KEMPER BLUE CHIP FUND
485APOS, 2000-11-30
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              Filed electronically with the Securities and Exchange
                         Commission on November 30, 2000

                                                               File No. 33-17777
                                                               File No. 811-5357

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM N-1A


             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933   /___/

                           Pre-Effective Amendment No.___              /___/
                         Post-Effective Amendment No. 19               /_X_/
                                                      --
                                     And/or
                        REGISTRATION STATEMENT UNDER THE
                         INVESTMENT COMPANY ACT OF 1940                /___/

                                Amendment No. 19                       /_X_/
                                              --


                              KEMPER BLUE CHIP FUND
                              ---------------------
               (Exact Name of Registrant as Specified in Charter)

                  222 South Riverside Plaza, Chicago, IL 60606
                  --------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

               Registrant's Telephone Number, including Area Code:
                                  312-537-7000

                 Philip J. Collora, Vice President and Secretary
                              Kemper Blue Chip Fund
                  222 South Riverside Plaza, Chicago, IL 60606
                  --------------------------------------------
                     (Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):

/___/    Immediately upon filing pursuant to paragraph (b)
/___/    60 days after filing pursuant to paragraph (a) (1)
/___/    75 days after filing pursuant to paragraph (a) (2)
/___/    On __________________ pursuant to paragraph (b)
/_X_/    On February 1, 2001 pursuant to paragraph (a) (1)
/___/    On __________________ pursuant to paragraph (a) (2) of Rule 485
/___/    On __________________ pursuant to paragraph (a) (3) of Rule 485

         If appropriate, check the following box:
/___/    This post-effective amendment designates a new effective date for a
         previously filed post-effective amendment



<PAGE>

                                                                       LONG-TERM

                                                                       INVESTING

                                                                            IN A

                                                                      SHORT-TERM

                                                                       WORLD(SM)

     February 1, 2001

Prospectus
                                                KEMPER EQUITY FUNDS/GROWTH STYLE

                                                   Kemper Aggressive Growth Fund

                                                           Kemper Blue Chip Fund

                                                             Classic Growth Fund

                                                              Kemper Growth Fund

                                         Kemper Small Capitalization Equity Fund

                                                          Kemper Technology Fund

                                                        Kemper Total Return Fund

                                                        Kemper Value+Growth Fund


As with all mutual funds, the Securities and Exchange Commission (SEC) does not
approve or disapprove these shares or determine whether the information in this
prospectus is truthful or complete. It is a criminal offense for anyone to
inform you otherwise.

[LOGO] KEMPER FUNDS

<PAGE>

HOW THE                                               INVESTING IN
FUNDS WORK                                            THE FUNDS

  2 Kemper Aggressive       32 Kemper Technology      60 Choosing A Share
    Growth Fund                Fund                      Class

  8 Kemper Blue Chip        38 Kemper Total Return    65 How To Buy Shares
    Fund                       Fund
                                                      66 How To Exchange Or
 14 Kemper Classic          44 Kemper Value+Growth       Sell Shares
    Growth Fund                Fund
                                                      67 Policies You Should
 20 Kemper Growth Fund      50 Other Policies And        Know About
                               Risks
                                                      73 Understanding
 26 Kemper Small            51 Financial Highlights      Distributions And
    Capitalization Equity                                Taxes
    Fund



<PAGE>


How The Funds Work

These funds invest mainly in common stocks, as a way of seeking growth of your
investment.

The funds invest mainly in growth companies: those that seem poised for
above-average growth of earnings. Each fund pursues its own goal.

Remember that mutual funds are investments, not bank deposits. They're not
guaranteed or insured by the FDIC or any other government agency, and you could
lose money by investing in them.


<PAGE>

TICKER SYMBOLS CLASS: A) KGGAX  B) KGGBX  C) KGGCX


Kemper
Aggressive Growth Fund

                  FUND GOAL The fund seeks capital appreciation through the use
                  of aggressive investment techniques.


                                       2
<PAGE>

--------------------------------------------------------------------------------
The Fund's Main Strategy

                     The fund normally invests at least 65% of total assets in
                     equities -- mainly common stocks -- of U.S. companies.
                     Although the fund can invest in stocks of any size and
                     market sector, it may invest in initial public offerings
                     (IPOs) and in growth-oriented market sectors, such as the
                     technology sector. In fact, the fund's stock selection
                     methods may at times cause it to invest more than 25% of
                     total assets in a single sector. A sector is made up of
                     numerous industries.

                     In choosing stocks, the portfolio managers look for
                     individual companies in growing industries that have
                     innovative products and services, competitive positions,
                     repeat customers, effective management, control over costs
                     and prices and strong balance sheets and earnings growth.

                     To a limited extent, the managers may seek to take
                     advantage of short-term trading opportunities that result
                     from market volatility. For example, the managers may
                     increase positions in favored companies when prices fall
                     and may sell fully valued companies when prices rise.

                     The fund normally will sell a stock when the managers
                     believe its price is unlikely to go much higher, its
                     fundamental qualities have deteriorated, other investments
                     offer better opportunities or to adjust its emphasis in a
                     given industry.

[ICON]
--------------------------------------------------------------------------------
OTHER INVESTMENTS

While the fund invests mainly in U.S. common stocks, it could invest up to 25%
of total assets in foreign securities. Also, while the fund is permitted to use
various types of derivatives (contracts whose value is based on, for example,
indices, currencies or securities), the managers don't intend to use them as
principal investments and might not use them all.


                                       3
<PAGE>

--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     As with most stock funds, the most important factor with
                     this fund is how stock markets perform. When stock prices
                     fall, you should expect the value of your investment to
                     fall as well. The fact that the fund may focus on one or
                     more sectors increases this risk, because factors affecting
                     those sectors could affect fund performance.

                     Similarly, because the fund isn't diversified and can
                     invest a larger percentage of assets in a given stock than
                     a diversified fund, factors affecting that stock could
                     affect fund performance. Because a stock represents
                     ownership in its issuer, stock prices can be hurt by poor
                     management, shrinking product demand and other business
                     risks. These may affect single companies as well as groups
                     of companies. Stocks of small companies (including most
                     that issue IPOs) can be highly volatile because their
                     prices often depend on future expectations.

                     Other factors that could affect performance include:

                     o the managers could be wrong in their analysis of
                       companies, sectors, economic trends or other matters

                     o growth stocks may be out of favor for certain periods

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

This fund may be appropriate for long-term investors who can accept an
above-average level of risk to their investment in exchange for potentially
higher performance.

                                       4
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows how the total returns for the fund's Class A shares have
varied from year to year, which may give some idea of risk. The chart doesn't
reflect sales loads; if it did, returns would be lower. The table shows how the
fund's returns over different periods average out.

For context, the table has two broad-based market indices (which, unlike the
fund, have no fees or expenses). All figures on this page assume reinvestment of
dividends and distributions. As always, past performance is no guarantee of
future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1997       33.38
1998       13.98
1999       49.06
2000        0.00

Best quarter: %, Q_ 19__
Worst quarter: %, Q_ 19__


--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
                                         Since 12/31/99    Since 12/31/96
                                         1 Year            Life of Class
--------------------------------------------------------------------------------
Class A                                  %                 %
--------------------------------------------------------------------------------
Class B
--------------------------------------------------------------------------------
Class C
--------------------------------------------------------------------------------
Index 1
--------------------------------------------------------------------------------
Index 2
--------------------------------------------------------------------------------

Index 1: Standard and Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

Index 2: Russell 3000 Index, an unmanaged index of 3,000 of the largest
capitalized companies that are domiciled in the United States and whose common
stocks trade there.

The table includes the effects of maximum sales loads. In both the table and the
chart, total returns for 1997 through 1999 would have been lower if operating
expenses hadn't been reduced.

--------------------------------------------------------------------------------

                                       5
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                        Class A  Class B  Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %
of offering price)                                5.75%    None      None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of
redemption proceeds)                              None*    4.00%     1.00%
--------------------------------------------------------------------------------

Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

Based on the figures above, this example is designed to help you compare the
expenses of each share class to those of other mutual funds. The example assumes
operating expenses remain the same and that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

                                       6
<PAGE>
<PAGE>


--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management, bringing together
professionals from many investment disciplines. Supporting each team are Scudder
Kemper's many economists, research analysts, traders and other investment
specialists, located across the United States and around the world.

For serving as the fund's advisor, Scudder Kemper receives a management fee,
which was __% of the fund's average daily net assets for the most recent fiscal
year. This fee is based on a rate of 0.65% of average daily net assets which is
adjusted up or down (to as low as 0.45% or as high as 0.85%) depending on how
the fund's Class A shares performed relative to the S&P 500 Index.

[ICON]
--------------------------------------------------------------------------------

FUND MANAGERS

                  The following people handle the fund's day-to-day
                  management:

                  Sewall F. Hodges             Jesus A. Cabrera
                  Lead Portfolio Manager       o Began investment career
                  o Began investment career      in 1984
                    in 1978                    o Joined the advisor in
                  o Joined the advisor in 1995   1999
                  o Joined the fund team       o Joined the fund team
                    in 1999                      in 1999

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

The fund is managed by a team of investment professionals who work together to
develop the fund's investment strategies.

                                       7
<PAGE>

TICKER SYMBOLS CLASS: A) KBCAX  B) KBCBX  C) KBCCX


Kemper
Blue Chip Fund

                  FUND GOAL The fund seeks growth of capital and of income.


                                       8
<PAGE>

--------------------------------------------------------------------------------
The Fund's Main Strategy

                     The fund normally invests at least 65% of total assets in
                     common stocks of large U.S. companies (those with market
                     values of $1 billion or more). As of December 31, 2000,
                     companies in which the fund invests have a median market
                     capitalization of approximately $__ billion.

                     In choosing stocks, the portfolio managers look for
                     attractive "blue chip" companies: large, well-known,
                     established companies with sound financial strength whose
                     stock price is attractive relative to potential growth. The
                     managers look for factors that could signal future growth,
                     such as new management, products or business strategies.

                     The managers may favor securities from different industries
                     and companies at different times while still maintaining
                     variety in terms of the industries and companies
                     represented.

                     The fund normally will sell a stock when the managers
                     believe its price is unlikely to go much higher, its
                     fundamental qualities have deteriorated or other
                     investments offer better opportunities.


[ICON]
--------------------------------------------------------------------------------

OTHER INVESTMENTS

While the fund invests mainly in U.S. common stocks, it could invest up to 25%
of total assets in foreign securities. Also, while the fund is permitted to use
various types of derivatives (contracts whose value is based on, for example,
indices, currencies or securities), the managers don't intend to use them as
principal investments and might not use them all.


                                       9
<PAGE>

--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     As with most stock funds, the most important factor with
                     this fund is how stock markets perform -- in this case, the
                     large company portion of the U.S. stock market. When prices
                     of these stocks fall, you should expect the value of your
                     investment to fall as well. Large company stocks at times
                     may not perform as well as stocks of smaller or mid-size
                     companies. Because a stock represents ownership in its
                     issuer, stock prices can be hurt by poor management,
                     shrinking product demand and other business risks. These
                     may affect single companies as well as groups of companies.

                     To the extent that the fund focuses on a given industry,
                     any factors affecting that industry could affect portfolio
                     securities. For example, a rise in unemployment could hurt
                     consumer goods makers, or the emergence of new technologies
                     could hurt computer software or hardware companies.

                     Other factors that could affect performance include:

                     o the managers could be wrong in their analysis of
                       companies, industries, economic trends or other matters

                     o growth stocks may be out of favor for certain periods

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

Investors with long-term goals who want a core stock investment may be
interested in this fund.


                                       10
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows how the total returns for the fund's Class A shares have
varied from year to year, which may give some idea of risk. The chart doesn't
reflect sales loads; if it did, returns would be lower. The table shows how the
fund's returns over different periods average out.

For context, the table has two broad-based market indices (which, unlike the
fund, have no fees or expenses). All figures on this page assume reinvestment of
dividends and distributions. As always, past performance is no guarantee of
future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1991       44.43
1992       -1.20
1993        3.82
1994       -5.16
1995       31.72
1996       27.70
1997       26.21
1998       14.40
1999       26.08
2000        0.00


Best quarter: %, Q_ 199_
Worst quarter: %, Q_ 199_

--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
                                                      Since
                             Since       Since        5/31/94     Since
                             12/31/99    12/31/95     Life of     12/31/90
                             1 Year      5 Years      Class B/C   10 Years
--------------------------------------------------------------------------------
Class A                      %           %           --           %
--------------------------------------------------------------------------------
Class B                                               %          --
--------------------------------------------------------------------------------
Class C                                                          --
--------------------------------------------------------------------------------
Index 1
--------------------------------------------------------------------------------
Index 2
--------------------------------------------------------------------------------

Index 1: Standard and Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

Index 2: Russell 1000 Index, an unmanaged price-only index of the 1,000 largest
capitalized companies that are domiciled in the United States and whose common
stocks are traded there.

The table includes the effects of maximum sales loads.
--------------------------------------------------------------------------------


                                       11
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                        Class A  Class B  Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your
investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %    5.75%    None      None
of offering price)
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of     None*    4.00%     1.00%
redemption proceeds)
--------------------------------------------------------------------------------
Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

Based on the figures above, this example is designed to help you compare the
expenses of each share class to those of other mutual funds. The example assumes
operating expenses remain the same and that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

                                       12
<PAGE>

--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management, bringing together
professionals from many investment disciplines. Supporting each team are Scudder
Kemper's many economists, research analysts, traders and other investment
specialists, located across the United States and around the world.

For serving as the fund's investment advisor, Scudder Kemper receives a
management fee. For the most recent fiscal year, the actual amount the fund paid
in management fees was __% of its average daily net assets.

[ICON]
--------------------------------------------------------------------------------
FUND MANAGERS

                     The following people handle the fund's day-to-day
                     management:

                     Tracy McCormick             Gary A. Langbaum
                     Lead Portfolio Manager      o Began investment career
                     o Began investment career     in 1970
                       in 1980                   o Joined the advisor
                     o Joined the advisor          in 1988
                       in 1994                   o Joined the fund team
                     o Joined the fund team        in 1998
                       in 1994

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

The fund is managed by a team of investment professionals who work together to
develop the fund's investment strategies.



                                       13
<PAGE>

TICKER SYMBOLS CLASS: A) KCGAX  B) KCGBX  C) KCGCX


Kemper
Classic Growth Fund


                     FUND GOAL The fund seeks long-term growth of capital
                     with reduced share price volatility compared with other
                     growth mutual funds.


* Kemper Classic Growth Fund is properly know as Classic Growth Fund

                                       14
<PAGE>

--------------------------------------------------------------------------------
The Fund's Main Strategy

                     The fund invests primarily in common stocks of U.S.
                     companies. Although the fund can invest in companies of any
                     size, it generally focuses on established companies with
                     market values of $2 billion or more.

                     In choosing stocks, the portfolio managers look for
                     individual companies that have strong competitive
                     positions, prospects for consistent growth, effective
                     management and strong balance sheets.

                     The managers use several strategies in seeking to reduce
                     share price volatility. They diversify the fund's
                     investments, by company as well as by industry and sector.
                     They prefer to invest in companies whose stock appears
                     reasonably valued in light of potential growth based on
                     various factors such as price-to-earnings ratios and market
                     capitalization. They also prefer to avoid companies whose
                     business fundamentals are deteriorating. Depending on their
                     outlook, the managers may increase or reduce the fund's
                     exposure to a given industry or company.

                     The fund will normally sell a stock when the managers
                     believe it is too highly valued, its fundamental qualities
                     have deteriorated or its potential risks have increased.

[ICON]
--------------------------------------------------------------------------------

OTHER INVESTMENTS

While the fund invests mainly in U.S. common stocks, it could invest up to 25%
of total assets in foreign securities. Also, while the fund is permitted to use
various types of derivatives (contracts whose value is based on, for example,
indices, currencies or securities), the manager doesn't intend to use them as
principal investments and might not use them all.


                                       15
<PAGE>

--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     As with most stock funds, the most important factor with
                     this fund is how stock markets perform -- in this case, the
                     large company portion of the U.S. stock market. When prices
                     of these stocks fall, you should expect the value of your
                     investment to fall as well. Large company stocks at times
                     may not perform as well as stocks of smaller or mid-size
                     companies. Because a stock represents ownership in its
                     issuer, stock prices can be hurt by poor management,
                     shrinking product demand and other business risks. These
                     may affect single companies as well as groups of companies.

                     To the extent that the fund focuses on a given industry,
                     any factors affecting that industry could affect portfolio
                     securities. For example, a rise in unemployment could hurt
                     manufacturers of consumer goods.

                     Other factors that could affect performance include:

                     o the managers could be wrong in their analysis of
                       companies, industries, economic trends or other matters

                     o growth stocks may be out of favor for certain periods

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

This fund may make sense for investors interested in a long-term investment that
seeks to lower its share price volatility.


                                       16
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows the total returns for the fund's Class A shares, which may
give some idea of risk. The chart doesn't reflect sales loads; if it did,
returns would be lower. The table shows how the fund's returns over different
periods average out.

For context, the table has a broad-based market index (which, unlike the fund,
has no fees or expenses). All figures on this page assume reinvestment of
dividends and distributions. As always, past performance is no guarantee of
future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1999       33.78
2000        0


Best quarter: %, Q_ 199_
Worst quarter: %, Q_ 199_


--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
                                           Since 12/31/99   Since 4/16/98
                                           1 Year           Life of Class
--------------------------------------------------------------------------------
Class A                                    %                %
--------------------------------------------------------------------------------
Class B
--------------------------------------------------------------------------------
Class C
--------------------------------------------------------------------------------
Index                                                       *
--------------------------------------------------------------------------------

Index: Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index), an
unmanaged, capitalization-weighted index that includes 500 large-cap U.S.
stocks.

The table includes the effects of maximum sales loads. In both the table and the
chart, total returns from the date of inception through 1999 would have been
lower if operating expenses hadn't been reduced.

*   Index comparison begins 4/30/1998
--------------------------------------------------------------------------------

                                       17
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                      Class A   Class B   Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %
of offering price)                                5.75%    None      None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of
redemption proceeds)                              None*    4.00%     1.00%
--------------------------------------------------------------------------------
Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------
Expense Waiver
--------------------------------------------------------------------------------
Net Annual Operating Expenses***
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

*** By contract, Scudder Kemper has agreed to waive 0.25% of its management fee
    until 1/31/2002.

Based on the figures above (including one year of waived expenses in each
period), this example is designed to help you compare the expenses of each share
class to those of other mutual funds. The example assumes operating expenses
remain the same and that you invested $10,000, earned 5% annual returns and
reinvested all dividends and distributions. This is only an example; actual
expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

                                       18
<PAGE>

--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management, bringing together
professionals from many investment disciplines. Supporting each team are Scudder
Kemper's many economists, research analysts, traders and other investment
specialists, located across the United States and around the world.

For serving as the fund's investment advisor, Scudder Kemper receives a
management fee. For the most recent fiscal year, the actual amount the fund paid
in management fees was __% of its average daily net assets.

[ICON]
--------------------------------------------------------------------------------
FUND MANAGER

                     William F. Gadsden handles the fund's day-to-day
                     management. He began his investment career in 1981, joined
                     the advisor in 1983 and joined the fund in 1996.



                                       19
<PAGE>

TICKER SYMBOLS CLASS: A) KGRAX  B) KGRBX  C) KGRCX


Kemper
Growth Fund

                     FUND GOAL The fund seeks growth of capital through
                     professional management and diversification of investments
                     in securities that the investment manager believes have the
                     potential for capital appreciation.


                                       20
<PAGE>

--------------------------------------------------------------------------------
The Fund's Main Strategy

                     The fund normally invests at least 65% of total assets in
                     common stocks of large U.S. companies (those with market
                     values of $1 billion or more). As of December 31, 2000,
                     companies in which the fund invests have a median market
                     capitalization of approximately $__ billion.

                     In choosing stocks, the portfolio managers look for
                     individual companies that have strong product lines,
                     effective management and leadership positions within core
                     markets. The managers also analyze each company's
                     valuation, stock price movements and other factors. Based
                     on their analysis, the managers classify stocks as follows:

                     Stable Growth (typically at least 70% of portfolio):
                     companies with strong business lines and potentially
                     sustainable earnings growth

                     Accelerating Growth (typically up to 25% of
                     portfolio): companies with a history of strong
                     earnings growth and the potential for continued
                     growth at a rapid rate

                     Special Situations (typically up to 15% of
                     portfolio): companies that appear likely to become
                     Stable Growth or Accelerating Growth companies
                     through a new product launch, restructuring, change
                     in management or other catalyst

                     The managers intend to keep the fund's holdings
                     diversified across industries and companies, and
                     generally keep its sector weightings similar to those
                     of the Russell 1000 Growth Index.

                     The fund normally will sell a stock when the managers
                     believe its earnings potential or its fundamental
                     qualities have deteriorated or when other investments
                     offer better opportunities.

[ICON]
--------------------------------------------------------------------------------
OTHER INVESTMENTS

The fund could invest up to 25% of total assets in foreign securities. Also,
while the fund is permitted to use various types of derivatives (contracts whose
value is based on, for example, indices, currencies or securities), the manager
doesn't intend to use them as principal investments and might not use them at
all.


                                       21
<PAGE>

--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     As with most stock funds, the most important factor with
                     this fund is how stock markets perform -- in this case, the
                     large company portion of the U.S. stock market. When prices
                     of these stocks fall, you should expect the value of your
                     investment to fall as well. Large company stocks at times
                     may not perform as well as stocks of smaller or mid-size
                     companies. Because a stock represents ownership in its
                     issuer, stock prices can be hurt by poor management,
                     shrinking product demand and other business risks. These
                     may affect single companies as well as groups of companies.

                     To the extent that the fund focuses on a given industry,
                     any factors affecting that industry could affect portfolio
                     securities. For example, a rise in unemployment could hurt
                     consumer goods makers, or the emergence of new technologies
                     could hurt computer software or hardware companies.

                     Other factors that could affect performance include:

                     o the managers could be wrong in their analysis of
                       companies, industries, economic trends or other matters

                     o growth stocks may be out of favor for certain periods

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

This fund may be suitable for investors who want a moderate to aggressive
long-term growth fund with a large-cap emphasis.



                                       22
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows how the total returns for the fund's Class A shares have
varied from year to year, which may give some idea of risk. The chart doesn't
reflect sales loads; if it did, returns would be lower. The table shows how the
fund's returns over different periods average out.

For context, the table has two broad-based market indices (which, unlike the
fund, have no fees or expenses). All figures on this page assume reinvestment of
dividends and distributions. As always, past performance is no guarantee of
future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1991       66.85
1992       -1.56
1993        1.63
1994       -5.91
1995       31.87
1996       16.34
1997       16.80
1998       14.22
1999       36.91
2000        0.00


Best quarter: %, Q_ 199_
Worst quarter: %, Q_ 199_


--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
                                                      Since
                             Since       Since        5/31/94     Since
                             12/31/99    12/31/95     Life of     12/31/90
                             1 Year      5 Years      Class B/C   10 Years
--------------------------------------------------------------------------------
Class A                      %           %           --           %
--------------------------------------------------------------------------------
Class B                                               %          --
--------------------------------------------------------------------------------
Class C                                                          --
--------------------------------------------------------------------------------
Index 1
--------------------------------------------------------------------------------
Index 2
--------------------------------------------------------------------------------

Index 1: Russell 1000 Growth Index, an unmanaged capitalization-weighted index
containing the growth stocks in the Russell 1000 Index.

Index 2: Standard and Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

The table includes the effects of maximum sales loads.
--------------------------------------------------------------------------------

                                       23
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                      Class A   Class B   Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %
of offering price)                                5.75%    None      None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of
redemption proceeds)                              None*    4.00%     1.00%
--------------------------------------------------------------------------------

Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

Based on the figures above, this example is designed to help you compare the
expenses of each share class to those of other mutual funds. The example assumes
operating expenses remain the same and that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

                                       24
<PAGE>

--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management, bringing together
professionals from many investment disciplines. Supporting each team are Scudder
Kemper's many economists, research analysts, traders and other investment
specialists, located across the United States and around the world.

For serving as the fund's investment advisor, Scudder Kemper receives a
management fee. For the most recent fiscal year, the actual amount the fund paid
in management fees was __% of its average daily net assets.

[ICON]
--------------------------------------------------------------------------------
FUND MANAGER

Valerie F. Malter handles the fund's day-to-day management. She began her
investment career in 1985, joined the advisor in 1995 and joined the fund in
1999.

                                       25
<PAGE>

TICKER SYMBOLS CLASS: A) KSCAX  B) KSCBX  C) KSCCX


Kemper
Small Capitalization
Equity Fund

                     FUND GOAL The fund seeks maximum appreciation of
                     investors' capital.


                                       26
<PAGE>


--------------------------------------------------------------------------------
The Fund's Main Strategy

                     Under normal market conditions, the fund invests at least
                     65% of total assets in small capitalization stocks similar
                     in size to those comprising the Russell 2000 Index.

                     In choosing stocks, the portfolio manager looks for
                     individual companies with a history of revenue growth,
                     effective management and strong balance sheets, among other
                     factors. In particular, the manager seeks companies that
                     may benefit from technological advances, new marketing
                     methods and economic and demographic changes.

                     The manager also considers the economic outlooks for
                     various sectors and industries, typically favoring those
                     where high growth companies tend to be clustered, such as
                     medical technology, software and specialty retailing.

                     The manager may favor securities from different industries
                     and companies at different times, while still maintaining
                     variety in terms of the industries and companies
                     represented.

                     The fund normally will sell a stock when the manager
                     believe its price is unlikely to go much higher, its
                     fundamental qualities have deteriorated or other
                     investments offer better opportunities. The fund also sells
                     securities of companies that have grown in market
                     capitalization above the maximum of the Russell 2000 Index,
                     as necessary to keep focused on smaller companies.

[ICON]
--------------------------------------------------------------------------------
OTHER INVESTMENTS

While the fund invests mainly in U.S. stocks, it could invest up to 25% of total
assets in foreign securities. Also, while the fund is permitted to use various
types of derivatives (contracts whose value is based on, for example, indices,
currencies or securities), the manager doesn't intend to use them as principal
investments and might not use them at all.


                                       27
<PAGE>


--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     As with most stock funds, the most important factor with
                     this fund is how stock markets perform -- in this case, the
                     small company portion of the U.S. stock market. When prices
                     of these stocks fall, you should expect the value of your
                     investment to fall as well. Small stocks tend to be more
                     volatile than stocks of larger companies, in part because
                     small companies tend to be less established than larger
                     companies and the valuation of their stocks often depends
                     on future expectations. Because a stock represents
                     ownership in its issuer, stock prices can be hurt by poor
                     management, shrinking product demand and other business
                     risks. These may affect single companies as well as groups
                     of companies.

                     To the extent that the fund focuses on a given industry,
                     any factors affecting that industry could affect portfolio
                     securities. For example, the emergence of new technologies
                     could hurt electronics or medical technology companies.

                     Other factors that could affect performance include:

                     o the manager could be wrong in his analysis of
                       companies, industries, economic trends or other
                       matters

                     o growth stocks may be out of favor for certain periods

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

Investors who are looking to add the growth potential of smaller companies or to
diversify a large-cap growth portfolio may want to consider this fund.


                                       28
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows how the total returns for the fund's Class A shares have
varied from year to year, which may give some idea of risk. The chart doesn't
reflect sales loads; if it did, returns would be lower. The table shows how the
fund's returns over different periods average out.

For context, the table has three broad-based market indices (which, unlike the
fund, have no fees or expenses). All figures on this page assume reinvestment of
dividends and distributions. As always, past performance is no guarantee of
future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1991       69.01
1992        0.12
1993       16.79
1994       -3.31
1995       31.17
1996       14.09
1997       20.47
1998       -3.10
1999       33.62
2000        0.00


Best quarter: %, Q_ 199_
Worst quarter: %, Q_ 199_


--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
                                                    Since
                             Since       Since      5/31/94       Since
                             12/31/99    12/31/95   Life of       12/31/90
                             1 Year      5 Years    Class B/C     10 Years
--------------------------------------------------------------------------------
Class A                      %           %           --           %
--------------------------------------------------------------------------------
Class B                                               %          --
--------------------------------------------------------------------------------
Class C                                                          --
--------------------------------------------------------------------------------
Index 1
--------------------------------------------------------------------------------
Index 2
--------------------------------------------------------------------------------
Index 3
--------------------------------------------------------------------------------

Index 1: Standard and Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

Index 2: Russell 2000 Index, an unmanaged capitalization-weighted measure of
approximately 2,000 small U.S. stocks.

Index 3: Russell 2000 Growth Index, an unmanaged capitalization-weighted index
containing the growth stocks in the Russell 2000 Index.

The table includes the effects of maximum sales loads.
--------------------------------------------------------------------------------

                                       29
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                       Class A  Class B   Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your
investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %
of offering price)                                5.75%    None      None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of
redemption proceeds)                              None*    4.00%     1.00%
--------------------------------------------------------------------------------

Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

Based on the figures above, this example is designed to help you compare the
expenses of each share class to those of other mutual funds. The example assumes
operating expenses remain the same and that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

                                       30
<PAGE>

--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management. Scudder Kemper's team
is comprised of investment professionals, economists, research analysts, traders
and other investment specialists, located across the United States and around
the world.

For serving as the fund's advisor, Scudder Kemper receives a management fee,
which was __% of the fund's average daily net assets for the most recent fiscal
year. This fee is based on a rate of __% of average daily net assets which is
adjusted up or down (to as low as 0.35% or as high as 0.95%) depending on how
the fund's Class A shares performed relative to the S&P 500 Index.

[ICON]
--------------------------------------------------------------------------------
FUND MANAGER

                     Jesus A. Cabrera handles the fund's day-to-day management.
                     He began his investment career in 1984, joined the advisor
                     in 1999 and joined the fund in 1999.

                                       31
<PAGE>

TICKER SYMBOLS CLASS: A) KTCAX  B) KTCBX  C) KTCCX



Kemper
Technology Fund

                     FUND GOAL The fund seeks growth of capital.


                                       32
<PAGE>

--------------------------------------------------------------------------------
The Fund's Main Strategy

                     The fund normally invests at least 65% of total assets in
                     common stocks of U.S. companies in the technology sector.
                     This may include companies of any size that commit at least
                     half of their assets to the technology sector, or derive at
                     least half of their revenues or net income from that
                     sector. Examples of industries within the technology sector
                     are aerospace, electronics, computers/software,
                     medicine/biotechnology, geology and oceanography.

                     In choosing stocks, the portfolio managers look for
                     individual companies that have robust and sustainable
                     earnings growth, large and growing markets, innovative
                     products and services and strong balance sheets, among
                     other factors.

                     The managers may favor securities from different industries
                     and companies within the technology sector at different
                     times, while still maintaining variety in terms of the
                     industries and companies represented.

                     The fund will normally sell a stock when the managers
                     believe its price is unlikely to go much higher, its
                     fundamental qualities have deteriorated or other
                     investments offer better opportunities.

