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SIGNATURE JEROME L. DUFFY
TITLE TREASURER
SUPPLEMENTARY REPORT OF INDEPENDENT AUDITORS
Board of Trustees
Kemper Adjustable Rate U.S. Government Fund
In planning and performing our audit of the financial statements of
Kemper Adjustable Rate U.S. Government Fund for the year ended
August 31, 1994, we considered its internal control structure,
including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal
control structure.
The management of Kemper Adjustable Rate U.S. Government Fund is
responsible for establishing and maintaining an internal control
structure. In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected benefits
and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure
are to provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss from unauthorized
use or disposition and that transactions are executed in accordance
with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally
accepted accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure to future periods is
subject to the risk that it may become inadequate because of changes
in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
that might be material weaknesses under standards established by the
American Institute of Certified Public Accountants. A material
weakness is a condition in which the design or operation of the
specific internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the
internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined
above as of August 31, 1994.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
September 26, 1994
The Board of Trustees
Kemper Adjustable Rate U.S. Government Fund
We have examined the accompanying description of Kemper Financial
Services, Inc. ("KFS") policies and procedures applicable to the
multiple distribution system for calculating the net asset value,
dividends and distributions of, and for allocating income and
expenses to, various classes of shares of the Kemper Adjustable Rate
U.S. Government Fund (the "Fund"). Our examination included
procedures to obtain reasonable assurance about whether (1) the
accompanying description presents fairly, in all material respects,
the aspects of KFS policies and procedures that may be relevant to
the Fund's internal control structure, (2) the control structure
policies and procedures included in the description were suitably
designed to achieve the control objectives specified in the
description, if those policies and procedures were complied with
satisfactorily, and (3) such policies and procedures had been placed
in operation as of August 31, 1994. The control objectives were
specified by KFS. Our examination was performed in accordance with
standards established by the American Institute of Certified Public
Accountants and included those procedures we considered necessary in
the circumstances to obtain a reasonable basis for rendering our
opinion.
In our opinion, the accompanying description of the aforementioned
portions of the internal control structure presents fairly, in all
material respects, the relevant aspects of KFS's policies and
procedures that had been placed in operation as of August 31, 1994.
Also, in our opinion, the policies and procedures, as described, are
suitably designed to provide reasonable assurance that the specified
control objectives would be achieved if the described policies and
procedures were complied with satisfactorily.
In addition to the procedures we considered necessary to render our
opinion as expressed in the previous paragraph, we applied tests to
specific policies and procedures, listed in Section III. The nature,
timing, extent, and results of the tests are listed in Section IV.
This information has been provided to the Fund and to its auditors to
be taken into consideration, along with information about the
internal control structure at the Fund, when making assessments of
control risks for the Fund. In our opinion, the policies and
procedures that were tested, were operating with sufficient
effectiveness to provide reasonable, but not absolute, assurance that
the control objectives specified in Section II were achieved as of
August 31, 1994. However, the scope of our engagement did not
included tests to determine whether control objectives not listed in
Section III were achieved; accordingly, we express no opinion on the
achievement of control objectives not included in Section III.
The relative effectiveness and significance of specific policies and
procedures at KFS and their effect on assessments of control risk at
the Fund are dependent on their interaction with the policies,
procedures, and other factors present at the Fund.
The description and tests of operating effectiveness of the policies
and procedures at KFS is as of August 31, 1994. Any projection of
such information to the future is subject to the risk that, because
of change, the description may no longer portray the system in
existence. The potential effectiveness of specified policies and
procedures at KFS is subject to inherent limitations and,
accordingly, errors or irregularities may occur and not be detected.
Furthermore, the projection of any conclusions, based on our
findings, to future periods is subject to the risk that changes may
alter the validity of such conclusions.
This report is intended for use by the management of KFS, the Fund
and its auditors, and the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
September 26, 1994
SECTION I
Description of the System
Kemper Financial Services, Inc. ("KFS") implemented plans which allow
the Kemper Adjustable Rate U.S. Government Fund (the Fund") to issue
multiple classes of shares.
Under the multiple distribution system, the Fund provides investors
with the option of purchasing shares in any or all of the following
four ways: (i) with a front-end sales load and a service fee (the
"Front-End Load Option" or Class A shares"); (ii) without a front-end
sales load, but subject to a contingent deferred sales charge as well
as to a distribution fee pursuant to a Rule 12b-1 Plan and to a
service fee (the "Deferred Option" or Class B shares"); (iii) without
a front-end sales load or contingent deferred sales charge but
subject to a Rule 12b-1 Plan providing for a distribution fee and to
a service fee (the Level Load Option" or "Class C shares"); and (iv)
without a front-end sales load, contingent deferred sales charge,
distribution fee or service fee ("Institutional Option" or "Class I
shares"). In addition, the Fund may from time to time create one or
more additional classes of shares, the terms of which may differ from
the Class A, B, C and I shares. Class B shares are converted to
Class A shares six years after issuance. Class C and I shares have
no conversion feature. No Class I shares have been issued.
The net asset value of all outstanding shares of each class is
computed based on the net assets and shares outstanding attributable
to each class. All expenses incurred by the Fund are allocated to
each class based on the relative percentage of adjusted net assets
except for the expenses of the distribution plan which are allocated
to class B and C shares, administrative service fees which are
allocated to class A, B and C shares, and class specific expenses
which will be borne exclusively by that class. Due to the specific
allocation of expenses that are borne solely by certain classes, the
net income attributable to, and the dividends paid by, each class may
vary.
SECTION II
Specific Control Objectives
Following are the specific control objective of the Fund's system of
internal accounting control relating to the allocation of income,
expenses, gains and losses and the calculation of NAV and
dividends/distributions for the four classes of shares:
1. Direct expenses charged to each class of shares are correctly
recorded in the Fund accounting records and allocated to the
correct class of shares.
2. Income, other operating expenses and realized and unrealized
gains and losses are allocated properly to each class of shares
based upon the relative net assets of each class of shares at
the beginning of the day after adjusting for the prior day's
Fund share activity.
3. Dividend rates and daily per share NAV's for each class of
shares reflect the proper allocation of income, expenses and
realized and unrealized gains and losses, including the proper
amount of any direct expenses charged to each class of shares.
SECTION III
Procedures to Achieve Specific Control Objectives
The following additional procedures will be performed to meet the
specific control objectives:
1. Preparation of the Multi-Class Pricing-NAV Worksheet
("Worksheet") daily.
2. A determination of the dividends by class is made by dividing
daily net investment income allocated to each class by the
number of shares of that class eligible to receive dividends
(record shares).
The periodic distribution rate for realized gains will be
determined by taking total net realized gains for each class and
dividing by total record date shares.
3. Upon completion of the Worksheet and the calculation of the
dividend rate, and prior to furnishing the computed NAV and
dividend rate to the Shareholder Service Agent, the Worksheet
and calculation will be reviewed for accuracy by an accounting
supervisor ("Final Reviewer"). The Final Reviewer will initial
the Worksheet as evidence of the review.
4. If the Reviewer notes any unusual fluctuations in the NAV or
daily dividend rates between the classes of shares of a Fund, he
or she will research the matter and document the reasons for,
and the reasonableness, of the fluctuation.
5. On a monthly basis, a reconciliation of all account balances for
each class of shares to the general ledger will be performed.
The reconciliation will be reviewed and initialed by the
reviewer.
SECTION IV
Tests of Effectiveness of Control Structure Policies and Procedures
Our tests of the effectiveness of control structure policies and
procedures were designed to determine whether:
1. the description of the KFS' policies and procedures included in
Section I of this report presents fairly, in all material
respects, those aspects of the KFS' control structure that may
be relevant to a user organization's internal control structure,
2. the control structure policies and procedures described in
Section III of this report were suitably designed to achieve the
control objectives defined in Section II of this report, if
those policies and procedures were complied with satisfactorily,
3. the control structure policies and procedures described in
Section III of this report had been placed in operation as of
the date specified, and
4. the control structure policies and procedures were operating
with sufficient effectiveness to provide reasonable, but not
absolute, assurance that the control objectives in Section II
were achieved as of August 31, 1994.
Our tests of the effectiveness of control structure policies and
procedures included the following procedures, to the extent we
considered necessary: (a) a review of the KFS' organizational
structure, including the segregation of functional responsibilities,
policy statements, and personnel policies, (b) discussions with
management, accounting, administrative and other personnel who are
assigned responsibilities for developing, ensuring adherence to and
applying control structure policies and procedures, and (c)
observations of personnel in the performance of their assigned
duties.
Our tests of the effectiveness of control structure policies and
procedures included such other tests as we considered necessary in
the circumstances to evaluate whether those policies and procedures,
and the extent of compliance with them, is sufficient to provide
reasonable, but not absolute, assurance that the specified control
objectives were achieved as of August 31, 1994. Our tests of the
operational effectiveness of control structure policies and
procedures were designed to cover the calculation as of August 31,
1994 for each of the functions listed in Section III which satisfy
the control objectives listed in Section II of this report. In
selecting particular tests of the operational effectiveness of
control structure policies and procedures, we considered the (a)
nature of the items being tested, (b) the kinds and competence of
available evidential matter, (c) the nature of the audit objectives
to be achieved, (d) the assessed level of control risk, and (e) the
expected efficiency and effectiveness of the tests.
Tests of effectiveness of control structure policies and procedures
included:
Tests of source documentation to ensure validity of information.
Tests of input and supervisory control procedures in place to
ensure accuracy, completeness, validity and integrity of
processing.
Tests of recalculation of output to verify accuracy.
Tests of output control procedures and resultant documents and
reports relative to specific calculations to ensure accurate and
timely updates of accounting records were achieved.
