<PAGE> PAGE 1
000 B000000 08/31/95
000 C000000 0000814955
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
001 B000000 811-5195
001 C000000 3127811121
002 A000000 120 SOUTH LASALLE STREET
002 B000000 CHICAGO
002 C000000 IL
002 D010000 60603
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
007 C011100 11
007 C011200 12
007 C011300 13
007 C011400 14
007 C011500 15
007 C011600 16
007 C011700 17
007 C011800 18
007 C011900 19
007 C012000 20
008 A000001 KEMPER FINANCIAL SERVICES, INC.
008 B000001 A
008 C000001 801-6634
008 D010001 CHICAGO
008 D020001 IL
008 D030001 60603
010 A000001 KEMPER DISTRIBUTORS, INC.
010 B000001 8-47765
010 C010001 CHICAGO
<PAGE> PAGE 2
010 C020001 IL
010 C030001 60603
011 A000001 KEMPER DISTRIBUTORS, INC.
011 B000001 8-47765
011 C010001 CHICAGO
011 C020001 IL
011 C030001 60603
012 A000001 KEMPER SERVICE COMPANY
012 B000001 84-1713
012 C010001 KANSAS CITY
012 C020001 MO
012 C030001 64105
013 A000001 ERNST & YOUNG LLP
013 B010001 CHICAGO
013 B020001 IL
013 B030001 60606
014 A000001 KEMPER DISTRIBUTORS, INC.
014 B000001 8-47765
014 A000002 KEMPER SECURITIES, INC.
014 B000002 8-37180
015 A000001 INVESTORS FIDUCIARY TRUST COMPANY
015 B000001 C
015 C010001 KANSAS CITY
015 C020001 MO
015 C030001 64105
015 E010001 X
015 A000002 STATE STREET BANK AND TRUST COMPANY
015 B000002 S
015 C010002 BOSTON
015 C020002 MA
015 C030002 02110
015 E010002 X
018 000000 Y
019 A000000 Y
019 B000000 46
019 C000000 KEMPERFNDS
020 A000001 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.
020 B000001 13-5674085
020 C000001 57
020 A000002 GOLDMAN, SACHS & CO.
020 B000002 13-5108880
020 C000002 34
020 A000003 PAINEWEBBER INCORPORATED
020 B000003 13-2638166
020 C000003 8
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
<PAGE> PAGE 3
020 C000010 0
021 000000 99
022 A000001 GOLDMAN SACHS & CO.
022 B000001 13-5108880
022 C000001 212300
022 D000001 60094
022 A000002 PAINEWEBBER INCORPORATED
022 B000002 13-2638166
022 C000002 69680
022 D000002 100482
022 A000003 FIRST BOSTON CORPORATION
022 B000003 13-5659485
022 C000003 81490
022 D000003 44375
022 A000004 LEHMAN BROTHERS
022 B000004 13-2518466
022 C000004 56322
022 D000004 65071
022 A000005 J.P. MORGAN SECURITIES INC.
022 B000005 13-3224016
022 C000005 49036
022 D000005 56964
022 A000006 MERRILL LYNCH, PIERCE, FENNER & SMITH INC.
022 B000006 13-5674085
022 C000006 50698
022 D000006 42996
022 A000007 FREDDIE MAC SECURITIES SALES AND TREASURY
022 B000007 UNKNOWN
022 C000007 44034
022 D000007 48468
022 A000008 KIDDER PEABODY & CO., INC.
022 B000008 13-5650440
022 C000008 29735
022 D000008 45098
022 A000009 DONALDSON, LUFKIN & JENRETTE SECURITIES CORP.
022 B000009 13-2741729
022 C000009 32722
022 D000009 34005
022 A000010 UBS SECURITIES INC.
022 B000010 13-2932996
022 C000010 37356
022 D000010 26090
023 C000000 746724
023 D000000 624735
024 000000 N
025 D000001 0
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
<PAGE> PAGE 4
025 D000007 0
025 D000008 0
026 A000000 Y
026 B000000 Y
026 C000000 Y
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027 000000 Y
028 A010000 6998
028 A020000 573
028 A030000 0
028 A040000 5084
028 B010000 897
028 B020000 500
028 B030000 0
028 B040000 9394
028 C010000 4343
028 C020000 515
028 C030000 0
028 C040000 7529
028 D010000 1788
028 D020000 494
028 D030000 0
028 D040000 7533
028 E010000 1834
028 E020000 459
028 E030000 0
028 E040000 7816
028 F010000 2368
028 F020000 454
028 F030000 0
028 F040000 10429
028 G010000 18228
028 G020000 2995
028 G030000 0
028 G040000 47785
028 H000000 10891
029 000000 Y
030 A000000 183
030 B000000 3.50
030 C000000 0.00
031 A000000 22
031 B000000 0
032 000000 121
033 000000 40
034 000000 Y
035 000000 30
<PAGE> PAGE 5
036 A000000 Y
036 B000000 0
037 000000 N
038 000000 0
039 000000 N
040 000000 Y
041 000000 Y
042 A000000 0
042 B000000 0
042 C000000 0
042 D000000 0
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 100
043 000000 43
044 000000 256
045 000000 Y
046 000000 N
047 000000 Y
048 000000 0.000
048 A010000 250000
048 A020000 0.550
048 B010000 750000
048 B020000 0.520
048 C010000 1500000
048 C020000 0.500
048 D010000 2500000
048 D020000 0.480
048 E010000 2500000
048 E020000 0.450
048 F010000 2500000
048 F020000 0.430
048 G010000 2500000
048 G020000 0.410
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 12500000
048 K020000 0.400
049 000000 N
050 000000 N
051 000000 N
052 000000 N
053 A000000 N
054 A000000 Y
054 B000000 Y
054 C000000 N
<PAGE> PAGE 6
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 N
054 H000000 Y
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 Y
054 N000000 N
054 O000000 N
055 A000000 Y
055 B000000 N
056 000000 Y
057 000000 N
058 A000000 N
059 000000 Y
060 A000000 Y
060 B000000 Y
061 000000 1000
062 A000000 Y
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 7.2
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 10.0
062 N000000 92.6
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 5.8