[ICON]
--------------------------------------------------------------------------------
OTHER INVESTMENTS

While the fund invests mainly in U.S. stocks, it could invest up to 25% of total
assets in foreign securities. Also, while the fund is permitted to use various
types of derivatives (contracts whose value is based on, for example, indices,
currencies or securities), the managers don't intend to use them as principal
investments and might not use them at all.


                                       33
<PAGE>

--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     As with most stock funds, the most important factor with
                     this fund is how stock markets perform. When stock prices
                     fall, you should expect the value of your investment to
                     fall as well. The fact that the fund concentrates in one
                     sector increases this risk, because factors affecting this
                     sector affect fund performance. For example, technology
                     companies could be hurt by such factors as market
                     saturation, price competition and competing technologies.

                     Because a stock represents ownership in its issuer, stock
                     prices can be hurt by poor management, shrinking product
                     demand and other business risks. These may affect single
                     companies as well as groups of companies. Many technology
                     companies are smaller companies that may have limited
                     business lines and financial resources, making them highly
                     vulnerable to business and economic risks.

                     Other factors that could affect performance include:

                     o the managers could be wrong in their analysis of
                       companies, industries, economic trends or other matters

                     o growth stocks may be out of favor for certain periods

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

This fund may appeal to investors who want exposure to a sector that offers
attractive long-term growth potential and who can accept above-average risks.


                                       34
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows how the total returns for the fund's Class A shares have
varied from year to year, which may give some idea of risk. The chart doesn't
reflect sales loads; if it did, returns would be lower. The table shows how the
fund's returns over different periods average out.

For context, the table has three market indices (which, unlike the fund, have no
fees or expenses). All figures on this page assume reinvestment of dividends and
distributions. As always, past performance is no guarantee of future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1991         44.35
1992         -1.19
1993         11.69
1994         11.35
1995         42.77
1996         20.60
1997          7.11
1998         43.59
1999        114.28
2000          0.00


Best quarter: %, Q_ 199_
Worst quarter: %, Q_ 199_


--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
            Since 12/31/99  Since 12/31/95  Since 5/31/94     Since 12/31/90
            1 Year          5 Years         Life of Class B/C  10 Years
--------------------------------------------------------------------------------
Class A             %         %             --                 %
--------------------------------------------------------------------------------
Class B                                      %                --
--------------------------------------------------------------------------------
Class C                                                       --
--------------------------------------------------------------------------------
Index 1
--------------------------------------------------------------------------------
Index 2
--------------------------------------------------------------------------------
Index 3
--------------------------------------------------------------------------------

Index 1: Russell 1000 Growth Index, an unmanaged capitalization-weighted index
containing the growth stocks in the Russell 1000 Index.

Index 2: Standard and Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

Index 3: Hambrecht & Quist Index, an unmanaged index composed of approximately
275 technology stocks, including companies from five technology groups: computer
hardware, computer software, communications, semiconductors and information
services.

The table includes the effects of maximum sales loads.
--------------------------------------------------------------------------------

                                       35
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                         Class A  Class B  Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %
of offering price)                                5.75%    None      None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of
redemption proceeds)                              None*    4.00%     1.00%
--------------------------------------------------------------------------------

Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

Based on the figures above, this example is designed to help you compare the
expenses of each share class to those of other funds. The example assumes
operating expenses remain the same and that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------


                                       36
<PAGE>

--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management, bringing together
professionals from many investment disciplines. Supporting each team are Scudder
Kemper's many economists, research analysts, traders and other investment
specialists, located across the United States and around the world.

For serving as the fund's investment advisor, Scudder Kemper receives a
management fee. For the most recent fiscal year, the actual amount the fund paid
in management fees was __% of its average daily net assets.

[ICON]
--------------------------------------------------------------------------------
FUND MANAGERS

                     The following people handle the fund's day-to-day
                     management:

                     James B. Burkart             Tracy McCormick
                     Co-lead Portfolio Manager    o Began investment career
                     o Began investment career      in 1980
                       in 1970                    o Joined the advisor
                     o Joined the advisor in 1998   in 1994
                     o Joined the fund team in    o Joined the fund team
                       1998                         in 1998

                     Deborah L. Koch
                     Co-lead Portfolio Manager
                     o Began investment career
                       in 1985
                     o Joined the advisor in 1992
                     o Joined the fund team
                       in 1999


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

The fund is managed by a team of investment professionals who work together to
develop the fund's investment strategies.


                                       37
<PAGE>

TICKER SYMBOLS CLASS: A) KTRAX  B) KTRBX  C) KTRCX


Kemper
Total Return Fund

                     FUND GOAL The fund seeks the highest total return, a
                     combination of income and capital appreciation, consistent
                     with reasonable risk.


                                       38
<PAGE>

--------------------------------------------------------------------------------
The Fund's Main Strategy

                     The fund follows a flexible investment program, investing
                     in a mix of growth stocks and bonds.

                     The fund can buy many types of securities, among them
                     common stocks, convertible securities, corporate bonds,
                     U.S. government bonds and mortgage- and asset-backed
                     securities. Generally, most are from U.S. issuers, but the
                     fund may invest up to 25% of total assets in foreign
                     securities.

                     The portfolio managers may shift the proportion of the
                     fund's holdings, at different times favoring stocks or
                     bonds (and within those asset classes, different types of
                     securities), while still maintaining variety in terms of
                     the securities, issuers and economic sectors represented.

                     In choosing individual stocks, the managers favor large
                     companies with a history of above-average growth,
                     attractive prices relative to potential growth, sound
                     financial strength and effective management, among other
                     factors.

                     The fund will normally sell a stock when it reaches a
                     target price or when the managers believe its fundamental
                     qualities have deteriorated.

                     In deciding what types of bonds to buy and sell, the
                     managers consider their relative potential for stability
                     and attractive income, and other factors such as credit
                     quality and market conditions. The fund may invest in bonds
                     of any duration.

[ICON]
--------------------------------------------------------------------------------
OTHER INVESTMENTS

Normally, this fund's bond component consists mainly of investment-grade bonds
(those in the top four grades of credit quality). However, the fund could invest
up to 35% of total assets in junk bonds (i.e., grade BB and below).

While the fund is permitted to use various types of derivatives (contracts whose
value is based on, for example, indices, currencies or securities), the managers
don't intend to use them as principal investments and might not use them at all.


                                       39
<PAGE>

--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     The most important factor is how stock markets perform --
                     something that depends on many influences, including
                     economic, political and demographic trends. When stock
                     prices fall, the value of your investment is likely to fall
                     as well. Stock prices can be hurt by poor management,
                     shrinking product demand and other business risks. Stock
                     risks tend to be greater with smaller companies.

                     The fund is also affected by the performance of bonds. A
                     rise in interest rates generally means a fall in bond
                     prices and, in turn, a fall in the value of your
                     investment. Some bonds could be paid off earlier than
                     expected, which would hurt the fund's performance; with
                     mortgage- or asset-backed securities, any unexpected
                     behavior in interest rates could increase the volatility of
                     the fund's share price and yield. Corporate bonds could
                     perform less well than other bonds in a weak economy.

                     Other factors that could affect performance include:

                     o the managers could be wrong in their analysis of
                       industries, companies or other matters

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o growth stocks may be out of favor for certain periods

                     o a bond could fall in credit quality or go into default

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

Because it invests in a mix of stocks and bonds, this fund could make sense for
investors seeking asset class diversification in a single fund.

                                       40
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows how the total returns for the fund's Class A shares have
varied from year to year, which may give some idea of risk. The chart doesn't
reflect sales loads; if it did, returns would be lower. The table shows how the
fund's returns over different periods average out.

For context, the table has three broad-based market indices (which, unlike the
fund, have no fees or expenses). All figures on this page assume reinvestment of
dividends and distributions. As always, past performance is no guarantee of
future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1991       40.16
1992        2.49
1993       11.59
1994       -9.18
1995       25.80
1996       16.25
1997       19.14
1998       15.91
1999       14.60
2000        0.00


Best quarter: %, Q_ 199_
Worst quarter: %, Q_ 199_


--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
                                                      Since
                             Since       Since        5/31/94     Since
                             12/31/99    12/31/95     Life of     12/31/90
                             1 Year      5 Years      Class B/C   10 Years
--------------------------------------------------------------------------------
Class A                      %           %           --           %
--------------------------------------------------------------------------------
Class B                                               %          --
--------------------------------------------------------------------------------
Class C                                                          --
--------------------------------------------------------------------------------
Index 1
--------------------------------------------------------------------------------
Index 2
--------------------------------------------------------------------------------
Index 3
--------------------------------------------------------------------------------

Index 1: Standard and Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

Index 2: Lehman Brothers Government/Corporate Bond Index, an unmanaged index of
government and investment-grade corporate debt securities of intermediate- and
long-term maturities.

Index 3: Russell 1000 Growth Index, an unmanaged capitalization-weighted index
containing the growth stocks in the Russell 1000 Index.

The table includes the effects of maximum sales loads.

--------------------------------------------------------------------------------


                                       41
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                     Class A   Class B   Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %
of offering price)                                5.75%    None      None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of
redemption proceeds)                              None*    4.00%     1.00%
--------------------------------------------------------------------------------

Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

Based on the figures above, this example is designed to help you compare the
expenses of each share class to those of other funds. The example assumes
operating expenses remain the same and that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------



                                       42
<PAGE>

--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management, bringing together
professionals from many investment disciplines. Supporting each team are Scudder
Kemper's many economists, research analysts, traders and other investment
specialists, located across the United States and around the world.

For serving as the fund's investment advisor, Scudder Kemper receives a
management fee. For the most recent fiscal year, the actual amount the fund paid
in management fees was __% of its average daily net assets.

[ICON]
--------------------------------------------------------------------------------
FUND MANAGERS
                     The following people handle the fund's day-to-day
                     management:

                     Gary A. Langbaum            Tracy McCormick
                     Lead Portfolio Manager      o Began investment career
                     o Began investment career     in 1980
                       in 1970                   o Joined the advisor
                     o Joined the advisor          in 1994
                       in 1988                   o Joined the fund team
                     o Joined the fund team        in 1998
                       in 1995

                     Robert S. Cessine
                     o Began investment career
                       in 1982
                     o Joined the advisor
                       in 1993
                     o Joined the fund team
                       in 1999

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

The fund is managed by a team of investment professionals who work together to
develop the fund's investment strategies.

                                       43
<PAGE>

TICKER SYMBOLS CLASS: A) KVGAX  B) KVGBX  C) KVGCX

Kemper Value+Growth Fund

                     FUND GOAL The fund seeks growth of capital through a
                     portfolio of growth and value stocks. A secondary objective
                     of the fund is the reduction of risk over a full market
                     cycle compared to a portfolio of only growth stocks or only
                     value stocks.


                                       44
<PAGE>

--------------------------------------------------------------------------------
The Fund's Main Strategy

                     The fund normally invests at least 65% of total assets in
                     U.S. common stocks. Although the fund can invest in stocks
                     of any size, it mainly chooses stocks from among the 1,000
                     largest (as measured by market capitalization). The fund
                     manages risk by investing in both growth and value stocks.

                     While the fund's neutral mix is 50% for growth stocks and
                     50% for value stocks, the managers may shift the fund's
                     holdings depending on their outlook, at different times
                     favoring growth stocks or value stocks, while still
                     maintaining variety in terms of the securities, issuers and
                     economic sectors represented. Typically, adjustments in the
                     fund's growth/value proportions are gradual. The allocation
                     to growth or value stocks may be up to 75% at any time.

                     In choosing growth stocks, the managers look for companies
                     with a history of above-average growth, attractive prices
                     relative to potential growth and sound financial strength,
                     among other factors. With value stocks, the managers look
                     for companies whose stock prices are low in light of
                     earnings, cash flow and other valuation measures, while
                     also considering such factors as dividend growth rates and
                     earnings estimates.

                     The fund will normally sell a stock when the managers
                     believe its price is unlikely to go much higher, its
                     fundamental qualities have deteriorated or to adjust the
                     proportions of growth and value stocks.

[ICON]
--------------------------------------------------------------------------------
OTHER INVESTMENTS

While the fund invests mainly in U.S. common stocks, it could invest up to 25%
of total assets in foreign securities. Also, while the fund is permitted to use
various types of derivatives (contracts whose value is based on, for example,
indices, currencies or securities), the managers don't intend to use them as
principal investments and might not use them at all.

                                       45
<PAGE>

--------------------------------------------------------------------------------
The Main Risks Of Investing In The Fund

                     There are several risk factors that could hurt the fund's
                     performance, cause you to lose money or make the fund
                     perform less well than other investments.

                     As with most stock funds, the most important factor with
                     this fund is how stock markets perform -- in this case, the
                     large company portion of the U.S. stock market. When large
                     company stock prices fall, you should expect the value of
                     your investment to fall as well. Large company stocks at
                     times may not perform as well as stocks of smaller or
                     mid-size companies. Because a stock represents ownership in
                     its issuer, stock prices can be hurt by poor management,
                     shrinking product demand and other business risks. These
                     may affect single companies as well as groups of companies.

                     In any given period, either growth stocks or value stocks
                     will generally lag the other; because the fund invests in
                     both, it is likely to lag any fund that focuses on the type
                     of stock that outperforms during that period, and at times
                     may lag both.

                     Other factors that could affect performance include:

                     o the managers could be wrong in their analysis of
                       industries, companies or other matters

                     o foreign securities may be more volatile than their
                       U.S. counterparts, for reasons such as currency
                       fluctuations and political and economic uncertainty

                     o derivatives could produce disproportionate losses

                     o at times, it could be hard to value some investments
                       or to get an attractive price for them


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

This fund is designed for investors with long-term goals who want to gain
exposure to both growth and value stocks in a single fund.


                                       46
<PAGE>

--------------------------------------------------------------------------------
Performance

The bar chart shows how the total returns for the fund's Class A shares have
varied from year to year, which may give some idea of risk. (The chart doesn't
reflect sales loads; if it did, returns would be lower.) The table shows how the
fund's returns over different periods average out.

For context, the table has two broad-based market indices (which, unlike the
fund, have no fees or expenses). All figures on this page assume reinvestment of
dividends and distributions. As always, past performance is no guarantee of
future results.

------------------------------------------------------------------------------
Annual Total Returns (%) as of 12/31 each year            Class A Shares
------------------------------------------------------------------------------

THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE

BAR CHART DATA:

1996       25.56
1997       24.52
1998       18.88
1999       16.69
2000        0.00


Best quarter: %, Q_ 199_
Worst quarter: %, Q_ 199_


--------------------------------------------------------------------------------
Average Annual Total Returns (as of 12/31/2000)
--------------------------------------------------------------------------------
                                 Since          Since          Since
                                 12/31/99       10/31/95 5     10/16/95 Life
                                 1 Year         Years          of Class
--------------------------------------------------------------------------------
Class A                          %              %              %
--------------------------------------------------------------------------------
Class B
--------------------------------------------------------------------------------
Class C
--------------------------------------------------------------------------------
Index 1                                                        *
--------------------------------------------------------------------------------
Index 2                                                        *
--------------------------------------------------------------------------------

Index 1: Standard and Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

Index 2: Russell 1000 Index, an unmanaged price-only index of 1,000 of the
largest capitalized companies that are domiciled in the United States and whose
common stocks are traded there.

The table includes the effects of maximum sales loads. In 1995, 1996, 1998 and
1999, for Class A Shares; and in 1995 through 1999, for Class B and C Shares,
total returns would have been lower in the table and the bar chart if operating
expenses hadn't been reduced.

*   Index comparison begins 10/31/1995
--------------------------------------------------------------------------------

                                       47
<PAGE>

--------------------------------------------------------------------------------
How Much Investors Pay

This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund.

--------------------------------------------------------------------------------
Fee Table                                      Class A    Class B   Class C
--------------------------------------------------------------------------------

Shareholder Fees, paid directly from your investment
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) On Purchases (as %
of offering price)                                5.75%    None      None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) (as % of
redemption proceeds)                              None*    4.00%     1.00%
--------------------------------------------------------------------------------

Annual Operating Expenses, deducted from fund assets
--------------------------------------------------------------------------------
Management Fee                                    %        %         %
--------------------------------------------------------------------------------
Distribution (12b-1) Fee                          None
--------------------------------------------------------------------------------
Other Expenses**
--------------------------------------------------------------------------------
Total Annual Operating Expenses
--------------------------------------------------------------------------------

*   The redemption of shares purchased at net asset value under the Large Order
    NAV Purchase Privilege (see "Policies You Should Know About -- Policies
    about transactions") may be subject to a contingent deferred sales charge of
    1.00% if redeemed within one year of purchase and 0.50% if redeemed during
    the second year following purchase.

**  Includes costs of shareholder servicing, custody, accounting services and
    similar expenses, which may vary with fund size and other factors. "Other
    Expenses" are restated to reflect changes in certain administrative and
    regulatory fees.

Based on the figures above, this example is designed to help you compare the
expenses of each share class to those of other funds. The example assumes
operating expenses remain the same and that you invested $10,000, earned 5%
annual returns and reinvested all dividends and distributions. This is only an
example; actual expenses will be different.

--------------------------------------------------------------------------------
Example                        1 Year      3 Years      5 Years    10 Years
--------------------------------------------------------------------------------
Expenses, assuming you sold your shares at the end of each period
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

Expenses, assuming you kept your shares
--------------------------------------------------------------------------------
Class A shares                     $           $            $           $
--------------------------------------------------------------------------------
Class B shares
--------------------------------------------------------------------------------
Class C shares
--------------------------------------------------------------------------------

                                       48
<PAGE>


--------------------------------------------------------------------------------
THE INVESTMENT ADVISOR

The fund's investment advisor is Scudder Kemper Investments, Inc., 345 Park
Avenue, New York, NY. Scudder Kemper has more than 80 years of experience
managing mutual funds and currently has more than $290 billion in assets under
management.

Scudder Kemper takes a team approach to asset management, bringing together
professionals from many investment disciplines. Supporting each team are Scudder
Kemper's many economists, research analysts, traders and other investment
specialists, located across the United States and around the world.

For serving as the fund's investment advisor, Scudder Kemper receives a
management fee. For the most recent fiscal year, the actual amount the fund paid
in management fees was __% of its average daily net assets.

[ICON]
--------------------------------------------------------------------------------
FUND MANAGER

                     Donald E. Hall handles the fund's day-to-day management. He
                     began his investment career and joined the advisor in 1982,
                     and joined the fund in 1999.


                                       49
<PAGE>

--------------------------------------------------------------------------------
Other Policies And Risks

                     While the previous pages describe the main points of each
                     fund's strategy and risks, there are a few other issues to
                     know about:

                     o Although major changes tend to be infrequent, each fund's
                       Board could change that fund's investment goal without
                       seeking shareholder approval

                     o As a temporary defensive measure, any of these funds
                       could shift up to 100% of assets into investments such as
                       money market securities. This could prevent losses, but
                       would mean that the fund would not be pursuing its goal

                     o Scudder Kemper establishes a security's credit quality
                       when it buys the security, using independent ratings or,
                       for unrated securities, its own credit determination.
                       When ratings don't agree, a fund may use the higher
                       rating. If a security's credit quality falls, the advisor
                       will determine whether selling it would be in the
                       shareholders' best interests

                     o The funds may trade securities more actively than many
                       funds, which could mean higher expenses (thus lowering
                       return) and higher taxable distributions

                     o These funds' equity investments are mainly common stocks,
                       but may also include other types of equities, such as
                       preferred or convertible stocks

                     Keep in mind that there is no assurance that any mutual
                     fund will achieve its goal.

                     Euro conversion

                     Funds which invest in foreign securities could be
                     affected by accounting differences, changes in tax
                     treatment or other issues related to the conversion
                     of certain European currencies into the euro, which
                     is already underway. Scudder Kemper is working to
                     address euro-related issues as they occur and
                     understands that other key service providers are
                     taking similar steps. Still, there's some risk that
                     this problem could materially affect a fund's
                     operation (including its ability to calculate net
                     asset value and to handle purchases and redemptions),
                     its investments or securities markets in general.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

This prospectus doesn't tell you about every policy or risk of investing in a
fund. For more information, request a copy of the Statement of Additional
Information (see back cover).



                                       50
<PAGE>

--------------------------------------------------------------------------------
Financial Highlights

These tables are designed to help you understand each fund's financial
performance in recent years. The figures in the first part of each table are for
a single share. The total return figures represent the percentage that an
investor in a particular fund would have earned (or lost), assuming all
dividends and distributions were reinvested. This information has been audited
by Ernst & Young LLP (except Kemper Classic Growth Fund, which has been audited
by PricewaterhouseCoopers LLP), whose reports, along with each fund's financial
statements, are included in that fund's annual report (see "Shareholder reports"
on the back cover).

Kemper Aggressive Growth Fund

                                       51
<PAGE>

Kemper Blue Chip Fund


                                       52
<PAGE>

Kemper Classic Growth Fund


                                       53
<PAGE>

Kemper Growth Fund


                                       54
<PAGE>

Kemper Small Capitalization Equity Fund


                                       55
<PAGE>

Kemper Technology Fund


                                       56
<PAGE>

Kemper Total Return Fund


                                       57
<PAGE>

Kemper Value+Growth Fund


                                       58
<PAGE>

Investing In The Funds

The following pages tell you about many of the services, choices and benefits of
being a Kemper Funds shareholder. You'll also find information on how to check
the status of your account using the method that's most convenient for you.

You can find out more about the topics covered here by speaking with your
financial representative or a representative of your workplace retirement plan
or other investment provider.

<PAGE>

--------------------------------------------------------------------------------
Choosing A Share Class

In this prospectus, there are three share classes for each fund. The Kemper
Classic Growth Fund offers a fourth class of shares separately. Each class has
its own fees and expenses, offering you a choice of cost structures.

Before you invest, take a moment to look over the characteristics of each share
class, so that you can be sure to choose the class that's right for you. You may
want to ask your financial representative to help you with this decision.

We describe each share class in detail on the following pages. But first, you
may want to look at the table below, which gives you a brief comparison of the
main features of each class.

--------------------------------------------------------------------------------
 Classes and features                    Points to help you compare
--------------------------------------------------------------------------------
 Class A

 o Sales charges of up to 5.75%,         o Some investors may be able to
   charged when you buy shares             reduce or eliminate their sales
 o In most cases, no charges when you      charges; see next page
   sell shares                           o Total annual expenses are lower
 o No distribution fee                     than those for Class B or Class C
--------------------------------------------------------------------------------

 Class B

 o No charges when you buy shares        o The deferred sales charge rate
 o Deferred sales charge of up to falls    to zero after six years
   4.00%, charged when you sell shares   o Shares automatically convert to
   you bought within the last six years    Class A after six years after
                                           purchase, which means lower
 o 0.75% distribution fee                  annual expenses going forward

--------------------------------------------------------------------------------

 Class C

 o No charges when you buy shares        o The deferred sales charge rate is
                                           lower, but your shares never
 o Deferred sales charge of 1.00%,         convert to Class A, so annual
   charged when you sell shares you        expenses remain higher
   bought within the last year

 o 0.75% distribution fee
------------------------------------------------------------------------------

                                       60

<PAGE>


                     Class A shares

                     Class A shares have a sales charge that varies with the
                     amount you invest:

                                           Sales charge     Sales charge
                                           as a % of        as a % of your
                     Your investment       offering price   net investment
                     ---------------------------------------------------------
                     Up to $50,000         5.75%            6.10%
                     ---------------------------------------------------------
                     $50,000-$99,999       4.50             4.71
                     ---------------------------------------------------------
                     $100,000-$249,999     3.50             3.63
                     ---------------------------------------------------------
                     $250,000-$499,999     2.60             2.67
                     ---------------------------------------------------------
                     $500,000-$999,999     2.00             2.04
                     -----------------------------------------------------------
                     $1 million or more    See below and next page
                     -----------------------------------------------------------

                     The offering price includes the sales charge.

                     You may be able to lower your Class A sales charges if:

                     o you plan to invest at least $50,000 over the next 24
                       months ("letter of intent")

                     o the amount of Kemper shares you already own (including
                       shares in certain other Kemper funds) plus the amount
                       you're investing now is at least $50,000 ("cumulative
                       discount")

                     o you are investing a total of $50,000 or more in
                       several Kemper funds at once ("combined purchases")

                     The point of these three features is to let you count
                     investments made at other times for purposes of calculating
                     your present sales charge. Any time you can use the
                     privileges to "move" your investment into a lower sales
                     charge category in the table above, it's generally
                     beneficial for you to do so. You can take advantage of
                     these methods by filling in the appropriate sections of
                     your application or by speaking with your financial
                     representative.

                                       61
<PAGE>

                     You may be able to buy Class A shares without sales charges
                     when you are:

                     o reinvesting dividends or distributions

                     o investing through certain workplace retirement plans

                     o participating in an investment advisory program under
                       which you pay a fee to an investment advisor or other
                       firm for portfolio management services

                     There are a number of additional provisions that apply in
                     order to be eligible for a sales charge waiver. The fund
                     may waive the sales charges for investors in other
                     situations as well. Your financial representative or Kemper
                     can answer your questions and help you determine if you are
                     eligible.

                     If you're investing $1 million or more, either as a lump
                     sum or through one of the sales charge reduction features
                     described on the previous page, you may be eligible to buy
                     Class A shares without sales charges. However, you may be
                     charged a contingent deferred sales charge (CDSC) of 1.00%
                     on any shares you sell within the first year of owning
                     them, and a similar charge of 0.50% on shares you sell
                     within the second year of owning them. This CDSC is waived
                     under certain circumstances (see "Policies You Should Know
                     About"). Your financial representative or Kemper can answer
                     your questions and help you determine if you're eligible.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

Class A shares may make sense for long-term investors, especially those who are
eligible for reduced or eliminated sales charges.



                                       62
<PAGE>

                     Class B shares

                     With Class B shares, you pay no up-front sales charges to
                     the fund. Class B shares do have a 12b-1 plan, under which
                     a distribution fee of 0.75% is deducted from fund assets
                     each year. This means the annual expenses for Class B
                     shares are somewhat higher (and their performance
                     correspondingly lower) compared to Class A shares, which
                     don't have a 12b-1 fee. After six years, Class B shares
                     automatically convert to Class A, which has the net effect
                     of lowering the annual expenses from the seventh year on.

                     Class B shares have a contingent deferred sales charge
                     (CDSC). This charge declines over the years you own shares,
                     and disappears completely after six years of ownership. But
                     for any shares you sell within those six years, you may be
                     charged as follows:

                     Year after you bought shares   CDSC on shares you sell
                     -----------------------------------------------------------
                     First year                     4.00%
                     -----------------------------------------------------------
                     Second or third year           3.00
                     -----------------------------------------------------------
                     Fourth or fifth year           2.00
                     -----------------------------------------------------------
                     Sixth year                     1.00
                     -----------------------------------------------------------
                     Seventh year and later         None (automatic conversion
                                                    to Class A)
                     -----------------------------------------------------------

                     This CDSC is waived under certain circumstances (see
                     "Policies You Should Know About"). Your financial
                     representative or Kemper can answer your questions and help
                     you determine if you're eligible.

                     While Class B shares don't have any front-end sales
                     charges, their higher annual expenses (due to 12b-1 fees)
                     mean that over the years you could end up paying more than
                     the equivalent of the maximum allowable front-end sales
                     charge.

THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

Class B shares can be a logical choice for long-term investors who would prefer
to see all of their investment go to work right away, and can accept somewhat
higher annual expenses in exchange.


                                       63
<PAGE>

                     Class C shares

                     Like Class B shares, Class C shares have no up-front sales
                     charges and have a 12b-1 plan under which a distribution
                     fee of 0.75% is deducted from fund assets each year.
                     Because of this fee, the annual expenses for Class C shares
                     are similar to those of Class B shares, but higher than
                     those for Class A shares (and the performance of Class C
                     shares is correspondingly lower than that of Class A).

                     Unlike Class B shares, Class C shares do NOT automatically
                     convert to Class A after six years, so they continue to
                     have higher annual expenses.

                     Class C shares have a contingent deferred sales charge
                     (CDSC), but only on shares you sell within one year of
                     buying them:

                     Year after you bought shares    CDSC on shares you sell
                     ----------------------------------------------------------
                     First year                      1.00%
                     ----------------------------------------------------------
                     Second year and later           None
                     ----------------------------------------------------------

                     This CDSC is waived under certain circumstances (see
                     "Policies You Should Know About"). Your financial
                     representative or Kemper can answer your questions and help
                     you determine if you're eligible.

                     While Class C shares don't have any front-end sales
                     charges, their higher annual expenses (due to 12b-1 fees)
                     mean that over the years you could end up paying more than
                     the equivalent of the maximum allowable front-end sales
                     charge.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

Class C shares may appeal to investors who plan to sell some or all shares
within six years of buying them, or who aren't certain of their investment time
horizon.


                                       64
<PAGE>

--------------------------------------------------------------------------------
How to Buy Shares

Once you've chosen a share class, use these instructions to make investments.
Make out any checks to "Kemper Funds."

--------------------------------------------------------------------------------
 First investment                        Additional investments
--------------------------------------------------------------------------------
 $1,000 or more for regular accounts     $100 or more for regular accounts

 $250 or more for IRAs                   $50 or more for IRAs

                                         $50 or more with an Automatic
                                         Investment Plan
--------------------------------------------------------------------------------
 Through a financial representative

 o Contact your representative using     o Contact your representative using
   the method that's most convenient       the method that's most convenient
   for you                                 for you
--------------------------------------------------------------------------------
 By mail or express mail (see below)

 o Fill out and sign an application      o Send a check and a Kemper
                                           investment slip to us at the
 o Send it to us at the appropriate        appropriate address below
   address, along with an investment
   check                                 o If you don't have an investment
                                           slip, simply include a letter with
                                           your name, account number, the full
                                           name of the fund and the share class
                                           and your investment instructions
--------------------------------------------------------------------------------
 By wire
 o Call (800) 621-1048 for instructions  o Call (800) 621-1048 for instructions
--------------------------------------------------------------------------------
 By phone
 --                                      o Call (800) 621-1048 for instructions
--------------------------------------------------------------------------------
 With an automatic investment plan

 --                                      o To set up regular investments,
                                           call (800) 621-1048
--------------------------------------------------------------------------------
 On the Internet

 o Follow the instructions at            o Follow the instructions at
   www.kemper.com                          www.kemper.com
--------------------------------------------------------------------------------


Regular mail: Kemper Funds, PO Box 219415, Kansas City, MO 64121-9415

Express, registered or certified mail:
Kemper Service Company, 811 Main Street, Kansas City, MO 64105-2005

Fax number: (800) 818-7526 (for exchanging and selling only)


                                       65
<PAGE>

--------------------------------------------------------------------------------
How to Exchange Or Sell Shares

Use these instructions to exchange or sell shares in your account.

