGF) Each Fund may not:
Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund, or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
(with respect to KARGF, KDIF, KICPF, KHYF, KSIGF) Each Fund may not:
Invest in interests in oil, gas, or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
(with respect to KCRF, KUSMF, KSIGF) Each Fund may not:
Invest in oil, gas or other mineral exploration or development programs.
(with respect to KARGF, KDIF, KHYF, and KICPF) Each Fund may not:
Invest in oil, gas and other mineral leases.
(with respect to KARGF and KSIGF) Each Fund may not:
Invest more than 5% of the Fund's total assets in securities of issuers
(other than obligations of, or guaranteed by, the U.S. Government, its
agencies or instrumentalities including collateralized obligations thereof)
which with their predecessors have a record of less than three years
continuous operations.
(with respect to KDIF, KICPF and KHYF) Each Fund may not:
Invest more than 5% of the Fund's total assets in securities of issuers
which with their predecessors have a record of less than three years
continuous operation and equity securities of issuers which are not readily
marketable.
(with respect to KARGF, KCRF, KUSMF, KSIGF, KDIF, KHYF, KICPF) Each Fund may
not:
Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of
the Fund's net assets, may be warrants not listed on the New York or
American Stock Exchanges. Warrants acquired in units or attached to
securities may be deemed to be without value for such purposes.
(with respect to KARGF and KSIGF) Each Fund may not:
Invest more than 5% of its total assets in restricted securities, excluding
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid pursuant to
procedures adopted by the Board of Trustees, provided that the total amount
of Fund assets invested in restricted securities and securities of issuers
which with their predecessor have a record of less than three years
continuous operation will not exceed 15% of total assets.
<PAGE> 11
(with respect to KARGF, KDIF, KHYF and KICPF) Each Fund may not:
Purchase or sell real property (including limited partnership interests but
excluding readily marketable interests in real estate investment trusts and
readily marketable securities of companies which invest in real estate).
(with respect to KCRF, KUSMF, KSIGF) Each Fund may not:
Invest in limited partnership interests in real estate.
(with respect to KARGF, KHYF and KSIGF) Each Fund may not:
Invest more than 10% of its total assets in securities of real estate
investment trusts.
(with respect to KDIF and KICPF) Each Fund may not:
Invest more than 10% of its total assets in securities of real estate
investment trusts.
OFFICERS AND TRUSTEES
Mr. Morax and Mr. Timbers are no longer trustees of the Funds for which they
served as trustees. The following are new trustees:
DANIEL PIERCE (03/18/34), Trustee*, (63), 345 Park Avenue, New York, Managing
Director, Scudder Kemper. New York; Director, Fiduciary Trust Company; Director,
Fiduciary Company Incorporated.
EDMOND D. VILLANI (03/04/47), Trustee*, (50), 345 Park Avenue, New York, New
York; Chief Executive Officer, Scudder Kemper.
PORTFOLIO TRANSACTIONS
To the maximum extent feasible, it is expected that Scudder Kemper will place
orders for portfolio transactions through Scudder Investor Services, Inc., Two
International Place, Boston, Massachusetts 02110 ("SIS"), a corporation
registered as a broker-dealer and a subsidiary of Scudder. 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.
December 31, 1997
KMF-IQQ
