<PAGE> 1
Kemper Short-Intermediate
Government Fund
REPORT TO SHAREHOLDERS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
OFFERING INVESTORS THE OPPORTUNITY FOR HIGH CURRENT INCOME AND PRESERVATION OF
CAPITAL
"...Our review for this
period echoes what
we said two months
ago: Staying fully
invested enhanced the
fund's performance..."
[KEMPER MUTUAL FUNDS LOGO]
<PAGE> 2
TABLE OF
CONTENTS
3
General
Economic Overview
5
Performance Update
8
Terms to Know
9
Portfolio Statistics
10
Portfolio of
Investments
11
Report of
Independent Auditors
12
Financial Statements
14
Notes to
Financial Statements
18
Financial Highlights
About Your Report
CHANGE IN FISCAL YEAR
A change in Kemper Short-Intermediate Government Fund's fiscal year requires
the mailing of another shareholder report just two months after the fund
reported on the fiscal year ended July 31, 1995. The fund's new fiscal year now
runs from October 1 to September 30. You can expect your next shareholder
report, which will be a semiannual update, in May.
At A Glance
Kemper Short-Intermediate Government Fund Total Returns for the two month
period ended September 30, 1995 (unadjusted for any sales charge):
[Bar Graph]
<TABLE>
<S> <C>
CLASS A 1.00%
CLASS B 0.97%
CLASS C 1.00%
LIPPER SHORT GOVERNMENT
FUNDS CATEGORY AVERAGE* 1.32%
</TABLE>
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
9/30/95 9/30/94
<S> <C>
KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS A $8.08 $8.01
KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS B $8.05 $7.98
KEMPER SHORT-INTERMEDIATE
GOVERNMENT FUND CLASS C $8.06 $7.98
</TABLE>
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND RANKINGS
COMPARED TO ALL OTHER FUNDS IN THE LIPPER SHORT GOVERNMENT FUNDS CATEGORY*
<TABLE>
<CAPTION>
1-YEAR 5-YEAR
<S> <C> <C>
CLASS A #77 OF 133 FUNDS N/A
CLASS B #111 OF 133 FUNDS #32 OF 37 FUNDS
CLASS C #107 OF 133 FUNDS N/A
</TABLE>
*Lipper Analytical Services, Inc. returns and rankings are based upon changes
in net asset value with all dividends reinvested and do not include the effect
of sales charges and, if they had, results may have been less favorable.
Returns and rankings are historical and do not reflect future performance.
DIVIDEND AND YIELD REVIEW
THE FOLLOWING TABLE SHOWS PER SHARE DIVIDEND AND YIELD INFORMATION FOR THE FUND
AS OF SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -----------------------------------------------------
<S> <C> <C> <C>
1 YEAR INCOME: $0.5340 $0.4655 $0.4703
SEPTEMBER
DIVIDEND: $0.0450% $0.0397% $0.0401%
ANNUALIZED
DISTRIBUTION RATE+: 6.68% 5.92% 5.97%
SEC YIELD+: 4.75% 4.00% 4.20%
- -----------------------------------------------------
</TABLE>
+Current annualized distribution rate is the latest monthly dividend shown as
an annualized percentage of net asset value on September 30, 1995. Distribution
rate simply measures the level of dividends and is not a complete measure of
performance. The SEC yield is net investment income per share earned over the
month ended September 30, 1995 shown as an annualized percentage of the maximum
offering price on that date. The SEC yield is computed in accordance with a
standardized method prescribed by the Securities and Exchange Commission.
<PAGE> 3
General Economic Overview
[Photo of Stephen B. Timbers]
STEPHEN B. TIMBERS IS CHIEF EXECUTIVE AND CHIEF INVESTMENT OFFICER OF
KEMPER FINANCIAL SERVICES, INC. (KFS). KFS AND ITS AFFILIATES MANAGE
APPROXIMATELY $63 BILLION IN ASSETS, INCLUDING $44 BILLION IN RETAIL MUTUAL
FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR SHAREHOLDER,
Investors enjoyed generally positive performance in both the fixed income and
stock markets in the first 10 months of 1995. At this point in the year, the
returns of most leading securities markets worldwide are significantly higher
than they were at the same time in 1994.
We have an excellent environment for financial assets. After several quarters
of robust growth, the United States economy seems to be growing at a pace that
investors find comfortable. Contrary to isolated reports that caused some
observers to become concerned, the economy is in no jeopardy of recession. Its
health was confirmed with the news that the economy grew (as measured by real
gross domestic product [GDP]) at an annual rate of 4.2% in the third quarter.
This follows much lower growth in the first two quarters, as the economy was
adjusting to the Federal Reserve Board's series of interest rate increases. The
slowdown, in fact, was acknowledged by the Fed when it eased short-term rates
by a small but symbolic 25 basis points in July. Now we know that the economy
was rebounding from July through September.
The economy's continued growth without a corresponding increase in inflation
is very encouraging. Although we are well along in the economic cycle and at a
point when prices often start hiking up, inflationary pressures have actually
been reduced somewhat.
Will the Federal Reserve Board adjust interest rates again? As of this date
- -- which precedes any resolution on the federal budget issue -- we doubt that
the Fed has motivation to either ease or (which would be even less likely)
raise interest rates. Our forecast calls for lower growth ranging between 2% to
3% for the next few quarters, with the momentum likely to come from exports and
nonresidential construction.