--------------------------------------------------------------------------------
Exchanging into another fund Selling shares
--------------------------------------------------------------------------------

 $1,000 or more to open a new account    Some transactions, including most for
                                         over $50,000, can only be ordered in
 $100 or more for exchanges between      writing with a signature guarantee; if
 existing accounts                       you're in doubt, see page 69
--------------------------------------------------------------------------------
 Through a financial representative

 o Contact your representative by the    o Contact your representative by
   method that's most convenient for       the method that's most convenient
   you                                     for you
--------------------------------------------------------------------------------
 By phone or wire

 o Call (800) 621-1048 for instructions  o Call (800) 621-1048 for instructions
--------------------------------------------------------------------------------
 By mail, express mail or fax
 (see previous page)

 Write a letter that includes:           Write a letter that includes:

 o the fund, class and account number    o the fund, class and account
   you're exchanging out of                number from which you want to
 o the dollar amount or number of          sell shares
   shares you want to exchange           o the dollar amount or number of
 o the name and class of the fund you      shares you want to sell
   want to exchange into                 o your name(s), signature(s) and
 o your name(s), signature(s) and          address, as they appear on your
   address, as they appear on your         account
   account                               o a daytime telephone number
 o a daytime telephone number
--------------------------------------------------------------------------------

 With a systematic exchange plan         With a systematic withdrawal plan

 o To set up regular exchanges from a    o To set up regular cash payments
   Kemper fund account, call               from a Kemper fund account, call
   (800) 621-1048                          (800) 621-1048
--------------------------------------------------------------------------------
 On the Internet
 o Follow the instructions at            o Follow the instructions at
   www.kemper.com                          www.kemper.com
--------------------------------------------------------------------------------

                                       66
<PAGE>


--------------------------------------------------------------------------------
Policies You Should Know About

                     Along with the instructions on the previous pages, the
                     policies below may affect you as a shareholder.

                     If you are investing through an investment provider,
                     check the materials you received from them. As a
                     general rule, you should follow the information in
                     those materials wherever it contradicts the
                     information given here. Please note that an
                     investment provider may charge its own fees.

                     In order to reduce the amount of mail you receive and to
                     help reduce fund expenses, we generally send a single copy
                     of any shareholder report and prospectus to each household.
                     If you do not want the mailing of these documents to be
                     combined with those for other members of your household,
                     please call (800) 621-1048.

                     Policies about transactions

                     The funds are open for business each day the New York
                     Stock Exchange is open. Each fund calculates its
                     share price every business day, as of the close of
                     regular trading on the Exchange (typically 3 p.m.
                     Central time, but sometimes earlier, as in the case
                     of scheduled half-day trading or unscheduled
                     suspensions of trading).

                     You can place an order to buy or sell shares at any
                     time. Once your order is received by Kemper Service
                     Company, and they have determined that it is a "good
                     order," it will be processed at the next share price
                     calculated.

                     Because orders placed through investment providers must be
                     forwarded to Kemper Service Company before they can be
                     processed, you'll need to allow extra time. A
                     representative of your investment provider should be able
                     to tell you when your order will be processed.

                     KemperACCESS, the Kemper Automated Information Line, is
                     available 24 hours a day by calling (800) 972-3060. You can
                     use Kemper ACCESS to get information on Kemper funds
                     generally and on accounts held directly at Kemper. You can
                     also use it to make exchanges and sell shares.


                                       67
<PAGE>

                     EXPRESS-Transfer lets you set up a link between a Kemper
                     account and a bank account. Once this link is in place, you
                     can move money between the two with a phone call. You'll
                     need to make sure your bank has Automated Clearing House
                     (ACH) services. Transactions take two to three days to be
                     completed, and there is a $100 minimum. To set up
                     EXPRESS-Transfer on a new account, see the account
                     application; to add it to an existing account, call (800)
                     621-1048.

                     Share certificates are available on written request.
                     However, we don't recommend them unless you want them for a
                     specific purpose, because your shares can only be sold by
                     mailing them in, and if they're ever lost they're difficult
                     and expensive to replace.

                     When you call us to sell shares, we may record the call,
                     ask you for certain information or take other steps
                     designed to prevent fraudulent orders. It's important to
                     understand that, with respect to certain pre-authorized
                     privileges, as long as we take reasonable steps to ensure
                     that an order appears genuine, we are not responsible for
                     any losses that may occur.

                     When you ask us to send or receive a wire, please note that
                     while we don't charge a fee to send or receive wires, it's
                     possible that your bank may do so. Wire transactions are
                     normally completed within 24 hours. The funds can only send
                     or accept wires of $1,000 or more.

                     Exchanges among Kemper funds are an option for most
                     shareholders. Exchanges are a shareholder privilege, not a
                     right: we may reject any exchange order, particularly when
                     there appears to be a pattern of "market timing" or other
                     frequent purchases and sales. We may also reject or limit
                     purchase orders, for these or other reasons.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

The Kemper Web site can be a valuable resource for shareholders with Internet
access. Go to www. kemper.com to get up-to-date information, review balances or
even place orders for exchanges.


                                       68
<PAGE>

                     When you want to sell more than $50,000 worth of shares or
                     send the proceeds to a third party or to a new address
                     you'll usually need to place your order in writing and
                     include a signature guarantee. The only exception is if you
                     want money wired to a bank account that is already on file
                     with us; in that case, you don't need a signature
                     guarantee. Also, you don't need a signature guarantee for
                     an exchange, although we may require one in certain other
                     circumstances.

                     A signature guarantee is simply a certification of your
                     signature -- a valuable safeguard against fraud. You can
                     get a signature guarantee from most brokers, banks, savings
                     institutions and credit unions. Note that you can't get a
                     signature guarantee from a notary public.

                     When you sell shares that have a contingent deferred
                     sales charge (CDSC), we calculate the CDSC as a
                     percentage of what you paid for the shares or what
                     you are selling them for -- whichever results in the
                     lowest charge to you. In processing orders to sell
                     shares, we turn to the shares with the lowest CDSC
                     first. Exchanges from one Kemper fund into another
                     don't affect CDSCs: for each investment you make, the
                     date you first bought Kemper shares is the date we
                     use to calculate a CDSC on that particular
                     investment.

                     There are certain cases in which you may be exempt from a
                     CDSC. These include:

                     o the death or disability of an account owner
                       (including a joint owner)

                     o withdrawals made through a systematic withdrawal plan

                     o withdrawals related to certain retirement or benefit
                       plans

                     o redemptions for certain loan advances, hardship
                       provisions or returns of excess contributions from
                       retirement plans

                     o for Class A shares purchased through the Large Order NAV
                       Purchase Privilege, redemption of shares whose dealer of
                       record at the time of the investment notifies Kemper
                       Distributors that the dealer is waiving the applicable
                       commission


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

If you ever have difficulty placing an order by phone or fax, you can always
send us your order in writing.


                                       69
<PAGE>

                     In each of these cases, there are a number of additional
                     provisions that apply in order to be eligible for a CDSC
                     waiver. Your financial representative or Kemper can answer
                     your questions and help you determine if you are eligible.

                     If you sell shares in a Kemper fund and then decide to
                     invest with Kemper again within six months, you can take
                     advantage of the "reinstatement feature." With this
                     feature, you can put your money back into the same class of
                     a Kemper fund at its current NAV and for purposes of sales
                     charges it will be treated as if it had never left Kemper.
                     You'll also be reimbursed (in the form of fund shares) for
                     any CDSC you paid when you sold your shares. Future CDSC
                     calculations will be based on your original investment
                     date, rather than your reinstatement date. There is also an
                     option that lets investors who sold Class B shares buy
                     Class A shares with no sales charge, although they won't be
                     reimbursed for any CDSC they paid. You can only use the
                     reinstatement feature once for any given group of shares.
                     To take advantage of this feature, contact Kemper or your
                     financial representative.

                     Money from shares you sell is normally sent out within one
                     business day of when your order is received in proper form,
                     although it could be delayed for up to seven days. There
                     are also two circumstances when it could be longer: when
                     you are selling shares you bought recently by check and
                     that check hasn't cleared yet (maximum delay: 10 days) or
                     when unusual circumstances prompt the SEC to allow further
                     delays. Certain expedited redemption processes may also be
                     delayed when you are selling recently purchased shares.


                                       70
<PAGE>

                     How the funds calculate share price

                     For each fund in this prospectus, the price at which
                     you buy shares is as follows:

                     Class A shares -- net asset value per share, or NAV,
                     adjusted to allow for any applicable sales charges (see
                     "Choosing A Share Class")

                     Class B and Class C shares-- net asset value per share,
                     or NAV

                     To calculate NAV, each share class of each fund uses the
                     following equation:

                           TOTAL ASSETS - TOTAL LIABILITIES
                          ----------------------------------      = NAV
                          TOTAL NUMBER OF SHARES OUTSTANDING

                     For each fund and share class in this prospectus, the price
                     at which you sell shares is also the NAV, although for
                     Class B and Class C investors a contingent deferred sales
                     charge may be taken out of the proceeds (see "Choosing A
                     Share Class").

                     We typically use market prices to value securities.
                     However, when a market price isn't available, or when we
                     have reason to believe it doesn't represent market
                     realities, we may use fair value methods approved by a
                     fund's Board. In such a case, the fund's value for a
                     security is likely to be different from quoted market
                     prices.


                                       71
<PAGE>

                     Other rights we reserve

                     For each fund in this prospectus, you should be aware that
                     we may do any of the following:

                     o withhold 31% of your distributions as federal income tax
                       if we have been notified by the IRS that you are subject
                       to backup withholding, or if you fail to provide us with
                       a correct taxpayer ID number or certification that you
                       are exempt from backup withholding

                     o reject a new account application if you don't provide a
                       correct Social Security or other tax ID number; if the
                       account has already been opened, we may give you 30 days'
                       notice to provide the correct number

                     o charge you $9 each calendar quarter if your account
                       balance is below $1,000 for the entire quarter; this
                       policy doesn't apply to most retirement accounts or if
                       you have an automatic investment plan

                     o pay you for shares you sell by "redeeming in kind," that
                       is, by giving you marketable securities (which typically
                       will involve brokerage costs for you to liquidate) rather
                       than cash

                     o change, add or withdraw various services, fees and
                       account policies (for example, we may change or terminate
                       the exchange privilege at any time)


                                       72
<PAGE>

--------------------------------------------------------------------------------
Understanding Distributions And Taxes

                     By law, a mutual fund is required to pass through to its
                     shareholders virtually all of its net earnings. A fund can
                     earn money in two ways: by receiving interest, dividends or
                     other income from securities it holds, and by selling
                     securities for more than it paid for them. (A fund's
                     earnings are separate from any gains or losses stemming
                     from your own purchase of shares.) A fund may not always
                     pay a distribution for a given period.

                     The fund intends to pay dividends and distributions to its
                     shareholders in November or December, and if necessary may
                     do so at other times as well.

                     You can choose how to receive your dividends and
                     distributions. You can have them all automatically
                     reinvested in fund shares (at NAV), all sent to you by
                     check, have one type reinvested and the other sent to you
                     by check or have them invested in a different fund. Tell us
                     your preference on your application. If you don't indicate
                     a preference, your dividends and distributions will all be
                     reinvested without sales charges. For retirement plans,
                     reinvestment is the only option.

                     Buying and selling fund shares will usually have tax
                     consequences for you (except in an IRA or other
                     tax-advantaged account). Your sales of shares may result in
                     a capital gain or loss for you; whether long-term or
                     short-term depends on how long you owned the shares. For
                     tax purposes, an exchange is the same as a sale.


THE FOLLOWING SIDEBAR TEXT APPEARS NEXT TO THE PRECEDING PARAGRAPHS.
--------------------------------------------------------------------------------

Because each shareholder's tax situation is unique, ask your tax professional
about the tax consequences of your investments, including any state and local
tax consequences.


                                       73
<PAGE>

                     The tax status of the fund earnings you receive, and your
                     own fund transactions, generally depends on their type:

                     Generally taxed at ordinary income rates
                     -------------------------------------------------------
                     o  short-term capital gains from selling fund shares
                     -------------------------------------------------------
                     o  income dividends you receive from a fund
                     -------------------------------------------------------
                     o  short-term capital gains distributions received
                        from a fund
                     -------------------------------------------------------

                     Generally taxed at capital gains rates
                     -------------------------------------------------------
                     o  long-term capital gains from selling fund shares
                     -------------------------------------------------------
                     o  long-term capital gains distributions received
                        from a fund
                     -------------------------------------------------------

                     You may be able to claim a tax credit or deduction for your
                     share of any foreign taxes your fund pays.

                     Your fund will send you detailed tax information every
                     January. These statements tell you the amount and the tax
                     category of any dividends or distributions you received.
                     They also have certain details on your purchases and sales
                     of shares. The tax status of dividends and distributions is
                     the same whether you reinvest them or not. Dividends or
                     distributions declared in the last quarter of a given year
                     are taxed in that year, even though you may not receive the
                     money until the following January.

                     If you invest right before the fund pays a dividend, you'll
                     be getting some of your investment back as a taxable
                     dividend. You can avoid this, if you want, by investing
                     after the fund declares a dividend. In tax-advantaged
                     retirement accounts you don't need to worry about this.

                     Corporations may be able to take a dividends- received
                     deduction for a portion of income dividends they receive.

                                       74
<PAGE>

To Get More Information

Shareholder reports -- These include commentary from each fund's management team
about recent market conditions and the effects of a fund's strategies on its
performance. For each fund, they also have detailed performance figures, a list
of everything the fund owns, and the fund's financial statements. Shareholders
get these reports automatically. For more copies, call (800) 621-1048.

Statements of Additional Information (SAIs) -- These tell you more about each
fund's features and policies, including additional risk information. The SAIs
are incorporated by reference into this document (meaning that they're legally
part of this prospectus).

If you'd like to ask for copies of these documents, or if you're a shareholder
and have questions, please contact Kemper or the SEC (see below). Materials you
get from Kemper are free; those from the SEC involve a copying fee. If you like,
you can look over these materials in person at the SEC's Public Reference Room
in Washington, DC.

SEC
450 Fifth Street, N.W.
Washington, DC 20549-0102
www.sec.gov
Tel (800) SEC-0330

Kemper Funds
222 South Riverside Plaza
Chicago, IL 60606-5808
www.kemper.com
Tel (800) 621-1048

SEC File Numbers

Kemper Aggressive Growth Fund                811-07855

Kemper Blue Chip Fund                        811-5357

Classic Growth Fund                          811-43

Kemper Growth Fund                           811-1365

Kemper Small Capitalization Equity Fund      811-1702

Kemper Technology Fund                       811-0547

Kemper Total Return Fund                     811-1236

Kemper Value+Growth Fund                     811-7331


Principal Underwriter
Kemper Distributors, Inc.
222 South Riverside Plaza Chicago, IL 60606-5808
www.kemper.com E-mail [email protected]
Tel (800) 621-1048

[LOGO] KEMPER FUNDS
Long-term investing in a short-term world(SM)

<PAGE>


Kemper Equity Funds/Growth Style
Kemper Aggressive Growth Fund
Kemper Blue Chip Fund
Kemper Growth Fund
Kemper Small Capitalization Equity Fund
Kemper Technology Fund
Kemper Total Return Fund
Kemper Value+Growth Fund

SUPPLEMENT TO PROSPECTUS
DATED FEBRUARY 1, 2001

CLASS I SHARES
--------------------------------------------------------------------------------

The above funds currently offer four classes of shares to provide investors with
different purchasing options. These are Class A, Class B and Class C shares,
which are described in the funds' prospectus, and Class I shares, which are
described in the prospectus as supplemented hereby. When placing purchase
orders, investors must specify whether the order is for Class A, Class B, Class
C or Class I shares.

Class I shares are available for purchase exclusively by the following
categories of institutional investors: (1) tax-exempt retirement plans (Profit
Sharing, 401(k), Money Purchase Pension and Defined Benefit Plans) of Scudder
Kemper Investments, Inc. ("Scudder Kemper") and its affiliates and rollover
accounts from those plans; (2) the following investment advisory clients of
Scudder Kemper and its investment advisory affiliates that invest at least $1
million in a fund: unaffiliated benefit plans, such as qualified retirement
plans (other than individual retirement accounts and self-directed retirement
plans); unaffiliated banks and insurance companies purchasing for their own
accounts; and endowment funds of unaffiliated non-profit organizations; (3)
investment-only accounts for large qualified plans, with at least $50 million in
total plan assets or at least 1000 participants; (4) trust and fiduciary
accounts of trust companies and bank trust departments providing fee-based
advisory services that invest at least $1 million in a fund on behalf of each
trust; and (5) policy holders under Zurich-American Insurance Group's collateral
investment program investing at least $200,000 in a fund; and (6) investment
companies managed by Scudder Kemper that invest primarily in other investment
companies.

Class I shares currently are available for purchase only from Kemper
Distributors, Inc. ("KDI"), principal underwriter for the funds, and, in the
case of category 4 above, selected dealers authorized by KDI. Share certificates
are not available for Class I shares.

<PAGE>

The primary distinctions among the classes of each fund's shares lie in their
initial and contingent deferred sales charge schedules and in their ongoing
expenses, including asset-based sales charges in the form of Rule 12b-1
distribution fees. Class I shares are offered at net asset value without an
initial sales charge and are not subject to a contingent deferred sales charge
or a Rule 12b-1 distribution fee. Also, there is no administrative services fee
charged to Class I shares. As a result of the relatively lower expenses for
Class I shares, the level of income dividends per share (as a percentage of net
asset value) and, therefore, the overall investment return, typically will be
higher for Class I shares than for Class A, Class B and Class C shares.

The following information supplements the indicated sections of the prospectus.

Performance
The table shows how the funds' returns over different periods average out. For
context, the table has market indices (which, unlike the funds, have no fees or
expenses). All figures on this page assume reinvestment of dividends and
distributions. As always, past performance is no guarantee of future results. No
performance data are available for the Class I shares of Kemper Aggressive
Growth Fund and Kemper Value+Growth Fund.

Average Annual Total Returns (as of 12/31/2000)

<TABLE>
<S>                          <C>         <C>        <C>          <C>

                                                    Since        Since
                             Since       Since      7/3/95       11/22/95
                             12/31/99    12/31/95   life of      Life of
                             1 Year      5 Years    Class        Class
------------------------------------------------------------------------------
Kemper Blue Chip Fund        %           %           --           %
Index 1                                              --
Index 2                                              --           *

Kemper Growth Fund                                    %          --
Index 1                                              **          --
Index 3                                              **          --

Kemper Small Capitalization                                      --
Equity Fund
Index 1                                              **          --
Index 4                                              **          --
Index 5                                              **          --

Kemper Technology Fund                                           --
Index 1                                              **          --
Index 3                                              **          --
Index 6                                              **          --

                                       2

<PAGE>


                                                    Since        Since
                             Since       Since      7/3/95       11/22/95
                             12/31/99    12/31/95   life of      Life of
                             1 Year      5 Years    Class        Class
------------------------------------------------------------------------------
Kemper Total Return
Fund                                                             --
Index 1                                              **          --
Index 3                                              **          --
Index 7                                              **          --

</TABLE>

*   Index comparison begins November 30, 1995

**  Index comparison begins June 30, 1995

Index 1: Standard & Poor's 500 Composite Stock Price Index (S&P 500), an
unmanaged capitalization-weighted index that includes 500 large-cap U.S. stocks.

Index 2: Russell 1000 Index, an unmanaged price-only index of the 1,000 largest
capitalized companies that are domiciled in the United States and whose common
stocks are traded there.

Index 3: Russell 1000 Growth Index, an unmanaged capitalization-weighted index
containing the growth stocks in the Russell 1000 Index.

Index 4: Russell 2000 Index, an unmanaged
capitalization-weighted measure of approximately 2,000
small U.S. stocks.

Index 5: Russell 2000 Growth Index, an unmanaged capitalization-weighted index
containing the growth stocks in the Russell 2000 Index.

Index 6: Hambrecht & Quist Index, an unmanaged index composed of approximately
275 technology stocks, including companies from five technology groups: computer
hardware, computer software, communications, semiconductors and information
services.

Index 7: Lehman Brothers Government/Corporate Bond Index, an unmanaged
index of government and investment-grade corporate debt securities of
intermediate- and long-term maturities.

                                       3

<PAGE>

How much investors pay
This table describes the fees and expenses that you may pay if you buy and hold
shares of a fund.

Shareholder fees: Fees paid directly from your investment.

<TABLE>
<S>              <C>          <C>         <C>         <C>           <C>

                   Maximum
                    Sales      Maximum
                   Charge      Deferred   Maximum
                   (Load)        Sales      Sales
                 Imposed on     Charge    Charge on   Redemption
                  Purchases   (Load) (as  Reinvested  Fee (as % of
                  (as % of       % of     Dividends/    amount
                  Offering    Redemption   Distribu-  redeemed, if  Exchange
                   Price)      Proceeds)     tions    applicable)     Fee
----------------------------------------------------------------------------
Kemper
Aggressive
Growth Fund         None        None         None        None       None
----------------------------------------------------------------------------
Kemper Blue
Chip Fund           None        None         None        None       None
----------------------------------------------------------------------------
Kemper Growth
Fund                None        None         None        None       None
----------------------------------------------------------------------------
Kemper Small
Capitalization
Equity Fund         None        None         None        None       None
----------------------------------------------------------------------------
Kemper
Technology
Fund                None        None         None        None       None
----------------------------------------------------------------------------
Kemper Total
Return Fund         None        None         None        None       None
----------------------------------------------------------------------------
Kemper
Value+Growth
Fund                None        None         None        None       None
----------------------------------------------------------------------------

</TABLE>

                                       4

<PAGE>


Annual fund operating expenses: Expenses that are deducted from fund assets.

<TABLE>
<S>                             <C>         <C>         <C>         <C>

                                                                     Total
                                             Distribu-               Annual
                                Investment     tion                   Fund
                                management   (12b-1)      Other     Operating
                                    Fee       Fees      Expenses*   Expenses
----------------------------------------------------------------------------
Kemper Aggressive Growth Fund        %         None         %          %
----------------------------------------------------------------------------
Kemper Blue Chip Fund                %         None         %          %
----------------------------------------------------------------------------
Kemper Growth Fund                   %         None         %          %
----------------------------------------------------------------------------
Kemper Small Capitalization          %         None         %          %
Equity Fund
----------------------------------------------------------------------------
Kemper Technology Fund               %         None         %          %
----------------------------------------------------------------------------
Kemper Total Return Fund             %         None         %          %
----------------------------------------------------------------------------
Kemper Value+Growth Fund             %         None         %          %
----------------------------------------------------------------------------

</TABLE>

*   "Other Expenses" are restated to reflect changes in certain administrative
    and regulatory fees.

Example
Based on the figures above, this example is designed to help you compare the
expenses of a fund to those of other funds. The example assumes operating
expenses remain the same and that you invested $10,000, earned 5% annual returns
and reinvested all dividends and distributions. This is only an example; actual
expenses will be different.

<TABLE>
<S>                                 <C>       <C>       <C>       <C>

                                    1 Year    3 Years   5 Years   10 Years
 ---------------------------------------------------------------------------
 Kemper Aggressive Growth Fund         $          $         $          $
 ---------------------------------------------------------------------------
 Kemper Blue Chip Fund                 $          $         $          $
 ---------------------------------------------------------------------------
 Kemper Growth Fund                    $          $         $          $
 ---------------------------------------------------------------------------
 Kemper Small Capitalization
 Equity Fund                           $          $         $          $
 ---------------------------------------------------------------------------
 Kemper Technology Fund                $          $         $          $
 ---------------------------------------------------------------------------
 Kemper Total Return Fund              $          $         $          $
 ---------------------------------------------------------------------------
 Kemper Value+Growth Fund              $          $         $          $
 ---------------------------------------------------------------------------

</TABLE>

                                       5

<PAGE>

Financial Highlights

Kemper Blue Chip Fund


                                       6

<PAGE>

Kemper Growth Fund

                                       7

<PAGE>

Kemper Small Capitalization Equity Fund


                                       8

<PAGE>

Kemper Technology Fund


                                       9

<PAGE>

Kemper Total Return Fund


                                       10

<PAGE>

Special Features
Shareholders of a Fund's Class I shares may exchange their shares for (i) shares
of Zurich Money Funds -- Zurich Money Market Fund if the shareholders of Class I
shares have purchased shares because they are participants in tax-exempt
retirement plans of Scudder Kemper and its affiliates and (ii) Class I shares of
any other "Kemper Mutual Fund" listed in the Statement of Additional
Information. Conversely, shareholders of Zurich Money Funds -- Zurich Money
Market Fund who have purchased shares because they are participants in
tax-exempt retirement plans of Scudder Kemper and its affiliates may exchange
their shares for Class I shares of "Kemper Mutual Funds" to the extent that they
are available through their plan. Exchanges will be made at the relative net
asset values of the shares. Exchanges are subject to the limitations set forth
in the prospectus.


February 1, 2001


<PAGE>

                               KEMPER EQUITY FUNDS




            Kemper Aggressive Growth Fund ("Aggressive Growth Fund")
                    Kemper Blue Chip Fund ("Blue Chip Fund")
                       Kemper Growth Fund ("Growth Fund")
           Kemper Small Capitalization Equity Fund ("Small Cap Fund")
                   Kemper Technology Fund ("Technology Fund")
                 Kemper Total Return Fund ("Total Return Fund")

               Kemper Value Plus Growth Fund ("Value+Growth Fund")
               Kemper Classic Growth Fund ("Classic Growth Fund")

                       Class A, Class B and Class C Shares














                       STATEMENT OF ADDITIONAL INFORMATION

                                February 2, 2001


         This Statement of Additional Information is not a prospectus and should
be read in conjunction  with the prospectus for the Funds,  as amended from time
to time, a copy of which may be obtained  without  charge by  contacting  Kemper
Distributors,   Inc.,  222  South  Riverside  Plaza,  Chicago,  Illinois  60606,
1-800-621-1048,  or from  the firm  from  which  this  Statement  of  Additional
Information was obtained.

         The Annual Report to Shareholders  of each Fund,  dated August 31, 2000
for Kemper Classic Growth Fund,  dated September 30, 2000 for Kemper  Aggressive
Growth Fund, Kemper Small Capitalization Equity Fund, Kemper Growth Fund, Kemper
Total Return Fund and Kemper Technology Fund,  respectively,  and dated November
30, 2000 for Kemper  Value+Growth  Fund accompanies this Statement of Additional
Information. They are incorporated by reference and are hereby deemed to be part
of this Statement of Additional Information.

         This Statement of Additional  Information is  incorporated by reference
into the combined prospectus.




<PAGE>

                       INVESTMENT POLICIES AND TECHNIQUES




AGGRESSIVE  GROWTH  FUND.  The  Aggressive  Growth  Fund  is  a  non-diversified
investment company that seeks capital appreciation through the use of aggressive
investment  techniques.  In seeking to achieve its  objective,  the Fund invests
primarily in equity  securities of U.S.  companies that the  investment  manager
believes  offer the best  opportunities  for capital  appreciation  at any given
time.  The  investment  manager  pursues a flexible  investment  strategy in the
selection  of  securities,  not  limited to any  particular  investment  sector,
industry or company  size;  and it may,  depending  upon  market  circumstances,
emphasize the securities of small, medium or large-sized  companies from time to
time.  The Fund may invest a portion of its assets in initial  public  offerings
("IPOs"),  which are  typically  securities  of small,  unseasoned  issuers.  In
addition,  since  the  Fund  is  a  non-diversified   investment  company,  when
attractive  investments  are  identified,  the investment  manager may establish
relatively large individual  positions,  sometimes  representing more than 5% of
total  assets.  Therefore,  the Fund has broader  latitude in its  selection  of
securities  than a typical  equity mutual fund.  There is no assurance  that the
management  strategy  for the Fund  will be  successful  or that  the Fund  will
achieve its objective.

The  investment  manager  uses a  disciplined  approach to stock  selection  and
fundamental  research to help it identify  quality  "growth"  companies.  Growth
stocks are stocks of  companies  whose  earnings  per share are  expected by the
investment manager to grow faster than the market average. Growth stocks tend to
trade at higher price to earnings (P/E) ratios than the general market,  but the
investment  manager believes that the potential of such stocks for above average
earnings more than justifies their price. The investment  manager relies heavily
upon the fundamental analysis and research of its large research staff, and will
generally seek to invest in growth  companies not fully recognized by the market
at large. Such companies may be:

o    Expected to achieve  accelerating  earnings  growth,  perhaps due to strong
     demand for their products or services;

o    Undergoing financial restructuring;

o    Involved in takeover or arbitrage situations;

o    Expected  to benefit  from  evolving  market  cycles or  changing  economic
     conditions; or

o    Representing special situations, such as changes in management or favorable
     regulatory developments.

Because of the flexible nature of the Fund's investment  policies,  the Fund may
have a higher  portfolio  turnover  than a typical  equity  mutual fund. To some
extent,  the Fund may trade in securities  for the short term. In addition,  the
investment  manager may use market  volatility  in an attempt to  capitalize  on
apparently  unwarranted  price  fluctuations,   both  to  purchase  or  increase
undervalued  positions and to sell or reduce overvalued  holdings.  For example,
during  market  declines,  the Fund may add to positions in favored  securities,
while becoming more  aggressive as it gradually  reduces the number of companies
represented in its portfolio. Conversely, in rising markets, the Fund may reduce
or eliminate  fully valued  positions,  while becoming more  conservative  as it
gradually increases the number of companies in its portfolio.

Although  the Fund will not  invest  25% or more of its total  assets in any one
industry,  it may, from time to time,  invest 25% or more of its total assets in
one or more market sectors,  such as the technology  sector. A sector is made up
of numerous industries.  If the Fund focuses its investments in a market sector,
financial,  economic,  business and other developments affecting issuers in that
sector  may have a greater  effect on the Fund  than if it had not  focuses  its
assets in that sector.

Under normal conditions, the Fund will invest at least 65%, and may invest up to
100%, of its total assets in equity securities. Equity securities include common
stocks, preferred stocks, securities convertible into or exchangeable for common
or preferred  stocks,  equity  investments in  partnerships,  joint ventures and
other forms of non-corporate  investment and warrants and rights exercisable for
equity securities.

                                       2
<PAGE>


The Fund may also engage in strategic transactions, purchase foreign securities,
illiquid securities and REITs and lend its portfolio  securities.  The Fund will
not purchase illiquid securities,  including  repurchase  agreements maturing in
more than seven days, if, as a result  thereof,  more than 15% of the Fund's net
assets,  valued  at the  time of the  transaction,  would  be  invested  in such
securities.  The Fund may engage in short sales against-the-box,  although it is
the Fund's  current  intention that no more than 5% of its net assets will be at
risk.  When a  defensive  position  is deemed  advisable,  all or a  significant
portion of the Fund's assets may be held  temporarily  in cash or defensive type
securities,  such  as  high-grade  debt  securities,   securities  of  the  U.S.
Government or its agencies and high quality money market instruments,  including
repurchase agreements. It is impossible to predict for how long such alternative
strategies may be utilized.


BLUE CHIP FUND.  The Blue Chip Fund seeks  growth of capital  and of income.  In
seeking to achieve  its  objective,  the Fund will  invest  primarily  in common
stocks of well  capitalized,  established  companies that the Fund's  investment
manager  believes  to have the  potential  for growth of capital,  earnings  and
dividends.  Under normal market  conditions,  the Fund will invest at least 65%,
and may invest up to 100%, of its total assets in the common stocks of companies
with a market capitalization of at least $1 billion at the time of investment.