064 A000000 N
064 B000000 N
066 A000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
070 B010000 N
<PAGE> PAGE 7
070 B020000 N
070 C010000 Y
070 C020000 N
070 D010000 N
070 D020000 N
070 E010000 Y
070 E020000 Y
070 F010000 N
070 F020000 N
070 G010000 Y
070 G020000 Y
070 H010000 N
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 Y
070 J020000 N
070 K010000 Y
070 K020000 N
070 L010000 N
070 L020000 N
070 M010000 N
070 M020000 N
070 N010000 Y
070 N020000 N
070 O010000 Y
070 O020000 N
070 P010000 N
070 P020000 N
070 Q010000 Y
070 Q020000 N
070 R010000 Y
070 R020000 N
071 A000000 489574
071 B000000 567217
071 C000000 158964
071 D000000 308
072 A000000 12
072 B000000 11056
072 C000000 0
072 D000000 0
072 E000000 0
072 F000000 887
072 G000000 312
072 H000000 0
072 I000000 0
072 J000000 451
072 K000000 0
072 L000000 65
072 M000000 14
072 N000000 0
<PAGE> PAGE 8
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 25
072 S000000 10
072 T000000 43
072 U000000 0
072 V000000 0
072 W000000 4
072 X000000 1811
072 Y000000 0
072 Z000000 9245
072AA000000 2498
072BB000000 5799
072CC010000 2153
072CC020000 0
072DD010000 8840
072DD020000 278
072EE000000 0
073 A010000 0.0000
073 A020000 0.0000
073 B000000 0.0000
073 C000000 0.0000
074 A000000 93
074 B000000 0
074 C000000 9396
074 D000000 133142
074 E000000 0
074 F000000 0
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 1358
074 K000000 0
074 L000000 1320
074 M000000 0
074 N000000 145309
074 O000000 15050
074 P000000 83
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 419
074 S000000 0
074 T000000 129757
074 U010000 14911
074 U020000 716
074 V010000 0.00
074 V020000 0.00
074 W000000 0.0000
<PAGE> PAGE 9
074 X000000 13199
074 Y000000 15253
075 A000000 0
075 B000000 162386
076 000000 0.00
077 A000000 Y
077 B000000 Y
077 C000000 N
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 N
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 N
077 Q020000 N
077 Q030000 N
080 A000000 ICI MUTUAL INSURANCE COMPANY
080 C000000 60000
081 A000000 Y
081 B000000 79
082 A000000 N
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
SIGNATURE JEROME L. DUFFY
TITLE TREASURER
<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. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1995 ANNUAL REPORT TO SHAREHOLDERS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
<SERIES>
<NUMBER> 00
<NAME> COMBINED FOR ALL CLASSES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 141,704
<INVESTMENTS-AT-VALUE> 142,538
<RECEIVABLES> 2,678
<ASSETS-OTHER> 93
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 145,309
<PAYABLE-FOR-SECURITIES> 15,050
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 502
<TOTAL-LIABILITIES> 15,552
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 139,617
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 904
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11,598)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 834
<NET-ASSETS> 129,757
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,056
<OTHER-INCOME> 0
<EXPENSES-NET> (1,811)
<NET-INVESTMENT-INCOME> 9,245
<REALIZED-GAINS-CURRENT> (3,301)
<APPREC-INCREASE-CURRENT> 2,153
<NET-CHANGE-FROM-OPS> 8,097
<EQUALIZATION> (591)
<DISTRIBUTIONS-OF-INCOME> (9,118)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (73,058)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (887)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,811)
<AVERAGE-NET-ASSETS> 162,386
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<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. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1995 ANNUAL REPORT TO SHAREHOLDERS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
<SERIES>
<NUMBER> 01
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<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> 14,911
<SHARES-COMMON-PRIOR> 23,791
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 123,808
<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> 4,929
<NUMBER-OF-SHARES-REDEEMED> (14,546)
<SHARES-REINVESTED> 737
<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> 8.33
<PER-SHARE-NII> .48
<PER-SHARE-GAIN-APPREC> (.04)
<PER-SHARE-DIVIDEND> (.47)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.30
<EXPENSE-RATIO> .011
<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. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1995 ANNUAL REPORT TO SHAREHOLDERS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
<SERIES>
<NUMBER> 02
<NAME> CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<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> 582
<SHARES-COMMON-PRIOR> 462
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,836
<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> 605
<NUMBER-OF-SHARES-REDEEMED> (509)
<SHARES-REINVESTED> 24
<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> 8.32
<PER-SHARE-NII> .43
<PER-SHARE-GAIN-APPREC> (.04)