Testing procedures were designed and performed to enable us to
conclude that the control objectives listed in Section II of this
report were achieved as of
August 31, 1994.
Exhibit 77C
Kemper Adjustable Rate U.S. Government Fund
Form N-SAR for the period ended 8/31/94
File No. 811-5195
Page 1
A special meeting of Registrant's shareholders was held on May 25,
1994. Votes regarding the items submitted for shareholder vote are
set forth below.
Proposal to amend the Agreement and Declaration of Trust.
For: 19,086,029
Against: 1,601,524
Proposal to amend investment management agreement
For: 13,054,747
Against: 5,227,707
Proposal to amend investment policies and restrictions regarding
restricted and illiquid securities.
For: 15,539,093
Against: 1,664,840
Proposal to amend investment restrictions regarding senior
securities.
For: 13,695,519
Against: 1,570,296
Proposal to change investment restricitons from fundamental to non-
fundamental.
For: 15,659,119
Against: 2,087,672
MAM|C:\WP51\DOCS\NSAR.EXH\KARGF594.77C|102194
Exhibit 77I
Kemper Adjustable Rate U.S. Government Fund
Form N-SAR for the period ended 8/31/94
File No. 811-5195
Prior to May 27, 1994, Registrant offered one class of shares.
Registrant's Agreement and Declaration of Trust was Amended and
Restated as of May 27, 1994 and a Written Instrument Establishing
and Designating Separate Classes of Shares was executed as of May
27, 1994 to create separate classes of shares; Class A, Class B,
Class C and Class I shares. The one class outstanding prior to the
reorganization was redesignated as the new Class A. Shares of each
class have equal noncumulative voting rights, except that Class B
and Class C shares have separate and exclusive voting rights with
respect to Registrant's Rule 12b-1 Plan. Shares of each class also
have equal rights with respect to dividends, assets and liquidation
of the Registrant subject to any preferences (such as resulting
from different Rule 12b-1 distribution fees), rights or privileges
of any classes of shares of Registrant. Shares are fully paid and
nonassessable when issued, are transferable without restriction and
have no preempetive or conversion rights.
MAM|C:\WP51\DOCS\NSAR.EXH\KARGF.77I|102194
Exhibit 77Q(a)
Kemper Adjustable Rate U.S. Government Fund
Form N-SAR for the period ended 8/31/94
File No. 811-5195
KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
WHEREAS, Article IX, Section 4 of the Agreement and
Declaration of Trust of Kemper Adjustable Rate U.S. Government Fund
dated May 28, 1987, as amended, provides that the Agreement and
Declaration of Trust may be amended at any time by an instrument in
writing signed by a majority of the then Trustees when authorized
so to do by vote of Shareholders holding a majority of the Shares
entitled to vote; and
WHEREAS, the holders of a majority of the Shares entitled to
vote have authorized this Amendment and Restatement of said
Agreement and Declaration of Trust;
NOW, THEREFORE, said Agreement and Declaration of Trust is
amended and restated to read in its entirety as follows:
WITNESSETH
WHEREAS, this Trust has been formed for the purposes of
carrying on the business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees have
acquired and may hereafter acquire assets and properties, to hold
and manage as trustees of a Massachusetts voluntary association
with transferable shares in accordance with the provisions
hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities and other assets and properties which
they may from time to time acquire in any manner as Trustees
hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the pro rata benefit of the
holders from time to time of shares in this Trust as hereinafter
set forth.
ARTICLE I
---------
NAME AND DEFINITIONS
--------------------
NAME AND REGISTERED AGENT
- - -------------------------
SECTION 1. This Trust shall be known as Kemper Adjustable
Rate U.S. Government Fund and the Trustees shall conduct the
business of the Trust under that name or any other name as they may
from time to time determine. The registered agent for the Trust in
Massachusetts shall be CT Corporation System whose address is 2
Oliver Street, Boston, Massachusetts or such other person as the
Trustees may from time to time designate.
DEFINITIONS
- - -----------
SECTION 2. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Massachusetts voluntary
association established by this Agreement and Declaration of Trust,
as amended from time to time, pursuant to Massachusetts General
Laws, Chapter 182;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article IV and then in office;
(c) "Shares" mean the equal proportionate transferable units
of interest into which the beneficial interest in the Trust shall
be divided from time to time or, if more than one series or class
of shares is authorized under or pursuant to Article III, the equal
proportionate transferable units of interest into which each such
series or class shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of
1940 (and any successor statute) and the Rules and Regulations
thereunder, all as amended from time to time;
(f) The terms "Affiliated Person", "Assignment",
"Commission", "Interested Person", "Principal Underwriter" and
"vote of a majority of the outstanding voting securities" shall
have the meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time;
(i) "Net asset value" shall have the meaning set forth in
Section 6 of Article VI hereof;
(j) The terms "series" or "series of Shares" refers to the
one or more separate investment portfolios of the Trust authorized
under or pursuant to Article III into which the assets and
liabilities of the Trust may be divided and the Shares of the Trust
representing the beneficial interest of Shareholders in such
respective portfolios; and
(k) The terms "class" or "class of Shares" refers to the
division of Shares representing any series into two or more classes
authorized under or pursuant to Article III.
ARTICLE II
----------
NATURE AND PURPOSE
------------------
The Trust is a voluntary association (commonly known as a
business trust) of the type referred to in Chapter 182 of the
General Laws of the Commonwealth of Massachusetts. The Trust is
not intended to be, shall not be deemed to be, and shall not be
treated as, a general or a limited partnership, joint venture,
corporation or joint stock company, nor shall the Trustees or
Shareholders or any of them for any purpose be deemed to be, or be
treated in any way whatsoever as though they were, liable or
responsible hereunder as partners or joint venturers. The purpose
of the Trust is to engage in, operate and carry on the business of
an open-end management investment company and to do any and all
acts or things as are necessary, convenient, appropriate,
incidental or customary in connection therewith.
ARTICLE III
-----------
SHARES DIVISION OF BENEFICIAL INTEREST
--------------------------------------
SECTION 1. The Shares of the Trust shall be issued in one or
more series as the Trustees may, without Shareholder approval,
authorize from time to time. Each series shall be preferred over
all other series in respect of the assets allocated to that series
as hereinafter provided. The beneficial interest in each series
shall at all times be divided into Shares (without par value) of
such series, each of which shall, except as provided in the
following sentence, represent an equal proportionate interest in
such series with each other Share of the same series, none having
priority or preference over another Share of the same series. The
Trustees may, without Shareholder approval, divide the Shares of
any series into two or more classes, Shares of each such class
having such preferences and special or relative rights or
privileges (including conversion rights, if any) as the Trustees
may determine. The number of Shares authorized shall be unlimited,
and the Shares so authorized may be represented in part by
fractional Shares. The Trustees may from time to time divide or
combine the shares of any series or class into a greater or lesser
number without thereby changing the proportionate beneficial
interests in the series or class. Without limiting the authority
of the Trustees set forth in this Section 1 to establish and
designate any further series or class, the Trustees hereby
establish and designate one series of Shares to be known as the
"Initial Portfolio." The establishment and designation of any
series or class of Shares in addition to the foregoing shall be
effective upon the execution by a majority of the then Trustees of
an instrument setting forth such establishment and designation and
the relative rights and preferences of such series or class. As
provided in Article IX, Section 1 hereof, any series or class of
Shares (whether or not there shall then be Shares outstanding of
said series or class) may be terminated by the Trustees by written
notice to the Shareholders of such series or class or by the vote
of the Shareholders of such series or class entitled to vote more
than fifty percent (50%) of the votes entitled to be cast on the
matter. In the event of any such termination, a majority of the
then Trustees shall execute an instrument setting forth the
termination of such series or class.
OWNERSHIP OF SHARES
- - -------------------
SECTION 2. The ownership and transfer of Shares shall be
recorded on the books of the Trust or its transfer or similar
agent. No certificates certifying the ownership of Shares shall be
issued except as the Trustees may otherwise determine from time to
time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of
Shares and similar matters. The record books of the Trust as kept
by the Trust or any transfer or similar agent of the Trust, as the
case may be, shall be conclusive as to who are the Shareholders of
each series or class and as to the number of Shares of each series
or class held from time to time by each Shareholder.
INVESTMENT IN THE TRUST; ASSETS OF A SERIES
- - -------------------------------------------
SECTION 3. The Trustees may issue Shares of the Trust to
such persons and on such terms and, subject to any requirements of
law, for such consideration, which may consist of cash or tangible
or intangible property or a combination thereof, as they may from
time to time authorize. All consideration received by the
Trust for the issue or sale of Shares of a particular series,
together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or
liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be,
shall, irrevocably belong to such series of Shares for all
purposes, subject only to the rights of creditors, and shall be so
handled upon the books of account of the Trust and are herein
referred to as "assets of" such series. Any allocation of the
assets of a series among any classes of Shares of such series shall
be made in a manner consistent with the preferences and special or
relative rights or privileges of such classes.
RIGHT TO REFUSE ORDERS
- - ----------------------
SECTION 4. The Trust by action of its Trustees shall have
the right to refuse to accept any subscription for its Shares at
any time without any cause or reason therefore whatsoever. Without
limiting the foregoing, the Trust shall have the right not to
accept subscriptions under circumstances or in amounts as the
Trustees in their sole discretion consider to be disadvantageous to
existing Shareholders and the Trust may from time to time set
minimum and/or maximum amounts which may be invested in Shares by
a subscriber.
<PAGE>
ORDER IN PROPER FORM
- - --------------------
SECTION 5. The criteria for determining what constitutes an
order in proper form and the time of receipt of such an order by
the Trust shall be prescribed by resolution of the Trustees.