In pursuing its objective,  the Fund will emphasize investments in common stocks
of large, well known, high quality companies. Companies of this general type are
often  referred to as "Blue Chip"  companies.  Blue Chip companies are generally
identified by their substantial capitalization,  established history of earnings
and  dividends,  easy access to credit,  good  industry  position  and  superior
management structure. Blue Chip companies are believed to generally exhibit less
investment  risk and less price  volatility  than  companies  lacking these high
quality characteristics,  such as smaller, less seasoned companies. In addition,
the large market of publicly  held shares for such  companies  and the generally
high  trading  volume in those  shares  results in a  relatively  high degree of
liquidity for such  investments.  The  characteristics  of high quality and high
liquidity  of Blue Chip  investments  should  make the  market  for such  stocks
attractive to investors both within and outside the United States. The Fund will
generally  attempt to avoid  speculative  securities  or those with  significant
speculative characteristics.

In  general,  the Fund will seek to invest in those  established,  high  quality
companies  whose  industries  are  experiencing  favorable  secular or  cyclical
change.  Thus,  the Fund in seeking its  objective  will  endeavor to select its
investments from among high quality  companies  operating in the more attractive
industries.


As indicated  above,  the Fund's  investment  portfolio  will  normally  consist
primarily  of common  stocks.  The Fund may invest to a more  limited  extent in
preferred   stocks,   debt  securities  and  securities   convertible   into  or
exchangeable  for common stocks,  including  warrants and rights,  when they are
believed to offer  opportunities  for growth of capital and of income.  The Fund
may also engage in strategic transactions,  purchase foreign securities and lend
its portfolio  securities.  The Fund may engage in short sales  against-the-box,
although  it is the  Fund's  current  intention  that no more than 5% of its net
assets  will be at  risk.  The  Fund  will  not  purchase  illiquid  securities,
including  repurchase  agreements  maturing  in more than seven  days,  if, as a
result  thereof,  more than 15% of the Fund's net assets,  valued at the time of
the  transaction,  would be  invested  in such  securities.  The  Fund  does not
generally make investments for short-term  profits,  but it is not restricted in
policy with regard to portfolio turnover and will make changes in its investment
portfolio  from time to time as  business  and  economic  conditions  and market
prices may dictate and as its investment policy may require.

There are risks inherent in the investment in any security,  including shares of
the Fund. The investment manager attempts to reduce risk through diversification
of the Fund's portfolio and fundamental research; however, there is no guarantee
that such efforts will be successful. The investment manager believes that there
are opportunities for growth of capital and growth of dividends from investments
in Blue Chip  companies  over time. The Fund's shares are intended for long-term
investment.  When a defensive position is deemed advisable, all or a significant
portion of the Fund's assets may be held  temporarily  in cash or defensive type
securities,  such  as  high-grade  debt  securities,   securities  of  the  U.S.
Government or its agencies and high quality money market instruments,  including
repurchase agreements. It is impossible to predict for how long such alternative
strategies may be utilized.


                                       3
<PAGE>

GROWTH  FUND.  The Growth  Fund seeks  growth of  capital  through  professional
management and  diversification of investments in securities it believes to have
potential for capital appreciation.


In seeking  to achieve  its  objective,  it will be the Fund's  policy to invest
primarily in securities  that it believes offer the potential for increasing the
Fund's total asset value.  While it is anticipated that most investments will be
in common stocks of companies with above-average  growth prospects,  investments
may also be made to a limited  degree in other common stocks and in  convertible
securities  (including  warrants),  such as bonds and preferred stocks. The Fund
may also engage in strategic transactions,  purchase foreign securities and lend
its  portfolio  securities.  The Fund  will not  purchase  illiquid  securities,
including  repurchase  agreements  maturing  in more than seven  days,  if, as a
result  thereof,  more than 15% of the Fund's net assets,  valued at the time of
the transaction, would be invested in such securities.


Some  of  the  factors  the  Fund's  management  will  consider  in  making  its
investments  are  patterns  of  increasing  growth  in sales and  earnings,  the
development  of new or improved  products or  services,  favorable  outlooks for
growth in the industry,  the  probability of increased  operating  efficiencies,
emphasis on research and development, cyclical conditions, or other signs that a
company is  expected to show  greater  than  average  capital  appreciation  and
earnings growth.


When a defensive position is deemed advisable,  all or a significant  portion of
the Fund's assets may be held  temporarily in cash or defensive type securities,
such as high-grade  debt  securities,  securities of the U.S.  Government or its
agencies  and  high  quality  money  market  instruments,  including  repurchase
agreements. It is impossible to predict for how long such alternative strategies
may be utilized.


SMALL CAP FUND.  The Small Cap Fund seeks  maximum  appreciation  of  investors'
capital. Current income will not be a significant factor.

The Fund seeks  attractive  areas for investment  opportunity  arising from such
factors as technological  advances,  new marketing  methods,  and changes in the
economy and population.  Currently,  the investment  manager  believes that such
investment opportunities may be found among the following: (a) companies engaged
in high technology  fields such as  electronics,  medical  technology,  computer
software and specialty retailing;  (b) companies having a significantly improved
earnings outlook as the result of a changed economic environment,  acquisitions,
mergers, new management,  changed corporate strategy or product innovation;  (c)
companies  supplying new or rapidly growing services to consumers and businesses
in such fields as automation,  data  processing,  communications,  marketing and
finance; and (d) companies having innovative concepts or ideas.

At least 65% of the Fund's  total  assets  normally  will be  invested  in small
capitalization  stocks  similar in size to those  comprising  the  Russell  2000
Index.  The  investment  manager  currently  believes  that  investment  in such
companies  may offer  greater  opportunities  for growth of capital than larger,
more established  companies,  but also involves  certain special risks.  Smaller
companies often have limited product lines, markets, or financial resources, and
they  may be  dependent  upon  one  or a few  key  people  for  management.  The
securities  of such  companies  generally  are subject to more abrupt or erratic
market  movements  and  may be less  liquid  than  securities  of  larger,  more
established companies or the market averages in general.


The Fund's investment portfolio will normally consist primarily of common stocks
and securities  convertible  into or exchangeable  for common stocks,  including
warrants and rights.  The Fund may also invest to a limited  degree in preferred
stocks and debt securities  when they are believed by the investment  manager to
offer  opportunities  for  capital  growth.  The Fund may  engage  in  strategic
transactions, purchase foreign securities and lend its portfolio securities.

In the  selection  of  investments,  long-term  capital  appreciation  will take
precedence  over short range  market  fluctuations.  The Fund does not intend to
engage actively in trading for short-term profits,  although it may occasionally
make  investments  for  short-term  capital  appreciation  when  such  action is
believed  to be  desirable  and  consistent  with  sound  investment  procedure.
Generally,  the Fund will make  long-term  rather than  short-term  investments.
Nevertheless,  it may dispose of such  investments  at any time it may be deemed
advisable  because of a subsequent  change in the  circumstances of a particular
company or industry or in general market or


                                       4
<PAGE>

economic  conditions.  For example, a security initially purchased for long-term
growth  potential  may be sold at any time  when it is  determined  that  future
growth may not be at an acceptable  rate or that there is a risk of  substantial
decline in market price. The rate of portfolio turnover is not a limiting factor
when  changes  in  investments  are  deemed  appropriate.  In  addition,  market
conditions,  cash  requirements  for redemption and repurchase of Fund shares or
other  factors  could  affect the  portfolio  turnover  rate.  The Fund will not
purchase illiquid securities,  including repurchase  agreements maturing in more
than  seven  days,  if, as a result  thereof,  more than 15% of the  Fund's  net
assets,  valued  at the  time of the  transaction,  would  be  invested  in such
securities.


Since  many  of  the  securities  in the  Fund's  portfolio  may  be  considered
speculative in nature by traditional investment standards, substantially greater
than average market volatility and investment risk may be involved. There can be
no assurance  that the Fund's  shareholders  will be protected  from the risk of
loss inherent in security ownership.


When a defensive position is deemed advisable,  all or a significant  portion of
the Fund's assets may be held  temporarily in cash or defensive type securities,
such as high-grade  debt  securities,  securities of the U.S.  Government or its
agencies  and  high  quality  money  market  instruments,  including  repurchase
agreements. It is impossible to predict for how long such alternative strategies
may be utilized.


TECHNOLOGY  FUND.  The  Technology  Fund seeks growth of capital.  In seeking to
achieve its objective, the Fund will invest primarily in securities of companies
which the investment manager expects to benefit from technological  advances and
improvements  ("technology  companies")  with an emphasis on the  securities  of
companies  that the  investment  manager  believes have  potential for long-term
capital  growth.  Receipt  of  income  from  such  securities  will be  entirely
incidental.  Technology  companies  include those whose  processes,  products or
services,  in the judgment of the investment manager,  are or may be expected to
be  significantly  benefited by scientific  developments  and the application of
technical  advances in  industry,  manufacturing  and  commerce  resulting  from
improving  technology  in such  fields as, for  example,  aerospace,  chemistry,
electronics,  genetic  engineering,  geology,  information  sciences  (including
computers and computer software),  metallurgy, medicine (including pharmacology,
biotechnology and biophysics) and  oceanography.  This investment policy permits
the  investment  manager to seek stocks  having  superior  growth  potential  in
virtually any industry in which they may be found.

The investment  manager currently  believes that investments in smaller emerging
growth  technology  companies  may offer  greater  opportunities  for  growth of
capital than  investments  in larger,  more  established  technology  companies.
However,  such investments also involve certain special risks. Smaller companies
often have limited product lines, markets, or financial resources;  and they may
be dependent  upon one or a few persons for  management.  The securities of such
companies  generally are subject to more abrupt or erratic market movements than
securities  of larger,  more  established  companies  or the market  averages in
general.  Thus,  investment by the Fund in smaller  emerging  growth  technology
companies  may expose  investors to greater than  average  financial  and market
risk. There is no assurance that the Fund's objective will be achieved.


The Fund's investment portfolio will normally consist primarily of common stocks
and securities  convertible  into or exchangeable  for common stocks,  including
warrants and rights.  The Fund may also invest to a limited  degree in preferred
stocks and debt  securities  when they are believed to offer  opportunities  for
capital  growth.  The Fund may also engage in strategic  transactions,  purchase
foreign  securities  and lend its  portfolio  securities.  The Fund's shares are
intended for long-term investment.

The Fund may invest up to 10% of its total assets in  entities,  such as limited
partnerships  or trusts,  that invest  primarily in the securities of technology
companies.  The investment manager believes that the flexibility to make limited
indirect  investment in technology  companies  through  entities such as limited
partnerships and trusts will provide the Fund with increased  opportunities  for
growth of capital.  However, there is no assurance that such investments will be
profitable.  Entities  that invest in the  securities  of  technology  companies
normally have  management  fees and other costs that are in addition to those of
the Fund. Such fees and costs will reduce any returns  directly  attributable to
the underlying technology companies. The effect of these fees will be considered
by the  investment  manager in  connection  with any  decision to invest in such
entities.  Securities


                                       5
<PAGE>

issued by these entities are normally privately placed, restricted and illiquid.
The Fund will not purchase illiquid securities,  including repurchase agreements
maturing in more than seven days, if, as a result thereof,  more than 15% of the
Fund's net assets,  valued at the time of the transaction,  would be invested in
such securities.


The Fund purchases securities for long-term investment, but it is the investment
manager's  belief that a sound  investment  program must be flexible in order to
meet changing  conditions,  and changes in holdings will be made whenever deemed
advisable.


When a defensive position is deemed advisable,  all or a significant  portion of
the Fund's assets may be held  temporarily in cash or defensive type securities,
such as high-grade  debt  securities,  securities of the U.S.  Government or its
agencies  and  high  quality  money  market  instruments,  including  repurchase
agreements. It is impossible to predict for how long such alternative strategies
may be utilized.


TOTAL  RETURN  FUND.  The Total Return Fund seeks the highest  total  return,  a
combination of income and capital appreciation, consistent with reasonable risk.
The Fund will emphasize  liberal  current  income in seeking its objective.  The
Fund's  investments  will normally  consist of domestic and foreign fixed income
and equity securities. Fixed income securities will include bonds and other debt
securities (such as U.S. and foreign Government  securities and investment grade
and high yield corporate  obligations) and preferred  stocks,  some of which may
have  a  call  on  common  stocks  through  attached  warrants  or a  conversion
privilege.  The  percentage of assets  invested in specific  categories of fixed
income  and equity  securities  will vary from time to time  depending  upon the
judgment of management as to general market and economic  conditions,  trends in
yields and interest rates and changes in fiscal or monetary  policies.  The Fund
may also engage in strategic transactions and lend its portfolio securities.


As noted above, the Fund may invest in high yield fixed income  securities which
are in the lower rating  categories and those which are unrated.  Thus, the Fund
could  invest in some  instruments  considered  by the rating  services  to have
predominantly  speculative  characteristics.   Investments  in  lower  rated  or
non-rated  securities,  while generally providing greater income and opportunity
for gain than  investments  in higher rated  securities,  entail greater risk of
loss of income and principal.  Currently,  it is anticipated that the Fund would
invest less than 35% of its total assets in high yield bonds.  The Fund will not
purchase illiquid securities,  including repurchase  agreements maturing in more
than  seven  days,  if, as a result  thereof,  more than 15% of the  Fund's  net
assets,  valued  at the  time of the  transaction,  would  be  invested  in such
securities.


The  Fund  does not  make  investments  for  short-term  profits,  but it is not
restricted in policy with regard to portfolio  turnover and will make changes in
its investment  portfolio from time to time as business and economic  conditions
and market prices may dictate and as its investment policy may require.


When a defensive position is deemed advisable,  all or a significant  portion of
the Fund's assets may be held  temporarily in cash or defensive type securities,
such as high-grade  debt  securities,  securities of the U.S.  Government or its
agencies  and  high  quality  money  market  instruments,  including  repurchase
agreements. It is impossible to predict for how long such alternative strategies
may be utilized.


VALUE+GROWTH  FUND.  The  Value+Growth  Fund  seeks  growth of  capital  through
professional  management of a portfolio of growth and value stocks. These stocks
include  stocks  of large  established  companies,  as well as  stocks  of small
companies.  A secondary  objective  is the  reduction of risk over a full market
cycle compared to a portfolio of only growth stocks or only value stocks.

Growth stocks are stocks of companies  whose  earnings per share are expected by
the  investment  manager to grow faster than the market  average.  Growth stocks
tend to trade at higher price to earnings (P/E) ratios than the general  market,
but the investment  manager believes that the potential of such stocks for above
average  earnings more than justifies  their price.  Value stocks are considered
"bargain stocks" because they are perceived as undervalued,  i.e.,  attractively
priced in relation to their earnings  potential  (low P/E ratios).  Value stocks
typically  have  dividend  yields  higher  than  the  average  of the  companies
represented in the Standard & Poor's 500 Stock Index.

                                       6
<PAGE>

The allocation  between growth and value stocks in the Fund's  portfolio will be
made by the investment manager's  Quantitative Research Department with the help
of a  proprietary  model  that  evaluates  macro-economic  factors  such  as the
strength of the economy,  interest rates and special factors  concerning  growth
and value stocks.  Historically,  the performance of growth and value stocks has
tended to be counter-cyclical, i.e., when one was in favor, the other was out of
favor relative to the equity market in general.  Through the allocation process,
the  investment  manager will seek to weight the  portfolio  more heavily in the
type of stocks that are believed to present greater return  opportunities at the
time. The neutral  allocation  between growth and value stocks would be 50%/50%.
The  allocation  to growth  or value  may be up to 75% at any  time.  Allocation
decisions are normally  based upon  long-term  considerations  and changes would
normally be expected to be gradual.  There is no assurance  that the  allocation
process will improve investment results.

In  managing  the  growth  portion  of the  portfolio,  the  investment  manager
emphasizes  stock  selection  and  fundamental  research  in  seeking to enhance
long-term  performance  potential.  The investment manager considers a number of
quantitative  factors  in  considering  whether  to invest in a stock  including
historical earnings growth, projected earnings growth, return on equity, debt to
capital and other  balance  sheet data.  In  managing  the value  portion of the
portfolio,  the investment  manager seeks stocks it believes to be  undervalued.
The factors considered include price-to-earnings  ratios,  price-to-book ratios,
price-to-cash-flow,  dividend growth rates, earnings estimates and growth rates,
return on equity and other balance sheet data.


Although it is anticipated  that the Fund will invest primarily in common stocks
of domestic companies, the Fund may also purchase foreign securities, as well as
convertible  securities,  such as bonds and preferred stocks (including warrants
and  rights).  The Fund may also engage in strategic  transactions  and lend its
portfolio securities. The Fund will not purchase illiquid securities,  including
repurchase agreements maturing in more than seven days, if, as a result thereof,
more than 15% of the Fund's net assets,  valued at the time of the  transaction,
would  be  invested  in such  securities.  The  Fund  does  not  generally  make
investments  for  short-term  profits,  but it is not  restricted in policy with
regard to portfolio  turnover and will make changes in its investment  portfolio
from time to time as business  and  economic  conditions  and market  prices may
dictate and as its investment policy may require.

When a defensive position is deemed advisable,  all or a significant  portion of
the Fund's assets may be held  temporarily in cash or defensive type securities,
such as high-grade  debt  securities,  securities of the U.S.  Government or its
agencies  and  high  quality  money  market  instruments,  including  repurchase
agreements. It is impossible to predict for how long such alternative strategies
may be utilized.

CLASSIC GROWTH FUND. Classic Growth Fund offers the following classes of shares:
Scudder Shares (the "Scudder  Shares" or "Shares") and Classic Growth Fund Class
A, B and C shares (the "Kemper  Shares").  Only the A, B and C Shares of Classic
Growth Fund are offered herein.

General.  The  Fund's  investment  objectives  are to seek  long-term  growth of
capital  with reduced  share price  volatility  compared to other growth  mutual
funds.  This diversified  equity fund is designed for investors  looking to grow
their  investment  principal over time for retirement and other long-term needs.
While current income is not a stated  objective of the Fund,  many of the Fund's
securities may provide regular  dividends,  which are also expected to grow over
time.

While the Fund is broadly diversified and conservatively managed, with attention
paid to stock  valuation  and risk,  its share  price will move up and down with
changes in the general  level of financial  markets.  Accordingly,  shareholders
should be  comfortable  with stock  market risk and view the Fund as a long-term
investment.

Except as otherwise indicated, the Fund's investment objectives and policies are
not fundamental and may be changed without a vote of shareholders. If there is a
change in investment  objective,  shareholders  should consider whether the Fund
remains  an  appropriate  investment  in light of their then  current  financial
position and needs. There can be no assurance that the Fund's objectives will be
met.

Under normal  market  conditions,  the Fund invests  primarily in a  diversified
portfolio of common stocks which the Fund's investment  adviser,  Scudder Kemper
Investments,  Inc. (the  "Investment  Manager"),  believes offers


                                       7
<PAGE>

above-average  appreciation potential yet, as a portfolio,  offers the potential
for less share price volatility than other growth mutual funds.

In seeking such  investments,  the Investment  Manager focuses its investment in
securities of high quality,  medium-to-large  sized U.S.  companies with leading
competitive  positions.  Using in-depth  fundamental company research along with
proprietary  financial quality,  stock rating and risk measures,  the Investment
Manager looks for  companies  with strong and  sustainable  earnings  growth,  a
proven ability to add value over time, and reasonable  stock market  valuations.
These  companies often have important  business  franchises,  leading  products,
services or technologies, or dominant marketing and distribution systems.

Classic  Growth Fund's  investment  approach  centers on  identifying a group of
stocks with both  attractive  return  potential  and moderate  risk. In order to
serve the Fund's dual objectives,  the Fund's managers avoid  "high-expectation"
stocks--stocks  with  tremendous  performance  potential  but whose  prices  can
quickly tumble on earnings disappointments. Additionally, the portfolio managers
select  stocks with higher  average  market  capitalizations  and lower  average
price-earnings  ratios than those held by the average growth fund. In general, a
fund comprised of stocks with lower P/E ratios will exhibit less volatility over
time.  The  portfolio  managers will use  portfolio  construction  techniques to
reduce overall  portfolio risk.  Although  individual  securities may experience
price  volatility,  the Fund will be managed for reduced share price fluctuation
in comparison to other growth funds.

The Fund allocates its investments among different industries and companies, and
adjusts its portfolio securities based on long-term investment considerations as
opposed to short-term trading.  While the Fund emphasizes U.S.  investments,  it
can  commit a portion  of assets to the  equity  securities  of  foreign  growth
companies that meet the criteria applicable to the Fund's domestic  investments.
The Fund may  invest  up to 25% of the  Fund's  assets in  listed  and  unlisted
foreign securities.

While the Fund invests  primarily in common stocks,  it can purchase other types
of equity  securities  including  securities  convertible  into  common  stocks,
preferred stocks, rights, illiquid securities and warrants. The Fund's policy is
to remain  substantially  invested in these  securities,  which may be listed on
national securities exchanges or, less commonly, trade over-the-counter.

The Fund may  purchase  "investment-grade"  bonds,  rated  Aaa,  Aa, A or Baa by
Moody's Investors Service,  Inc.  ("Moody's") or AAA, AA, A or BBB by Standard &
Poor's Corporation ("S&P") or, if unrated, judged to be of equivalent quality as
determined by the Investment  Manager.  The Fund may invest up to 20% of its net
assets in such debt securities when the Investment Manager  anticipates that the
capital appreciation on debt securities is likely to equal or exceed the capital
appreciation  on common stocks over a selected  time,  such as during periods of
unusually  high  interest  rates.  As interest  rates  fall,  the prices of debt
securities tend to rise. The Fund may also invest in money market  securities in
anticipation of meeting redemptions or paying Fund expenses.  Also, the Fund may
purchase  securities  of  other  investment  companies,  enter  into  repurchase
agreements, reverse repurchase agreements and engage in strategic transactions.

For  temporary  defensive  purposes,  the Fund may invest  without limit in high
quality money market  securities,  including  U.S.  Treasury  bills,  repurchase
agreements,  commercial  paper,  certificates  of deposit issued by domestic and
foreign branches of U.S. banks, bankers' acceptances, and other debt securities,
such as U.S.  Government  obligations  and corporate debt  instruments  when the
Adviser  deems  such a  position  advisable  in  light  of  economic  or  market
conditions. It is impossible to accurately predict for how long such alternative
strategies may be utilized.


Additional Information about Investment Techniques

The  following  section  includes  disclosure  about  investment  practices  and
techniques  which  may be  utilized  by one or  more  funds  described  in  this
Statement of Additional Information. The name of each fund authorized to utilize
the  technique  precedes  its  discussion.  Specific  limitations  and  policies
regarding the use of these  techniques  may be found in each fund's  "Investment
Objective and Policies" section, as well as in "Investment  Restrictions" below.
Descriptions  in  this  Statement  of  Additional  Information  of a  particular
investment


                                       8
<PAGE>

practice or technique in which a Fund may engage or a financial instrument which
a Fund may  purchase  are meant to describe  the  spectrum of  investments  that
Scudder Kemper Investments,  Inc. (the "Investment Manager"), in its discretion,
might,  but is not required to, use in managing a Fund's portfolio  assets.  The
Investment  Manager may, in its  discretion,  at any time employ such  practice,
technique or  instrument  for one or more funds but not for all funds advised by
it. Furthermore,  it is possible that certain types of financial  instruments or
investment  techniques  described  herein  may  not be  available,  permissible,
economically  feasible or effective for their intended  purposes in all markets.
Certain practices, techniques, or instruments may not be principal activities of
a Fund but,  to the  extent  employed,  could  from time to time have a material
impact on the Fund's performance.

Borrowing.  The Fund will borrow only when the Investment  Manager believes that
borrowing will benefit the Fund after taking into account considerations such as
the costs of the  borrowing.  Borrowing  by the Fund will  involve  special risk
considerations.  Although the principal of the Fund's  borrowings will be fixed,
the  Fund's  assets  may  change  in  value  during  the  time  a  borrowing  is
outstanding, proportionately increasing exposure to capital risk.

Common  Stocks.  Common  stock is issued by companies to raise cash for business
purposes  and  represents  a  proportionate  interest in the issuing  companies.
Therefore,  the Fund  participates  in the  success or failure of any company in
which  it  holds  stock.  The  market  values  of  common  stock  can  fluctuate
significantly,  reflecting  the  business  performance  of the issuing  company,
investor perception and general economic and financial market movements. Despite
the risk of price volatility, however, common stocks have historically offered a
greater potential for long-term gain on investment, compared to other classes of
financial  assets such as bonds or cash  equivalents,  although  there can be no
assurance that this will be true in the future.

Convertible Securities. The Fund may invest in convertible securities,  that is,
bonds,  notes,  debentures,  preferred  stocks  and other  securities  which are
convertible into common stock. Investments in convertible securities can provide
an  opportunity  for capital  appreciation  and/or income  through  interest and
dividend payments by virtue of their conversion or exchange features.

The convertible  securities in which the Fund may invest are either fixed income
or zero coupon debt  securities  which may be converted or exchanged at a stated
or  determinable  exchange  ratio into  underlying  shares of common stock.  The
exchange ratio for any particular convertible security may be adjusted from time
to time due to stock splits, dividends, spin-offs, other corporate distributions
or scheduled  changes in the exchange  ratio.  Convertible  debt  securities and
convertible  preferred  stocks,  until converted,  have general  characteristics
similar to both debt and equity  securities.  Although  to a lesser  extent than
with debt securities generally, the market value of convertible securities tends
to decline as interest  rates  increase  and,  conversely,  tends to increase as
interest  rates  decline.  In addition,  because of the  conversion  or exchange
feature,  the market value of convertible  securities  typically  changes as the
market value of the underlying common stocks changes, and, therefore, also tends
to follow  movements  in the  general  market  for equity  securities.  A unique
feature of convertible  securities is that as the market price of the underlying
common stock declines,  convertible  securities tend to trade  increasingly on a
yield basis, and so may not experience  market value declines to the same extent
as the underlying  common stock.  When the market price of the underlying common
stock  increases,  the prices of the  convertible  securities  tend to rise as a
reflection of the value of the underlying common stock,  although  typically not
as much as the  underlying  common stock.  While no securities  investments  are
without risk,  investments in convertible  securities generally entail less risk
than investments in common stock of the same issuer.

As debt securities,  convertible  securities are investments which provide for a
stream of income (or in the case of zero coupon securities, accretion of income)
with  generally  higher  yields  than  common  stocks.   Convertible  securities
generally offer lower yields than non-convertible  securities of similar quality
because of their conversion or exchange features.

Of course,  like all debt  securities,  there can be no  assurance  of income or
principal payments because the issuers of the convertible securities may default
on their obligations.

                                       9
<PAGE>

Convertible   securities   generally  are  subordinated  to  other  similar  but
non-convertible  securities of the same issuer,  although  convertible bonds, as
corporate debt  obligations,  enjoy  seniority in right of payment to all equity
securities,  and  convertible  preferred stock is senior to common stock, of the
same issuer.  However,  because of the subordination feature,  convertible bonds
and  convertible  preferred  stock  typically  have lower  ratings  than similar
non-convertible securities. Convertible securities may be issued as fixed income
obligations that pay current income or as zero coupon notes and bonds, including
Liquid Yield Option Notes ("LYONs"(TM)).

Investment-Grade  Bonds. The Fund may purchase  "investment-grade"  bonds, which
are those rated Aaa,  Aa, A or Baa by Moody's or AAA, AA, A or BBB by S&P or, if
unrated,  judged to be of equivalent  quality as  determined  by the  Investment
Manager.  Moody's  considers bonds it rates Baa to have speculative  elements as
well as investment-grade characteristics. To the extent that the Fund invests in
higher-grade  securities,  the  Fund  will  not  be  able  to  avail  itself  of
opportunities  for  higher  income  which  may be  available  at  lower  grades.
Depositary  Receipts.  The Fund may invest in sponsored or unsponsored  American
Depositary  Receipts ("ADRs"),  European  Depositary  Receipts ("EDRs"),  Global
Depositary  Receipts ("GDRs"),  International  Depositary  Receipts ("IDRs") and
other types of Depositary Receipts (which, together with ADRs, GDRs and IDRs are
hereinafter referred to as "Depositary  Receipts").  Depositary receipts provide
indirect  investment  in securities of foreign  issuers.  Prices of  unsponsored
Depositary  Receipts  may be more  volatile  than if they were  sponsored by the
issuer of the underlying securities.  Depositary Receipts may not necessarily be
denominated  in the same currency as the underlying  securities  into which they
may be  converted.  In  addition,  the  issuers  of  the  stock  of  unsponsored
Depositary  Receipts are not obligated to disclose  material  information in the
United  States  and,  therefore,  there may not be a  correlation  between  such
information and the market value of the Depositary Receipts. ADRs are Depositary
Receipts which are bought and sold in the United States and are typically issued
by a  U.S.  bank  or  trust  company  which  evidence  ownership  of  underlying
securities by a foreign  corporation.  GDRs,  IDRs and other types of Depositary
Receipts are typically issued by foreign banks or trust companies, although they
may also be issued by  United  States  banks or trust  companies,  and  evidence
ownership of underlying securities issued by either a foreign or a United States
corporation.  Generally, Depositary Receipts in registered form are designed for
use in the United States  securities  markets and Depositary  Receipts in bearer
form are designed for use in securities  markets outside the United States.  For
purposes of the Fund's investment policies, the Fund's investments in ADRs, GDRs
and other types of Depositary  Receipts will be deemed to be  investments in the
underlying securities.  Depositary Receipts, including those denominated in U.S.
dollars will be subject to foreign  currency  exchange  rate risk.  However,  by
investing  in U.S.  dollar-denominated  ADRs  rather  than  directly  in foreign
issuers' stock, the Fund avoids currency risks during the settlement  period. In
general,  there is a large,  liquid  market in the United  States for most ADRs.
However,  certain  Depositary  Receipts  may not be  listed on an  exchange  and
therefore may be illiquid securities.

Euro. The  implementation  of the Euro may result in uncertainties  for European
securities  and the operation of the Fund. The Euro was introduced on January 1,
1999 by eleven  members  countries of the European  Economic and Monetary  Union
(EMU).  Implementation of the Euro requires the  redenomination of European debt
and  equity  securities  over a period  of time,  which may  result  in  various
accounting  differences  and/or tax treatments  which would not otherwise occur.
Additional  questions  are  raised  by the  fact  that  certain  other  European
Community members,  including the United Kingdom,  did not officially  implement
the Euro on January 1, 1999.

Foreign  Currencies.  Because  investments  in foreign  securities  usually will
involve currencies of foreign  countries,  and because the Fund may hold foreign
currencies  and  forward  contracts,  futures  contracts  and options on foreign
currencies and foreign  currency futures  contracts,  the value of the assets of
the Fund as measured in U.S. dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations, and
the  Fund  may  incur  costs  and   experience   conversion   difficulties   and
uncertainties  in  connection  with  conversions   between  various  currencies.
Fluctuations in exchange rates may also affect the earning power and asset value
of the foreign entity issuing the security.

