<PAGE> PAGE 1
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010 B000001 8-47765
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<PAGE> PAGE 2
012 C020001 MO
012 C030001 64105
013 A000001 ERNST & YOUNG LLP
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013 B030001 60606
014 A000001 KEMPER DISTRIBUTORS, INC.
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015 B000002 C
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020 C000003 30
020 A000004 MCGRAW-HILL SECURITIES TRADING, INC.
020 B000004 13-2671951
020 C000004 23
020 A000005 ALEX BROWN & SONS INCORPORATED
020 B000005 52-0256630
020 C000005 23
020 A000006 BRIDGE TRADING COMPANY
020 B000006 43-1450530
020 C000006 20
020 A000007 SMITH BARNEY SHEARSON INC.
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020 C000007 20
<PAGE> PAGE 3
020 A000008 CS FIRST BOSTON CORPORATION
020 B000008 13-5659485
020 C000008 19
020 A000009 LEHMAN BROTHERS
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022 C000005 4942
022 D000005 5483
022 A000006 CHEMICAL BANK
022 B000006 13-4994650
022 C000006 8992
022 D000006 0
022 A000007 CANTOR FITZGERALD & CO., INC.
022 B000007 95-1786286
022 C000007 1598
022 D000007 2744
022 A000008 MORGAN STANLEY & CO. INCORPORATED
022 B000008 13-2655998
022 C000008 1326
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022 C000009 1461
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022 A000010 SMITH/BARNEY SHEARSON
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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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> 0000823342
<NAME> KEMPER BLUE CHIP FUND
<SERIES>
<NUMBER> 0
<NAME> COMBINED FOR ALL CLASSES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 141,845
<INVESTMENTS-AT-VALUE> 164,656
<RECEIVABLES> 7,272
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171,928
<PAYABLE-FOR-SECURITIES> 2,591
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,071
<TOTAL-LIABILITIES> 3,662
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 130,375
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1,262
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 13,818
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22,811
<NET-ASSETS> 168,266
<DIVIDEND-INCOME> 2,589
<INTEREST-INCOME> 1,729
<OTHER-INCOME> 0
<EXPENSES-NET> (2,092)
<NET-INVESTMENT-INCOME> 2,226
<REALIZED-GAINS-CURRENT> 13,899
<APPREC-INCREASE-CURRENT> 15,753
<NET-CHANGE-FROM-OPS> 31,878
<EQUALIZATION> (252)
<DISTRIBUTIONS-OF-INCOME> (2,340)
<DISTRIBUTIONS-OF-GAINS> (244)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,094
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,092)
<AVERAGE-NET-ASSETS> 155,831
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<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> 0000823342
<NAME> KEMPER BLUE CHIP FUND
<SERIES>
<NUMBER> 01
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
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<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OTHER> 0
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<NUMBER-OF-SHARES-REDEEMED> (3,870)
<SHARES-REINVESTED> 198
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<GROSS-EXPENSE> 0
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<PER-SHARE-NAV-BEGIN> 12.33
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> 2.57
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.22)
<RETURNS-OF-CAPITAL> 0
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<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> 0000823342
<NAME> KEMPER BLUE CHIP FUND
<SERIES>
<NUMBER> 02
<NAME> CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
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</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> 0000823342
<NAME> KEMPER BLUE CHIP FUND
<SERIES>
<NUMBER> 03
<NAME> CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
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<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> 58
<SHARES-COMMON-PRIOR> 9
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 864
<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> 102
<NUMBER-OF-SHARES-REDEEMED> (53)
<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
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 12.32
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> 2.62
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.88
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</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 October 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 October 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
December 15, 1995
Kemper Funds Exhibit A
October 31, 1995
Kemper Total Return Fund
Kemper International Fund
Kemper Blue Chip Fund
Exhibit 77C
Kemper Blue Chip Fund
Form N-SAR for the period ended 10/31/95
File No. 811-5357
Page 1
A special meeting of Registrant's shareholders was held on
September 19, 1995. Votes regarding the items submitted to
shareholder vote are set forth below.
Item 1: Election of the Board of Trustees
David W. Belin
Vote Number
---- -----------
FOR 6,348,462
WITHHELD 234,348
Lewis A. Burnham
Vote Number
---- -----------
FOR 6,348,462
WITHHELD 234,348
Donald L. Dunaway
Vote Number
---- -----------
FOR 6,351,095
WITHHELD 231,715
Robert B. Hoffman
Vote Number
---- -----------
FOR 6,351,095
WITHHELD 231,715
Donald R. Jones
Vote Number
---- -----------
FOR 6,351,095
WITHHELD 231,715
David B. Mathis
Vote Number
---- -----------
FOR 6,341,879
WITHHELD 240,931
Exhibit 77C
Kemper Blue Chip Fund
Form N-SAR for the period ended 10/31/95
File No. 811-5357
Page 2
Shirley D. Peterson
Vote Number
---- -----------
FOR 6,345,829
WITHHELD 236,981
William P. Sommers
Vote Number
---- -----------
FOR 6,342,537
WITHHELD 240,273
Stephen B. Timbers
Vote Number
---- -----------
FOR 6,351,095
WITHHELD 231,715
Item 2: Selection of Independent Auditors
Vote Number
---- -----------
FOR 6,288,643
AGAINST 90,943
ABSTAIN 203,224
Exhibit 77C
Kemper Blue Chip Fund
Form N-SAR for the period ended 10/31/95
File No. 811-5357
Page 3
Item 3: New Investment Management Agreement
Vote Number
---- ----------
FOR 6,164,397
AGAINST 124,310
ABSTAIN 294,103
Item 4B: New Rule 12b-1 Distribution Plan (For Class B
Shareholders Only)
Vote Number
---- ----------
FOR 330,248
AGAINST 12,760
ABSTAIN 19,633
Item 4C: New Rule 12b-1 Distribution Plan (For Class C
Shareholders Only)
Vote Number
---- ----------
FOR 26,280
AGAINST 253
ABSTAIN 2,652
MRB|W:\FUNDS\NSAR.EXH\KBCF-O95.77C|121495
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 October 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 October 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 October 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 October 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
December 15, 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 as of the date listed in Exhibit A
attached hereto ("Report Date").
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 Report
Date. Our tests of the operational effectiveness of control
structure policies and procedures were designed to cover the
calculation as of Report Date 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
Report Date.
Kemper Funds Exhibit A
October 31, 1995
Kemper Total Return Fund
Kemper International Fund
Kemper Blue Chip Fund