WHEN SHARES BECOME OUTSTANDING
- - ------------------------------
SECTION 6. Shares subscribed for and for which an order in
proper form has been received shall be deemed to be outstanding as
of the time of acceptance of the order therefor and the
determination of the net price thereof, which price shall be then
deemed to be an asset of the Trust.
MERGER OR CONSOLIDATION
- - -----------------------
SECTION 7. In connection with the acquisition of all or
substantially all the assets or stock of another investment
company, investment trust, or of a company classified as a personal
holding company under Federal Income Tax laws, the Trustees may
issue or cause to be issued Shares of a series or class and accept
in payment therefor, in lieu of cash, such assets at their market
value, or such stock at the market value of the assets held by such
investment company or investment trust, either with or without
adjustment for contingent costs or liabilities.
NO PREEMPTIVE RIGHTS, ETC.
- - --------------------------
SECTION 8. Shareholders shall have no preemptive or other
right to receive, purchase or subscribe for any additional Shares
or other securities issued by the Trust. The Shareholders shall
have no appraisal rights with respect to their Shares and, except
as otherwise determined by the Trustees in their sole discretion,
shall have no exchange or conversion rights with respect to their
Shares.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
- - -----------------------------------------------------
SECTION 9. Shares shall be deemed to be personal property
giving only the rights provided in this instrument. Every
Shareholder by virtue of having become a Shareholder shall be held
to have expressly assented and agreed to the terms of the
Declaration of Trust and to have become a party thereto. The death
of a Shareholder during the continuance of the Trust shall not
operate to terminate the same nor entitle the representative of any
deceased Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but only to
the rights of said decedent under this Trust. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole
or any part of the Trust property or right to call for a partition
or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither
the Trust nor the Trustees, nor any officer, employee or agent of
the Trust shall have any power to bind personally any Shareholder,
nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time
personally agree to pay.
SHAREHOLDER INSPECTION RIGHTS
- - -----------------------------
SECTION 10. Any Shareholder or his agent may inspect and
copy during normal business hours any of the following documents of
the Trust: By-Laws, minutes of the proceedings of the Shareholders
and annual financial statements of the Trust, including a balance
sheet and financial statements of operations. The foregoing rights
of inspection of Shareholders of the Trust are the exclusive and
sole rights of the Shareholders with respect thereto and no
Shareholder of the Trust shall have, as a Shareholder, the right to
inspect or copy any of the books, records or other documents of the
Trust except as specifically provided in this Section 10 of this
Article III or except as otherwise determined by the Trustees.
ARTICLE IV
----------
THE TRUSTEES
------------
NUMBER, DESIGNATION, ELECTION, TERM, ETC.
- - -----------------------------------------
SECTION 1.
- - ----------
(a) INITIAL TRUSTEE. Philip J. Collora, the initial Trustee,
appointed other Trustees pursuant to subsection (c) of this Section
1 and then resigned.
(b) NUMBER. The Trustees serving as such, whether named
above or hereafter becoming Trustees, may increase or decrease the
number of Trustees to a number other than the number theretofore
determined which number shall not be less than three nor more than
fifteen except during the period that the initial Trustee named
above is sole Trustee. No decrease in the number of Trustees shall
have the effect of removing any Trustee from office prior to the
expiration of his term, but the number of Trustees may be decreased
in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 1.
(c) TERM AND ELECTION. Each Trustee, whether named above or
hereafter becoming a Trustee, shall serve as a Trustee until the
next meeting of Shareholders, if any, called for the purpose of
considering the election or re-election of such Trustee or of a
successor to such Trustee, and until the election and qualification
of his successor, if any, elected at such meeting, or until such
Trustee sooner dies, resigns, retires or is removed. Upon the
election and qualification of a new Trustee, the Trust estate shall
vest in the new Trustee (together with the continuing or other new
Trustees) without any further act or conveyance. Prior to any sale
of Shares pursuant to any public offering, the initial Trustee
named above shall have the right to appoint other persons as
Trustees each to serve as Trustees as aforesaid until the first
meeting of Shareholders called for the purpose of the election or
re-election of such Trustee or of a successor to such Trustee.
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign his
trust or retire as a Trustee, by written instrument signed by him
and delivered to the other Trustees or to the Chairman of the
Board, if any, the President or the Secretary of the Trust, and
such resignation or retirement shall take effect upon such delivery
or upon such later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed for cause at any
time by written instrument, signed by at least a majority of the
number of Trustees prior to such removal, specifying the date upon
which such removal shall become effective. Any Trustee may be
removed with or without cause (i) by the vote of the Shareholders
entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter voting together without regard to
series or class at any meeting called for such purpose, or (ii) by
a written consent filed with the custodian of the Trust's portfolio
securities and executed by the Shareholders entitled to vote more
than fifty percent (50%) of the votes entitled to be cast on the
matter voting together without regard to series or class.
Whenever ten or more Shareholders of record who have been such
for at least six months preceding the date of application, and who
hold in the aggregate Shares constituting at least one percent of
the outstanding Shares of the Trust, shall apply to the Trustees in
writing, stating that they wish to communicate with other
Shareholders with a view to obtaining signatures to a request for
a meeting to consider removal of a Trustee and accompanied by a
form of communication and request that they wish to transmit, the
Trustees shall within five business days after receipt of such
application inform such applicants as to the approximate cost of
mailing to the Shareholders of record the proposed communication
and form of request. Upon the written request of such applicants,
accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, the Trustees shall, within
reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books of the Trust.
Notwithstanding the foregoing, the Trustees may refuse to mail such
material on the basis and in accordance with the procedures set
forth in the last two paragraphs of Section 16(c) of the 1940 Act.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting
from any reason, including without limitation the death,
resignation, retirement, removal or incapacity of any of the
Trustees, or resulting from an increase in the number of Trustees
by the other Trustees may (but so long as there are at least three
remaining Trustees, need not unless required by the 1940 Act) be
filled either by a majority of the remaining Trustees, even if less
than a quorum, through the appointment in writing of such other
person as such remaining Trustees in their discretion shall
determine or, whenever deemed appropriate by the remaining
Trustees, by the election by the Shareholders, at a meeting called
for such purpose, of a person to fill such vacancy. Upon the
appointment or election and qualification of a new Trustee as
aforesaid, the Trust estate shall vest in the new Trustee, together
with the continuing Trustees, without any further act or
conveyance, except that any such appointment or election in
anticipation of a vacancy to occur by reason of retirement,
resignation, or increase in number of Trustees to be effective at
a later date shall become effective only at or after the effective
date of said retirement, resignation, or increase in number of
Trustees.
(g) MANDATORY ELECTION BY SHAREHOLDERS. Notwithstanding the
foregoing provisions of this Section 1, the Trustees shall call a
meeting of the Shareholders for the election of one or more
Trustees at such time or times as may be required in order that the
provisions of the 1940 Act may be complied with, and the authority
hereinabove provided for the Trustees to appoint any successor
Trustee or Trustees shall be restricted if such appointment would
result in failure of the Trust to comply with any provision of the
1940 Act.
(h) EFFECT OF DEATH, RESIGNATION, ETC. The death,
resignation, retirement, removal or incapacity of the Trustees, or
any one of them, shall not operate to annul or terminate the Trust
or to revoke or terminate any existing agency or contract created
or entered into pursuant to the terms of this Declaration of Trust.
(i) NO ACCOUNTING. Except under circumstances which would
justify his removal for cause, no person ceasing to be a Trustee as
a result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required to
make an accounting to the Shareholders or remaining Trustees upon
such cessation.
POWERS
- - ------
SECTION 2. The Trustees, subject only to the specific
limitations contained in this Declaration of Trust or otherwise
imposed by the 1940 Act or other applicable law, shall have,
without further or other authorization and free from any power or
control of the Shareholders, full, absolute and exclusive power,
control and authority over the Trust assets and the business and
affairs of the Trust to the same extent as if the Trustees were the
sole and absolute owners thereof in their own right and to do all
such acts and things as in their sole judgment and discretion are
necessary and incidental to, or desirable for the carrying out of
any of the purposes of the Trust or conducting the business of the
Trust. Any determination made in good faith by the Trustees of the
purposes of the Trust or the existence of any power or authority
hereunder shall be conclusive. In construing the provisions of
this Declaration of Trust, there shall be a presumption in favor of
the grant of power and authority to the Trustees. Without limiting
the foregoing, the Trustees may adopt By-Laws not inconsistent with
this Declaration of Trust containing provisions relating to the
business of the Trust, the conduct of its affairs, its rights or
powers and the rights or powers of its Shareholders, Trustees,
officers, employees and other agents and may amend and repeal them
to the extent that such By-Laws do not reserve that right to the
Shareholders; fill vacancies in their number, including vacancies
resulting from increases in their number, unless a vote of the
Trust's Shareholders is required to fill such vacancies pursuant to
the 1940 Act; elect and remove such officers and appoint and
terminate such agents as they consider appropriate; appoint from
their own number, and terminate, any one or more committees
consisting of two or more Trustees, including an executive
committee which may, when the Trustees are not in session, exercise
some or all of the powers and authority of the Trustees as the
Trustees may determine; appoint an advisory board, the members of
which shall not be Trustees and need not be Shareholders; employ
one or more investment advisers or managers as provided in Section
6 of this Article IV; employ one or more custodians of the assets
of the Trust and authorize such custodians to employ subcustodians
and to deposit all or any part of such assets in a system or
systems for the central handling of securities; retain a transfer
agent or a Shareholder services agent, or both; provide for the
distribution of Shares by the Trust, through one or more principal
underwriters or otherwise; set record dates for the determination
of Shareholders with respect to various matters; and in general
delegate such authority as they consider desirable to any officer
of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter.