                                       10
<PAGE>

The  strength  or  weakness  of the U.S.  dollar  against  these  currencies  is
responsible for part of the Fund's investment  performance.  If the dollar falls
in value  relative to the  Japanese  yen,  for  example,  the dollar  value of a
Japanese  stock  held in the  portfolio  will rise even  though the price of the
stock remains  unchanged.  Conversely,  if the dollar rises in value relative to
the yen,  the  dollar  value of the  Japanese  stock  will  fall.  Many  foreign
currencies  have  experienced  significant  devaluation  relative to the dollar.

Although the Fund values its assets daily in terms of U.S. dollars,  it does not
intend to convert its  holdings  of foreign  currencies  into U.S.  dollars on a
daily basis.  It will do so from time to time, and investors  should be aware of
the costs of  currency  conversion.  Although  foreign  exchange  dealers do not
charge a fee for  conversion,  they do realize a profit based on the  difference
(the "spread")  between the prices at which they are buying and selling  various
currencies.  Thus, a dealer may offer to sell a foreign  currency to the Fund at
one rate,  while  offering a lesser rate of  exchange  should the Fund desire to
resell that currency to the dealer.  The Fund will conduct its foreign  currency
exchange  transactions  either  on a spot  (i.e.,  cash)  basis at the spot rate
prevailing in the foreign  currency  exchange  market,  or through entering into
options or forward or futures contracts to purchase or sell foreign currencies.

Foreign Fixed Income Securities.  Since most foreign fixed income securities are
not rated, the Fund will invest in foreign fixed income  securities based on the
Investment  Manager's analysis without relying on published ratings.  Since such
investments  will be based upon the Investment  Manager's  analysis  rather than
upon published ratings, achievement of the Fund's goals may depend more upon the
abilities of the Investment Manager than would otherwise be the case.

The value of the foreign fixed income  securities held by the Fund, and thus the
net asset value of the Fund's shares,  generally will fluctuate with (a) changes
in the  perceived  creditworthiness  of the  issuers  of those  securities,  (b)
movements  in  interest  rates,  and (c) changes in the  relative  values of the
currencies  in which the  Fund's  investments  in fixed  income  securities  are
denominated with respect to the U.S. Dollar.  The extent of the fluctuation will
depend  on  various  factors,  such  as  the  average  maturity  of  the  Fund's
investments in foreign fixed income securities, and the extent to which the Fund
hedges its interest  rate,  credit and currency  exchange  rate risks.  A longer
average  maturity  generally is associated  with a higher level of volatility in
the market value of such securities in response to changes in market conditions.

Investments in sovereign  debt,  including  Brady Bonds,  involve special risks.
Brady Bonds are debt securities  issued under a plan implemented to allow debtor
nations to restructure their outstanding  commercial bank indebtedness.  Foreign
governmental  issuers of debt or the  governmental  authorities that control the
repayment  of the debt may be  unable or  unwilling  to repay  principal  or pay
interest  when due.  In the event of  default,  there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party.  Political conditions,  especially a sovereign entity's
willingness  to  meet  the  terms  of  its  fixed  income  securities,   are  of
considerable  significance.  Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign  entity may not contest  payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements.  In  addition,  there is no  bankruptcy  proceeding  with respect to
sovereign debt on which a sovereign has defaulted, and the Fund may be unable to
collect  all or any  part  of its  investment  in a  particular  issue.  Foreign
investment  in certain  sovereign  debt is  restricted  or controlled to varying
degrees,  including  requiring  governmental  approval for the  repatriation  of
income, capital or proceed of sales by foreign investors.  These restrictions or
controls may at times limit or preclude foreign  investment in certain sovereign
debt or  increase  the costs and  expenses  of the Fund.  Sovereign  debt may be
issued  as  part  of  debt  restructuring  and  such  debt  is to be  considered
speculative.  There is a history of defaults  with  respect to  commercial  bank
loans by public and private  entities  issuing Brady Bonds.  All or a portion of
the interest payments and/or principal repayment with respect to Brady Bonds may
be  uncollateralized.

Foreign  Securities.  Investing in foreign  securities  involves certain special
considerations,  including  those  set  forth  below,  which  are not  typically
associated  with  investing  in U.S.  securities  and  which  may  favorably  or
unfavorably  affect  the  Fund's  performance.  As  foreign  companies  are  not
generally  subject to  uniform  accounting,  auditing  and  financial  reporting
standards, practices and requirements comparable to those applicable to domestic
companies,  there may be less  publicly  available  information  about a foreign
company than about a domestic company.  Many foreign securities  markets,  while
growing in volume of trading activity,


                                       11
<PAGE>

have  substantially  less volume than the U.S.  market,  and  securities of some
foreign  issuers are less liquid and more volatile  than  securities of domestic
issuers.  Similarly,  volume and  liquidity in most foreign bond markets is less
than in the U.S.  and, at times,  volatility of price can be greater than in the
U.S.  Fixed  commissions on some foreign  securities  exchanges and bid to asked
spreads in foreign bond markets are generally  higher than commissions or bid to
asked spreads on U.S. markets,  although the Investment Manager will endeavor to
achieve the most favorable net results on its portfolio  transactions.  There is
generally less governmental  supervision and regulation of securities exchanges,
brokers and listed  companies  in foreign  countries  than in the U.S. It may be
more difficult for the Fund's agents to keep currently  informed about corporate
actions  in  foreign   countries  which  may  affect  the  prices  of  portfolio
securities.  Communications  between the U.S. and foreign  countries may be less
reliable than within the U.S., thus  increasing the risk of delayed  settlements
of portfolio  transactions  or loss of  certificates  for portfolio  securities.
Payment for  securities  without  delivery  may be  required in certain  foreign
markets.  In addition,  with respect to certain foreign countries,  there is the
possibility  of  expropriation  or  confiscatory  taxation,  political or social
instability,  or diplomatic  developments which could affect U.S. investments in
those countries.  Moreover, individual foreign economies may differ favorably or
unfavorably  from the U.S.  economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment,  resource self-sufficiency and
balance of payments  position.  The management of the Fund seeks to mitigate the
risks   associated  with  the  foregoing   considerations   through   continuous
professional management.

High Yield/High Risk Bonds. The Fund may also purchase debt securities which are
rated below  investment-grade  (commonly referred to as "junk bonds"),  that is,
rated below Baa by Moody's or below BBB by S&P and unrated  securities judged to
be of  equivalent  quality  as  determined  by  the  Investment  Manager.  These
securities  usually entail greater risk (including the possibility of default or
bankruptcy  of the  issuers  of  such  securities),  generally  involve  greater
volatility  of price and risk to principal  and income,  and may be less liquid,
than securities in the higher rating  categories.  The lower the ratings of such
debt  securities,  the more their  risks  render  them like  equity  securities.
Securities  rated D may be in default  with  respect to payment of  principal or
interest.  [See the Appendix to this Statement of Additional  Information  for a
more complete  description of the ratings assigned by ratings  organizations and
their respective characteristics].

Issuers of such high yielding  securities often are highly leveraged and may not
have available to them more  traditional  methods of financing.  Therefore,  the
risk  associated  with  acquiring the  securities  of such issuers  generally is
greater than is the case with higher rated  securities.  For example,  during an
economic  downturn or or a sustained  period of rising  interest  rates,  highly
leveraged  issuers of high yield  securities  may experience  financial  stress.
During such periods, such issuers may not have sufficient revenues to meet their
interest  payment  obligations.   The  issuer's  ability  to  service  its  debt
obligations may also be adversely affected by specific  corporate  developments,
or the issuer's inability to meet specific projected business forecasts,  or the
unavailability  of  additional  financing.  The risk of loss from default by the
issuer is significantly greater for the holders of high yield securities because
such  securities  are generally  unsecured and are often  subordinated  to other
creditors  of the  issuer.  Prices  and  yields of high  yield  securities  will
fluctuate over time and, during periods of economic  uncertainty,  volatility of
high yield  securities  may  adversely  affect the  Fund's net asset  value.  In
addition,  investments  in high yield zero coupon or pay-in-kind  bonds,  rather
than  income-bearing  high yield securities,  may be more speculative and may be
subject to greater fluctuations in value due to changes in interest rates.

The Fund may have  difficulty  disposing  of  certain  high  yield  (high  risk)
securities because they may have a thin trading market.  Because not all dealers
maintain  markets in all high yield  securities,  the Fund anticipates that such
securities  could be sold only to a limited  number of dealers or  institutional
investors.  The lack of a liquid  secondary market may have an adverse effect on
the market price and the Fund's ability to dispose of particular  issues and may
also make it more difficult for the Fund to obtain  accurate  market  quotations
for  purposes of valuing the Fund's  assets.  Market  quotations  generally  are
available  on many high yield  issues only from a limited  number of dealers and
may not  necessarily  represent  firm bids of such  dealers or prices for actual
sales.

                                       12
<PAGE>

Adverse publicity and investor perceptions may decrease the values and liquidity
of high yield securities. These securities may also involve special registration
responsibilities,   liabilities   and  costs,   and   liquidity   and  valuation
difficulties.

Credit  quality in the  high-yield  securities  market can change  suddenly  and
unexpectedly,  and even recently-issued credit ratings may not fully reflect the
actual risks posed by a particular high-yield security. For these reasons, it is
generally  the  policy of the  Investment  Manager  not to rely  exclusively  on
ratings issued by established  credit rating  agencies,  but to supplement  such
ratings with its own  independent  and on-going  review of credit  quality.  The
achievement of the Fund's investment  objective by investment in such securities
may be more dependent on the Investment  Manager's  credit  analysis than is the
case for higher  quality  bonds.  Should the rating of a  portfolio  security be
downgraded,  the  Investment  Manager will  determine  whether it is in the best
interests of the Fund to retain or dispose of such security.

Prices for below investment-grade  securities may be affected by legislative and
regulatory  developments.  Also,  Congress  has  from  time to  time  considered
legislation  which would  restrict or eliminate  the corporate tax deduction for
interest  payments in these  securities and regulate  corporate  restructurings.
Such legislation may significantly depress the prices of outstanding  securities
of this type.

Illiquid Securities and Restricted Securities.  The Fund may purchase securities
that are subject to legal or  contractual  restrictions  on resale  ("restricted
securities").  Generally speaking, restricted securities may be sold (i) only to
qualified  institutional buyers; (ii) in a privately negotiated transaction to a
limited number of purchasers;  (iii) in limited  quantities after they have been
held for a specified  period of time and other conditions are met pursuant to an
exemption  from  registration;  or  (iv)  in  a  public  offering  for  which  a
registration  statement  is in  effect  under  the  Securities  Act of 1933,  as
amended.  Issuers of restricted  securities may not be subject to the disclosure
and other  investor  protection  requirements  that would be applicable if their
securities were publicly traded.

Restricted  securities  are often  illiquid,  but they may also be  liquid.  For
example,  restricted securities that are eligible for resale under Rule 144A are
often deemed to be liquid. ).

[The Fund's Board has approved  guidelines for use by the Investment  Manager in
determining  whether a security  is liquid or  illiquid.  Among the  factors the
Investment Manager may consider in reaching liquidity decisions relating to Rule
144A  securities  are: (1) the  frequency of trades and quotes for the security;
(2) the  number of dealers  wishing to  purchase  or sell the  security  and the
number of other potential  purchasers;  (3) dealer undertakings to make a market
in the security; and (4) the nature of the security and the nature of the market
for the security (i.e.,  the time needed to dispose of the security,  the method
of soliciting offers, and the mechanics of the transfer).]

Issuers of restricted  securities may not be subject to the disclosure and other
investor  protection  requirement  that would be applicable if their  securities
were publicly traded. Where a registration  statement is required for the resale
of  restricted  securities,  the Fund may be required to bear all or part of the
registration  expenses.  The  Fund  may be  deemed  to be an  "underwriter"  for
purposes of the  Securities  Act of 1933,  as amended  when  selling  restricted
securities  to the  public  and,  in such  event,  the  Fund  may be  liable  to
purchasers of such  securities  if the  registration  statement  prepared by the
issuer  is  materially  inaccurate  or  misleading.

The  Fund  may  also  purchase  securities  that  are not  subject  to  legal or
contractual   restrictions  on  resale,  but  that  are  deemed  illiquid.  Such
securities  may be illiquid,  for example,  because  there is a limited  trading
market for them.

The Fund may be unable to sell a restricted or illiquid  security.  In addition,
it may be more  difficult to determine a market value for restricted or illiquid
securities. Moreover, if If adverse market conditions were to develop during the
period between the Fund's decision to sell a restricted or illiquid security and
the point at which the Fund is permitted or able to sell such security, the Fund
might  obtain a price  less  favorable  than the price  that  prevailed  when it
decided to sell.

                                       13
<PAGE>

This  investment  practice,  therefore,  could have the effect of increasing the
level of illiquidity of the Fund.

Interfund Borrowing and Lending Program.  The Fund has received exemptive relief
from the SEC which  permits  the Fund to  participate  in an  interfund  lending
program among certain investment companies advised by the Manager. The interfund
lending  program  allows the  participating  funds to borrow money from and loan
money to each other for temporary or emergency purposes.  The program is subject
to a number of conditions designed to ensure fair and equitable treatment of all
participating  funds,  including  the  following:  (1) no fund may borrow  money
through the program  unless it receives a more  favorable  interest  rate than a
rate  approximating  the  lowest  interest  rate at which  bank  loans  would be
available to any of the participating  funds under a loan agreement;  and (2) no
fund may lend money  through  the program  unless it  receives a more  favorable
return than that available from an investment in repurchase  agreements  and, to
the extent applicable, money market cash sweep arrangements. In addition, a fund
may participate in the program only if and to the extent that such participation
is consistent with the fund's investment  objectives and policies (for instance,
money market  funds would  normally  participate  only as lenders and tax exempt
funds only as borrowers).  Interfund loans and borrowings may extend  overnight,
but could  have a maximum  duration  of seven  days.  Loans may be called on one
day's notice. A fund may have to borrow from a bank at a higher interest rate if
an interfund loan is called or not renewed.  Any delay in repayment to a lending
fund could result in a lost  investment  opportunity  or additional  costs.  The
program is subject to the  oversight  and  periodic  review of the Boards of the
participating  funds.  To the extent the Fund is actually  engaged in  borrowing
through the interfund lending program,  the Fund, as a matter of non-fundamental
policy,  may not borrow for other than temporary or emergency  purposes (and not
for  leveraging),  except  that  the  Fund  may  engage  in  reverse  repurchase
agreements and dollar rolls for any purpose.

[*Explanatory  note:  Depending on the  non-fundamental  borrowing policy of the
Fund[s] for which this SAI  disclosure is made, the borrowing  exceptions  noted
for reverse repurchase agreements and dollar rolls may have to be revised.]

Investing in Emerging Markets.  The Fund's investments in foreign securities may
be in developed  countries or in countries  considered by the Fund's  Investment
Manager to have  developing or "emerging"  markets,  which involves  exposure to
economic  structures  that are  generally  less  diverse  and mature than in the
United States, and to political systems that may be less stable. A developing or
emerging market country can be considered to be a country that is in the initial
stages of its  industrialization  cycle.  Currently,  emerging markets generally
include every country in the world other than the United States,  Canada, Japan,
Australia,   New  Zealand,  Hong  Kong,  Singapore  and  most  Western  European
countries. Currently, investing in many emerging markets may not be desirable or
feasible  because of the lack of adequate  custody  arrangements  for the Fund's
assets,  overly burdensome  repatriation and similar  restrictions,  the lack of
organized and liquid securities markets,  unacceptable  political risks or other
reasons.  As  opportunities to invest in securities in emerging markets develop,
the Fund may expand and further  broaden the group of emerging  markets in which
it invests. In the past, markets of developing or emerging market countries have
been more  volatile  than the  markets of  developed  countries;  however,  such
markets often have provided higher rates of return to investors.  The Investment
Manager believes that these  characteristics  may be expected to continue in the
future.

Most emerging  securities markets have substantially less volume and are subject
to less governmental  supervision than U.S.  securities  markets.  Securities of
many  issuers in  emerging  markets may be less  liquid and more  volatile  than
securities of comparable domestic issuers. In addition, there is less regulation
of securities  exchanges,  securities dealers, and listed and unlisted companies
in  emerging  markets  than in the U.S.

Emerging markets also have different clearance and settlement procedures, and in
certain markets there have been times when  settlements  have not kept pace with
the volume of  securities  transactions.  Delays in  settlement  could result in
temporary  periods when a portion of the assets of the Fund is uninvested and no
return is earned  thereon.  The inability of the Fund to make intended  security
purchases due to  settlement  problems  could cause the Fund to miss  attractive
investment  opportunities.  Inability to dispose of portfolio  securities due to
settlement  problems could result either in losses to the Fund due to subsequent
declines in value of the  portfolio  security or, if the Fund has entered into a
contract  to sell the  security,  could  result  in  possible  liability  to the
purchaser.   Costs  associated  with  transactions  in  foreign  securities  are
generally  higher than costs


                                       14
<PAGE>

associated with transactions in U.S. securities.  Such transactions also involve
additional costs for the purchase or sale of foreign currency.

Certain emerging markets require prior  governmental  approval of investments by
foreign  persons,  limit the  amount  of  investment  by  foreign  persons  in a
particular  company,  limit the investment by foreign persons only to a specific
class of securities of a company that may have less advantageous rights than the
classes  available for purchase by  domiciliaries of the countries and/or impose
additional  taxes  on  foreign  investors.  Certain  emerging  markets  may also
restrict  investment  opportunities in issuers in industries deemed important to
national interest.

Certain emerging markets may require governmental  approval for the repatriation
of investment income,  capital or the proceeds of sales of securities by foreign
investors.  In  addition,  if a  deterioration  occurs in an  emerging  market's
balance of payments  or for other  reasons,  a country  could  impose  temporary
restrictions  on  foreign  capital  remittances.  The Fund  could  be  adversely
affected by delays in, or a refusal to grant, any required governmental approval
for  repatriation  of capital,  as well as by the application to the Fund of any
restrictions on investments.

In the course of investment in emerging markets, the Fund will be exposed to the
direct or indirect consequences of political, social and economic changes in one
or more emerging markets. While the Fund will manage its assets in a manner that
will seek to minimize the exposure to such risks, there can be no assurance that
adverse political,  social or economic changes will not cause the Fund to suffer
a loss of value in respect of the securities in the Fund's  portfolio.

The risk  also  exists  that an  emergency  situation  may  arise in one or more
emerging  markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's securities in such markets may
not be readily available.  The Fund may suspend redemption of its shares for any
period during which an emergency  exists,  as determined by the  Securities  and
Exchange   Commission.   Accordingly  if  the  Fund  believes  that  appropriate
circumstances  exist,  it will  promptly  apply to the  Securities  and Exchange
Commissionfor  a determination  that an emergency is present.  During the period
commencing  from the Fund's  identification  of such condition until the date of
the  Securities and Exchange  Commission  action,  the Fund's  securities in the
affected  markets  will be valued at fair value  determined  in good faith by or
under the direction of the Fund's Board.

Volume and  liquidity  in most  foreign  markets are less than in the U.S.,  and
securities  of many foreign  companies  are less liquid and more  volatile  than
securities of comparable U.S. companies. Fixed commissions on foreign securities
exchanges are generally  higher than negotiated  commissions on U.S.  exchanges,
although  the Fund  endeavors to achieve the most  favorable  net results on its
portfolio  transactions.  There is generally  less  government  supervision  and
regulation of business and industry practices,  securities  exchanges,  brokers,
dealers and listed  companies than in the U.S. Mail service between the U.S. and
foreign  countries  may be slower or less  reliable  than within the U.S.,  thus
increasing the risk of delayed settlements of portfolio  transactions or loss of
certificates for certificated portfolio securities. In addition, with respect to
certain  emerging  markets,   there  is  the  possibility  of  expropriation  or
confiscatory   taxation,   political  or  social   instability,   or  diplomatic
developments  which  could  affect the Fund's  investments  in those  countries.
Moreover,   individual   emerging  market  economies  may  differ  favorably  or
unfavorably  from the U.S.  economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment,  resource self-sufficiency and
balance of payments position.

The Fund may have limited legal  recourse in the event of a default with respect
to certain debt  obligations it holds. If the issuer of a fixed-income  security
owned by the Fund  defaults,  the Fund may  incur  additional  expenses  to seek
recovery.  Debt obligations issued by emerging market country governments differ
from debt  obligations  of private  entities;  remedies  from  defaults  on debt
obligations issued by emerging market governments, unlike those on private debt,
must be pursued in the courts of the defaulting party itself. The Fund's ability
to enforce its rights  against  private  issuers may be limited.  The ability to
attach assets to enforce a judgment may be limited.  Legal recourse is therefore
somewhat diminished. Bankruptcy, moratorium and other similar laws applicable to
private issuers of debt obligations may be substantially different from those of
other  countries.  The  political  context,  expressed  as  an  emerging  market
governmental issuer's willingness to meet the terms of the debt obligation,  for
example, is of considerable  importance.  In addition, no assurance can be given

                                       15
<PAGE>

that the holders of commercial bank debt may not contest payments to the holders
of  debt  obligations  in the  event  of  default  under  commercial  bank  loan
agreements.

Income from securities held by the Fund could be reduced by a withholding tax at
the source or other taxes imposed by the emerging market  countries in which the
Fund makes its  investments.  The Fund's net asset value may also be affected by
changes  in the  rates  or  methods  of  taxation  applicable  to the Fund or to
entities in which the Fund has invested.  The  Investment  Manager will consider
the  cost  of any  taxes  in  determining  whether  to  acquire  any  particular
investments,  but can provide no assurance that the taxes will not be subject to
change.

Many  emerging  markets  have  experienced  substantial,  and, in some  periods,
extremely  high  rates  of  inflation  for  many  years.   Inflation  and  rapid
fluctuations  in  inflation  rates  have had and may  continue  to have  adverse
effects on the  economies  and  securities  markets of certain  emerging  market
countries. In an attempt to control inflation, wage and price controls have been
imposed in certain  countries.  Of these countries,  some, in recent years, have
begun to control inflation through prudent economic policies.

Emerging market governmental issuers are among the largest debtors to commercial
banks,  foreign  governments,  international  financial  organizations and other
financial  institutions.  Certain emerging market governmental  issuers have not
been able to make  payments of interest on or principal of debt  obligations  as
those  payments  have  come due.  Obligations  arising  from past  restructuring
agreements  may  affect  the  economic  performance  and  political  and  social
stability of those issuers.

Governments  of many emerging  market  countries  have exercised and continue to
exercise  substantial  influence over many aspects of the private sector through
the ownership or control of many companies, including some of the largest in any
given  country.  As a result,  government  actions  in the  future  could have a
significant  effect on economic  conditions in emerging markets,  which in turn,
may adversely affect companies in the private sector,  general market conditions
and prices and yields of  certain  of the  securities  in the Fund's  portfolio.
Expropriation,  confiscatory taxation,  nationalization,  political, economic or
social instability or other similar  developments have occurred  frequently over
the history of certain  emerging  markets and could adversely  affect the Fund's
assets should these  conditions  recur.

The  ability of  emerging  market  country  governmental  issuers to make timely
payments  on their  obligations  is  likely  to be  influenced  strongly  by the
issuer's balance of payments,  including export  performance,  and its access to
international  credits and  investments.  An emerging  market whose  exports are
concentrated  in a few  commodities  could be  vulnerable  to a  decline  in the
international   prices   of  one  or  more  of  those   commodities.   Increased
protectionism  on the part of an emerging  market's  trading partners could also
adversely  affect the country's  exports and diminish its trade account surplus,
if any. To the extent that emerging  markets  receive payment for its exports in
currencies other than dollars or non-emerging market currencies,  its ability to
make debt payments  denominated  in dollars or  non-emerging  market  currencies
could be affected.

Another factor bearing on the ability of emerging market countries to repay debt
obligations is the level of international reserves of the country.  Fluctuations
in the level of these  reserves  affect the amount of foreign  exchange  readily
available  for  external  debt  payments  and thus  could  have a bearing on the
capacity  of  emerging   market   countries  to  make  payments  on  these  debt
obligations.

To the extent that an emerging  market country cannot  generate a trade surplus,
it must  depend on  continuing  loans  from  foreign  governments,  multilateral
organizations or private commercial banks, aid payments from foreign governments
and inflows of foreign investment. The access of emerging markets to these forms
of external  funding may not be certain,  and a withdrawal  of external  funding
could  adversely  affect the capacity of emerging  market  country  governmental
issuers  to make  payments  on  their  obligations.  In  addition,  the  cost of
servicing  emerging  market  debt  obligations  can be  affected  by a change in
international  interest  rates  since the  majority of these  obligations  carry
interest rates that are adjusted periodically based upon international rates.

Investment  Company  Securities.  The  Fund  may  acquire  securities  of  other
investment  companies to the extent consistent with its investment objective and
subject to the  limitations of the 1940 Act. The Fund will  indirectly  bear its
proportionate share of any management fees and other expenses paid by such other
investment  companies.



                                       16
<PAGE>

For example, the Fund may invest in a variety of investment companies which seek
to track the  composition  and  performance  of  specific  indexes or a specific
portion of an index.  These  index-based  investments hold  substantially all of
their assets in securities representing their specific index.  Accordingly,  the
main risk of investing in index-based  investments is the same as investing in a
portfolio  of equity  securities  comprising  the index.  The  market  prices of
index-based  investments  will fluctuate in accordance  with both changes in the
market  value of their  underlying  portfolio  securities  and due to supply and
demand for the  instruments on the exchanges on which they are traded (which may
result in their  trading at a discount  or premium to their  NAVs).  Index-based
investments  may not replicate  exactly the performance of their specified index
because of  transaction  costs and because of the  temporary  unavailability  of
certain component securities of the index.

Examples of index-based investments include:

SPDRs(R):  SPDRs,  an acronym for "Standard & Poor's  Depositary  Receipts," are
based on the S&P 500  Composite  Stock Price Index.  They are issued by the SPDR
Trust,  a unit  investment  trust that  holds  shares of  substantially  all the
companies  in the S&P 500 in  substantially  the  same  weighting  and  seeks to
closely track the price performance and dividend yield of the Index.

MidCap  SPDRs(R):  MidCap SPDRs are based on the S&P MidCap 400 Index.  They are
issued by the MidCap SPDR Trust, a unit investment  trust that holds a portfolio
of securities  consisting of  substantially  all of the common stocks in the S&P
MidCap 400 Index in substantially  the same weighting and seeks to closely track
the price performance and dividend yield of the Index.

Select Sector SPDRs(R):  Select Sector SPDRs are based on a particular sector or
group of  industries  that are  represented  by a specified  Select Sector Index
within the Standard & Poor's Composite Stock Price Index. They are issued by The
Select Sector SPDR Trust, an open-end  management  investment  company with nine
portfolios  that each seeks to closely track the price  performance and dividend
yield of a particular Select Sector Index.

DIAMONDS(SM):  DIAMONDS are based on the Dow Jones Industrial Average(SM).  They
are issued by the DIAMONDS Trust, a unit investment trust that holds a portfolio
of all the component common stocks of the Dow Jones Industrial Average and seeks
to closely track the price performance and dividend yield of the Dow.

Nasdaq-100 Shares: Nasdaq-100 Shares are based on the Nasdaq 100 Index. They are
issued by the Nasdaq-100  Trust, a unit investment  trust that holds a portfolio
consisting of substantially  all of the securities,  in  substantially  the same
weighting,  as the component stocks of the Nasdaq-100 Index and seeks to closely
track the price performance and dividend yield of the Index.

WEBs(SM):  WEBs, an acronym for "World Equity Benchmark Shares," are based on 17
country-specific  Morgan Stanley Capital International  Indexes. They are issued
by the WEBs Index Fund,  Inc., an open-end  management  investment  company that
seeks to generally  correspond to the price and yield  performance of a specific
Morgan Stanley Capital International Index.

Investment of  Uninvested  Cash  Balances.  The Fund may have cash balances that
have not been invested in portfolio securities  ("Uninvested Cash").  Uninvested
Cash may result  from a variety of  sources,  including  dividends  or  interest
received from portfolio securities, unsettled securities transactions,  reserves
held for  investment  strategy  purposes,  scheduled  maturity  of  investments,
liquidation  of  investment  securities  to  meet  anticipated  redemptions  and
dividend payments, and new cash received from investors.  Uninvested Cash may be
invested  directly  in  money  market   instruments  or  other  short-term  debt
obligations.  Pursuant to an Exemptive Order issued by the SEC, the Fund may use
Uninvested  Cash to purchase  shares of affiliated  funds including money market
funds,  short-term bond funds and Scudder Cash Management  Investment  Trust, or
one or more future entities for which Scudder Kemper Investments acts as trustee
or investment  advisor that operate as cash management  investment  vehicles and
that are excluded from the definition of investment  company pursuant to section
3(c)(1) or 3(c)(7) of the  Investment  Company  Act of 1940  (collectively,  the
"Central  Funds")  in excess  of the  limitations  of  Section  12(d)(1)  of the
Investment  Company Act.  Investment  by the Fund in shares of the Central Funds
will be in accordance with the Fund's  investment  policies and  restrictions as
set forth in its registration statement.

                                       17
<PAGE>

Certain of the  Central  Funds  comply  with rule 2a-7 under the Act.  The other
Central Funds are or will be short-term  bond funds that invest in  fixed-income
securities  and maintain a dollar  weighted  average  maturity of three years or
less.  Each of the  Central  Funds will be managed  specifically  to  maintain a
highly liquid  portfolio,  and access to them will enhance the Fund's ability to
manage Uninvested Cash.

The Fund will invest  Uninvested  Cash in Central  Funds only to the extent that
the Fund's aggregate  investment in the Central Funds does not exceed 25% of its
total  assets in shares of the Central  Funds.  Purchase  and sales of shares of
Central Funds are made at net asset value.

Lending of  Portfolio  Securities.  The Fund may seek to increase  its income by
lending   portfolio   securities.   Such   loans  may  be  made  to   registered
broker/dealers or other financial  institutions,  and are required to be secured
continuously  by  collateral in cash or liquid  assets,  maintained on a current
basis at an amount at least equal to the market  value and  accrued  interest of
the  securities  loaned.  The Fund has the right to call a loan and  obtain  the
securities loaned on five days' notice or, in connection with securities trading
on foreign  markets,  within such longer period of time which coincides with the
normal  settlement  period for  purchases  and sales of such  securities in such
foreign  markets.  During the existence of a loan, the Fund continues to receive
the equivalent of any distributions  paid by the issuer on the securities loaned
and also receives compensation based on investment of the collateral.  The risks
in lending securities,  as with other extensions of secured credit, consist of a
possible  delay in recovery  and a loss of rights in the  collateral  should the
borrower of the  securities  fail  financially.  Loans may be made only to firms
deemed by the  Investment  Manager to be of good  standing  and will not be made
unless,  in the judgment of the  Investment  Manager,  the  consideration  to be
earned from such loans would justify the risk.