MARKET OUTLOOK
Slow growth and low inflation is the optimal combination for investors in the
fixed income markets, and we expect them to continue to perform well.
We believe that the opportunities for common stock investors will be
increasingly concentrated in higher quality investments. After hitting new
highs and showing considerable strength for most of the year, the stock market
showed some vulnerability when it took a tumble in the summer. The market
recovered after a brief period and has gained ground since. But such a sudden,
severe mini-correction served to remind investors that the current bull market
will inevitably come to an end someday and that some sectors may even be
overextended today.
As we view the remainder of the year, companies cannot necessarily count on
the economy to provide above-average earnings support. Rather, stocks that have
proven themselves with a pattern of consistent earnings are likely to attract
investor support. Specifically, sectors that produce more consistent earnings,
such as health care, consumer nondurables, selected technology and selected
capital goods can be expected to do well. Picking the right sectors to invest
in will be the key challenge for equity investors during the next few quarters.
International investing continues to be quite complex. After sinking to its
post-World War II low in April, the value of the U.S. dollar has gained
strength against most foreign currencies. While a stronger dollar favors the
U.S. economy because it reduces the cost of American imports and attracts
foreign capital, a strong dollar in relation to a local currency has the effect
of devaluing a foreign investment. The value of the dollar and the
attractiveness of U.S. investments to foreign investors will be key factors in
the next few months.
3
<PAGE> 4
General Economic Overview
ECONOMIC GUIDEPOSTS
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund
performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The
10-year Treasury rate and the prime rate are prevailing interest rates. The
other data report year-to-year percentage changes.
<TABLE>
<CAPTION>
Now (10/31/95) 6 months ago 1 year ago 2 years ago
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 6.04 6.63 7.96 5.72
PRIME RATE(2) 8.75 9 8.15 6
INFLATION RATE(3)(*) 2.52 3.12 2.5 2.5
THE U.S. DOLLAR(4) -1.17 -10.11 -5.82 1.03
CAPITAL GOODS ORDERS(5)(*) 11.72 9.44 18.9 19.12
INDUSTRIAL PRODUCTION(6)(*) 2.6 3.6 5.65 3.62
EMPLOYMENT GROWTH(7) 1.91 2.12 3.03 2.34
</TABLE>
*Data as of September 30, 1995
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best
borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on corporate profits and equity performance.
(7) An influence on family income and retail sales.
SOURCE: ECONOMICS DEPARTMENT, KEMPER FINANCIAL SERVICES, INC.
We are in the midst of a global recovery, and the same fundamentals that have
driven markets higher in the U.S. can be found in many foreign countries
currently. However, leading international economies continue to lag the U.S.
Japan and Germany, whose economies typically follow U.S. growth, are not
as robust as in past cycles. Moreover, conditions in emerging market countries
underline the importance of careful research and experience in understanding
how these markets work.
Political leadership also has some bearing on the progress of the economy and
the state of the financial markets. In the months preceding a presidential
election year, it has been common for incumbents to attempt to stimulate
growth. Given our Republican Congress and Democratic President, however, we
do not consider this as likely this time.
With the rest of the country, we are
closely following political initiatives to produce a balanced federal budget.
This is a political wild card, but we would expect both the stock and
fixed-income markets to react with enthusiasm if progress can be made.
With that as an economic backdrop, we encourage you to read the following
detailed report of your fund, including a question-and-answer interview with
your fund's portfolio manager. Thank you for your continued support. We
appreciate the opportunity to serve your investment needs.
Sincerely,
Stephen B. Timbers
STEPHEN B. TIMBERS
CHIEF INVESTMENT AND EXECUTIVE OFFICER
November 6, 1995
4
<PAGE> 5
Performance Update
[Photo of J. Patrick Beimford]
J. PATRICK BEIMFORD, JR. JOINED KEMPER FINANCIAL SERVICES, INC., IN 1976 AND IS
NOW EXECUTIVE VICE PRESIDENT AND CHIEF INVESTMENT OFFICER FOR FIXED-INCOME
INVESTMENTS. MR. BEIMFORD HAS RE-ASSUMED THE ROLE OF PORTFOLIO CO-MANAGER FOR
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND. MR. BEIMFORD RECEIVED A B.S.I.M.
DEGREE FROM PURDUE UNIVERSITY AND RECEIVED HIS M.B.A. FROM THE UNIVERSITY OF
CHICAGO.
[Photo of Michelle Keeley]
MICHELLE KEELEY JOINED KFS IN 1990 AND IS FIRST VICE PRESIDENT OF KFS AND
PORTFOLIO CO-MANAGER OF KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND. MS. KEELEY
RECEIVED HER BACHELOR OF ARTS DEGREE FROM MICHIGAN STATE UNIVERSITY AND WENT ON
TO RECEIVE HER M.B.A. FROM NORTHWESTERN UNIVERSITY.
J. PATRICK BEIMFORD, JR. AND MICHELLE KEELEY, PORTFOLIO CO-MANAGERS OF THE
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND EXPLAIN THE ADJUSTMENTS MADE TO THE
FUND DURING THE TWO-MONTH PERIOD ENDED SEPTEMBER 30, 1995. TO PROVIDE YOU WITH
A LONG-TERM PERSPECTIVE ON THE FUND'S INVESTMENT ACTIVITY, WE HAVE ALSO
INCLUDED AN UPDATED VERSION OF THE Q&A PRINTED IN YOUR LAST ANNUAL REPORT,
WHICH NOW ALSO PROVIDES FUND PERFORMANCE INFORMATION FOR AUGUST 1995 AND
SEPTEMBER 1995.