In furtherance of and not in limitation of the foregoing, the
Trustees shall have power and authority:
(a) To invest and reinvest in, to buy or otherwise acquire,
to hold, for investment or otherwise, to sell or otherwise dispose
of, to lend or to pledge, to trade in or deal in securities or
interests of all kinds, however evidenced, or obligations of all
kinds, however evidenced, or rights, warrants, or contracts to
acquire such securities, interests, or obligations, of any private
or public company, corporation, association, general or limited
partnership, trust or other enterprise or organization, foreign or
domestic, or issued or guaranteed by any national or state
government, foreign or domestic, or their agencies,
instrumentalities or subdivisions (including but not limited to,
bonds, debentures, bills, time notes and all other evidences of
indebtedness); negotiable or non-negotiable instruments; any and
all futures contracts; government securities and money market
instruments (including but not limited to, bank certificates of
deposit, finance paper, commercial paper, bankers acceptances, and
all kinds of repurchase agreements);
(b) To invest and reinvest in, to buy or otherwise acquire,
to hold, for investment or otherwise, to sell or otherwise dispose
of foreign currencies, and funds and exchanges, and make deposits
in banks, savings banks, trust companies, and savings and loan
associations, foreign or domestic;
(c) To acquire (by purchase, lease or otherwise) and to hold,
use, maintain, develop, and dispose of (by sale or otherwise) any
property, real or personal, and any interest therein;
(d) To sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the assets of the Trust;
(e) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(f) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities;
(g) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable
form, or in the name of the Trustees or of the Trust or in the name
of a custodian, subcustodian or other depositary or a nominee or
nominees or otherwise;
(h) Subject to the provisions of Article III, to allocate
assets, liabilities, income and expenses of the Trust to a
particular series of Shares or to apportion the same among two or
more series, provided that any liabilities or expenses incurred by
a particular series shall be payable solely out of the assets of
that series; and to the extent necessary or appropriate to give
effect to the preferences and special or relative rights or
privileges of any classes of Shares, to allocate assets,
liabilities, income and expenses of a series to a particular class
of Shares of that series or to apportion the same among two or more
classes of Shares of that series;
(i) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
issuer, any security or property of which is or was held in the
Trust; to consent to any contract, lease, mortgage, purchase or
sale of property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security held in the Trust;
(j) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security
to, any such committee, depositary or trustee, and to delegate to
them such power and authority with relation to any security
(whether or not so deposited or transferred) as the Trustees shall
deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee
as the Trustees shall deem proper;
(k) To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy,
including but not limited to claims for taxes;
(l) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof; and
to mortgage and pledge the Trust property or any part thereof to
secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the
conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of
distribution and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually
against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or
omitted by any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or manager, principal
underwriter, or independent contractor, including any action taken
or omitted that may be determined to constitute negligence, whether
or not the Trust would have the power to indemnify such person
against such liability; and
(p) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings,
thrift and other retirement, incentive and benefit plans, trusts
and provisions, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and
agents of the Trust.
The Trustees shall not in any way be bound or limited by any
present or future law or custom in regard to investments by
trustees of common law trusts. Except as otherwise provided herein
or from time to time in the By- Laws, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees (if a quorum by present), within or without
Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all
persons participating in the meeting can communicate with each
other simultaneously and participation by such means shall
constitute presence in person at a meeting, or by written consents
of a majority of the Trustees then in office.
PAYMENT OF EXPENSES, ALLOCATION OF LIABILITIES
- - ----------------------------------------------
SECTION 3. The Trustees are authorized to pay or to cause to
be paid out of the principal or income of the Trust, or partly out
of principal and partly out of income, as they deem fair, all
expenses, fees, charges, taxes and liabilities incurred or arising
in connection with the Trust, or in connection with the management
thereof, including, but not limited to, the Trustees' compensation
and such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, principal
underwriter, auditor, counsel, custodian, transfer agent,
shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may
deem necessary or proper to incur.
The assets of a particular series of Shares shall be charged
with the liabilities (including, in the discretion of the Trustees
or their delegate, accrued expenses and reserves) incurred in
respect of such series (but not with liabilities incurred in
respect of any other series) and such series shall also be charged
with its share of any other liabilities. Any allocation of the
liabilities of a series among classes of Shares of that series
shall be done in a manner consistent with the preferences and
special or relative rights or privileges of such classes. The
determination of the Trustees shall be final and conclusive as to
the amount of liabilities to be charged to one or more particular
series or class. The Trustees may delegate from time to time the
power to make such allocation to one or more Trustees or to an
agent of the Trust appointed for such purpose. The liabilities
with which a series is so charged are herein referred to as the
"liabilities of" such series.
SECTION 4. The Trustees shall have the power, as frequently
as they may determine, to cause each Shareholder to pay directly,
in advance or arrears, for charges for the Trust's custodian or
transfer or shareholder service or similar agent, an amount fixed
from time to time by the Trustees, by setting off such charges due
from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account
of such Shareholder by that number of full and/or fractional shares
which represents the outstanding amount of such charges due from
such Shareholder.
OWNERSHIP OF ASSETS OF THE TRUST
- - --------------------------------
SECTION 5. Title to all of the assets of each series of the
Trust and of the Trust shall at all times be considered as vested
in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
- - -------------------------------------
SECTION 6. Subject to a favorable vote of a majority of the
outstanding voting securities of a series of the Trust, the
Trustees may on behalf of such series, at any time and from time to
time, contract for exclusive or nonexclusive advisory and/or
management services for such series with a corporation, trust,
association or other organization, every such contract to comply
with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Trustees may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of such series shall be held
uninvested and to make changes in such series' investments. The
Trustees may also, at any time and from time to time, contract with
a corporation, trust, association or other organization, appointing
it exclusive or nonexclusive distributor or principal underwriter
for the Shares, every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws;
and any such contract may contain such other terms interpretive of
or in addition to said requirements and restrictions as the
Trustees may determine.
The fact that:
(a) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, advisor, principal underwriter, or distributor or agent of
or for any corporation, trust, association, or other organization,
or of or for any parent or affiliate of any organization, with
which an advisory or management or principal underwriter's or
distributor's contract, or transfer, shareholder services or other
agency contract may have been or may hereafter be made, or that any
such organization, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust, or that
(b) any corporation, trust, association or other organization
with which an advisory or management or principal underwriter's or
distributor's contract, or transfer, shareholder services or other
agency contract may have been or may hereafter be made also has an
advisory or management contract, or principal underwriter's or
distributor's contract, or transfer, shareholder services or other
agency contract with one or more other corporations, trusts,
associations, or other organizations, or has other businesses or
interests shall not affect the validity of any such contract or
disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders.
<PAGE>
ARTICLE V
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
VOTING POWERS
- - -------------
SECTION 1. Subject to the voting provisions of one or more
classes of Shares, the Shareholders shall have power to vote only:
(a) for the election or removal of Trustees as provided in Article
IV, Section 1; (b) with respect to any investment advisor or
manager as provided in Article IV, Section 6; (c) with respect to
any termination or reorganization of the Trust or any series or
class thereof to the extent and as provided in Article IX, Section
1; (d) with respect to any amendment of this Declaration of Trust
to the extent and as provided in Article IX, Section 4; and (e)
with respect to such additional matters relating to the Trust as
may be required by law, the 1940 Act, this Declaration of Trust,
the By-Laws or any registration of the Trust with the Securities
and Exchange Commission (or any successor agency) or any state, or
as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share
shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of the Declaration of Trust, on
any matter submitted to a vote of Shareholders all Shares of the
Trust then entitled to vote shall, except to the extent otherwise
required or permitted by the preferences and special or relative
rights or privileges of any class of Shares, be voted by individual
series and not in the aggregate or by class, except (a) when
required by the 1940 Act, Shares shall be voted in the aggregate
and not by individual series; and (b) when the Trustees have
determined that the matter affects only the interests of one or
more series or classes, then only Shareholders of such series or
class shall be entitled to vote thereon. There shall be no
cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy.
A proxy with respect to Shares held in the name of two or more
persons shall be valid if executed by any one of them unless at or
prior to the exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
Until Shares of any series or class are issued, the Trustees
may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the By-Laws to be
taken by Shareholders of such series or class.
<PAGE>
SHAREHOLDER MEETINGS
- - --------------------
SECTION 2. Meetings of Shareholders (including meetings
involving only one or more but less than all series or classes) may
be called and held from time to time for the purpose of taking
action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by
the Trustees to be necessary or desirable. Such meetings shall be
held at the principal office of the Trust as set forth in the By-
Laws of the Trust or at any such other place within the United
States as may be designated in the call thereof, which call shall
be made by the Trustees or the President of the Trust. Meetings of
Shareholders may be called by the Trustees or such other person or
persons as may be specified in the By- Laws upon written
application by Shareholders holding at least twenty-five percent
(25%) (or ten percent (10%)) if the purpose of the meeting is to
determine if a Trustee is to be removed from office) of the Shares
then outstanding of all series and classes entitled to vote at such
meeting requesting a meeting be called for a purpose requiring
action by the Shareholders as provided herein or in the By-Laws
which purpose shall be specified in any such written application.
Shareholders shall be entitled to at least seven days' written
notice of any meeting of the Shareholders.
QUORUM AND REQUIRED VOTE
- - ------------------------
SECTION 3. The presence at a meeting of Shareholders in
person or by proxy of Shareholders entitled to vote at least thirty
percent (30%) of all votes entitled to be cast at the meeting of
each series or class entitled to vote as a series or class shall be
a quorum for the transaction of business at a Shareholders'
meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that the holders of Shares
shall vote in the aggregate and not as a series or class, then the
presence in person or by proxy of Shareholders entitled to vote at
least thirty percent (30%) of all votes entitled to be cast at the
meeting (without regard to series or class) shall constitute a
quorum. Any lesser number, however, shall be sufficient for
adjournments. Any adjourned session or sessions may be held within
a reasonable time after the date set for the original meeting
without the necessity of further notice.