Non-diversified.  As a  non-diversified  fund,  the  Fund may  invest a  greater
proportion of its assets in the  obligations  of a small number of issuers,  and
may be subject to greater risk and substantial  losses as a result of changes in
the financial  condition or the market's  assessment  of the issuers.  While not
limited by the 1940 Act as to the proportion of its assets that it may invest in
obligations  of a single issuer,  the Fund will comply with the  diversification
requirements  imposed  by the  Internal  Revenue  Code  for  qualification  as a
regulated investment company.

Privatized Enterprises. Investments in foreign securities may include securities
issued  by  enterprises   that  have  undergone  or  are  currently   undergoing
privatization.  The  governments of certain  foreign  countries have, to varying
degrees,  embarked on privatization  programs  contemplating  the sale of all or
part of their  interests in state  enterprises.  The Fund's  investments  in the
securities  of  privatized   enterprises   may  include   privately   negotiated
investments in a government or  state-owned or controlled  company or enterprise
that has not yet  conducted  an  initial  equity  offering,  investments  in the
initial  offering of equity  securities  of a state  enterprise  or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.

In certain jurisdictions,  the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less  advantageous  than for
local investors.  Moreover, there can be no assurance that governments that have
embarked on  privatization  programs will continue to divest their  ownership of
state  enterprises,  that  proposed  privatizations  will be  successful or that
governments will not re-nationalize enterprises that have been privatized.

In the case of the enterprises in which the Fund may invest, large blocks of the
stock of those  enterprises may be held by a small group of  stockholders,  even
after  the  initial  equity  offerings  by those  enterprises.  The sale of some
portion or all of those blocks could have an adverse  effect on the price of the
stock of any such enterprise.

Prior to making an initial  equity  offering,  most state  enterprises or former
state  enterprises go through an internal  reorganization  or  management.  Such
reorganizations  are made in an attempt to better  enable these  enterprises  to
compete in the private sector. However,  certain reorganizations could result in
a  management  team  that does not  function  as well as an  enterprise's  prior
management and may have a negative effect on such enterprise.  In addition,  the
privatization  of an  enterprise  by its  government  may occur over a number of

                                       18
<PAGE>

years,  with the  government  continuing to hold a  controlling  position in the
enterprise even after the initial equity offering for the enterprise.

Prior to  privatization,  most of the  state  enterprises  in which the Fund may
invest  enjoy the  protection  of and receive  preferential  treatment  from the
respective  sovereigns that own or control them.  After making an initial equity
offering,  these  enterprises may no longer have such protection or receive such
preferential  treatment and may become subject to market  competition from which
they were  previously  protected.  Some of these  enterprises may not be able to
operate  effectively in a competitive market and may suffer losses or experience
bankruptcy due to such competition.

Real  Estate  Investment  Trusts  ("REITs").   REITs  are  sometimes  informally
characterized  as equity REITs,  mortgage REITs and hybrid REITs.  Investment in
REITs may subject the Fund to risks associated with the direct ownership of real
estate,  such  as  decreases  in real  estate  values,  overbuilding,  increased
competition  and other risks  related to local or general  economic  conditions,
increases  in  operating  costs and  property  taxes,  changes  in zoning  laws,
casualty or condemnation losses, possible environmental liabilities,  regulatory
limitations on rent and  fluctuations  in rental income.  Equity REITs generally
experience  these risks  directly  through fee or leasehold  interests,  whereas
mortgage REITs generally  experience  these risks  indirectly  through  mortgage
interests,  unless the mortgage REIT  forecloses on the underlying  real estate.
Changes in interest rates may also affect the value of the Fund's  investment in
REITs.  For  instance,  during  periods of  declining  interest  rates,  certain
mortgage REITs may hold mortgages  that the  mortgagors  elect to prepay,  which
prepayment may diminish the yield on securities issued by those REITs.

Certain REITs have relatively  small market  capitalizations,  which may tend to
increase the  volatility of the market price of their  securities.  Furthermore,
REITs  are  dependent  upon   specialized   management   skills,   have  limited
diversification and are,  therefore,  subject to risks inherent in operating and
financing a limited  number of  projects.  REITs are also  subject to heavy cash
flow dependency, defaults by borrowers and the possibility of failing to qualify
for tax-free  pass-through of income under the Internal Revenue Code of 1986, as
amended,  and to maintain  exemption from the  registration  requirements of the
Investment  Company Act of 1940,  as amended.  By investing in REITs  indirectly
through  the Fund,  a  shareholder  will bear not only his or her  proportionate
share of the expenses of the Fund, but also, indirectly, similar expenses of the
REITs.  In addition,  REITs depend  generally on their  ability to generate cash
flow to make distributions to shareholders.

Repurchase Agreements.  The Fund may invest in repurchase agreements pursuant to
its  investment  guidelines.  In  a  repurchase  agreement,  the  Fund  acquires
ownership of a security and  simultaneously  commits to resell that  security to
the seller, typically a bank or broker/dealer.

         A repurchase  agreement provides a means for the Fund to earn income on
funds for periods as short as overnight.  It is an  arrangement  under which the
purchaser  (i.e.,  the Fund) acquires a security  ("Obligation")  and the seller
agrees,  at the time of sale, to repurchase  the  Obligation at a specified time
and price. Securities subject to a repurchase agreement are held in a segregated
account and, as described in more detail below,  the value of such securities is
kept at least equal to the  repurchase  price on a daily basis.  The  repurchase
price may be higher than the purchase price,  the difference being income to the
Fund, or the purchase and repurchase  prices may be the same, with interest at a
stated rate due to the Fund together with the repurchase  price upon repurchase.
In either case,  the income to the Fund is unrelated to the interest rate on the
Obligation  itself.  Obligations will be held by the custodian or in the Federal
Reserve Book Entry System.

         [It  is not  clear  whether  a  court  would  consider  the  Obligation
purchased by the Fund  subject to a  repurchase  agreement as being owned by the
Fund or as being  collateral for a loan by the Fund to the seller.] In the event
of the commencement of bankruptcy or insolvency  proceedings with respect to the
seller of the Obligation  before repurchase of the Obligation under a repurchase
agreement,  the Fund may  encounter  delay and incur costs  before being able to
sell the  security.  Delays may involve  loss of interest or decline in price of
the Obligation.  [If the court  characterizes  the transaction as a loan and the
Fund has not perfected a security  interest in the  Obligation,  the Fund may be
required to return the  Obligation  to the seller's  estate and be treated as an
unsecured creditor of the seller. As an unsecured creditor, the Fund would be at
risk  of  losing  some  or all


                                       19
<PAGE>

of the principal and income involved in the  transaction.] As with any unsecured
debt Obligation  purchased for the Fund, the Investment  Manager seeks to reduce
the risk of loss through repurchase agreements by analyzing the creditworthiness
of the obligor,  in this case the seller of the Obligation.  Apart from the risk
of bankruptcy or insolvency proceedings,  there is also the risk that the seller
may fail to repurchase the  Obligation,  in which case the Fund may incur a loss
if the  proceeds  to the Fund of the  sale to a third  party  are less  than the
repurchase  price.  However,  if the market  value  (including  interest) of the
Obligation subject to the repurchase  agreement becomes less than the repurchase
price (including interest), the Fund will direct the seller of the Obligation to
deliver additional  securities so that the market value (including  interest) of
all  securities  subject to the  repurchase  agreement  will equal or exceed the
repurchase price.

Reverse  Repurchase  Agreements.  The Fund may enter  into  "reverse  repurchase
agreements," which are repurchase agreements in which the Fund, as the seller of
the  securities,  agrees to  repurchase  such  securities  at an agreed time and
price.  The Fund maintains a segregated  account in connection with  outstanding
reverse  repurchase  agreements.  The Fund will  enter into  reverse  repurchase
agreements only when the Investment Manager believes that the interest income to
be earned from the investment of the proceeds of the transaction will be greater
than the interest  expense of the  transaction.  Such  transactions may increase
fluctuations in the market value of Fund assets and its yield.

Strategic  Transactions and  Derivatives.  The Fund may, but is not required to,
utilize various other investment  strategies as described below for a variety of
purposes,  such as hedging various market risks, managing the effective maturity
or duration of  fixed-income  securities in the Fund's  portfolio,  or enhancing
potential gain.  These  strategies may be executed through the use of derivative
contracts.

In the course of pursuing these investment strategies, the Fund may purchase and
sell  exchange-listed and  over-the-counter  put and call options on securities,
equity and fixed-income indices and other instruments, purchase and sell futures
contracts and options thereon,  enter into various  transactions  such as swaps,
caps, floors, collars,  currency forward contracts,  currency futures contracts,
currency swaps or options on currencies,  or currency  futures and various other
currency  transactions  (collectively,  all  the  above  are  called  "Strategic
Transactions").  In  addition,  strategic  transactions  may  also  include  new
techniques,  instruments or strategies that are permitted as regulatory  changes
occur.  Strategic  Transactions  may be used without  limit  (subject to certain
limitations  imposed by the 1940 Act) to attempt  to  protect  against  possible
changes in the market value of  securities  held in or to be  purchased  for the
Fund's  portfolio  resulting from securities  markets or currency  exchange rate
fluctuations,  to  protect  the  Fund's  unrealized  gains  in the  value of its
portfolio  securities,  to facilitate the sale of such securities for investment
purposes,   to  manage  the  effective  maturity  or  duration  of  fixed-income
securities  in  the  Fund's  portfolio,  or  to  establish  a  position  in  the
derivatives  markets  as a  substitute  for  purchasing  or  selling  particular
securities.  Some Strategic  Transactions may also be used to enhance  potential
gain  although  no more  than 5% of the  Fund's  assets  will  be  committed  to
Strategic  Transactions  entered into for  non-hedging  purposes.  Any or all of
these investment techniques may be used at any time and in any combination,  and
there is no particular  strategy  that dictates the use of one technique  rather
than  another,  as use of any  Strategic  Transaction  is a function of numerous
variables including market conditions.  The ability of the Fund to utilize these
Strategic  Transactions  successfully  will depend on the  Manager's  ability to
predict  pertinent  market  movements,  which  cannot be assured.  The Fund will
comply  with  applicable   regulatory   requirements  when  implementing   these
strategies, techniques and instruments.  Strategic Transactions will not be used
to alter fundamental  investment  purposes and  characteristics of the Fund, and
the Fund will segregate assets (or as provided by applicable regulations,  enter
into certain  offsetting  positions)  to cover its  obligations  under  options,
futures and swaps to limit leveraging of the Fund.

Strategic  Transactions,  including derivative contracts,  have risks associated
with them  including  possible  default by the other  party to the  transaction,
illiquidity and, to the extent the Manager's view as to certain market movements
is incorrect,  the risk that the use of such Strategic Transactions could result
in losses  greater  than if they had not been used.  Use of put and call options
may  result  in losses to the Fund,  force  the sale or  purchase  of  portfolio
securities  at  inopportune  times or for prices higher than (in the case of put
options)  or lower than (in the case of call  options)  current  market  values,
limit the amount of  appreciation  the Fund can  realize on its  investments  or
cause the Fund to hold a security it might  otherwise  sell. The use of currency

                                       20
<PAGE>

transactions  can result in the Fund incurring losses as a result of a number of
factors   including  the   imposition  of  exchange   controls,   suspension  of
settlements,  or the inability to deliver or receive a specified  currency.  The
use of  options  and  futures  transactions  entails  certain  other  risks.  In
particular,  the  variable  degree of  correlation  between  price  movements of
futures contracts and price movements in the related  portfolio  position of the
Fund  creates  the  possibility  that losses on the  hedging  instrument  may be
greater than gains in the value of the Fund's position. In addition, futures and
options   markets   may  not  be  liquid  in  all   circumstances   and  certain
over-the-counter  options may have no markets.  As a result, in certain markets,
the  Fund  might  not be able  to  close  out a  transaction  without  incurring
substantial  losses,  if at  all.  Although  the  use  of  futures  and  options
transactions  for  hedging  should  tend to  minimize  the risk of loss due to a
decline in the value of the hedged position, at the same time they tend to limit
any  potential  gain  which  might  result  from an  increase  in  value of such
position. Finally, the daily variation margin requirements for futures contracts
would create a greater ongoing potential  financial risk than would purchases of
options,  where the  exposure  is  limited to the cost of the  initial  premium.
Losses resulting from the use of Strategic  Transactions  would reduce net asset
value, and possibly income, and such losses can be greater than if the Strategic
Transactions had not been utilized.


General  Characteristics of Options. Put options and call options typically have
similar structural  characteristics and operational  mechanics regardless of the
underlying  instrument on which they are purchased or sold.  Thus, the following
general  discussion relates to each of the particular types of options discussed
in greater  detail below.  In addition,  many Strategic  Transactions  involving
options  require  segregation of Fund assets in special  accounts,  as described
below under "Use of Segregated and Other Special Accounts."


A put option gives the purchaser of the option,  upon payment of a premium,  the
right to sell, and the writer the  obligation to buy, the  underlying  security,
commodity,  index,  currency or other  instrument  at the  exercise  price.  For
instance, the Fund's purchase of a put option on a security might be designed to
protect its holdings in the underlying  instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the Fund
the right to sell such  instrument at the option  exercise price. A call option,
upon payment of a premium,  gives the  purchaser of the option the right to buy,
and the seller the obligation to sell, the underlying instrument at the exercise
price.  The Fund's  purchase of a call option on a security,  financial  future,
index,  currency  or other  instrument  might be  intended  to protect  the Fund
against an increase in the price of the underlying instrument that it intends to
purchase  in the  future  by  fixing  the  price at which it may  purchase  such
instrument.  An American  style put or call option may be  exercised at any time
during  the  option  period  while a  European  style put or call  option may be
exercised only upon expiration or during a fixed period prior thereto.  The Fund
is authorized to purchase and sell exchange listed options and  over-the-counter
options  ("OTC  options").  Exchange  listed  options  are issued by a regulated
intermediary such as the Options Clearing Corporation ("OCC"),  which guarantees
the  performance  of the  obligations  of  the  parties  to  such  options.  The
discussion  below uses the OCC as an example,  but is also  applicable  to other
financial intermediaries.


With certain exceptions, OCC issued and exchange listed options generally settle
by physical  delivery of the  underlying  security or currency,  although in the
future cash  settlement  may become  available.  Index  options  and  Eurodollar
instruments are cash settled for the net amount,  if any, by which the option is
"in-the-money"  (i.e., where the value of the underlying  instrument exceeds, in
the case of a call  option,  or is less than,  in the case of a put option,  the
exercise  price of the option) at the time the option is exercised.  Frequently,
rather than taking or making delivery of the underlying  instrument  through the
process of  exercising  the option,  listed  options are closed by entering into
offsetting  purchase or sale transactions that do not result in ownership of the
new option.


The Fund's  ability to close out its position as a purchaser or seller of an OCC
or exchange listed put or call option is dependent,  in part, upon the liquidity
of the option  market.  Among the  possible  reasons for the absence of a liquid
option market on an exchange are: (i)  insufficient  trading interest in certain
options; (ii) restrictions on transactions imposed by an exchange; (iii) trading
halts,  suspensions  or other  restrictions  imposed with respect to  particular
classes or series of options or underlying  securities  including reaching daily
price  limits;  (iv)  interruption  of the  normal  operations  of the OCC or an
exchange;  (v)  inadequacy  of the


                                       21
<PAGE>

facilities of an exchange or OCC to handle  current  trading  volume;  or (vi) a
decision by one or more  exchanges to  discontinue  the trading of options (or a
particular  class or series of options),  in which event the relevant market for
that option on that exchange would cease to exist,  although outstanding options
on that exchange would  generally  continue to be exercisable in accordance with
their terms.


The hours of trading for listed  options may not coincide  with the hours during
which the underlying  financial  instruments are traded.  To the extent that the
option   markets  close  before  the  markets  for  the   underlying   financial
instruments,  significant  price  and  rate  movements  can  take  place  in the
underlying markets that cannot be reflected in the option markets.


OTC  options  are  purchased  from  or  sold to  securities  dealers,  financial
institutions  or  other  parties  ("Counterparties")  through  direct  bilateral
agreement with the Counterparty.  In contrast to exchange listed options,  which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement,  term, exercise price,
premium,  guarantees and security,  are set by  negotiation of the parties.  The
Fund will only sell OTC  options  (other  than OTC  currency  options)  that are
subject to a buy-back provision  permitting the Fund to require the Counterparty
to sell the option back to the Fund at a formula  price within  seven days.  The
Fund  expects  generally  to enter into OTC  options  that have cash  settlement
provisions, although it is not required to do so.

Unless the  parties  provide  for it,  there is no central  clearing or guaranty
function in an OTC option.  As a result,  if the  Counterparty  fails to make or
take delivery of the security,  currency or other  instrument  underlying an OTC
option  it has  entered  into  with the Fund or fails to make a cash  settlement
payment due in accordance with the terms of that option,  the Fund will lose any
premium  it paid  for the  option  as well  as any  anticipated  benefit  of the
transaction.  Accordingly,  the Manager must assess the creditworthiness of each
such Counterparty or any guarantor or credit  enhancement of the  Counterparty's
credit to  determine  the  likelihood  that the terms of the OTC option  will be
satisfied.  The Fund  will  engage  in OTC  option  transactions  only with U.S.
government securities dealers recognized by the Federal Reserve Bank of New York
as "primary  dealers"  or  broker/dealers,  domestic  or foreign  banks or other
financial  institutions which have received (or the guarantors of the obligation
of which have  received) a short-term  credit rating of A-1 from S&P or P-1 from
Moody's or an  equivalent  rating  from any  nationally  recognized  statistical
rating organization ("NRSRO") or, in the case of OTC currency transactions,  are
determined to be of equivalent  credit quality by the Manager.  The staff of the
SEC  currently  takes the position that OTC options  purchased by the Fund,  and
portfolio securities  "covering" the amount of the Fund's obligation pursuant to
an OTC  option  sold by it (the  cost of the  sell-back  plus  the  in-the-money
amount,  if any) are  illiquid,  and are  subject  to the Fund's  limitation  on
investing no more than 15% of its net assets in illiquid securities.

If the Fund sells a call  option,  the premium  that it receives  may serve as a
partial hedge,  to the extent of the option  premium,  against a decrease in the
value of the  underlying  securities  or  instruments  in its  portfolio or will
increase the Fund's income. The sale of put options can also provide income.

The Fund may  purchase  and sell  call  options  on  securities  including  U.S.
Treasury and agency securities,  mortgage-backed  securities,  foreign sovereign
debt,  corporate  debt  securities,  equity  securities  (including  convertible
securities)  and  Eurodollar  instruments  that are traded on U.S.  and  foreign
securities  exchanges  and in the  over-the-counter  markets,  and on securities
indices,  currencies and futures  contracts.  All calls sold by the Fund must be
"covered" (i.e., the Fund must own the securities or futures contract subject to
the call) or must meet the asset  segregation  requirements  described  below as
long as the call is  outstanding.  Even though the Fund will  receive the option
premium to help  protect it against  loss,  a call sold by the Fund  exposes the
Fund during the term of the option to possible  loss of  opportunity  to realize
appreciation  in the market price of the  underlying  security or instrument and
may require the Fund to hold a security or instrument  which it might  otherwise
have sold.

The Fund may purchase and sell put options on securities including U.S. Treasury
and agency  securities,  mortgage-backed  securities,  foreign  sovereign  debt,
corporate debt securities,  equity securities (including convertible securities)
and Eurodollar  instruments (whether or not it holds the above securities in its
portfolio),  and on securities  indices,  currencies and futures contracts other
than futures on individual corporate debt and individual equity securities.  The
Fund will not sell put  options  if, as a  result,  more than 50% of the  Fund's

                                       22
<PAGE>

total  assets  would  be  required  to be  segregated  to  cover  its  potential
obligations  under such put options other than those with respect to futures and
options  thereon.  In selling put options,  there is a risk that the Fund may be
required to buy the  underlying  security at a  disadvantageous  price above the
market price.

General Characteristics of Futures. The Fund may enter into futures contracts or
purchase  or sell  put and  call  options  on such  futures  as a hedge  against
anticipated  interest rate, currency or equity market changes,  and for duration
management,  risk  management  and  return  enhancement  purposes.  Futures  are
generally  bought and sold on the  commodities  exchanges  where they are listed
with payment of initial and variation  margin as described  below. The sale of a
futures contract creates a firm obligation by the Fund, as seller, to deliver to
the buyer the specific type of financial  instrument  called for in the contract
at a specific  future  time for a  specified  price (or,  with  respect to index
futures and  Eurodollar  instruments,  the net cash amount).  Options on futures
contracts  are  similar  to  options on  securities  except  that an option on a
futures contract gives the purchaser the right in return for the premium paid to
assume a position in a futures contract and obligates the seller to deliver such
position.

The Fund's use of futures and options  thereon  will in all cases be  consistent
with  applicable  regulatory  requirements  and  in  particular  the  rules  and
regulations of the Commodity Futures Trading Commission and will be entered into
for bona fide hedging,  risk management (including duration management) or other
portfolio and return enhancement management purposes.  Typically,  maintaining a
futures  contract or selling an option thereon requires the Fund to deposit with
a financial  intermediary  as security for its  obligations an amount of cash or
other specified  assets (initial  margin) which initially is typically 1% to 10%
of the face amount of the  contract  (but may be higher in some  circumstances).
Additional  cash or assets  (variation  margin) may be required to be  deposited
thereafter  on a  daily  basis  as the  mark to  market  value  of the  contract
fluctuates. The purchase of an option on financial futures involves payment of a
premium for the option  without any further  obligation on the part of the Fund.
If the Fund  exercises  an option on a futures  contract it will be obligated to
post  initial  margin  (and  potential  subsequent  variation  margin)  for  the
resulting futures position just as it would for any position.  Futures contracts
and  options  thereon  are  generally  settled by  entering  into an  offsetting
transaction  but there can be no assurance that the position can be offset prior
to settlement at an advantageous price, nor that delivery will occur.

The Fund will not enter into a futures  contract or related  option  (except for
closing transactions) if, immediately  thereafter,  the sum of the amount of its
initial margin and premiums on open futures  contracts and options thereon would
exceed 5% of the Fund's total assets (taken at current value);  however,  in the
case of an  option  that  is  in-the-money  at the  time  of the  purchase,  the
in-the-money  amount may be  excluded  in  calculating  the 5%  limitation.  The
segregation  requirements  with respect to futures contracts and options thereon
are described below.

Options on Securities  Indices and Other  Financial  Indices.  The Fund also may
purchase and sell call and put options on securities indices and other financial
indices and in so doing can achieve many of the same objectives it would achieve
through  the sale or  purchase  of options  on  individual  securities  or other
instruments.  Options on  securities  indices  and other  financial  indices are
similar to options on a security or other  instrument  except that,  rather than
settling by physical delivery of the underlying instrument,  they settle by cash
settlement,  i.e.,  an option on an index gives the holder the right to receive,
upon exercise of the option, an amount of cash if the closing level of the index
upon which the option is based exceeds,  in the case of a call, or is less than,
in the case of a put, the exercise  price of the option  (except if, in the case
of an OTC option, physical delivery is specified).  This amount of cash is equal
to the excess of the closing  price of the index over the exercise  price of the
option,  which  also may be  multiplied  by a formula  value.  The seller of the
option is  obligated,  in return for the premium  received,  to make delivery of
this  amount.  The  gain or loss on an  option  on an  index  depends  on  price
movements in the instruments making up the market,  market segment,  industry or
other  composite  on which the  underlying  index is based,  rather  than  price
movements in  individual  securities,  as is the case with respect to options on
securities.

Currency  Transactions.  The Fund  may  engage  in  currency  transactions  with
Counterparties  primarily in order to hedge,  or manage the risk of the value of
portfolio holdings denominated in particular  currencies against fluctuations in
relative  value.  Currency  transactions  include  forward  currency  contracts,
exchange listed currency futures, exchange listed

                                       23
<PAGE>

and OTC options on currencies,  and currency swaps. A forward currency  contract
involves a privately  negotiated  obligation to purchase or sell (with  delivery
generally required) a specific currency at a future date, which may be any fixed
number of days from the date of the contract  agreed upon by the  parties,  at a
price  set at the time of the  contract.  A  currency  swap is an  agreement  to
exchange  cash  flows  based  on the  notional  difference  among  two  or  more
currencies and operates  similarly to an interest rate swap,  which is described
below. The Fund may enter into currency  transactions with Counterparties  which
have  received (or the  guarantors  of the  obligations  which have  received) a
credit  rating of A-1 or P-1 by S&P or  Moody's,  respectively,  or that have an
equivalent  rating  from a NRSRO  or  (except  for  OTC  currency  options)  are
determined to be of equivalent credit quality by the Manager.

The  Fund's   dealings  in  forward   currency   contracts  and  other  currency
transactions  such as futures,  options,  options on futures and swaps generally
will be limited to hedging  involving either specific  transactions or portfolio
positions  except as described  below.  Transaction  hedging is entering  into a
currency transaction with respect to specific assets or liabilities of the Fund,
which  will  generally  arise in  connection  with the  purchase  or sale of its
portfolio  securities or the receipt of income  therefrom.  Position  hedging is
entering  into  a  currency  transaction  with  respect  to  portfolio  security
positions denominated or generally quoted in that currency.

The Fund generally will not enter into a transaction to hedge currency  exposure
to an  extent  greater,  after  netting  all  transactions  intended  wholly  or
partially to offset other transactions,  than the aggregate market value (at the
time of entering into the  transaction)  of the securities held in its portfolio
that are denominated or generally  quoted in or currently  convertible into such
currency, other than with respect to proxy hedging or cross hedging as described
below.

The Fund may also  cross-hedge  currencies  by  entering  into  transactions  to
purchase or sell one or more  currencies  that are  expected to decline in value
relative to other  currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.

To reduce  the  effect of  currency  fluctuations  on the value of  existing  or
anticipated holdings of portfolio securities,  the Fund may also engage in proxy
hedging.  Proxy  hedging  is often  used when the  currency  to which the Fund's
portfolio is exposed is difficult to hedge or to hedge against the dollar. Proxy
hedging  entails  entering into a commitment or option to sell a currency  whose
changes in value are  generally  considered  to be  correlated  to a currency or
currencies in which some or all of the Fund's  portfolio  securities  are or are
expected to be  denominated,  in exchange  for U.S.  dollars.  The amount of the
commitment  or  option  would not  exceed  the  value of the  Fund's  securities
denominated in correlated currencies. For example, if the Manager considers that
the Austrian schilling is correlated to the German  deutschemark (the "D-mark"),
the Fund holds  securities  denominated in schillings  and the Manager  believes
that the value of schillings will decline against the U.S.  dollar,  the Manager
may enter into a commitment or option to sell D-marks and buy dollars.  Currency
hedging involves some of the same risks and considerations as other transactions
with similar instruments. Currency transactions can result in losses to the Fund
if the currency  being hedged  fluctuates in value to a degree or in a direction
that  is  not  anticipated.  Further,  there  is the  risk  that  the  perceived
correlation  between various currencies may not be present or may not be present
during the particular  time that the Fund is engaging in proxy  hedging.  If the
Fund enters into a currency hedging  transaction,  the Fund will comply with the
asset segregation requirements described below.

Risks of  Currency  Transactions.  Currency  transactions  are  subject to risks
different from those of other portfolio  transactions.  Because currency control
is of great  importance  to the  issuing  governments  and  influences  economic
planning and policy, purchases and sales of currency and related instruments can
be  negatively  affected  by  government  exchange  controls,   blockages,   and
manipulations or exchange restrictions imposed by governments.  These can result
in losses to the Fund if it is unable to deliver or receive currency or funds in
settlement of obligations  and could also cause hedges it has entered into to be
rendered  useless,  resulting  in full  currency  exposure as well as  incurring
transaction  costs.  Buyers and sellers of  currency  futures are subject to the
same risks that apply to the use of futures generally.  Further, settlement of a
currency  futures  contract for the purchase of most  currencies must occur at a
bank  based in the  issuing  nation.  Trading  options  on  currency  futures is
relatively  new,  and the ability to establish  and close out  positions on such
options is


                                       24
<PAGE>

subject to the maintenance of a liquid market which may not always be available.
Currency  exchange  rates  may  fluctuate  based on  factors  extrinsic  to that
country's economy.

Combined Transactions. The Fund may enter into multiple transactions,  including
multiple options transactions,  multiple futures transactions, multiple currency
transactions  (including forward currency  contracts) and multiple interest rate
transactions and any combination of futures, options, currency and interest rate
transactions   ("component"   transactions),   instead  of  a  single  Strategic
Transaction,  as part of a single or combined  strategy  when, in the opinion of
the  Manager,  it is in the best  interests  of the  Fund to do so.  A  combined
transaction  will usually  contain  elements of risk that are present in each of
its component transactions.  Although combined transactions are normally entered
into based on the Manager's  judgment that the combined  strategies  will reduce
risk or otherwise  more  effectively  achieve the desired  portfolio  management
goal, it is possible that the  combination  will instead  increase such risks or
hinder achievement of the portfolio management objective.

Swaps, Caps, Floors and Collars. Among the Strategic Transactions into which the
Fund may enter  are  interest  rate,  currency,  index  and other  swaps and the
purchase or sale of related caps, floors and collars.  The Fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment  or  portion  of  its   portfolio,   to  protect   against   currency
fluctuations,  as a duration  management  technique  or to protect  against  any
increase in the price of securities the Fund  anticipates  purchasing at a later
date.  The Fund will not sell interest rate caps or floors where it does not own
securities  or other  instruments  providing  the income  stream the Fund may be
obligated  to pay.  Interest  rate swaps  involve the  exchange by the Fund with
another party of their respective commitments to pay or receive interest,  e.g.,
an exchange of floating  rate payments for fixed rate payments with respect to a
notional  amount of principal.  A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential  among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference  indices.  The
purchase  of a cap  entitles  the  purchaser  to receive  payments on a notional
principal  amount from the party selling such cap to the extent that a specified
index exceeds a predetermined  interest rate or amount.  The purchase of a floor
entitles the purchaser to receive  payments on a notional  principal amount from
the party selling such floor to the extent that a specified  index falls below a
predetermined  interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a  predetermined  range of interest
rates or values.

The Fund will  usually  enter into swaps on a net basis,  i.e.,  the two payment
streams  are  netted  out in a cash  settlement  on the  payment  date or  dates
specified in the instrument,  with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. Inasmuch as the Fund will segregate
assets (or enter  into  offsetting  positions)  to cover its  obligations  under
swaps,  the Manager and the Fund  believe  such  obligations  do not  constitute
senior  securities under the 1940 Act and,  accordingly,  will not treat them as
being  subject to its borrowing  restrictions.  The Fund will not enter into any
swap, cap, floor or collar transaction unless, at the time of entering into such
transaction, the unsecured long-term debt of the Counterparty, combined with any
credit enhancements,  is rated at least A by S&P or Moody's or has an equivalent
rating from a NRSRO or is determined to be of equivalent  credit  quality by the
Manager.  If  there  is a  default  by  the  Counterparty,  the  Fund  may  have
contractual remedies pursuant to the agreements related to the transaction.  The
swap market has grown substantially in recent years with a large number of banks
and investment  banking firms acting both as principals and as agents  utilizing
standardized  swap  documentation.  As a  result,  the swap  market  has  become
relatively  liquid.  Caps,  floors and collars are more recent  innovations  for
which  standardized   documentation  has  not  yet  been  fully  developed  and,
accordingly, they are less liquid than swaps.