Q. DURING AUGUST 1995 AND SEPTEMBER 1995 THE FUND PROVIDED A MODEST RETURN.
WHAT WERE THE MAJOR FACTORS THAT IMPACTED THE FUND'S PERFORMANCE?
A. Our review for this period echoes what we said two months ago: Staying
fully invested enhanced the fund's performance. Let's review the economic
climate during August and September and how it influenced our adjustments to
the fund.
Overall, the government bond market performed modestly during August and
September. The period was hallmarked by a great degree of volatility brought on
by a spate of economic data that revealed mixed signs about the strength of the
economy's growth. Investors also vacillated as stops and starts in the progress
of the federal budget negotiations occurred. But despite these gyrations, there
were no lasting material shifts within the market. We chose to focus on the
positive indicators and maintained our fully invested position throughout the
period. This enabled the fund to provide positive returns for the two months.
During the period, Treasuries performed well, with intermediate-term
Treasuries offering more price appreciation than shorter-term Treasuries. In
response to this, we sold our two percent position in adjustable-rate mortgages
and decreased the fund's short-term Treasury holdings by three percent. We made
the adjustments in order to increase the fund's holdings in intermediate-term
U.S. Treasuries, which accounted for 51 percent of the portfolio on September
30 compared to 46 percent of the portfolio on July 31. This was consistent with
our decision, late in 1994, to maintain a fully invested position with a
relatively long duration for the fund. Duration is a measure of the fund's
sensitivity to interest rates. The longer the duration, the more sensitive it
is to interest rates. As rates move lower during this period, the fund
continued to benefit from its extended duration.
Q. SINCE AUGUST 1994, WE'VE SEEN BOTH RISING AND FALLING INTEREST RATES. WHAT
KINDS OF ADJUSTMENTS DID YOU MAKE TO THE PORTFOLIO AS RATES CONTINUED TO RISE
AND THEN REVERSE DIRECTION?
A. We adjusted investments as rates fluctuated and our economic outlook
changed. From August 1994 through January 1995, interest rates rose and
5
<PAGE> 6
Performance Update
the economy continued its rapid expansion. Typically we try to keep the fund's
duration level between 1.5 years and 3.0 years. During that period, we invested
primarily in Treasuries with short durations of about 1.5 years. We adopted
this relatively short duration strategy to mitigate the decline in Treasury
prices that can be expected as interest rates rise.
By February, we saw signs that economic growth was starting to slow. We then
began to gradually move the fund into longer-duration investments such as
intermediate-term Treasuries with maturities of three to five years. We made
this shift because we did not anticipate any further interest rate increases.
Our strategy proved appropriate and the fund's return outperformed the average
of its peers in May, when the level of intermediate Treasuries reached 44
percent.
Q. 1994 WAS ONE OF THE WORST YEARS IN THE HISTORY OF THE BOND MARKET. YET, THE
BOND MARKET MORE THAN RECOVERED IN THE FIRST SEVERAL MONTHS OF 1995. WHAT, IF
ANYTHING, DID YOU LEARN FROM THESE TWO PERIODS?
A. More than anything, perhaps, the two periods have demonstrated the
importance of being flexible. Our fund was designed for conservative investors
who prefer a more stable net asset value than a longer term income fund but
want to take on a bit more risk than a money market fund* for the potential of
a higher total return and capital gains. The changing performance of the bonds
has also highlighted the importance of staying fully invested in the market --
it was an approach that enabled us to weather rough market conditions and
enhance our performance.
SEVERAL MARKET FORCES INFLUENCED INVESTORS IN U.S. GOVERNMENT SECURITIES FROM
OCTOBER 1994 THROUGH SEPTEMBER 1995
A. ECONOMIC GROWTH SLOWED THEN ACCELERATED
Economic growth, as measured by quarterly changes in the U.S. economy's gross
domestic product (GDP), was robust throughout 1994, but fell dramatically by
mid-1995 then gained momentum during the third quarter.
[Bar Graph]
<TABLE>
<S> <C>
4Q94 5.1
1Q95 2.7
2Q95 1.3
3Q95 4.2
</TABLE>
SOURCE: The Wall Street Journal AND Barrons
B. WHILE SHORT-TERM INTEREST RATES ROSE AND THEN FELL...
The Federal Reserve Board continued its series of interest rate hikes until
early July 1995, when it announced a modest interest rate cut. This line tracks
the Fed's changes to the federal funds rate (the interest rate that banks
charge each other for overnight loans), which is a measure of short-term
interest rates.
[Line Graph]
<TABLE>
<S> <C>
10/1/94 4.75
11/15 5.5
2/15 6
7/6/95 5.75
</TABLE>
SOURCE: Investment Company Institute (ICI) Mutual Fund 1995 Fact Book and The
Wall Street Journal
C. BUT INFLATION POSED NO THREAT
Despite worries that the strong growth in 1994 would result in increased price
inflation, the Consumer Price Index (CPI) was never a concern during the
period.
[Bar Graph]
<TABLE>
<S> <C>
4Q94 0.6
1Q95 0.8
2Q95 0.8
3Q95 0.5
</TABLE>
SOURCE: Towers Data Systems
*Kemper Financial Services, Inc. Forecast
6
<PAGE> 7
Performance Update
Q. DID YOUR PREFERENCE FOR TREASURIES OVER MORTGAGES HAVE ANYTHING TO DO WITH
THE FUND'S DIVIDEND INCREASE IN 1995?