Except when a larger vote is required by any provisions of the
1940 Act, this Declaration of Trust or the By-Laws, a majority of
the Shares of each series or class voted on the matter shall decide
that matter insofar as that series or class is concerned, provided
that where any provision of law, this Declaration of Trust or the
By-Laws permits or requires that the holders of Shares vote in the
aggregate and not as a series or class, then a majority of the
Shares voted on any matter (without regard to series or class)
shall decide such matter and a plurality shall elect a Trustee.
<PAGE>
ACTION BY WRITTEN CONSENT
- - -------------------------
SECTION 4. Any action taken by Shareholders may be taken
without a meeting if Shareholders entitled to vote more than fifty
percent (50%) of the votes entitled to be cast on the matter of
each series or class or, where any provision of law, this
Declaration of Trust or the By-Laws permits or requires that the
holders of Shares vote in the aggregate and not as a series or
class, if Shareholders entitled to vote more than fifty percent
(50%) of the votes entitled to be cast thereon (without regard to
series or class) (or in either case such larger vote as shall be
required by any provision of this Declaration of Trust or the
By-Laws) consent to the action in writing and such written consents
are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a
meeting of Shareholders.
ADDITIONAL PROVISIONS
- - ---------------------
SECTION 5. The By-Laws may include further provisions for
Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
----------
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
------------------------------------------
AND DETERMINATION OF NET ASSET VALUE
------------------------------------
DISTRIBUTIONS
- - -------------
SECTION 1. The Trustees may in their sole discretion from
time to time distribute to the Shareholders of any series such
income and gains, accrued or realized, as the Trustees may
determine, after providing for actual and accrued expenses and
liabilities of such series (including such reserves as the Trustees
may establish) determined in accordance with this Declaration of
Trust and good accounting practices. The Trustees shall have full
discretion to determine which items shall be treated as income and
which items as capital and their determination shall be binding
upon the Shareholders. Distributions to any series, if any be
made, shall be in Shares of such series, in cash or otherwise and
on a date or dates deter- mined by the Trustees. At any time and
from time to time in their discre- tion, the Trustees may
distribute to the Shareholders of any series as of a record date or
dates determined by the Trustees, in Shares of such series, in cash
or otherwise, all or part of any gains realized on the sale or
disposition of property of the series or otherwise, or all or part
of any other principal of the Trust attributable to the series.
Except to the extent otherwise required or permitted by the
preferences and special or relative rights or privileges of any
classes of Shares of that series, each distribution pursuant to
this Section 1 shall be made ratably according to the number of
Shares of the series held by the several Shareholders on the
applicable record date thereof, provided that distributions from
assets of a series may only be made to the holders of the Shares of
such series and provided that no distributions need be made on
Shares purchased pursuant to orders received, or for which payment
is made, after such time or times as the Trustees may determine.
Any distribution to the Shareholders of a particular class of
Shares shall be made to such Shareholders prorata in proportion to
the number of Shares of such class held by each of them. Any
distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with this Declaration of Trust.
The Trustees have the power, in their discretion, to distribute for
any year amounts sufficient to enable the Trust to qualify as a
"regulated investment company" under the Internal Revenue Code as
amended (or any successor thereto) to avoid any liability for
federal income tax in respect of that year.
REDEMPTIONS AND REPURCHASES
- - ---------------------------
SECTION 2. Any holder of Shares of the Trust may, by
presentation of a request in proper form, together with his
certificates, if any, for such Shares, in proper form for transfer
to the Trust or duly authorized agent of the Trust, request
redemption of his shares for the net asset value thereof determined
and computed in accordance with the provisions of this Section 2
and the provisions of Section 6 of this Article VI.
Upon receipt by the Trust or its duly authorized agent, as the
case may be, of such a request for redemption of Shares in proper
form, such Shares shall be redeemed at the net asset value per
share of the particular series or class next determined after such
request is received or determined as of such other time fixed by
the Trustees as may be permitted or required by the 1940 Act. The
criteria for determining what constitutes a request for redemption
in proper form and the time of receipt of such request shall be
fixed by the Trustees.
The obligation of the Trust to redeem its Shares as set forth
above in this Section 2 shall be subject to the condition that such
obligation may be suspended by the Trust by or under authority of
the Trustees during any period or periods when and to the extent
permissible under the 1940 Act. If there is such a suspension, any
Shareholder may withdraw any request for redemption which has been
received by the Trust during any such period and the applicable net
asset value with respect to which would but for such suspension be
calculated as of a time during such period. Upon such withdrawal,
the Trust shall return to the Shareholder the certificates
therefor, if any.
The Trust may also purchase, repurchase or redeem Shares in
accordance with such other methods, upon such other terms and
subject to such other conditions as the Trustee may from time to
time authorize at a price not exceeding the net asset value of such
Shares in effect when the purchase or repurchase or any contract to
purchase or repurchase is made. Shares redeemed or repurchased by
the Trust hereunder shall be canceled upon such redemption or
repurchase without further action by the Trust or the Trustees and
the number of issued and outstanding Shares of the relevant series
and class shall thereupon by reduced by such amount.
PAYMENT FOR SHARES REDEEMED
- - ---------------------------
SECTION 3. Payment of the redemption price for Shares
redeemed pursuant to this Article VI shall be made by the Trust or
its duly authorized agent after receipt by the Trust or its duly
authorized agent of a request for redemption in proper form
(together with any certificates for such Shares as provided in
Section 2 above) in accordance with procedures and subject to
conditions prescribed by the Trustees; provided, however, that
payment may be postponed during the period in which the redemption
of Shares is suspended under Section 2 above. Subject to any
generally applicable limitation imposed by the Trustees, any
payment on redemption, purchase or repurchase by the Trust of
Shares may, if authorized by the Trustees, be made wholly or partly
in kind, instead of in cash. Such payment in kind shall be made by
distributing securities or other property, constituting, in the
opinion of the Trustees, a fair representation of the various types
of securities and other property then held by the series of Shares
being redeemed, purchased or repurchased (but not necessarily
involving a portion of each of the series' holdings) and taken at
their value used in determining the net asset value of the Shares
in respect of which payment is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
- - --------------------------------------
SECTION 4. The Trust shall have the right at its option and
at any time and from time to time to redeem Shares of any
Shareholder at the net asset value thereof as determined in
accordance with Section 6 of this Article VI, if at such time such
Shareholder owns fewer shares of a series or class than, or Shares
of a series or class having an aggregate net asset value of less
than, an amount determined from time to time by the Trustees. Any
such redemption at the option of the Trust shall be made in
accordance with such other criteria and procedures for determining
the Shares to be redeemed, the redemption date and the means of
effecting such redemption as the Trustees may from time to time
authorize.
ADDITIONAL PROVISIONS RELATING TO DIVIDENDS, REDEMPTIONS AND
- - ------------------------------------------------------------
REPURCHASES
- - -----------
SECTION 5. The completion of redemption, purchase or
repurchase of Shares shall constitute a full discharge of the Trust
and the Trustees with respect to such Shares. No dividend or
distribution (including, without limitation, any distribution paid
upon termination of the Trust or of any series or class) with
respect to, nor any redemption or repurchase of, the Shares of any
series or class shall be effected by the Trust other than from the
assets of such series.
DETERMINATION OF NET ASSET VALUE
- - --------------------------------
SECTION 6. The term "net asset value" of each Share of a
series or class as of any particular time shall be the quotient
obtained by dividing the value, as at such time, of the net assets
of such series or class (i.e., the value of the assets of such
series or class less the liabilities of such series or class,
exclusive of liabilities represented by the Shares of such series
or class) by the total number of Shares of such series or class
outstanding at such time, all determined and computed in accordance
with the Trust's current prospectus.
The Trustees, or any officer, or officers or agent of the
Trust designated for the purpose by the Trustees shall determine
the net asset value of the Shares of each series or class, and the
Trustees shall fix the time or times as of which the net asset
value of the Shares of each series or class shall be determined and
shall fix the periods during which any such net asset value shall
be effective as to sales, redemptions and repurchases of, and other
transactions in, the Shares of such series or class, except as such
times and periods for any such transaction may be fixed by other
provisions of this Declaration of Trust or by the By-Laws.
Determinations in accordance with this Section 6 made in good
faith shall be binding on all parties concerned.
HOW LONG SHARES ARE OUTSTANDING
- - -------------------------------
SECTION 7. Shares of the Trust surrendered to the Trust for
redemption by it pursuant to the provisions of Section 2 of this
Article VI shall be deemed to be outstanding until the redemption
price thereof is determined pursuant to this Article VI and,
thereupon and until paid, the redemption price thereof shall be
deemed to be a liability of the Trust. Shares of the Trust
purchased by the Trust in the open market shall be deemed to be
outstanding until confirmation of purchase thereof by the Trust
and, thereupon and until paid, the purchase price thereof shall be
deemed to be a liability of the Trust. Shares of the Trust
redeemed by the Trust pursuant to Section 4 of this Article VI
shall be deemed to be outstanding until said Shares are deemed to
be redeemed in accordance with procedures adopted by the Trustees
pursuant to said Section 4.
<PAGE>
ARTICLE VII
-----------
COMPENSATION AND LIMITATION OF LIABILITY OF
-------------------------------------------
TRUSTEES AND SHAREHOLDERS
-------------------------
SECTION 1. The Trustees as such shall be entitled to
reasonable compensation from the Trust if the rate thereof is
prescribed by such Trustees. Nothing herein shall in any way
prevent the employment of any Trustee for advisory, management,
legal, accounting, investment banking or other services and payment
for the same by the Trust, it being recognized that such employment
may result in such Trustee being considered an Affiliated Person or
an Interested Person.