<PER-SHARE-DIVIDEND> (.40)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.31
<EXPENSE-RATIO> .019
<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. THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED FROM THE 1995 ANNUAL REPORT TO SHAREHOLDERS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000814955
<NAME> KEMPER ADJUSTABLE RATE U.S. GOVERNMENT FUND
<SERIES>
<NUMBER> 03
<NAME> CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<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> 134
<SHARES-COMMON-PRIOR> 101
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,113
<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> 169
<NUMBER-OF-SHARES-REDEEMED> (142)
<SHARES-REINVESTED> 6
<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> 8.33
<PER-SHARE-NII> .43
<PER-SHARE-GAIN-APPREC> (.04)
<PER-SHARE-DIVIDEND> (.40)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.32
<EXPENSE-RATIO> .018
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
SUPPLEMENTARY REPORT OF INDEPENDENT AUDITORS
Board of Trustees
Kemper Funds
In planning and performing our audit of the financial statements of
each of the Kemper Funds listed in Exhibit A attached hereto (the
"Funds") for the year ended August 31, 1995, we considered their
internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on their financial statements and
to comply with the requirements of Form N-SAR, not to provide
assurance on the internal control structure.
The management of the Funds is responsible for establishing and
maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments 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, 1995.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
October 13, 1995
Kemper Funds Exhibit A
August 31, 1995
Kemper Adjustable Rate U.S. Government Fund
Kemper State Tax-Free Income Series:
Kemper California Tax-Free Income Fund
Kemper Florida Tax-Free Income Fund
Kemper Michigan Tax-Free Income Fund
Kemper New Jersey Tax-Free Income Fund
Kemper New York Tax-Free Income Fund
Kemper Ohio Tax-Free Income Fund
Kemper Pennsylvania Tax-Free Income Fund
Kemper Texas Tax-Free Income Fund
Report of Independent Auditors
The Board of Trustees
Kemper Funds
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 each of the Kemper
Funds listed in Exhibit A attached hereto (the "Funds"). 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 Funds' 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, 1995. 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, 1995. 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 Funds
and to their auditors to be taken into consideration, along with
information about the internal control structure at the Funds,
when making assessments of control risks for the Funds. 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, 1995.
The relative effectiveness and significance of specific policies
and procedures at KFS and their effect on assessments of control
risk at the Funds are dependent on their interaction with the
policies, procedures, and other factors present at the Funds.
The description and tests of operating effectiveness of the
policies and procedures at KFS is as of August 31, 1995. 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
Funds and their auditors, and the Securities and Exchange
Commission.
ERNST & YOUNG
LLP
Chicago, Illinois
October 13, 1995
SECTION I
Description of the System
Kemper Financial Services, Inc. ("KFS") implemented plans which
allow each of the Kemper Funds listed in Exhibit A attached
hereto (the "Funds") to issue multiple classes of shares.
Under the multiple distribution system, the Funds provide
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 Funds 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 each 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 objectives of each 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 for each
Fund 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 Final Reviewer notes any unusual fluctuation 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, 1995.
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, are
sufficient to provide reasonable, but not absolute, assurance
that the specified control objectives were achieved as of August
31, 1995. Our tests of the operational effectiveness of control
structure policies and procedures were designed to cover the
calculation as of August 31, 1995 for each of the procedures
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, 1995.
Kemper Funds Exhibit A
August 31, 1995
Kemper Adjustable Rate U.S. Government Fund
Kemper State Tax-Free Income Series:
Kemper California Tax-Free Income Fund
Kemper Florida Tax-Free Income Fund
Kemper Michigan Tax-Free Income Fund
Kemper New Jersey Tax-Free Income Fund
Kemper New York Tax-Free Income Fund
Kemper Ohio Tax-Free Income Fund
Kemper Pennsylvania Tax-Free Income Fund
Kemper Texas Tax-Free Income Fund