A. No, the dividend increase was a factor of the rising interest rate
environment. Here's what happened. Since1994, interest rates on short-term
investments increased more than interest rates on long-term investments which
caused a narrowing in yield between the two. This narrowing allowed us to
maintain a short-duration stance yet still provide an attractive distribution
rate. So it was actually the increase in short-term yields that made it
possible for us to increase the fund's dividend during the fiscal year.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT FEW MONTHS?
A. We are undaunted in our belief that the economy is growing, but at a pace
slow enough to allow for further interest rate cuts. Given this outlook, we
have positioned the fund in short-term and intermediate-term Treasuries that
should perform well in that environment.
Q. WHAT COULD THREATEN YOUR OUTLOOK -- AND RESULT IN AN ADJUSTMENT OF YOUR
PORTFOLIO MANAGEMENT STRATEGY?
A. Our risks are fairly obvious. If the economy takes off like a rocket,
for example, our interest rate outlook will be wrong, and we'd have to
readjust and move into shorter duration investments. But we don't see that
happening. We expect a continued slow-growth, low-inflation environment, which
is positive for government securities and should be good for the fund.
* An investment in a money market fund is neither insured nor guaranteed by the
U.S. government, and there can be no guarantee that a money fund will maintain
a stable $1 share price. The fund's yield will vary.
AVERAGE ANNUAL TOTAL RETURNS*
FOR PERIODS ENDED SEPTEMBER 30, 1995 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 5-YEAR CLASS
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER SHORT-INTERMEDIATE GOV'T FUND A 4.06% N/A 4.06% (SINCE 1/10/92)
KEMPER SHORT-INTERMEDIATE GOV'T FUND B 3.94% 5.84% 6.17% (SINCE 2/1/89)
KEMPER SHORT-INTERMEDIATE GOV'T FUND C 7.13% N/A 5.63% (SINCE 5/31/94)
- -------------------------------------------------------------------------------------------------
</TABLE>
Past performance is not predictive of future performance. Returns and net asset
value fluctuate. Shares are redeemable at current net asset value, which may be
more or less than original cost.
* Average annual total return measures net investment income and capital gain or
loss from portfolio investments, assuming reinvestment of all dividends and
for A shares adjustment for the maximum sales charge of 3.5% and for B shares
adjustment for the applicable contingent deferred sales charge as follows:
1-year, 3%; 5-year, 1%; since inception, 0%. During the periods noted,
securities prices fluctuated. For additional information, see the Prospectus and
Statement of Additional Information and the Financial Highlights at the end of
this report.
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND CLASS A
FROM 1/10/92 THROUGH 9/30/95
[Line Graph]
<TABLE>
<CAPTION>
- KEMPER - MERRIL LYNCH 1-5
SHORT-INTERMEDIATE GOVERNMENT/GNMA - CONSUMER PRICE
FUND CLASS A(1) INDEX+ INDEX++
<S> <C> <C> <C>
1/10/92 10,000 10,000 10,000
12/31/92 10,262 10,693 10,290
12/31/93 10,826 11,437 10,573
12/31/94 10,722 11,333 10,856
9/30/95 11,597 12,505 11,109
</TABLE>
(1) Performance includes reinvestment of dividends and adjustment for the
applicable sales charge in effect at the end of the period. In comparing the
Kemper Short-Intermediate Government Fund performance to the Merrill Lynch
Mortgage/GNMA Index, you should also note that the fund's performance reflects
the maximum sales charge, while no such charges are reflected in the
performance of the index.
+ The Merrill Lynch Market Weighted Index, an unmanaged index, is comprised of
the universe of 1-5 year Treasuries plus the Merrill Lynch GNMA Index. Source
is Bloomberg.
++ 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. It is generally considered to be a measure of inflation. Source is
Towers Data Systems.
7
<PAGE> 8
Performance Update
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND CLASS B
FROM 2/1/89 THROUGH 9/30/95
[Line Graph]
<TABLE>
<CAPTION>
- KEMPER - MERRIL LYNCH 1-5
SHORT-INTERMEDIATE GOVERNMENT/GNMA - CONSUMER PRICE
FUND CLASS B(1) INDEX+ INDEX++
<S> <C> <C> <C>
2/1/89 10,000 10,000 10,000
12/31/91 12,808 13,975 11,387
12/31/93 14,115 15,690 12,040
9/30/95 14,895 17,154 12,626
</TABLE>
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND CLASS C
FROM 5/31/94 THROUGH 9/30/95
[Line Graph]
<TABLE>
<CAPTION>
- KEMPER MERRIL LYNCH 1-5
SHORT-INTERMEDIATE GOVERNMENT/GNMA CONSUMER PRICE
FUND CLASS C(1) INDEX+ INDEX++
<S> <C> <C> <C>
5/31/94 10,000 10,000 10,000
12/31/94 10,000 10,093 10,149
9/30/95 10,762 11,136 10,386
</TABLE>
Terms To Know
DURATION Duration is a measure of the interest rate sensitivity of a
fixed-income portfolio incorporating time to maturity and coupon size. The
larger the duration number, the greater the interest rate risk.