LIMITATION OF LIABILITY
- - -----------------------
SECTION 2. The Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent,
employee, investment advisor or manager, principal underwriter or
custodian, nor shall any Trustee be responsible for the act or
omission of any other Trustee. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which such
Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate, Share or
undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust or the Trustee or any of them in
connection with the Trust shall be conclusively deemed to have been
executed or done only in or with respect to their or his capacity
as Trustees or Trustee and neither such Trustees or Trustee nor the
Shareholders shall be personally liable thereon.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts
and shall recite that the same was executed or made by or on behalf
of the Trust by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders
individually but are binding only upon the assets and property of
the Trust or a particular series of Shares, and may contain such
further recital as he or they may deem appropriate, but the
omission thereof shall not operate to bind any Trustees or Trustee
or officers or officer or Shareholders or Shareholder individually.
All persons extending credit to, contracting with or having
any claim against the Trust or a particular series of Shares shall
look only to the assets of the Trust or the assets of that
particular series of Shares, as the case may be, for payment under
such credit, contract or claim; and neither the Shareholders nor
the Trustees, nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable
therefor.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
- - -------------------------------------------------------------
SECTION 3. The exercise by the Trustees of their powers and
discretions hereunder shall be binding upon everyone interested.
A Trustee shall be liable only for his own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees hereunder, and
shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. In
discharging their duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of account of the Trust
and upon written reports made to the Trustees by any officer
appointed by them, any independent public accountant and (with
respect to the subject matter of the contract involved) any
officer, partner or responsible employee of any other party to any
contract entered into pursuant to Section 2 of Article IV. The
Trustees shall not be required to give any bond as such, nor any
surety if a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
- - ------------------------------------------------
SECTION 4. No person dealing with the Trustees shall be bound
to make any inquiry concerning the validity of any transaction made
or to be made by the Trustees or to see to the application of any
payments made or property transferred to the Trust or upon its
order.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
Subject to the exceptions and limitations contained in this
Article, every person who is, or has been, a Trustee or officer of
the Trust (including persons who serve at the request of the Trust
as directors, officers or trustees of another organization in which
the Trust has an interest as a shareholder, creditor or otherwise)
hereinafter referred to as a "Covered Person", shall be indemnified
by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in
which he becomes involved as a party or otherwise by virtue of his
being or having been such a Trustee, director or officer and
against amounts paid or incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered
Person:
(a) against any liability to the Trust or its
Shareholders by reason of a final adjudication by the court or
other body before which the proceeding was brought that he
engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
his office;
(b) with respect to any matter as to which he shall have
been finally adjudicated not to have acted in good faith in
the reasonable belief that his action was in the best interest
of the Trust; or
(c) in the event of a settlement or other disposition not
involving a final adjudication (as provided in paragraph (a)
or (b)) and resulting in a payment by a Covered Person, unless
there has been either a determination that such Covered
Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office by the court or other body approving the
settlement or other disposition or a reasonable determination,
based on a review of readily available facts (as opposed to a
full trial-type inquiry) that he did not engage in such
conduct:
(i) by a vote of a majority of the Disinterested
Trustees acting on the matter (provided that a majority
of the Disinterested Trustees then in office act on the
matter); or
(ii) by written opinion of independent legal
counsel.
The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable,
shall not affect any other rights to which any Covered Person may
now or hereafter be entitled, shall continue as to a person who has
ceased to be such a Covered Person and shall inure to the benefit
of the heirs, executors and administrators of such a person.
Nothing contained herein shall affect any rights to indemnification
to which Trust personnel other than Covered Persons may be entitled
by contract or otherwise under law.
Expenses of preparation and presentation of a defense to any
claim, action, suit or proceeding subject to a claim for
indemnification under this Article shall be advanced by the Trust
prior to final disposition thereof upon receipt of an undertaking
by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification
under this Article, provided that either:
(a) such undertaking is secured by a surety bond or some
other appropriate security or the Trust shall be insured
against losses arising out of any such advances; or
(b) a majority of the Disinterested Trustees acting on
the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter) or independent
legal counsel in a written opinion shall determine, based upon
a review of the readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to
indemnification.
As used in this Article, a "Disinterested Trustee" is one (a)
who is not an "interested person" of the Trust, as defined in the
1940 Act (including anyone who has been exempted from being an
"interested person" by any rule, regulation or order of the
Commission), and (b) against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on
the same or similar grounds is then or has been pending.
As used in this Article, the words "claim", "action", "suit"
or "proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals), actual
or threatened; and the words "liability" and "expenses" shall
include without limitation, attorneys' fees, cost, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
In case any Shareholder or former Shareholder shall be held to
be personally liable solely by reason of his or her being or having
been a Shareholder and not because of his or her acts or omissions
or for some other reason, the Shareholder or former Shareholder (or
his or her heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity,
its corporate or other general successor) shall be entitled to be
held harmless from and indemnified against all loss and expense
arising from such liability but only out of the assets of the
particular series of Shares of which he or she is or was a
Shareholder; provided, however, there shall be no liability or
obligation of the Trust arising hereunder to reimburse any
Shareholder for taxes paid by reason of such Shareholder's
ownership of Shares or for losses suffered by reason of any changes
in value of any Trust assets.
ARTICLE IX
----------
MISCELLANEOUS
-------------
DURATION, TERMINATION AND REORGANIZATION OF TRUST
- - -------------------------------------------------
SECTION 1. Unless terminated as provided herein, the Trust
shall continue without limitation of time. The Trust may be
terminated at any time by the Trustees by written notice to the
Shareholders without a vote of the Shareholders of the Trust or by
the vote of the Shareholders entitled to vote more than fifty
percent (50%) of the votes of each series or class entitled to be
cast on the matter. Any series or class of Shares may be
terminated at any time by the Trustees by written notice to the
Shareholders of such series or class without a vote of the
Shareholders of such series or class or by the vote of the
Shareholders of such series or class entitled to vote more than
fifty percent (50%) of the votes entitled to be cast on the matter.
Upon termination of the Trust or of any one or more series or
classes of Shares, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, of the particular series or class as may be determined
by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce to the extent necessary
the remaining assets of the particular series to distributable form
in cash or other securities, or any combination thereof, and
distribute the proceeds to the Shareholders of the series or class
involved, ratably according the number of Shares of such series or
class held by the several Shareholders of such series or class on
the date of termination. Any such distributions with respect to
any series which has one or more classes of Shares outstanding
shall be made ratably to such classes in the same proportion as the
number of Shares of each class bears to the total number of Shares
of the series, except to the extent otherwise required or permitted
by the preferences and special or relative rights or privileges of
any classes of Shares of any such series.
At any time by the affirmative vote of the Shareholders of the
affected series entitled to vote more than fifty percent (50%) of
the votes entitled to be cast on the matter, the Trustees may sell,
convey and transfer the assets of the Trust, or the assets
belonging to any one or more series, to another trust, partnership,
association or corporation organized under the laws of any state of
the United States, or to the Trust to be held as assets belonging
to another series of the Trust, in exchange for cash, shares or
other securities (including, in the case of a transfer to another
series of the Trust, Shares of such other series) with such
transfer being made subject to or with the assumption by the
transferee of, the liabilities belonging to each series the assets
of which are so distributed. Following such transfer, the Trustees
shall distribute such cash, shares or other securities (giving due
effect to the assets and liabilities belonging to and any other
differences among the various series the assets belonging to which
have so been transferred) among the Shareholders of the series the
assets belonging to which have been so transferred; and if all the
assets of the Trust have been so distributed, the Trust shall be
terminated.
FILING OF COPIES, REFERENCES, HEADINGS
- - --------------------------------------
SECTION 2. The original or a copy of this instrument and of
each amendment hereto shall be kept at the office of the Trust
where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust
with the Secretary of State of The Commonwealth of Massachusetts
and with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone
dealing with the Trust may rely on a certificate by any officer of
the Trust as to whether or not any such amendments have been made
and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy
certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in
any such amendment, references to this instrument, and all
expressions like "herein", "hereof", and "hereunder", shall be
deemed to refer to this instrument as amended from time to time.
Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of
which shall be deemed an original.
APPLICABLE LAW
- - --------------
SECTION 3. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of
said Commonwealth. The Trust shall be of the type commonly called
a Massachusetts business trust, and without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
AMENDMENTS
- - ----------
SECTION 4. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then
Trustees when authorized so to do by vote of Shareholders holding
more than fifty percent (50%) of the Shares of each series entitled
to vote, except that an amendment which in the determination of the
Trustees shall affect the holders of one or more series or classes
of Shares but not the holders of all outstanding series and classes
shall be authorized by vote of the Shareholders holding more than
fifty percent (50%) of the Shares entitled to vote of each series
or class affected and no vote of Shareholders of a series or class
not affected shall be required. Amendments having the purpose of
changing the name of the Trust or of supplying any omission, curing
any ambiguity or curing, correcting or supplementing any provision
which is defective or inconsistent with the 1940 Act or with the
requirements of the Internal Revenue Code and the regulations
thereunder for the Trust's obtaining the most favorable treatment
thereunder available to regulated investment companies shall not
require authorization by Shareholder vote.
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands and seals for themselves and their assigns, as of this 27th
day of May, 1994.