Eurodollar Instruments. The Fund may make investments in Eurodollar instruments.
Eurodollar instruments are U.S.  dollar-denominated futures contracts or options
thereon  which are  linked  to the  London  Interbank  Offered  Rate  ("LIBOR"),
although  foreign  currency-denominated  instruments  are available from time to
time.  Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of funds and sellers to obtain a fixed rate for borrowings. The Fund
might use  Eurodollar  futures  contracts  and options  thereon to hedge against
changes in LIBOR, to which many interest rate swaps and fixed income instruments
are linked.

                                       25
<PAGE>

Risks of Strategic  Transactions  Outside the U.S.  When  conducted  outside the
U.S., Strategic  Transactions may not be regulated as rigorously as in the U.S.,
may not involve a clearing mechanism and related guarantees,  and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities,  currencies and other instruments.  The value of such positions also
could be adversely affected by: (i) other complex foreign  political,  legal and
economic factors,  (ii) lesser availability than in the U.S. of data on which to
make trading decisions,  (iii) delays in the Fund's ability to act upon economic
events occurring in foreign markets during  non-business hours in the U.S., (iv)
the  imposition of different  exercise and  settlement  terms and procedures and
margin  requirements  than  in the  U.S.,  and  (v)  lower  trading  volume  and
liquidity.

Use of Segregated and Other Special Accounts.  Many Strategic  Transactions,  in
addition to other  requirements,  require that the Fund segregate cash or liquid
assets with its  custodian  to the extent  Fund  obligations  are not  otherwise
"covered" through ownership of the underlying security,  financial instrument or
currency.  In general,  either the full amount of any  obligation by the Fund to
pay or  deliver  securities  or  assets  must be  covered  at all  times  by the
securities, instruments or currency required to be delivered, or, subject to any
regulatory  restrictions,  an amount of cash or liquid  assets at least equal to
the current amount of the obligation must be segregated with the custodian.  The
segregated  assets cannot be sold or transferred  unless  equivalent  assets are
substituted in their place or it is no longer  necessary to segregate  them. For
example,  a call  option  written by the Fund will  require the Fund to hold the
securities  subject  to the  call (or  securities  convertible  into the  needed
securities  without  additional  consideration)  or to segregate  cash or liquid
assets  sufficient  to  purchase  and  deliver  the  securities  if the  call is
exercised.  A call option sold by the Fund on an index will  require the Fund to
own portfolio  securities which correlate with the index or to segregate cash or
liquid assets equal to the excess of the index value over the exercise  price on
a current basis. A put option written by the Fund requires the Fund to segregate
cash or liquid assets equal to the exercise price.

Except when the Fund enters into a forward  contract for the purchase or sale of
a security denominated in a particular currency,  which requires no segregation,
a  currency  contract  which  obligates  the Fund to buy or sell  currency  will
generally  require the Fund to hold an amount of that  currency or liquid assets
denominated  in that currency  equal to the Fund's  obligations  or to segregate
cash or liquid assets equal to the amount of the Fund's obligation.

OTC options entered into by the Fund,  including those on securities,  currency,
financial  instruments  or  indices  and OCC issued and  exchange  listed  index
options, will generally provide for cash settlement.  As a result, when the Fund
sells  these  instruments  it will  only  segregate  an amount of cash or liquid
assets  equal to its accrued net  obligations,  as there is no  requirement  for
payment or delivery of amounts in excess of the net amount.  These  amounts will
equal 100% of the exercise price in the case of a non cash-settled put, the same
as an OCC guaranteed listed option sold by the Fund, or the in-the-money  amount
plus any sell-back  formula amount in the case of a cash-settled put or call. In
addition,  when  the Fund  sells a call  option  on an index at a time  when the
in-the-money  amount exceeds the exercise price, the Fund will segregate,  until
the option expires or is closed out, cash or cash equivalents  equal in value to
such excess.  OCC issued and exchange listed options sold by the Fund other than
those above  generally  settle with  physical  delivery,  or with an election of
either  physical  delivery or cash  settlement  and the Fund will  segregate  an
amount of cash or  liquid  assets  equal to the full  value of the  option.  OTC
options settling with physical delivery,  or with an election of either physical
delivery or cash settlement  will be treated the same as other options  settling
with physical delivery.

In the case of a futures  contract or an option  thereon,  the Fund must deposit
initial  margin and possible daily  variation  margin in addition to segregating
cash or liquid assets  sufficient to meet its  obligation to purchase or provide
securities  or  currencies,  or to pay the amount owed at the  expiration  of an
index-based  futures  contract.  Such liquid  assets may  consist of cash,  cash
equivalents, liquid debt or equity securities or other acceptable assets.

With  respect to swaps,  the Fund will accrue the net amount of the  excess,  if
any, of its  obligations  over its  entitlements  with respect to each swap on a
daily basis and will segregate an amount of cash or liquid assets having a value
equal to the accrued excess.  Caps,  floors and collars  require  segregation of
assets with a value equal to the Fund's net obligation, if any.

                                       26
<PAGE>

Strategic  Transactions  may be covered  by other  means  when  consistent  with
applicable  regulatory  policies.  The  Fund  may  also  enter  into  offsetting
transactions so that its combined position,  coupled with any segregated assets,
equals  its  net  outstanding   obligation  in  related  options  and  Strategic
Transactions.  For example,  the Fund could  purchase a put option if the strike
price of that option is the same or higher than the strike price of a put option
sold by the Fund. Moreover,  instead of segregating cash or liquid assets if the
Fund held a futures or forward  contract,  it could purchase a put option on the
same futures or forward  contract with a strike price as high or higher than the
price of the contract held.  Other Strategic  Transactions may also be offset in
combinations.  If the offsetting  transaction terminates at the time of or after
the primary  transaction no segregation is required,  but if it terminates prior
to such time, cash or liquid assets equal to any remaining obligation would need
to be segregated.

Warrants.  The holder of a warrant has the right, until the warrant expires,  to
purchase a given number of shares of a particular  issuer at a specified  price.
Such  investments  can  provide a greater  potential  for profit or loss than an
equivalent  investment  in the  underlying  security.  Prices of warrants do not
necessarily  move,  however,  in  tandem  with  the  prices  of  the  underlying
securities and are, therefore, considered speculative investments.  Warrants pay
no  dividends  and confer no rights  other than a purchase  option.  Thus,  if a
warrant held by the Fund were not exercised by the date of its  expiration,  the
Fund would lose the entire purchase price of the warrant.

                             Investment Restrictions

The following restrictions may not be changed with respect to a Fund without the
approval of a majority of the outstanding  voting securities of such Fund which,
under the 1940 Act and the rules  thereunder  and as used in this  Statement  of
Additional  Information,  means the lesser of (i) 67% of the shares of such Fund
present at a meeting if the holders of more than 50% of the  outstanding  shares
of such Fund are  present  in  person or by proxy,  or (ii) more than 50% of the
outstanding shares of such Fund.

The  Aggressive  Growth Fund has elected to be classified  as a  non-diversified
open-end  investment fund. The Blue Chip Fund, Classic Growth Fund, Growth Fund,
Small Cap Fund,  Technology Fund,  Total Return Fund and Value+Growth  Fund have
elected to be classified as diversified open-end investment funds.

In addition, as a matter of fundamental policy, each Fund will not:

         (1)      borrow money, except as permitted under the Investment Company
                  Act of 1940,  as amended,  and as  interpreted  or modified by
                  regulatory authority having jurisdiction, from time to time;

         (2)      issue  senior  securities,   except  as  permitted  under  the
                  Investment Company Act of 1940, as amended, and as interpreted
                  or modified by regulatory authority having jurisdiction,  from
                  time to time;

         (3)      purchase  physical   commodities  or  contracts   relating  to
                  physical commodities;

         (4)      concentrate its investments in a particular industry,  as that
                  term  is  used  in the  Investment  Company  Act of  1940,  as
                  amended,   and  as   interpreted  or  modified  by  regulatory
                  authority having jurisdiction, from time to time;

         (5)      engage in the business of  underwriting  securities  issued by
                  others, except to the extent that the Fund may be deemed to be
                  an underwriter in connection with the disposition of portfolio
                  securities;

         (6)      purchase  or sell real  estate,  which  term does not  include
                  securities of companies which deal in real estate or mortgages
                  or  investments  secured by real estate or interests  therein,
                  except that the Fund reserves freedom of action to hold and to
                  sell real estate acquired as a result of the Fund's  ownership
                  of securities; and

                                       27
<PAGE>

         (7)      make loans except as permitted  under the  Investment  Company
                  Act of 1940,  as amended,  and as  interpreted  or modified by
                  regulatory authority having jurisdiction, from time to time.


Each Fund has adopted the following non-fundamental  restrictions,  which may be
changed by the Board without shareholder approval. Each Fund may not:

1.       borrow  money  in an  amount  greater  than  5%  of  its  total  assets
         (one-third of total assets for  Aggressive  Growth Fund and Kemper Blue
         Chip Fund),  except (i) for temporary or emergency purposes and (ii) by
         engaging  in reverse  repurchase  agreements,  dollar  rolls,  or other
         investments  or  transactions  described  in  the  Fund's  registration
         statement which may be deemed to be borrowings;

2.       enter into either of reverse  repurchase  agreements or dollar rolls in
         an amount greater than 5% of its total assets;

3.       purchase  securities  on margin or make short  sales,  except (i) short
         sales against the box, (ii) in connection with arbitrage  transactions,
         (iii) for margin deposits in connection with futures contracts, options
         or other  permitted  investments,  (iv) that  transactions  in  futures
         contracts  and  options  shall  not be  deemed  to  constitute  selling
         securities  short,  and (v) that the Fund may  obtain  such  short-term
         credits  as  may  be  necessary   for  the   clearance  of   securities
         transactions;

4.       purchase  options,  unless  the  aggregate  premiums  paid on all  such
         options  held by the Fund at any time do not  exceed  20% of its  total
         assets; or sell put options, if as a result, the aggregate value of the
         obligations  underlying  such put options would exceed 50% of its total
         assets;

5.       enter  into  futures  contracts  or  purchase  options  thereon  unless
         immediately  after the  purchase,  the value of the  aggregate  initial
         margin with respect to such futures contracts entered into on behalf of
         the Fund and the premiums  paid for such  options on futures  contracts
         does not exceed 5% of the fair market value of the Fund's total assets;
         provided that in the case of an option that is in-the-money at the time
         of purchase,  the in-the-money  amount may be excluded in computing the
         5% limit;

6.       purchase warrants if as a result,  such securities,  taken at the lower
         of cost or market value,  would  represent more than 5% of the value of
         the Fund's total assets (for this purpose,  warrants  acquired in units
         or attached to securities will be deemed to have no value); and

7.       lend  portfolio  securities in an amount  greater than one-third of its
         total assets (5% for Classic Growth Fund)

8.       invest  more than 15% of net  assets  in  illiquid  securities  (except
         Classic Growth Fund,  which limits  investments in illiquid  securities
         according to the Investment Company Act of 1940).

                                 Net Asset Value

The net  asset  value  per  share  of a Fund is the  value of one  share  and is
determined  separately  for each  class by  dividing  the value of a Fund's  net
assets  attributable  to the  class  by the  number  of  shares  of  that  class
outstanding. The per share net asset value of each of Class B and Class C shares
of the Fund will  generally  be lower  than that of the Class A shares of a Fund
because of the higher expenses borne by the Class B and Class C shares.  The net
asset  value of shares of [the/a]  Fund is  computed  as of the close of regular
trading on the New York Stock Exchange (the "Exchange") on each day the Exchange
is open for trading (the "Value  Time").  The Exchange is scheduled to be closed
on the following  holidays:  New Year's Day, Dr.  Martin  Luther King,  Jr. Day,
Presidents'  Day,  Good  Friday,  Memorial  Day,  Independence  Day,  Labor Day,
Thanksgiving  and Christmas,  and on the preceding  Friday or subsequent  Monday
when one of these  holidays  falls on a Saturday  or Sunday,  respectively.  Net
asset  value  per share is  determined  separately  for each  class of shares by
dividing the value of the total assets of [the/a] Fund attributable to the share
of that class, less all liabilities, by the total number of shares outstanding.

                                       28
<PAGE>

An  exchange-traded  equity  security is valued at its most recent sale price on
the exchange it is traded as of the Value Time.  Lacking any sales, the security
is valued at the  calculated  mean between the most recent bid quotation and the
most recent asked quotation (the  "Calculated  Mean") on such exchange as of the
Value Time.  Lacking a Calculated Mean the security is valued at the most recent
bid quotation on such exchange as of the Value Time. An equity security which is
traded on the National  Association of Securities  Dealers  Automated  Quotation
("Nasdaq") system will be valued at its most recent sale price on such system as
of the Value Time.  Lacking any sales, the security is valued at the most recent
bid quotation as of the Value Time.  The value of an equity  security not quoted
on the Nasdaq System, but traded in another over-the-counter market, is its most
recent  sale price if there are any sales of such  security on such market as of
the Value Time. Lacking any sales, the security is valued at the Calculated Mean
quotation  for such  security as of the Value Time.  Lacking a  Calculated  Mean
quotation  the  security  is valued at the most recent bid  quotation  as of the
Value Time.

Debt  securities,  other than  money  market  instruments,  are valued at prices
supplied by the Fund's  pricing  agent(s) which reflect  broker/dealer  supplied
valuations and electronic data processing  techniques.  Money market instruments
with an original  maturity of sixty days or less maturing at par shall be valued
at amortized cost, which the Board believes  approximates market value. If it is
not possible to value a particular  debt  security  pursuant to these  valuation
methods, the value of such security is the most recent bid quotation supplied by
a bona fide  market  maker.  If it is not  possible to value a  particular  debt
security pursuant to the above methods, the Investment Manager of the particular
fund may  calculate  the price of that debt  security,  subject  to  limitations
established by the Board.

An exchange traded options contract on securities, currencies, futures and other
financial  instruments is valued at its most recent sale price on such exchange.
Lacking  any sales,  the  options  contract  is valued at the  Calculated  Mean.
Lacking any Calculated  Mean, the options  contract is valued at the most recent
bid quotation in the case of a purchased  options  contract,  or the most recent
asked quotation in the case of a written options  contract.  An options contract
on   securities,    currencies   and   other   financial    instruments   traded
over-the-counter  is valued at the most  recent bid  quotation  in the case of a
purchased options contract and at the most recent asked quotation in the case of
a written  options  contract.  Futures  contracts  are valued at the most recent
settlement price.  Foreign currency exchange forward contracts are valued at the
value  of  the  underlying  currency  at the  prevailing  exchange  rate  on the
valuation date.

If a security is traded on more than one exchange, or upon one or more exchanges
and in the  over-the-counter  market,  quotations  are taken  from the market in
which the security is traded most extensively.

If, in the opinion of the Valuation Committee, the value of a portfolio asset as
determined  in  accordance  with these  procedures  does not  represent the fair
market value of the portfolio  asset,  the value of the portfolio asset is taken
to be an amount  which,  in the opinion of the Valuation  Committee,  represents
fair market value on the basis of all available information.  The value of other
portfolio holdings owned by [the/a] Fund is determined in a manner which, in the
discretion of the Valuation  Committee most fairly reflects fair market value of
the property on the valuation date.

Following the valuations of securities or other portfolio assets in terms of the
currency in which the market quotation used is expressed ("Local Currency"), the
value of these  portfolio  assets  in terms of U.S.  dollars  is  calculated  by
converting  the Local  Currency  into U.S.  dollars at the  prevailing  currency
exchange rate on the valuation date.

                             Transaction Information

PURCHASE OF SHARES


Alternative  Purchase  Arrangements.  Class A  shares  of each  Fund are sold to
investors subject to an initial sales charge. Class B shares are sold without an
initial  sales charge but are subject to higher  ongoing  expenses  than Class A
shares and a contingent deferred sales charge payable upon certain  redemptions.
Class B shares automatically convert to Class A shares six years after issuance.
Class C shares  are sold  without  an initial  sales  charge but are  subject to
higher  ongoing  expenses  than  Class A shares,  are  subject  to a  contingent
deferred  sales


                                       29
<PAGE>

charge  payable  upon  certain  redemptions  within  the  first  year  following
purchase, and do not convert into another class. [IF APPROPRIATE: Class I shares
are  offered at net asset  value  without an  initial  sales  charge and are not
subject to a contingent deferred sales charge or a Rule 12b-1 distribution fee.]
When placing purchase  orders,  investors must specify which class of shares the
order is for.

The primary  distinctions  among the classes of each Fund's  shares lie in their
initial and  contingent  deferred  sales charge  structures and in their ongoing
expenses,  including  asset-based  sales  charges  in the  form  of  Rule  12b-1
distribution  fees.  These  differences are summarized in the table below.  Each
class has distinct  advantages and  disadvantages for different  investors,  and
investors  may  choose  the  class  that  best  suits  their  circumstances  and
objectives.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                    Sales                               Annual 12b-1 Fees(as a % of
                    Charge                              average daily net assets)     Other Information
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
<S>                 <C>                                                               <C>
Class A             Maximum initial sales charge of     None                          Initial sales charge
                    5.75% of the public offering                                      waived or reduced for
                    price                                                             certain purchases

                    (4. 5% for Kemper Global Income
                    Fund)
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
Class B             Maximum contingent deferred         0.75%                         Shares convert to
                    sales charge of 4% of redemption                                  Class A shares six years
                    proceeds; declines to zero after                                  after issuance
                    six years
--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
Class C             Contingent deferred sales charge    0.75%                         No conversion feature
                    of 1% of redemption proceeds for
                    redemptions made during first
                    year after purchase
--------------------------------------------------------------------------------------------------------------
</TABLE>

The  minimum  initial  investment  for  each  Fund is  $1,000  and  the  minimum
subsequent  investment is $100. The minimum initial investment for an Individual
Retirement Account is $250 and the minimum  subsequent  investment is $50. Under
an  automatic  investment  plan,  such as Bank Direct  Deposit,  Payroll  Direct
Deposit or  Government  Direct  Deposit,  the  minimum  initial  and  subsequent
investment  is  $50.  These  minimum  amounts  may be  changed  at any  time  in
management's discretion.

Share certificates will not be issued unless requested in writing and may not be
available for certain types of account  registrations.  It is  recommended  that
investors not request share  certificates  unless needed for a specific purpose.
You cannot  redeem  shares by  telephone or wire  transfer or use the  telephone
exchange  privilege if share  certificates have been issued. A lost or destroyed
certificate  is difficult to replace and can be expensive to the  shareholder (a
bond value of 2% or more of the certificate value is normally required).

                                       30
<PAGE>


Initial Sales Charge Alternative -- Class A Shares. The public offering price of
Class A shares for purchasers  choosing the initial sales charge  alternative is
the net asset value plus a sales charge, as set forth below.

<TABLE>
<CAPTION>
                                                                                               Sales Charge Allowed to
                                     As a Percentage of              As a Percentage of Net    Dealers as a Percentage of
Amount of Purchase                   Offering Price                  Asset Value*              Offering Price


<S>                                               <C>                   <C>                           <C>
Less than $50,000                                 5.75%                 6.10%                         5.20%

$50,000 but less than $100,000                    4.50                  4.71                          4.00

$100,000 but less than $250,000                   3.50                  3.63                          3.00

$250,000 but less than $500,000                   2.60                  2.67                          2.25

$500,000 but less than $1 million                 2.00                  2.04                          1.75

$1 million and over                               0.00**                0.00**                    ***
</TABLE>

*        Rounded to the nearest one-hundredth percent.

**       Redemption  of shares  may be subject to a  contingent  deferred  sales
         charge as discussed below.

***      Commission is payable by KDI as discussed below.

Each Fund  receives  the entire net asset value of all its Class A shares  sold.
Kemper Distributors, Inc. ("KDI"), the Funds' principal underwriter, retains the
sales charge on sales of Class A shares from which it allows  discounts from the
applicable  public  offering price to investment  dealers,  which  discounts are
uniform for all  dealers in the United  States and its  territories.  The normal
discount allowed to dealers is set forth in the above table.  Upon notice to all
dealers with whom it has sales agreements,  KDI may reallow to dealers up to the
full applicable  sales charge,  as shown in the above table,  during periods and
for  transactions  specified in such notice and such  reallowances  may be based
upon attainment of minimum sales levels.  During periods when 90% or more of the
sales charge is reallowed, such dealers may be deemed to be underwriters as that
term is defined in the Securities Act of 1933.

Class A  shares  of a Fund may be  purchased  at net  asset  value  by:  (a) any
purchaser  provided that the amount invested in such Fund or Kemper Mutual Funds
listed under "Special  Features -- Class A Shares -- Combined  Purchases" totals
at least  $1,000,000  (the  "Large  Order  NAV  Purchase  Privilege")  including
purchases of Class A shares  pursuant to the  "Combined  Purchases,"  "Letter of
Intent" and "Cumulative  Discount" features described under "Special  Features;"
or (b) a  participant-directed  qualified  retirement  plan  described  in  Code
Section 401(a) or a  participant-directed  non-qualified  deferred  compensation
plan  described  in  Code  Section  457  or  a  participant-directed   qualified
retirement plan described in Code Section  403(b)(7) which is not sponsored by a
K-12 school district, provided in each case that such plan has not less than 200
eligible  employees]  (the "Large  Order NAV  Purchase  Privilege").  Redemption
within  two  years of shares  purchased  under  the  Large  Order  NAV  Purchase
Privilege may be subject to a contingent  deferred sales charge.  See "Purchase,
Repurchase and Redemption of Shares -- Contingent Deferred Sales Charge -- Large
Order NAV Purchase Privilege."

KDI may in its  discretion  compensate  investment  dealers  or other  financial
services  firms in  connection  with the sale of Class A shares of a Fund at net
asset value in accordance with the Large Order NAV Purchase  Privilege up to the
following amounts:  1.00% of the net asset value of shares sold on amounts up to
$5 million, 0.50% on


                                       31
<PAGE>

the next $45  million  and 0.25% on amounts  over $50  million.  The  commission
schedule will be reset on a calendar year basis for sales of shares  pursuant to
the Large Order NAV Purchase  Privilege to employer  sponsored  employee benefit
plans using the subaccount  record  keeping system made available  through KSvC.
For purposes of determining the appropriate  commission percentage to be applied
to a particular sale under the Funds' foregoing schedule,  KDI will consider the
cumulative  amount  invested by the  purchaser in a Fund and other Kemper Mutual
Funds listed under "Special  Features -- Class A Shares -- Combined  Purchases,"
including purchases pursuant to the "Combined Purchases," "Letter of Intent" and
"Cumulative  Discount"  features  referred to above and  including  purchases of
class R shares of certain  Scudder  funds.  The privilege of purchasing  Class A
shares of a Fund at net asset value under the Large Order NAV Purchase Privilege
is not available if another net asset value purchase privilege also applies.

Class A shares of a Fund or any other Kemper  Mutual Fund listed under  "Special
Features -- Class A Shares -- Combined  Purchases" may be purchased at net asset
value in any amount by members of the plaintiff class in the proceeding known as
Howard and Audrey Tabankin,  et al. v. Kemper  Short-Term Global Income Fund, et
al., Case No. 93 C 5231 (N.D. IL). This privilege is generally  non-transferable
and continues  for the lifetime of  individual  class members and for a ten year
period for non-individual  class members.  To make a purchase at net asset value
under this  privilege,  the investor  must,  at the time of  purchase,  submit a
written  request that the  purchase be processed at net asset value  pursuant to
this  privilege  specifically  identifying  the  purchaser  as a  member  of the
"Tabankin  Class." Shares purchased under this privilege will be maintained in a
separate account that includes only shares  purchased under this privilege.  For
more details concerning this privilege, class members should refer to the Notice
of (1)  Proposed  Settlement  with  Defendants;  and (2)  Hearing  to  Determine
Fairness of Proposed  Settlement,  dated August 31, 1995,  issued in  connection
with the aforementioned court proceeding.  For sales of Fund shares at net asset
value  pursuant to this  privilege,  KDI may at its  discretion  pay  investment
dealers and other financial services firms a concession,  payable quarterly,  at
an  annual  rate of up to  0.25%  of net  assets  attributable  to  such  shares
maintained and serviced by the firm. A firm becomes  eligible for the concession
based  upon  assets in  accounts  attributable  to shares  purchased  under this
privilege in the month after the month of purchase and the concession  continues
until terminated by KDI. The privilege of purchasing Class A shares of a Fund at
net asset value under this privilege is not available if another net asset value
purchase privilege also applies.

Class A shares may be sold at net asset  value in any  amount to: (a)  officers,
trustees, directors, employees (including retirees) and sales representatives of
a Fund, its Manager , its principal underwriter or certain affiliated companies,
for themselves or members of their families; (b) registered  representatives and
employees  of  broker-dealers  having  selling  group  agreements  with  KDI and
officers, directors and employees of service agents of the Funds, for themselves
or their spouses or dependent  children;  (c)  shareholders  who owned shares of
Kemper Value Series,  Inc.  ("KVS") on September 8, 1995, and have  continuously
owned shares of KVS (or a Kemper Fund  acquired by exchange of KVS shares) since
that date, for themselves or members of their families;  (d) any trust, pension,
profit-sharing  or other  benefit  plan for only such  persons;  (e) persons who
purchase  such shares  through bank trust  departments  that process such trades
through an  automated,  integrated  mutual fund clearing  program  provided by a
third party  clearing  firm;  and (f) persons  who  purchase  shares of the Fund
through  KDI  as  part  of an  automated  billing  and  wage  deduction  program
administered  by  RewardsPlus  of  America  for  the  benefit  of  employees  of
participating  employer groups. Class A shares may be sold at net asset value in
any  amount  to  selected  employees  (including  their  spouses  and  dependent
children)   of  banks  and  other   financial   services   firms  that   provide
administrative  services  related to order  placement  and payment to facilitate
transactions  in shares of the Funds for their clients  pursuant to an agreement
with KDI or one of its affiliates.  Only those employees of such banks and other
firms who as part of their usual duties provide services related to transactions
in Fund  shares  may  purchase  a  Fund's  Class A  shares  at net  asset  value
hereunder.  Class A shares may be sold at net asset  value in any amount to unit
investment   trusts  sponsored  by  Ranson  &  Associates,   Inc.  In  addition,
unitholders of unit investment trusts sponsored by Ranson & Associates,  Inc. or
its predecessors may purchase a Fund's Class A shares at net asset value through
reinvestment  programs  described in the  prospectuses  of such trusts that have
such  programs.  Class A shares of a Fund may be sold at net asset value through
certain investment advisors registered under the Investment Advisors Act of 1940
and other financial services firms that adhere to certain standards  established
by KDI,  including  a  requirement  that


                                       32
<PAGE>

such  shares  be sold for the  benefit  of  their  clients  participating  in an
investment advisory program under which such clients pay a fee to the investment
advisor or other firm for portfolio  management and other services.  Such shares
are sold for  investment  purposes  and on the  condition  that they will not be
resold except through  redemption or repurchase by the Funds. The Funds may also
issue Class A shares at net asset value in connection  with the  acquisition  of
the assets of or merger or consolidation with another investment  company, or to
shareholders  in connection  with the investment or  reinvestment  of income and
capital gain dividends.

Class A shares of a Fund may be  purchased  at net asset  value in any amount by
certain  professionals  who assist in the promotion of Kemper Funds  pursuant to
personal  services  contracts  with KDI,  for  themselves  or  members  of their
families.  KDI in its  discretion may  compensate  financial  services firms for
sales of Class A shares under this  privilege  at a commission  rate of 0.50% of
the amount of Class A shares purchased.

The  sales  charge  scale is  applicable  to  purchases  made at one time by any
"purchaser" which includes: an individual;  or an individual,  his or her spouse
and  children  under the age of 21; or a trustee or other  fiduciary of a single
trust estate or single fiduciary account; or an organization exempt from federal
income  tax  under  Section  501(c)(3)  or  (13)  of  the  Code;  or a  pension,
profit-sharing  or other  employee  benefit plan whether or not qualified  under
Section  401  of  the  Code;  or  other   organized  group  of  persons  whether
incorporated  or not,  provided the  organization  has been in existence  for at
least six months and has some  purpose  other than the  purchase  of  redeemable
securities of a registered investment company at a discount. In order to qualify
for a lower sales  charge,  all orders from an  organized  group will have to be
placed  through a single  investment  dealer  or other  firm and  identified  as
originating from a qualifying purchaser.

Deferred  Sales Charge  Alternative  -- Class B Shares.  Investors  choosing the
deferred sales charge alternative may purchase Class B shares at net asset value
per share without any sales charge at the time of purchase. Since Class B shares
are  being  sold  without  an  initial  sales  charge,  the full  amount  of the
investor's  purchase  payment  will be invested in Class B shares for his or her
account.  A contingent  deferred sales charge may be imposed upon  redemption of
Class B shares. See "Purchase, Repurchase and Redemption of Shares -- Contingent
Deferred Sales Charge -- Class B Shares."

KDI  compensates  firms  for  sales of  Class B shares  at the time of sale at a
commission rate of up to 3.75% of the amount of Class B shares purchased. KDI is
compensated by each Fund for services as distributor  and principal  underwriter
for Class B shares. See "Investment Manager and Underwriter."

Class B shares of a Fund  will  automatically  convert  to Class A shares of the
same Fund six years after  issuance on the basis of the relative net asset value
per share. The purpose of the conversion  feature is to relieve holders of Class
B shares from the distribution services fee when they have been outstanding long
enough for KDI to have been compensated for distribution  related expenses.  For
purposes  of  conversion  to  Class  A  shares,  shares  purchased  through  the
reinvestment of dividends and other  distributions  paid with respect to Class B
shares in a shareholder's  Fund account will be converted to Class A shares on a
pro rata basis.

Purchase of Class C Shares. The public offering price of the Class C shares of a
Fund is the next determined net asset value. No initial sales charge is imposed.
Since Class C shares are sold without an initial sales  charge,  the full amount
of the investor's purchase payment will be invested in Class C shares for his or
her  account.  A  contingent  deferred  sales  charge  may be  imposed  upon the
redemption  of Class C shares if they are redeemed  within one year of purchase.
See "Purchase,  Repurchase and Redemption of Shares -- Contingent Deferred Sales
Charge -- Class C  Shares."  KDI  currently  advances  to firms  the first  year
distribution  fee at a rate of 0.75% of the purchase  price of such shares.  For
periods after the first year,  KDI  currently  intends to pay firms for sales of
Class C shares a distribution fee, payable quarterly, at an annual rate of 0.75%
of net assets  attributable  to Class C shares  maintained  and  serviced by the
firm. KDI is compensated by each Fund for services as distributor  and principal
underwriter for Class C shares. See "Investment Manager and Underwriter."