TOTAL RETURN A fund's total return figure measures both the net investment
income and any realized and unrealized appreciation or depreciation of the
underlying investments in its portfolio for the period, assuming the
reinvestment of all dividends. It represents the aggregate percentage or dollar
value change over the period.
YIELD A fund's yield is a measure of the net investment income per share earned
over a specific one month or 30-day period expressed as a percentage of the
maximum offering price of the fund's shares at the end of the period.
8
<PAGE> 9
Portfolio Statistics
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
ON 9/30/95 ON 9/30/94
- --------------------------------------------------------------------------
<S> <C> <C>
Government short-term securities 43% 93%
Government intermediate-term securities 51% 4
Mortgage-backed GNMAs -- 1
Cash and equivalents 6 2
100% 100%
</TABLE>
- - GOVERNMENT SHORT-TERM SECURITIES
- - GOVERNMENT INTERMEDIATE-TERM SECURITIES
- - MORTGAGE-BACKED GNMAS
- - CASH AND EQUIVALENTS
[Pie Chart] [Pie Chart]
ON 9/30/95 ON 9/30/94
YEARS TO MATURITY
AS A PERCENTAGE OF THE PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
ON 9/30/95 ON 9/30/94
- --------------------------------------------------------------------------
<S> <C> <C>
Less than 3 years 49% 95%
3-10 years 51 4
10-20 years -- 1
100% 100%
</TABLE>
- - LESS THAN 3 YEARS
- - 3-10 YEARS
- - 10-20 YEARS
[Pie Chart] [Pie Chart]
ON 9/30/95 ON 9/30/94
DURATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
ON 9/30/95 ON 9/30/94
- --------------------------------------------------------------------------
<S> <C> <C>
Duration 2.5 years 1.5 years
</TABLE>
9
<PAGE> 10
Portfolio of Investments
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS AT SEPTEMBER 30, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
- -------------------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
U.S. GOVERNMENT OBLIGATIONS RATE MATURITY AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. TREASURY 9.375% 1996 $ 10,000 $ 10,192
NOTES -- 97.4% 8.75 1997 10,000 10,547
(Cost: $231,273) 8.625 1997 15,000 15,731
8.50 1997 20,000 20,852
7.50 1997 10,000 10,214
8.875 1998 16,000 17,318
8.25 1998 20,000 21,184
7.875 1998 15,000 15,692
7.25 1998 10,000 10,295
9.125 1999 10,000 11,008
8.875 1999 25,000 27,191
7.75 1999 10,000 10,625
7.125 1999 10,000 10,392
6.75 1999 10,000 10,247
8.75 2000 10,000 11,131
7.125 2000 10,000 10,417
6.875 2000 10,000 10,328
-------------------------------------------------------------------
233,364
-----------------------------------------------------------------------------------
FEDERAL HOME 6.181 2024 161 161
LOAN MORTGAGE 11.25 2010 498 545
CORPORATION -- .3% -------------------------------------------------------------------
(Cost: $723) 706
GOVERNMENT 9.00-9.50 2016-2020 188 199
NATIONAL MORTGAGE
ASSOCIATION -- 1%
(Cost: $200)
===================================================================================
TOTAL U.S. GOVERNMENT OBLIGATIONS--97.8%
(Cost: $232,196) 234,269
===================================================================================
REPURCHASE Collateralized by Federal National Mortgage Association securities
AGREEMENTS -- .4% Yield-6.30%, Dated September 29, 1995, Due October 2, 1995
(Cost: $1,100)
Merrill Lynch Government Securities Inc. 1,100 1,100
(held at Chemical Bank)
===================================================================================
TOTAL INVESTMENTS--98.2%
(Cost: $233,296) 235,369
===================================================================================
CASH AND OTHER ASSETS, LESS LIABILITIES--1.8% 4,250
===================================================================================
NET ASSETS--100% $239,619
===================================================================================
</TABLE>
- -------------------------------------------------------------------------------
NOTE TO PORTFOLIO OF INVESTMENTS
- -------------------------------------------------------------------------------
Based on the cost of investments of $233,296,000 for federal income tax
purposes at September 30, 1995, the aggregate gross unrealized appreciation was
$2,444,000, the aggregate gross unrealized depreciation was $371,000 and the
net unrealized appreciation of investments was $2,073,000.
See accompanying Notes to Financial Statements.
