KEMPER TAX FREE INCOME FUNDS
SUPPLEMENT TO PROSPECTUS
DATED JANUARY 1, 1999
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CLASS I SHARES
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Kemper Municipal Bond Fund
Kemper Intermediate Municipal Bond Fund
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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 funds' prospectus, and Class I shares, which are
described in the prospectus as supplemented hereby. When placing purchase
orders, investors must specify whether the order is for Class A, Class B, Class
C or Class I shares.
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 at 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
January 1, 1999
<PAGE>
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, typically will be
higher for Class I shares than for Class A, Class B and Class C shares.
The following information supplements the indicated sections of the prospectus.
Expense Information
This information is designed to help you understand the fees and expenses that
you may pay if you buy and hold shares of the funds.
Shareholder fees: Fees paid directly from your investment.
<TABLE>
<CAPTION>
Maximum Maximum Maximum Deferred
Sales Charge Sales Sales Charge
on Purchases Charge on (as a % of
(as a % of Reinvested Redemption Exchange redemption
offering price) Dividends Fee Fee proceeds)
--------------- --------- --- --- ---------
<S> <C> <C> <C> <C> <C>
Kemper
Municipal Bond
Fund None None None None None
Kemper None None None None None
Intermediate
Municipal Bond
Fund
</TABLE>
Annual fund operating expenses: Expenses that are deducted from fund assets.
Total fund
Investment Rule Other operating
management fee 12b-1 fees expenses* expenses*
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Kemper Municipal Bond 0.41% None 0.18% 0.59%
Fund
Kemper Intermediate 0.55% None 0.26% 0.81%
Municipal Bond Fund
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* Estimated, since no Class I shares were issued as of September 30, 1998,
the fiscal year end of the funds.
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
<PAGE>
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 Municipal Bond Fund $60 $189 $329 $738
Kemper Intermediate Municipal $83 $259 $450 $1,002
Bond Fund
FINANCIAL HIGHLIGHTS
No financial information is presented for Class I shares of Kemper Municipal
Bond Fund and Kemper Intermediate Municipal Bond Fund, since no Class I shares
were issued as of September 30, 1998, the fiscal year end of the funds.
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 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.
