KEMPER INCOME FUNDS
Kemper Diversified Income Fund
Kemper High Yield Fund
Kemper High Yield Opportunity Fund
Kemper Income and Capital Preservation Fund
SUPPLEMENT DATED JANUARY 1, 1999
TO PROSPECTUS DATED JANUARY 1, 1999
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A proxy statement dated October 23, 1998 (the "Proxy Statement") solicited the
approval of the shareholders of each of the funds listed above (each a "Fund"
and, collectively, the "Funds") on certain proposals, including the elimination
of the shareholder approval requirement to amend investment objectives and
certain investment policies (the "Proposals"). However, at the Special Meeting
of Shareholders held on December 17, 1998 (the "Special Meeting"), there were
insufficient votes to approve the Proposals. The Special Meeting was adjourned
to January 15, 1999. The currently effective Prospectus of the Funds describes
the investment objectives and investment policies as proposed to be changed.
Until such time as the requisite number of shares of the Funds has been voted in
favor of the Proposals, the Prospectus is revised to read as follows:
The last sentence of the first paragraph of the "Investment Objective and
Principal Strategies" section for each Fund is replaced in its entirety by the
following sentences:
Each Fund has adopted certain fundamental investment restrictions which are
presented in the Statement of Additional Information and that, together with the
investment objective and policies of a Fund (for the Kemper High Yield
Opportunity Fund, however, only those policies specifically designated in the
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 a 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 a Fund. Policies of the Kemper High Yield
Opportunity 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 Fund without shareholder approval.
January 1, 1999