10
<PAGE> 11
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER SHORT-INTERMEDIATE GOVERNMENT FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Short-Intermediate Government
Fund, a series of Kemper Portfolios, as of September 30, 1995, and the related
statements of operations for the two months then ended and the year ended July
31, 1995, and changes in net assets for the two months ended September 30, 1995
and each of the two years in the period ended July 31, 1995, and the financial
highlights for each of the fiscal periods since 1991. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
September 30, 1995, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Kemper Short-Intermediate Government Fund at September 30, 1995, the results of
its operations, the changes in its net assets, and the financial highlights for
the periods referred to above, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
November 14, 1995
11
<PAGE> 12
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
(in thousands)
<TABLE>
<S> <C>
ASSETS
- --------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $233,296) $ 235,369
Cash 27
Receivable for:
Fund shares sold 96
Investments sold 10
Interest 5,170
TOTAL ASSETS 240,672
==================================================================================================
LIABILITIES AND NET ASSETS
- --------------------------------------------------------------------------------------------------
Payable for:
Fund shares redeemed 686
Management fee 111
Distribution services fee 133
Administrative services fee 49
Custodian and transfer agent fees and related expenses 63
Other 11
Total liabilities 1,053
NET ASSETS $ 239,619
- --------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------------------------------------------------------------
Paid-in capital $ 253,450
Accumulated net realized loss on investments (18,384)
Net unrealized appreciation on investments 2,073
Undistributed net investment income 2,480
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 239,619
- --------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($31,602 divided by 3,909 shares outstanding) $8.08
==================================================================================================
Maximum offering price per share
(net asset value, plus 3.63% of
net asset value or 3.50% of offering price) $8.37
==================================================================================================
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($205,601 divided by 25,540 shares outstanding) $8.05
==================================================================================================
CLASS C SHARES
Net asset value and redemption price per share
($2,416 divided by 300 shares outstanding) $8.06
==================================================================================================
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 13
Financial Statements
STATEMENT OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
TWO MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, JULY 31,
1995 1995
<S> <C> <C>
NET INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------
Investment income $3,093 19,669
Expenses:
Management fee 224 1,402
Distribution services fee 267 1,731
Administrative services fee 99 616
Custodian and transfer agent fees and related expenses 132 707
Professional fees 29 41
Reports to shareholders 1 60
Trustees' fees and other 6 26
Total expenses 758 4,583
NET INVESTMENT INCOME 2,335 15,086
- ------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------
Net realized loss on sale of investments (353) (4,486)
Net realized loss from futures transactions (16) (696)
Net realized loss (369) (5,182)
Change in net unrealized appreciation/depreciation on investments 281 3,921
Net loss on investments (88) (1,261)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,247 13,825
============================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
TWO MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED JULY 31,
1995 1995 1994
<S> <C> <C> <C>
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------------------
Net investment income $ 2,335 15,086 14,144
Net realized loss (369) (5,182) (12,024)
Change in net unrealized appreciation/depreciation 281 3,921 (3,439)
Net increase (decrease) in net assets resulting from operations 2,247 13,825 (1,319)
Net equalization charges (63) (249) (68)
Distribution from net investment income (2,444) (14,897) (12,992)
Distribution from realized gain -- -- (3,792)
Total dividends to shareholders (2,444) (14,897) (16,784)
Net increase (decrease) from capital share transactions (6,369) (19,071) 1,562
TOTAL DECREASE IN NET ASSETS (6,629) (20,392) (16,609)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Beginning of period 246,248 266,640 283,249
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $2,480, $2,651, AND $2,706, RESPECTIVELY) $239,619 246,248 266,640
============================================================================================================
</TABLE>
13
<PAGE> 14
Notes to Financial Statements
1 DESCRIPTION OF THE FUND Kemper Short-Intermediate Government Fund is a
separate series of Kemper Portfolios, an open-end
management investment company organized as a business
trust under the laws of Massachusetts. The Fund
offers four classes of shares. Class A shares are
sold to investors subject to an initial sales charge,
Class B shares are sold without an initial sales
charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales
charge payable upon certain redemptions. Class B
shares automatically convert to Class A shares six
years after issuance. Class C shares are sold without
an initial or a contingent deferred sales charge but
are subject to higher ongoing expenses than Class A
shares and do not convert into another class. Class I
shares (none sold through September 30, 1995) are
offered to a limited group of investors, are not
subject to initial or contingent deferred sales
charges and have lower ongoing expenses than other
classes. Each share represents an identical interest
in the investments of the Fund and has the same
rights.
In 1995, the Fund changed its fiscal year end
for financial reporting purposes and federal income
tax purposes from July 31 to September 30.
2 SIGNIFICANT INVESTMENT VALUATION. Investments are stated at
ACCOUNTING POLICIES value. Fixed income securities are valued by using
market quotations, or independent pricing services
that use prices provided by market makers or
estimates of market values obtained from yield data
relating to instruments or securities with similar
characteristics. Exchange traded fixed income options
are valued at the last sale price unless there is no
sale price, in which event prices provided by market
makers are used. Over-the-counter traded fixed income
options are valued based upon prices provided by
market makers. Financial futures and options thereon
are valued at the settlement price established each
day by the board of trade or exchange on which they
are traded. Other securities and assets are valued at
fair value as determined in good faith by the Board
of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Interest income is recorded on the
accrual basis and includes premium and discount
amortization on money market instruments and
mortgage-backed securities; it also includes original
issue and market discount amortization on long-term
fixed income securities. Realized gains and losses
from investment transactions are reported on an
identified cost basis.
FUND SHARE VALUATION. Fund shares are sold and
redeemed on a continuous basis at net asset value
(plus an initial sales charge on most sales of Class
A shares). Proceeds payable on redemption of Class B
shares will be reduced by the amount of any
applicable contingent deferred sales charge. On each
day the New York Stock Exchange is open for trading,
the net asset value per share is determined as of the
earlier of 3:00 p.m. Chicago time or the close of the
Exchange. The net asset value per share
14
<PAGE> 15
Notes to Financial Statements
is determined separately for each class by dividing
the Fund's net assets attributable to that class by
the number of shares of the class outstanding.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS.
The Fund has complied with the special provisions of
the Internal Revenue Code available to investment
companies and therefore no federal income tax
provision is required. The accumulated net realized
loss on sales of investments for federal income tax
purposes at September 30, 1995, amounting to
approximately $18,057,000, is available to offset
future taxable gains. If not applied, the loss
carryover expires during the period 2002 through
2003.
Differences in dividends per share are due to
different class expenses. Dividends payable to its
shareholders are recorded by the Fund on the
ex-dividend date.