(SEAL)
/s/ Charles M. Kierscht
-----------------------------------
Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
(signatures continue)
<PAGE>
/s/ David W. Belin
-----------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
-----------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
-----------------------------------
Donald L. Dunaway, Trustee
235A North Elm Grove Road
Brookfield, Wisconsin 53005
/s/ Robert B. Hoffman
-----------------------------------
Robert B. Hoffman, Trustee
1448 North Lake Shore Drive, Apt. 7-8A
Chicago, IL 60610
/s/ Donadl R. Jones
-----------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
/s/ Charles M. Kierscht
------------------------------------
Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
/s/ William P. Sommers
------------------------------------
William P. Sommers, Trustee
2181 Parkside Ave.
Hillsborough, California 94010
/s/ Stephen B. Timbers
------------------------------------
Stephen B. Timbers, Trustee
1448 North Lake Shore Drive,
Apt. 12 1/2 C
Chicago, Illinois 60610
<PAGE>
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
Then personally appeared the afore-named David W. Belin, Lewis
A. Burnham, Donald L. Dunaway, Robert B. Hoffman, Donald R. Jones,
Charles M. Kierscht, William P. Sommers and Stephen B. Timbers who
acknowledged the foregoing instrument to be their free act and
deed, before me this 27th day of May, 1994.
/s/ Mary A. McCallister
----------------------------
NOTARY PUBLIC
Exhibit 77Q(d)
Kemper Adjustable Rate U.S. Government Fund
Form N-SAR for the period ended 8/31/94
File No. 811-5195
KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
WRITTEN INSTRUMENT ESTABLISHING
AND DESIGNATING SEPARATE CLASSES OF SHARES
------------------------------------------
The undersigned constitute all the Trustees of Kemper
Adjustable Rate U.S. Government Fund (the "Fund"), a Massachusetts
business trust governed by an Amended and Restated Agreement and
Declaration of Trust dated May 27, 1994 (the "Amended Declaration
of Trust"). This instrument is executed pursuant to Section 1 of
Article III of the Amended Declaration of Trust in order to
establish and designate separate classes of shares of any series of
the Fund, and it is based in part upon resolutions of the Board of
Trustees of the Fund adopted at a meeting on January 14, 1994.
WHEREAS, Under the Amended Declaration of Trust the Board of
Trustees has the authority, in its discretion and without
shareholder approval, to divide the shares of any series of the
Fund into separate classes of shares;
WHEREAS, This Board of Trustees has previously approved,
subject to various conditions, the division of the shares of each
series of the Fund into four classes of shares, to be named "Class
A Shares," "Class B Shares," "Class C Shares" and "Class I Shares;"
WHEREAS, This Board of Trustees deems it desirable and in the
best interests of the Fund to divide the shares of each series of
the Fund, whether now existing or hereafter created (the "series"),
into four separate classes of shares to be named, as previously
indicated, "Class A Shares," "Class B Shares," "Class C Shares" and
"Class I Shares" and to provide investors with a conversion feature
from Class B Shares to the Class A Shares, which conversion feature
would thereby eliminate any distribution services fee then in
effect under any plan adopted pursuant to Rule 12b-1 of the
Investment Company Act of 1940 ("1940 Act") for such Class B
Shares; and
WHEREAS, This Board of Trustees believes that the creation of
four separate classes of shares as provided herein will be in the
best interests of and will have no negative effects upon the
current shareholders of the Fund;
NOW, THEREFORE, the establishment and designation of separate
classes of shares of any series of the Fund is approved in
accordance with the following provisions:
1. Subject to the conditions hereinafter set forth, the
shares of any series shall be divided into four classes to be known
respectively as the "Class A Shares," the "Class B Shares," the
"Class C Shares" and the "Class I Shares," which classes shall have
such preferences and special or relative rights and privileges as
may be determined from time to time by this Board of Trustees
subject always to the Amended Declaration of Trust and the 1940 Act
and the rules and regulations thereunder.
2. Subject to the terms of the Amended Declaration of Trust,
the Class A Shares, Class B Shares, Class C Shares and Class I
Shares will have the same rights and privileges except that:
(A) the Class A Shares
(1) shall be sold subject to an initial sales charge as
described in the prospectus for the Fund as from time to
time in effect or shall be issued to shareholders in
connection with the conversion feature as hereinafter
described;
(2) shall have an administrative service fee;
(3) shall not have a plan of distribution adopted under
Rule 12b-1 of the 1940 Act ("Rule 12b-1 plan") and no fees
payable under the Rule 12b-1 plans for the Class B Shares
or Class C Shares shall be allocated or charged to the
Class A Shares; and
(4) shall have such dividend reinvestment, exchange and
redemption rights and privileges as may be described in
the prospectus for the Fund as from time to time in
effect; and
(B) the Class B Shares
(1) shall be sold without an initial sales charge but
subject to a contingent deferred sales charge imposed upon the
redemption of the Class B shares as described in the
prospectus of the Fund as from time to time in effect;
(2) shall have an administrative service fee;
(3) shall have a Rule 12b-1 plan and any fees payable
from time to time under such plan shall be allocated and
charged to, and any voting rights with respect to such
plan shall be exercisable by, the Class B Shares only;
(4) shall convert to Class A Shares within a specified
number of years as hereinafter described; and
(5) shall have such purchase, dividend reinvestment,
exchange and redemption rights and privileges associated
therewith as may be described in the prospectus for the Fund
as from time to time in effect; and
(C) the Class C Shares
(1) shall be sold without any initial sales charge or any
contingent deferred sales charge;
(2) shall have an administrative service fee;
(3) shall have a Rule 12b-1 plan and any fees payable
from time to time under such plan shall be allocated and
charged to, and any voting rights with respect to such
plan shall be exercisable by, the Class C Shares only; and
(4) shall have such purchase, dividend reinvestment,
exchange and redemption rights and privileges associated
therewith as may be described in the prospectus for the Fund
as from time to time in effect; and
(D) the Class I Shares
(1) shall be sold without any initial sales charge or any
contingent deferred sales charge;
(2) shall not have an administrative service fee;
(3) shall not have a Rule 12b-1 plan and no fees payable
under the plans for the Class B Shares or Class C Shares
shall be allocated or charged to the Class I Shares; and
(4) shall have such dividend reinvestment, exchange and
redemption rights and privileges as may be described in
the prospectus for the Fund as from time to time in
effect.
3. Any shares of the Fund that are issued and outstanding at
the time when shares of the Fund are effectively divided into
separate classes of shares as set forth above shall be classified
as Class A Shares.
4. Class A Shares of a series shall be issued to holders of
Class B Shares of the same series pursuant to the following
described conversion feature:
(A) Class B Shares will convert to Class A Shares six
years after issuance of such Class B Shares; provided,
however, that any Class B Shares issued in exchange for shares
originally classified as Initial Shares of Kemper Portfolios,
formerly known as Kemper Investment Portfolios (KP), whether
in connection with a reorganization with a series of KP or
otherwise, shall convert to Class A Shares seven years after
issuance of such Initial Shares if such Initial Shares were
issued prior to February 1, 1991;
(B) Class B Shares issued upon reinvestment of income and
capital gain dividends and other distributions will convert
to Class A Shares on a pro rata basis with other Class B
Shares; and
(C) Conversion to Class A Shares shall be based upon the
relative net asset values of the Class A Shares and the Class
B Shares at the time of conversion.
IN WITNESS WHEREOF, the undersigned have this 27th day of May,
1994 signed these presents.
/s/ Charles M. Kierscht
-----------------------------------
Charles M. Kierscht
321 Princeton Road
Hinsdale, Illinois 60521
(signatures continue)
<PAGE>
/s/ David W. Belin
-----------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
-----------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
-----------------------------------
Donald L. Dunaway, Trustee
235A North Elm Grove Road
Brookfield, Wisconsin 53005
/s/ Robert B. Hoffman
-----------------------------------
Robert B. Hoffman, Trustee
1448 North Lake Shore Drive, Apt. 7-8A
Chicago, IL 60610
/s/ Donald R. Jones
-----------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
/s/ William P. Sommers
-----------------------------------
William P. Sommers, Trustee
2181 Parkside Ave.
Hillsborough, California 94010
/s/ Stephen B. Timbers
-----------------------------------
Stephen B. Timbers, Trustee
1448 North Lake Shore Drive,
Apt. 12 1/2 C
Chicago, Illinois 60610
Exhibit 77Q(e)
Kemper Adjustable Rate U.S. Government Fund
Form N-SAR for the period ended 8/31/94
File No. 811-5195
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 28th day of May, 1994, by and between
KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND, a Massachusetts
business trust (the "Fund"), and KEMPER FINANCIAL SERVICES,
INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment
company registered under the Investment Company Act of 1940, the
shares of beneficial interest ("Shares") of which are registered
under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate
series or portfolios with each representing the interests in a
separate portfolio of securities and other assets;
WHEREAS, the Fund currently offers or intends to offer
Shares in one portfolio, the Initial Portfolio, together with
any other Fund portfolios which may be established later and
served by the Adviser hereunder, being herein referred to
collectively as the "Portfolios" and individually referred to
as a "Portfolio"; and
WHEREAS, the Fund desires at this time to retain the
Adviser to render investment advisory and management services
to the Initial Portfolio, and the 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 Fund hereby employs the Adviser to act as the investment
adviser for the Initial Portfolio and other Portfolios hereunder
and to manage the investment and reinvestment of the assets of
each such Portfolio in accordance with the applicable investment
objectives and policies and limitations, and to administer the
affairs of each such Portfolio to the extent requested by and
subject to the supervision of 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 it; and, in
connection therewith, the 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 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, the 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 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 Adviser's overall responsibilities with
respect to the clients of the Adviser as to which the Adviser
exercises investment discretion. The Fund recognizes that all
research services and research that the Adviser receives or
generates are available for all clients, and that the Fund and
other clients 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 Adviser accepts such employment and agrees during such
period to render such services, to furnish 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
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 in any way or otherwise be deemed an agent
of the Fund. It is understood and agreed that the Adviser, by
separate agreements with the Fund, may also serve the Fund in
other capacities.
2. In the event that the Fund establishes one or more
portfolios other than the Initial Portfolio with respect to
which it desires to retain the Adviser to render investment
advisory and management services hereunder, it shall notify the
Adviser in writing. If the Adviser is willing to render such
services, it shall notify the Fund in writing whereupon such
portfolio or portfolios shall become a Portfolio or Portfolios
hereunder.
3. For the services and facilities described in Section 1, the
Fund will pay to the Adviser at the end of each calendar month,
an investment management fee for each Portfolio computed by
applying the following annual rates to the applicable average
daily net assets of the Portfolio:
<PAGE>
<TABLE>
Applicable Average
Daily Net Assets
<CAPTION>
(Thousands) Annual Rate
----------------- -----------
<S> <C>
$0 - $ 250,000 .55 of 1%
$ 250,000 - $ 1,000,000 .52 of 1%
$ 1,000,000 - $ 2,500,000 .50 of 1%
$ 2,500,000 - $ 5,000,000 .48 of 1%
$ 5,000,000 - $ 7,500,000 .45 of 1%
$ 7,500,000 - $10,000,000 .43 of 1%
$10,000,000 - $12,500,000 .41 of 1%
Over $12,500,000 .40 of 1%
</TABLE>
The fee as computed above shall be computed separately for,
and charged as an expense of, each Portfolio based upon the
average daily net assets of such Portfolio. 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 Adviser to the Fund under this Agreement
are not to be deemed exclusive, and the Adviser shall be free
to render similar services or other services to others so long
as its services hereunder are not impaired thereby.
5. In addition to the fee of the Adviser, the Fund shall assume
and pay any expenses for services rendered by a custodian for
the safekeeping of the Fund's securities or other property, for
keeping its books of account, for any other charges of the
custodian, and for calculating the net asset value of the Fund
as provided in the prospectus of the Fund. The Adviser shall
not be required to pay and the Fund shall assume and pay the
charges and expenses of its operations, including compensation
of the trustees (other than those affiliated with the Adviser),
charges and expenses of independent auditors, of legal counsel,
of any transfer or dividend disbursing agent, and of any
registrar of the Fund, costs of acquiring and disposing of
portfolio securities, interest, if any, on obligations incurred
by the Fund, costs of share certificates and of reports,
membership dues in the Investment Company Institute or any
similar organization, costs of reports and notices to
shareholders, other like miscellaneous expenses and all taxes
and fees payable to federal, state or other governmental
agencies on account of the registration of securities issued by
the Fund, filing of trust documents or otherwise. The Fund
shall not pay or incur any obligation for any expenses for which
the Fund intends to seek reimbursement from the Adviser as
herein provided without first obtaining the written approval of
the Adviser. The Adviser shall arrange, if desired by the Fund,
for officers or employees of the 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.
If expenses borne by the Fund for those Portfolios which
the Adviser manages in any fiscal year (including the Adviser's
fee, but excluding interest, taxes, fees incurred in acquiring
and disposing of portfolio securities, distribution services
fees, extraordinary expenses and any other expenses excludable
under state securities law limitations) exceed any applicable
limitation arising under state securities laws, the Adviser will
reduce its fee or reimburse the Fund for any excess to the
extent required by such state securities laws. If for any month
the expenses of the Fund properly chargeable to the income
account shall exceed 1/12 of the percentage of average net
assets allowable as expenses, the payment to the Adviser for
that month shall be reduced and if necessary the Adviser shall
make a refund payment to the Fund so that the total net expense
will not exceed such percentage. As of the end of the Fund's
fiscal year, however, the foregoing computations and payments
shall be readjusted so that the aggregate compensation payable
to the Adviser for the year is equal to the percentage
calculated in accordance with Section 3 hereof of the average
net asset value as determined as described herein throughout the
fiscal year, diminished to the extent necessary so that the
total of the aforementioned expense items of the Fund shall not
exceed the expense limitation. The aggregate of repayments, if
any, by the Adviser to the Fund for the year shall be the amount
necessary to limit the said net expense to said percentage in
accordance with the foregoing.
The net asset value for each Portfolio shall be calculated
in accordance with the provisions of the Fund's prospectus or
as the trustees may determine 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
Portfolio shall be deemed to be the net asset value of such
Portfolio as of the close of business on the last day on which
such calculation was made for the purpose of the foregoing
computations.
6. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are or
may be interested in the Adviser as officers, directors, agents,
shareholders or otherwise, and that the officers, directors,
shareholders and agents of the Adviser may be interested in the
Fund otherwise than as a trustee, officer or agent.
<PAGE>
7. The Adviser shall not be liable for any error of judgment
or of law or for any loss suffered by the Fund 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 Adviser in the performance of its
obligations and duties or by reason of its reckless disregard
of its obligations and duties under this Agreement.
8. This Agreement shall become effective with respect to the
Initial Portfolio on the date hereof and shall remain in full
force until March 1, 1995, unless sooner terminated as
hereinafter provided. This Agreement shall continue in force
from year to year thereafter with respect to each Portfolio, but
only as long as such continuance is specifically approved for
each Portfolio 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 Portfolio, the Adviser may
continue to serve in such capacity for such Portfolio 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 and may be terminated at any time without the
payment of any penalty by the Fund or by the Adviser on sixty
(60) days written notice to the other party. The Fund may
effect termination with respect to any Portfolio by action of
the Board of Trustees or by vote of a majority of the
outstanding voting securities of such Portfolio.
This Agreement may be terminated with respect to any
Portfolio 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 such Portfolio in the event that it shall
have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken
any action which results in a breach of the covenants of the
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 Adviser to receive payments on any unpaid balance of the
compensation described in Section 3 earned prior to such
termination.
9. 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>
10. 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.
11. 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 representa-
tives 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 the Adviser for recovery of that
portion of the investment management fee (or any other liability
of the Fund arising hereunder) allocated to a particular
Portfolio, whether in accordance with the express terms hereof
or otherwise, the Adviser shall have recourse solely against the
assets of that Portfolio to satisfy such claim and shall have
no recourse against the assets of any other Portfolio for such
purpose.
12. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 11 hereof which
shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) the laws of the State of
Illinois.
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 Fund and the Adviser have caused
this Agreement to be executed as of the day and year first above
written.
KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
By: /s/ John Peters
----------------------------------------
Title: Sr. Vice President
-------------------------------------
ATTEST:
/s/ Philip Collora
- - ----------------------------
Title: Asst. Secretary
----------------------
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
----------------------------------------
Title: Sr. Vice President
--------------------------------------
ATTEST:
/s/ David F. Dierenfeldt
- - ---------------------------
Title: Asst. Secretary
---------------------
LKW|C:\WP51\LINDAK\MILLER\EDGAR\OPEN.END\KARGF\INVESTAG|102594
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
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</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE US GOVERNMENT FUND
<SERIES>
<NUMBER> 0
<NAME> COMBINED FOR ALL CLASSES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<INVESTMENTS-AT-COST> 204,237
<INVESTMENTS-AT-VALUE> 202,918
<RECEIVABLES> 9,771
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 212,689
<PAYABLE-FOR-SECURITIES> 5,119
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,755
<TOTAL-LIABILITIES> 9,874
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 211,063
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,363
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (8,292)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,319)
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,046
<OTHER-INCOME> 0
<EXPENSES-NET> 2,099
<NET-INVESTMENT-INCOME> 8,947
<REALIZED-GAINS-CURRENT> (4,926)
<APPREC-INCREASE-CURRENT> (2,831)
<NET-CHANGE-FROM-OPS> 1,190
<EQUALIZATION> 36
<DISTRIBUTIONS-OF-INCOME> 10,570
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (9,879)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,161
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,099
<AVERAGE-NET-ASSETS> 224,788
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
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PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
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</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE US GOVERNMENT FUND
<SERIES>
<NUMBER> 01
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 23,791
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 198,122
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 114,850
<NUMBER-OF-SHARES-REDEEMED> 127,781
<SHARES-REINVESTED> 7,682
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.680
<PER-SHARE-NII> .340
<PER-SHARE-GAIN-APPREC> (.290)
<PER-SHARE-DIVIDEND> .400
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.330
<EXPENSE-RATIO> .009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
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</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE US GOVERNMENT FUND
<SERIES>
<NUMBER> 02
<NAME> CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 462
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,849
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,113
<NUMBER-OF-SHARES-REDEEMED> 261
<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.370
<PER-SHARE-NII> .070
<PER-SHARE-GAIN-APPREC> (.040)
<PER-SHARE-DIVIDEND> .080
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.320
<EXPENSE-RATIO> .020
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PER SHARE AND RATIO INFORMATION IS SHOWN AT THE CLASS LEVEL. ALL OTHER
INFORMATION IS COMBINED FOR ALL CLASSES.
</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE US GOVERNEMT FUND
<SERIES>
<NUMBER> 03
<NAME> CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 101
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 844
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 973
<NUMBER-OF-SHARES-REDEEMED> 125
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.370
<PER-SHARE-NII> .080
<PER-SHARE-GAIN-APPREC> (.040)
<PER-SHARE-DIVIDEND> .080
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.330
<EXPENSE-RATIO> .019
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
KEMPER FINANCIAL SERVICES, INC.
120 S. LaSalle Street, Chicago, IL 60603 312/781-1121
October 26, 1994
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Filing Desk, Stop 1-4
Re: KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
(FILE NOS. 33-14832 and 811-5195)
Dear Sir or Madam:
Enclosed pursuant to Rule 30b-1 under the Investment Company Act of
1940 is the Form N-SAR for the above-referenced Registrant for the
twelve-month period ended August 31, 1994. A wire in the amount of
$125 for the filing fee has been sent to the Mellon Bank.
Very truly yours,
Maureen A. Miller
Associate Counsel
MAM/lkw
Enclosures
cc: Mr. Philip J. Collora/KFS