Dividends are determined in accordance with
income tax principles which may treat certain
transactions differently than generally accepted
accounting principles.
EQUALIZATION ACCOUNTING. A portion of proceeds
from sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment
income so that income per share available for
distribution is not affected by sales or redemptions
of shares.
3 TRANSACTIONS MANAGEMENT AGREEMENT. The Fund has a management
WITH AFFILIATES agreement with Kemper Financial Services, Inc. (KFS)
and pays a management fee at an annual rate of .55%
of the first $250 million of average daily net assets
declining gradually to .40% of average daily net
assets in excess of $12.5 billion. The Fund incurred
a management fee of $224,000 for the two month period
ended September 30, 1995 and $1,402,000 for the year
ended July 31, 1995.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI). Underwriting commissions paid in connection
with the distribution of Class A shares are as
follows:
<TABLE>
<CAPTION>
Commissions allowed
Commissions by KDI to retail firms Commissions paid
retained by KDI (including affiliates) to affiliates of KDI
--------------- ---------------------- --------------------
<S> <C> <C> <C>
Two months ended
September 30, 1995 $ 2,000 26,000 17,000
Year ended
July 31, 1995 $21,000 194,000 60,000
</TABLE>
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of average
daily net assets of the Class B and Class C shares.
Pursuant to the agreement, KDI enters into related
selling group agreements with various firms at various
rates for sales of Class B and Class C shares. In
addition, KDI receives any contingent deferred sales
charges from redemptions of Class B shares.
Distribution fees and commissions paid in connection
with the sale of Class B and Class C shares,
15
<PAGE> 16
and contingent deferred sales charges received in
connection with the redemption of Class B shares are
as follows:
<TABLE>
<CAPTION>
Commissions
and
distribution fees
Distribution paid by KDI Amounts Contingent
fees paid to firms paid to deferred sales
by the Fund (including affiliates charges
to KDI affiliates) of KDI received by KDI
----------- ----------- -------- ---------------
<S> <C> <C> <C> <C>
Two months ended
September 30, 1995 $ 267,000 73,000 19,000 101,000
Year ended
July 31, 1995 $1,731,000 668,000 58,000 910,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has
an administrative services agreement with KDI. For
providing information and administrative services to
shareholders, the Fund pays KDI a fee at an annual
rate of up to .25% of average daily net assets. KDI in
turn has various agreements with financial services
firms that provide these services and pays these firms
based on assets of Fund accounts the firms service.
Administrative services fees paid are as follows:
<TABLE>
<CAPTION>
Administrative
Administrative services fees paid Administrative
services fees paid by KDI to firms services fees paid
by the Fund to KDI (including affiliates) to affiliates of KDI
------------------ -------------------- --------------------
<S> <C> <C> <C>
Two months ended
September 30, 1995 $ 99,000 97,000 8,000
Year ended
July 31, 1995 $616,000 601,000 52,000
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the Fund. For the two month period
ended September 30, 1995 and the year ended July 31,
1995, the transfer agent remitted shareholder services
fees to KSvC of $109,000 and $715,000, respectively.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of KFS.
For the two month period ended September 30, 1995
and the year ended July 31, 1995 the Fund made no
payments to its officers and incurred trustees' fees
of $2,000 and $15,000 respectively to independent
trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT Investment transactions (excluding short-term
TRANSACTIONS instruments) are as follows (in thousands):
<TABLE>
<CAPTION>
Two months Year
ended ended
September 30, July 31,
1995 1995
------------- ---------
<S> <C> <C>
Purchases $65,274 1,427,567
Proceeds from sales 70,435 1,447,991
</TABLE>
16
<PAGE> 17
Notes to Financial Statements
5 CAPITAL SHARE The following table summarizes the activity in
TRANSACTIONS capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
TWO MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED JULY 31,
1995 1995 1994
----------------------- ------------------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
SHARES SOLD
------------------------------------------------------------------------------------------
Class A 401 $ 3,200 2,581 $ 20,257 553 $ 4,703
Class B 353 2,801 4,895 37,726 10,856 90,855
Class C 25 200 460 3,661 76 611
------------------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
------------------------------------------------------------------------------------------
Class A 33 267 161 1,392 64 534
Class B 191 1,532 1,224 10,537 1,457 11,729
Class C 3 21 14 117 -- --
------------------------------------------------------------------------------------------
SHARES REDEEMED
------------------------------------------------------------------------------------------
Class A (251) (2,007) (1,561) (12,311) (522) (4,281)
Class B (1,527) (12,161) (9,966) (78,456) (12,389) (102,589)
Class C (28) (222) (250) (1,994) -- --
------------------------------------------------------------------------------------------
CONVERSION OF SHARES
------------------------------------------------------------------------------------------
Class A 71 571 571 4,585 999 8,133
Class B (71) (571) (574) (4,585) (1,001) (8,133)
NET INCREASE (DECREASE)
FROM CAPITAL SHARE
TRANSACTIONS $(6,369) $(19,071) $ 1,562
==========================================================================================
</TABLE>
6 FINANCIAL FUTURES In order to take advantage of anticipated market
CONTRACTS conditions, the Fund has entered into exchange traded
financial futures contracts as described below. The
Fund bears the market risk that arises from changes in
the value of these financial instruments.
At the time the Fund enters into a futures contract,
it is required to make a margin deposit with its
custodian. Subsequently, gain or loss is recognized
and payments are made on a daily basis between the
Fund and the broker as the market price of the
futures contract fluctuates. At September 30, 1995,
the market value of investments pledged by the Fund
to cover margin requirements for open futures
positions was $124,000. At September 30, 1995, the
Fund had outstanding financial futures contracts as
follows:
<TABLE>
<CAPTION>
FACE EXPIRATION GAIN AT
TYPE AMOUNT POSITION MONTH 9/30/95
-----------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
Securities $3,000,000 Long December $9,000
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
------------------------------------------------
CLASS A SHARES
------------------------------------------------
TWO MONTHS JANUARY 10,
ENDED YEAR ENDED JULY 31, 1992 TO
SEPTEMBER 30, -------------------- JULY 31,
1995 1995 1994 1993 1992
------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.09 8.11 8.63 8.65 8.59
Income from investment operations:
Net investment income .09 .54 .48 .53 .29
Net realized and unrealized gain (loss) (.01) (.03) (.44) (.03) .11
Total from investment operations .08 .51 .04 .50 .40
Less dividends:
Distribution from net investment income .09 .53 .45 .52 .34
Distribution from net realized gain -- -- .11 -- --
Total dividends .09 .53 .56 .52 .34
Net asset value, end of period $8.08 8.09 8.11 8.63 8.65
===========================================================================================
TOTAL RETURN (NOT ANNUALIZED) 1.00% 6.58 .41 6.01 4.87
- -------------------------------------------------------------------------------------------
ANNUALIZED RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 1.05% 1.06 1.06 1.04 .95
Net investment income 6.56 6.65 5.85 6.06 7.48
<CAPTION>
-----------------------------------------------------
CLASS B SHARES
-----------------------------------------------------
TWO MONTHS
ENDED YEAR ENDED JULY 31,
SEPTEMBER 30, -------------------------------------
1995 1995 1994 1993 1992 1991
-----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period $8.06 8.08 8.61 8.64 8.27 8.42
Income from investment operations:
Net investment income .08 .47 .40 .45 .58 .69
Net realized and unrealized gain (loss) (.01) (.03) (.44) (.02) .36 (.14)
Total from investment operations .07 .44 (.04) .43 .94 .55
Less dividends:
Distribution from net investment income .08 .46 .38 .46 .57 .70
Distribution from net realized gain -- -- .11 -- -- --
Total dividends .08 .46 .49 .46 .57 .70
Net asset value, end of period $8.05 8.06 8.08 8.61 8.64 8.27
=================================================================================================
TOTAL RETURN (NOT ANNUALIZED) .87% 5.68 (.48) 5.13 11.76 6.85
- -------------------------------------------------------------------------------------------------
ANNUALIZED RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------------
Expenses 1.91% 1.87 1.93 1.87 1.89 2.07
Net investment income 5.70 5.84 4.95 5.23 6.84 8.19
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
CLASS C SHARES
------------------------------------------------
TWO MONTHS
ENDED YEAR ENDED MAY 31, TO
SEPTEMBER 30, 1995 JULY 31, 1995 JULY 31, 1994
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------
Net asset value, beginning of period $8.06 8.08 8.09
Income from investment operations:
Net investment income .09 .47 .07
Net realized and unrealized loss (.01) (.03) (.01)
Total from investment operations .08 .44 .06
Less distribution from net investment income .08 .46 .07
Net asset value, end of period $8.06 8.06 8.08
=========================================================================================
TOTAL RETURN (NOT ANNUALIZED) 1.00% 5.73 .77
- -----------------------------------------------------------------------------------------
ANNUALIZED RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------
Expenses 1.74% 1.78 1.83
Net investment income 5.87 5.93 5.54
- -----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -----------------------------------------------------------------------------------------
<CAPTION>
TWO MONTHS
ENDED YEAR ENDED JULY 31,
SEPTEMBER 30, ----------------------------------------
1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net assets at end of period (in thousands) $239,619 246,248 266,640 283,249 191,716 104,279
Portfolio turnover rate 173% 597 916 339 120 180
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges.
19
<PAGE> 20
TRUSTEES
STEPHEN B. TIMBERS
President and Trustee
DAVID W. BELIN
Trustee
LEWIS A. BURNHAM
Trustee
DONALD L. DUNAWAY
Trustee
ROBERT B. HOFFMAN
Trustee
DONALD R. JONES
Trustee
DAVID B. MATHIS
Trustee
SHIRLEY D. PETERSON
Trustee
WILLIAM P. SOMMERS
Trustee
OFFICERS
J. PATRICK BEIMFORD, JR.
Vice President
JOHN E. PETERS
Vice President
MICHELLE M. KEELEY
Vice President
FRANK J. RACHWALSKI, JR.
Vice President
PHILIP J. COLLORA
Vice President
and Secretary
CHARLES F. CUSTER
Vice President and
Assistant Secretary
JEROME L. DUFFY
Treasurer
ELIZABETH C. WERTH
Assistant Secretary
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
1-800-621-1048
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
INDEPENDENT AUDITORS ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, IL 60606
INVESTMENT MANAGER KEMPER FINANCIAL SERVICES, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street
Chicago, IL 60603
[Recycled Paper LOGO]
Printed on recycled paper.
This report is not to be distributed [KEMPER LOGO]
unless preceded or accompanied by a
Kemper Financial Income Fund prospectus.
KSIGF - 2 (11/95)