Purchase  of Class I Shares.  Class I shares  are  offered  at net  asset  value
without an initial  sales  charge and are not subject to a  contingent  deferred
sales charge or a Rule 12b-1  distribution fee. Also, there is no administration
services  fee  charged to Class I


                                       33
<PAGE>

shares.  As a result of the relatively  lower  expenses for Class I shares,  the
level of income  dividends  per share (as a percentage  of net asset value) and,
therefore,  the overall  investment  value, will typically be higher for Class I
shares than for Class A, Class B, or Class C shares.

Class  I  shares  are  available  for  purchase  exclusively  by  the  following
categories of institutional  investors:  (1) tax-exempt retirement plans (Profit
Sharing,  401(k),  Money Purchase  Pension and Defined Benefit Plans) of Scudder
Kemper and its  affiliates  and  rollover  accounts  from those  plans;  (2) the
following  investment  advisory  clients  of Scudder  Kemper and its  investment
advisory  affiliates  that  invest at least $1 million  in a Fund:  unaffiliated
benefit  plans,  such as  qualified  retirement  plans  (other  than  individual
retirement accounts and self-directed retirement plans);  unaffiliated banks and
insurance  companies  purchasing for their own accounts;  and endowment funds of
unaffiliated non-profit  organizations;  (3) investment-only  accounts for large
qualified plans, with at least $50 million in total plan assets or at least 1000
participants; (4) trust and fiduciary accounts of trust companies and bank trust
departments  providing  fee  based  advisory  services  that  invest at least $1
million  in  a  Fund  on  behalf  of  each  trust;   (5)  policy  holders  under
Zurich-American  Insurance Group's  collateral  investment  program investing at
least $200,000 in a Fund; and (6) investment companies managed by Scudder Kemper
that invest  primarily in other investment  companies.  Class I shares currently
are available for purchase only from KDI,  principal  underwriter for the Funds,
and, in the case of category  (4) above,  selected  dealers  authorized  by KDI.
Share certificates are not available for Class I shares.

Which  Arrangement  is Better for You?  The decision as to which class of shares
provides  a more  suitable  investment  for an  investor  depends on a number of
factors,  including the amount and intended length of the investment.  Investors
making investments that qualify for reduced sales charges might consider Class A
shares.  Investors who prefer not to pay an initial sales charge and who plan to
hold their  investment  for more than six years might  consider  Class B shares.
Investors  who prefer not to pay an initial  sales charge but who plan to redeem
their shares within six years might consider Class C shares.  Orders for Class B
shares or Class C shares for $500,000 or more will be declined. Orders for Class
B shares or Class C shares by employer  sponsored  employee  benefit plans using
the subaccount  record keeping  system made  available  through the  Shareholder
Service  Agent will be  invested  instead  in Class A shares at net asset  value
where the  combined  subaccount  value in a Fund or Kemper  Mutual  Funds listed
under "Special Features -- Class A Shares -- Combined Purchases" is in excess of
$5 million including purchases pursuant to the "Combined  Purchases," "Letter of
Intent" and "Cumulative  Discount" features described under "Special  Features."
For more information about the three sales arrangements,  consult your financial
representative or the Shareholder  Service Agent.  Financial  services firms may
receive different  compensation  depending upon which class of shares they sell.
[ONLY FOR FUNDS  OFFERING  CLASS I SHARES:  Class I shares are available only to
certain institutional investors.]

General.  Shares of a Fund are sold at their public offering price, which is the
net asset value per share of the Fund next determined after an order is received
in proper form plus,  with respect to Class A shares,  an initial  sales charge.
The minimum initial investment is $1,000 and the minimum  subsequent  investment
is $100 but such  minimum  amounts may be changed at any time.  An order for the
purchase of shares that is accompanied by a check drawn on a foreign bank (other
than a check drawn on a Canadian bank in U.S. Dollars) will not be considered in
proper form and will not be processed unless and until a Fund determines that it
has received  payment of the proceeds of the check. The time required for such a
determination will vary and cannot be determined in advance.

Upon  receipt by the  Shareholder  Service  Agent of a request  for  redemption,
shares of a Fund will be  redeemed by a Fund at the  applicable  net asset value
per share of such Fund. The amount received by a shareholder  upon redemption or
repurchase may be more or less than the amount paid for such shares depending on
the market value of a Trust's portfolio securities at the time.

Scheduled  variations  in or the  elimination  of the initial  sales  charge for
purchases  of  Class A  shares  or the  contingent  deferred  sales  charge  for
redemption of Class B or Class C shares by certain classes of persons or through
certain types of transactions are provided  because of anticipated  economies in
sales and sales related efforts.

                                       34
<PAGE>

Tax  Identification  Number. Be sure to complete the Tax  Identification  Number
section of the Fund's  application  when you open an  account.  Federal  tax law
requires  each  Fund  to  withhold  31%  of  taxable  dividends,  capital  gains
distributions  and  redemption and exchange  proceeds from accounts  (other than
those of certain exempt payees) without a correct  certified  Social Security or
tax  identification  number and  certain  other  certified  information  or upon
notification  from the IRS or a broker that  withholding is required.  Each Fund
reserves  the  right to  reject  new  account  applications  without  a  correct
certified Social Security or tax  identification  number. The Fund also reserves
the right, following 30 days' notice, to redeem all shares in accounts without a
correct  certified Social Security or tax  identification  number. A shareholder
may avoid  involuntary  redemption by providing the  applicable  Fund with a tax
identification  number  during the 30-day  notice  period.  Shareholders  should
direct their inquiries to Kemper Service Company, 811 Main Street,  Kansas City,
Missouri  64105-2005 or to the firm from which they  received this  Statement of
Additional Information.

Redemptions and Exchanges

A Fund may suspend the right of redemption or delay payment more than seven days
(a) during any period when the New York Stock  Exchange  ("Exchange")  is closed
other than customary  weekend and holiday closings or during any period in which
trading on the Exchange is  restricted,  (b) during any period when an emergency
exists  as a result  of  which  (i)  disposal  of a  Fund's  investments  is not
reasonably  practicable,  or (ii) it is not reasonably practicable for a Fund to
determine  the value of its net  assets,  or (c) for such  other  periods as the
Securities  and Exchange  Commission may by order permit for the protection of a
Fund's shareholders.

The  conversion  of Class B  shares  to Class A  shares  may be  subject  to the
continuing availability of an opinion of counsel, ruling by the Internal Revenue
Service or other  assurance  acceptable  to each Fund to the effect that (a) the
assessment of the  distribution  services fee with respect to Class B shares and
not Class A shares and the  assessment of the  administrative  services fee with
respect  to each  class  does  not  result  in a Fund's  dividends  constituting
"preferential  dividends"  under the  Internal  Revenue  Code,  and (b) that the
conversion  of Class B shares to Class A shares  does not  constitute  a taxable
event under the Internal Revenue Code. The conversion of Class B shares to Class
A shares may be suspended if such assurance is not available.  In that event, no
further  conversions of Class B shares would occur, and shares might continue to
be subject to the  distribution  services fee for an indefinite  period that may
extend beyond the proposed conversion date.

The  Fund  has  authorized  certain  members  of  the  National  Association  of
Securities  Dealers,  Inc.  ("NASD"),  other  than KDI to  accept  purchase  and
redemption  orders for a Fund's shares.  Those brokers may also designate  other
parties to accept purchase and redemption orders on a Fund's behalf.  Orders for
purchase or redemption  will be deemed to have been received by a Fund when such
brokers or their authorized designees accept the orders. Subject to the terms of
the contract between a Fund and the broker,  ordinarily orders will be priced at
a Fund's net asset value next computed after acceptance by such brokers or their
authorized  designees.  Further,  if purchases or redemptions of a Fund's shares
are arranged and settlement is made at an investor's  election through any other
authorized  NASD member,  that member may, at its  discretion,  charge a fee for
that service. The Board of Trustees or Directors as the case may be ("Board") of
a Fund and KDI each has the right to limit the  amount of  purchases  by, and to
refuse to sell to, any person.  The Board and KDI may suspend or  terminate  the
offering of shares of a Fund at any time for any reason.

General.  Any shareholder  may require a Fund to redeem his or her shares.  When
shares are held for the account of a shareholder by the Funds'  transfer  agent,
the  shareholder  may redeem them by sending a written  request with  signatures
guaranteed to Kemper Mutual Funds,  Attention:  Redemption Department,  P.O. Box
419557, Kansas City, Missouri 64141-6557. When certificates for shares have been
issued,  they must be mailed to or deposited with the Shareholder Service Agent,
along with a duly endorsed stock power and  accompanied by a written request for
redemption.  Redemption  requests  and a stock  power  must be  endorsed  by the
account holder with signatures  guaranteed by a commercial  bank, trust company,
savings and loan  association,  federal savings bank,  member firm of a national
securities  exchange or other  eligible  financial  institution.  The redemption
request  and stock  power must be signed  exactly as the  account is  registered
including any special capacity of the registered owner. Additional documentation
may  be  requested,  and  a  signature  guarantee  is


                                       35
<PAGE>

normally  required,  from  institutional and fiduciary account holders,  such as
corporations,  custodians  (e.g.,  under the Uniform  Transfers  to Minors Act),
executors, administrators, trustees or guardians.

The redemption  price for shares of a Fund will be the net asset value per share
of that Fund next determined  following receipt by the Shareholder Service Agent
of a properly  executed request with any required  documents as described above.
Payment for shares  redeemed will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly  executed  request
accompanied by any outstanding  share  certificates in proper form for transfer.
When a Fund is asked to redeem  shares  for  which it may not have yet  received
good  payment  (i.e.,  purchases  by  check,  EXPRESS-Transfer  or  Bank  Direct
Deposit),  it  may  delay  transmittal  of  redemption  proceeds  until  it  has
determined  that  collected  funds have been  received  for the purchase of such
shares,  which  may be up to 10 days  from  receipt  by a Fund  of the  purchase
amount. The redemption within two years of Class A shares purchased at net asset
value  under  the  Large  Order  NAV  Purchase  Privilege  may be  subject  to a
contingent  deferred sales charge (see  "Purchase,  Repurchase and Redemption of
Shares -- Initial Sales Charge  Alternative -- Class A Shares"),  the redemption
of Class B shares within six years may be subject to a contingent deferred sales
charge (see "Contingent Deferred Sales Charge -- Class B Shares" below), and the
redemption  of Class C shares  within the first year  following  purchase may be
subject to a contingent  deferred sales charge (see  "Contingent  Deferred Sales
Charge -- Class C Shares" below).

Because of the high cost of maintaining  small accounts,  the Funds may assess a
quarterly  fee of $9 on an account with a balance  below $1,000 for the quarter.
The fee will not apply to accounts enrolled in an automatic  investment program,
Individual  Retirement  Accounts or employer  sponsored  employee  benefit plans
using  the  subaccount   record  keeping  system  made  available   through  the
Shareholder Service Agent.

Shareholders  can request the following  telephone  privileges:  expedited  wire
transfer redemptions and EXPRESS-Transfer  transactions (see "Special Features")
and  exchange  transactions  for  individual  and  institutional   accounts  and
pre-authorized  telephone  redemption  transactions  for  certain  institutional
accounts. Shareholders may choose these privileges on the account application or
by contacting the Shareholder Service Agent for appropriate instructions. Please
note that the telephone  exchange  privilege is automatic unless the shareholder
refuses it on the  account  application.  A Fund or its agents may be liable for
any  losses,  expenses  or  costs  arising  out of  fraudulent  or  unauthorized
telephone  requests  pursuant  to these  privileges  unless a Fund or its agents
reasonably  believe,  based upon reasonable  verification  procedures,  that the
telephone  instructions are genuine. The shareholder will bear the risk of loss,
including loss resulting from fraudulent or unauthorized  transactions,  as long
as  the  reasonable  verification  procedures  are  followed.  The  verification
procedures  include  recording   instructions,   requiring  certain  identifying
information before acting upon instructions and sending written confirmations.

Telephone  Redemptions.  If  the  proceeds  of  the  redemption  (prior  to  the
imposition of any contingent  deferred sales charge) are $50,000 or less and the
proceeds  are  payable to the  shareholder  of record at the  address of record,
normally a  telephone  request or a written  request by any one  account  holder
without a signature  guarantee is sufficient  for  redemptions  by individual or
joint account  holders,  and trust,  executor,  guardian and  custodial  account
holders, provided the trustee,  executor,  guardian or custodian is named in the
account  registration.  Other  institutional  account  holders may exercise this
special  privilege of redeeming  shares by telephone  request or written request
without signature guarantee subject to the same conditions as individual account
holders and subject to the  limitations on liability  described  under "General"
above, provided that this privilege has been pre-authorized by the institutional
account  holder  or  guardian  account  holder  by  written  instruction  to the
Shareholder Service Agent with signatures guaranteed.  Telephone requests may be
made  by  calling   1-800-621-1048.   Shares   purchased  by  check  or  through
EXPRESS-Transfer or Bank Direct Deposit may not be redeemed under this privilege
of redeeming  shares by telephone  request until such shares have been owned for
at least 10 days. This privilege of redeeming shares by telephone  request or by
written request  without a signature  guarantee may not be used to redeem shares
held in certificated form and may not be used if the  shareholder's  account has
had an address change within 30 days of the redemption  request.  During periods
when it is difficult to contact the Shareholder  Service Agent by telephone,  it
may be difficult to use the

                                       36
<PAGE>

telephone redemption privilege, although investors can still redeem by mail. The
Funds reserve the right to terminate or modify this privilege at any time.

Repurchases   (Confirmed   Redemptions).   A  request  for   repurchase  may  be
communicated  by a shareholder  through a securities  dealer or other  financial
services firm to KDI, which each Fund has authorized to act as its agent.  There
is no charge by KDI with respect to repurchases; however, dealers or other firms
may charge customary commissions for their services. Dealers and other financial
services firms are obligated to transmit orders  promptly.  The repurchase price
will be the net asset value of the applicable Fund next determined after receipt
of a request by KDI.  However,  requests for repurchases  received by dealers or
other  firms  prior to the  determination  of net asset  value  (see "Net  Asset
Value")  and  received by KDI prior to the close of KDI's  business  day will be
confirmed at the net asset value  effective on that day. The offer to repurchase
may be suspended at any time.  Requirements  as to stock  powers,  certificates,
payments and delay of payments are the same as for redemptions.

Expedited   Wire  Transfer   Redemptions.   If  the  account  holder  has  given
authorization for expedited wire redemption to the account holder's brokerage or
bank account, shares of a Fund can be redeemed and proceeds sent by federal wire
transfer to a single  previously  designated  account.  Requests received by the
Shareholder  Service  Agent prior to the  determination  of net asset value will
result  in  shares  being  redeemed  that day at the net  asset  value of a Fund
effective on that day and normally the proceeds  will be sent to the  designated
account  the  following  business  day.  Delivery  of  the  proceeds  of a  wire
redemption  of $250,000 or more may be delayed by a Fund for up to seven days if
the Fund or the  Shareholder  Servicing  Agent deems it  appropriate  under then
current  market  conditions.  Once  authorization  is on file,  the  Shareholder
Service Agent will honor requests by telephone at  1-800-621-1048 or in writing,
subject to the limitations on liability  described under  "General"  above.  The
Funds are not  responsible  for the efficiency of the federal wire system or the
account  holder's  financial  services firm or bank. The Funds  currently do not
charge the account holder for wire transfers.  The account holder is responsible
for any charges imposed by the account  holder's firm or bank. There is a $1,000
wire redemption  minimum  (including any contingent  deferred sales charge).  To
change the  designated  account  to receive  wire  redemption  proceeds,  send a
written request to the Shareholder  Service Agent with signatures  guaranteed as
described  above or  contact  the  firm  through  which  shares  of a Fund  were
purchased.  Shares purchased by check or through EXPRESS-Transfer or Bank Direct
Deposit may not be redeemed by wire  transfer  until such shares have been owned
for at least 10 days.  Account  holders  may not use this  privilege  to  redeem
shares held in certificated form. During periods when it is difficult to contact
the  Shareholder  Service  Agent by  telephone,  it may be  difficult to use the
expedited  wire transfer  redemption  privilege.  The Funds reserve the right to
terminate or modify this privilege at any time.

Contingent  Deferred  Sales  Charge -- Large  Order NAV  Purchase  Privilege.  A
contingent  deferred  sales  charge may be imposed  upon  redemption  of Class A
shares  that are  purchased  under the Large  Order NAV  Purchase  Privilege  as
follows:  1% if they are redeemed  within one year of purchase and 0.50% if they
are redeemed during the second year following  purchase.  The charge will not be
imposed upon  redemption  of  reinvested  dividends or share  appreciation.  The
charge is applied  to the value of the shares  redeemed  excluding  amounts  not
subject to the charge.  The  contingent  deferred sales charge will be waived in
the event of: (a)  redemptions by a  participant-directed  qualified  retirement
plan  described in Code Section 401(a) or a  participant-directed  non-qualified
deferred    compensation   plan   described   in   Code   Section   457   or   a
participant-directed   qualified  retirement  plan  described  in  Code  Section
403(b)(7) which is not sponsored by a K-12 school  district;  (b) redemptions by
employer  sponsored  employee benefit plans using the subaccount  record keeping
system made available  through the Shareholder  Service Agent; (c) redemption of
shares of a shareholder  (including a registered  joint owner) who has died; (d)
redemption of shares of a shareholder  (including a registered  joint owner) who
after  purchase  of the shares  being  redeemed  becomes  totally  disabled  (as
evidenced by a determination by the federal Social Security Administration); (e)
redemptions  under a Fund's  Systematic  Withdrawal Plan at a maximum of 10% per
year of the net asset value of the account;  and (f) redemptions of shares whose
dealer of  record at the time of the  investment  notifies  KDI that the  dealer
waives the commission applicable to such Large Order NAV Purchase.

                                       37
<PAGE>

Contingent  Deferred Sales Charge -- Class B Shares. A contingent deferred sales
charge may be imposed upon redemption of Class B shares. There is no such charge
upon  redemption of any share  appreciation  or reinvested  dividends on Class B
shares.  The charge is computed at the  following  rates applied to the value of
the shares redeemed excluding amounts not subject to the charge.

                                                         Contingent Deferred
         Year of Redemption After Purchase               Sales Charge

         First                                           4%

         Second                                          3%

         Third                                           3%

         Fourth                                          2%

         Fifth                                           2%

         Sixth                                           1%

The  contingent  deferred  sales charge will be waived:  (a) in the event of the
total disability (as evidenced by a determination by the federal Social Security
Administration)  of  the  shareholder   (including  a  registered  joint  owner)
occurring after the purchase of the shares being  redeemed,  (b) in the event of
the death of the  shareholder  (including a  registered  joint  owner),  (c) for
redemptions made pursuant to a systematic withdrawal plan (see "Special Features
-- Systematic  Withdrawal  Plan" below) and (d) for redemptions made pursuant to
any  IRA  systematic  withdrawal  based  on the  shareholder's  life  expectancy
including,  but not limited to,  substantially equal periodic payments described
in Internal  Revenue Code Section  72(t)(2)(A)(iv)  prior to age 59 1/2; and (e)
for redemptions to satisfy required minimum  distributions after age 70 1/2 from
an IRA account (with the maximum  amount subject to this waiver being based only
upon the  shareholder's  Kemper IRA  accounts).  The  contingent  deferred sales
charge  will also be waived in  connection  with the  following  redemptions  of
shares held by employer  sponsored  employee  benefit  plans  maintained  on the
subaccount  record  keeping  system made  available by the  Shareholder  Service
Agent:  (a)  redemptions  to satisfy  participant  loan advances (note that loan
repayments  constitute  new  purchases for purposes of the  contingent  deferred
sales charge and the conversion  privilege),  (b) redemptions in connection with
retirement  distributions  (limited at any one time to 10% of the total value of
plan  assets   invested  in  a  Fund),   (c)   redemptions  in  connection  with
distributions  qualifying under the hardship  provisions of the Internal Revenue
Code and (d) redemptions  representing  returns of excess  contributions to such
plans.

Contingent  Deferred Sales  Charge--Class C Shares. A contingent  deferred sales
charge  of 1% may be  imposed  upon  redemption  of Class C  shares  if they are
redeemed  within  one year of  purchase.  The charge  will not be  imposed  upon
redemption of reinvested dividends or share appreciation.  The charge is applied
to the value of the shares redeemed excluding amounts not subject to the charge.
The  contingent  deferred  sales  charge  will be waived  in the  event of:  (a)
redemptions by a  participant-directed  qualified  retirement  plan described in
Code   Section   401(a)  or  a   participant-directed   non-qualified   deferred
compensation  plan  described in Code Section 457; (b)  redemptions  by employer
sponsored employee benefit plans using the subaccount record keeping system made
available  through the Shareholder  Service Agent; (c) redemption of shares of a
shareholder (including a registered joint owner) who has died; (d) redemption of
shares of a shareholder  (including a registered joint owner) who after purchase
of the shares  being  redeemed  becomes  totally  disabled


                                       38
<PAGE>

(as evidenced by a determination by the federal Social Security Administration);
(e) redemptions  under a Fund's  Systematic  Withdrawal Plan at a maximum of 10%
per year of the net asset  value of the  account;  (f) any  participant-directed
redemption  of  shares  held  by  employer   sponsored  employee  benefit  plans
maintained  on the  subaccount  record  keeping  system  made  available  by the
Shareholder  Service Agent;  (g)  redemption of shares by an employer  sponsored
employee  benefit  plan that offers  funds in addition to Kemper Funds and whose
dealer of record has waived the advance of the first year administrative service
and distribution  fees applicable to such shares and agrees to receive such fees
quarterly;  and (h) redemption of shares  purchased  through a  dealer-sponsored
asset allocation program maintained on an omnibus record-keeping system provided
the dealer of record has  waived  the  advance of the first year  administrative
services  and  distribution  fees  applicable  to such  shares and has agreed to
receive such fees quarterly.

Contingent  Deferred  Sales  Charge  --  General.  The  following  example  will
illustrate the operation of the contingent deferred sales charge. Assume that an
investor makes a single  purchase of $10,000 of a Fund's Class B shares and that
16 months later the value of the shares has grown by $1,000  through  reinvested
dividends  and by an  additional  $1,000  of  share  appreciation  to a total of
$12,000.  If the investor were then to redeem the entire $12,000 in share value,
the  contingent  deferred  sales  charge  would be payable  only with respect to
$10,000  because  neither the $1,000 of  reinvested  dividends nor the $1,000 of
share  appreciation is subject to the charge. The charge would be at the rate of
3% ($300) because it was in the second year after the purchase was made.

The rate of the  contingent  deferred  sales charge under the schedule  above is
determined by the length of the period of ownership.  Investments are tracked on
a monthly  basis.  The period of ownership for this purpose begins the first day
of the month in which the order for the investment is received.  In the event no
specific  order is  requested  when  redeeming  shares  subject to a  contingent
deferred  sales  charge,   the  redemption   will  be  made  first  from  shares
representing reinvested dividends and then from the earliest purchase of shares.
KDI receives any contingent deferred sales charge directly.

Reinvestment  Privilege. A shareholder who has redeemed Class A shares of a Fund
or any Kemper  Mutual Fund listed under  "Special  Features -- Class A Shares --
Combined  Purchases"  (other  than  shares  of the  Kemper  Cash  Reserves  Fund
purchased  directly  at net asset  value)  may  reinvest  up to the full  amount
redeemed at net asset value at the time of the reinvestment in Class A shares of
a Fund or of the listed Kemper Mutual Funds.  A shareholder  of a Fund or Kemper
Mutual  Fund who  redeems  Class A shares  purchased  under the Large  Order NAV
Purchase  Privilege  (see  "Purchase,  Repurchase  and  Redemption  of Shares --
Initial Sales Charge  Alternative -- Class A Shares") or Class B shares or Class
C shares and incurs a  contingent  deferred  sales charge may reinvest up to the
full amount redeemed at net asset value at the time of the reinvestment in Class
A shares,  Class B shares or Class C shares, as the case may be, of a Fund or of
Kemper Mutual Funds.  The amount of any  contingent  deferred  sales charge also
will be reinvested.  These reinvested shares will retain their original cost and
purchase date for purposes of the  contingent  deferred  sales  charge.  Also, a
holder of Class B shares who has  redeemed  shares may  reinvest  up to the full
amount redeemed,  less any applicable  contingent deferred sales charge that may
have been imposed  upon the  redemption  of such  shares,  at net asset value in
Class A shares of a Fund or of the Kemper  Mutual Funds  listed  under  "Special
Features  --  Class A Shares  --  Combined  Purchases."  Purchases  through  the
reinvestment  privilege  are  subject  to the  minimum  investment  requirements
applicable to the shares being  purchased and may only be made for Kemper Mutual
Funds available for sale in the shareholder's state of residence as listed under
"Special Features -- Exchange Privilege." The reinvestment privilege can be used
only once as to any specific shares and reinvestment must be effected within six
months of the  redemption.  If a loss is realized on the  redemption of a Funds'
shares,  the  reinvestment  in the same Fund may be subject  to the "wash  sale"
rules if made within 30 days of the  redemption,  resulting in a postponement of
the recognition of such loss for federal income tax purposes. In addition,  upon
a reinvestment,  the shareholder may not be permitted to take into account sales
charges  incurred on the original  purchase of shares in computing their taxable
gain or loss.  The  reinvestment  privilege may be terminated or modified at any
time.

SPECIAL FEATURES

                                       39
<PAGE>

Class  A  Shares--Combined  Purchases.  Each  Fund's  Class  A  shares  (or  the
equivalent)  may be purchased  at the rate  applicable  to the discount  bracket
attained by  combining  concurrent  investments  in Class A shares of any of the
following funds: Kemper Aggressive Growth Fund, Kemper Asian Growth Fund, Kemper
Blue Chip Fund,  Kemper  California  Tax-Free Income Fund,  Kemper Cash Reserves
Fund,  Kemper  Contrarian  Fund,  Kemper  Emerging  Markets Growth Fund,  Kemper
Florida Tax-Free Income Fund, Kemper Global Blue Chip Fund, Kemper Global Income
Fund,  Kemper  Growth Fund,  Kemper High Yield Fund,  Kemper High Yield Fund II,
Kemper High Yield Opportunity Fund, Kemper Horizon 10+ Portfolio, Kemper Horizon
20+  Portfolio,   Kemper   Horizon  5  Portfolio,   Kemper  Income  and  Capital
Preservation Fund, Kemper Intermediate Municipal Bond Fund, Kemper International
Fund,  Kemper  International  Research  Fund,  Kemper Large Company  Growth Fund
(currently available only to employees of Scudder Kemper Investments,  Inc.; not
available in all states), Kemper Latin America Fund, Kemper Municipal Bond Fund,
Kemper New Europe  Fund,  Kemper New York  Tax-Free  Income  Fund,  Kemper  Ohio
Tax-Free  Income  Fund,  Kemper  Research  Fund  (currently  available  only  to
employees of Scudder  Kemper  Investments,  Inc.;  not available in all states),
Kemper  Retirement  Fund -- Series II,  Kemper  Retirement  Fund -- Series  III,
Kemper  Retirement Fund -- Series IV, Kemper Retirement Fund -- Series V, Kemper
Retirement  Fund -- Series VI, Kemper  Retirement Fund -- Series VII, Kemper S&P
500 Index Fund, Kemper  Short-Term U.S.  Government Fund, Kemper Small Cap Value
Fund, Kemper Small Cap Value+Growth Fund (currently  available only to employees
of Scudder Kemper Investments,  Inc.; not available in all states), Kemper Small
Capitalization  Equity Fund,  Kemper Strategic  Income Fund,  Kemper Target 2010
Fund, Kemper  Technology Fund, Kemper Total Return Fund, Kemper U.S.  Government
Securities Fund,  Kemper U.S. Growth and Income Fund, Kemper U.S. Mortgage Fund,
Kemper  Value+Growth Fund, Kemper Worldwide 2004 Fund,  Kemper-Dreman  Financial
Services Fund,  Kemper-Dreman  High Return Equity Fund ("Kemper  Mutual Funds").
Except as noted below, there is no combined purchase credit for direct purchases
of shares of Zurich Money Funds,  Cash Equivalent  Fund,  Tax-Exempt  California
Money  Market  Fund,  Cash  Account  Trust,  Investors  Municipal  Cash  Fund or
Investors Cash Trust ("Money Market  Funds"),  which are not considered  "Kemper
Mutual  Funds" for  purposes  hereof.  For  purposes of the  Combined  Purchases
feature  described  above as well as for the  Letter  of Intent  and  Cumulative
Discount features  described below,  employer  sponsored  employee benefit plans
using  the  subaccount   record  keeping  system  made  available   through  the
Shareholder Service Agent or its affiliates may include:  (a) Money Market Funds
as "Kemper  Mutual  Funds," (b) all classes of shares of any Kemper Mutual Fund,
and (c) the value of any other plan investments,  such as guaranteed  investment
contracts and employer  stock,  maintained  on such  subaccount  record  keeping
system.

Class A Shares -- Letter of Intent.  The same reduced  sales charges for Class A
shares,  as shown in the  applicable  prospectus,  also  apply to the  aggregate
amount of  purchases  of such  Kemper  Mutual  Funds  listed  above  made by any
purchaser  within a 24-month period under a written Letter of Intent  ("Letter")
provided by KDI. The Letter,  which  imposes no  obligation  to purchase or sell
additional Class A shares,  provides for a price  adjustment  depending upon the
actual amount purchased  within such period.  The Letter provides that the first
purchase following  execution of the Letter must be at least 5% of the amount of
the  intended  purchase,  and that 5% of the  amount  of the  intended  purchase
normally will be held in escrow in the form of shares pending  completion of the
intended  purchase.  If the total investments under the Letter are less than the
intended amount and thereby qualify only for a higher sales charge than actually
paid, the  appropriate  number of escrowed  shares are redeemed and the proceeds
used toward  satisfaction  of the obligation to pay the increased  sales charge.
The Letter for an employer  sponsored  employee  benefit plan  maintained on the
subaccount record keeping system available through the Shareholder Service Agent
may have special  provisions  regarding  payment of any  increased  sales charge
resulting from a failure to complete the intended  purchase under the Letter.  A
shareholder may include the value (at the maximum  offering price) of all shares
of such Kemper Mutual Funds held of record as of the initial purchase date under
the Letter as an "accumulation  credit" toward the completion of the Letter, but
no price  adjustment  will be made on such shares.  Only  investments in Class A
shares of a Fund are included for this privilege.

Class A Shares  --  Cumulative  Discount.  Class A shares  of a Fund may also be
purchased at the rate applicable to the discount  bracket  attained by adding to
the cost of shares of a Fund being purchased, the value


                                       40
<PAGE>

of all Class A shares of the above  mentioned  Kemper Mutual Funds  (computed at
the maximum offering price at the time of the purchase for which the discount is
applicable) already owned by the investor.

Class A Shares  --  Availability  of  Quantity  Discounts.  An  investor  or the
investor's  dealer or other financial  services firm must notify the Shareholder
Service  Agent or KDI  whenever a quantity  discount or reduced  sales charge is
applicable to a purchase. Upon such notification,  the investor will receive the
lowest  applicable  sales  charge.  Quantity  discounts  described  above may be
modified or terminated at any time.

Exchange  Privilege.  Shareholders  of Class A,  Class B and Class C shares  may
exchange  their shares for shares of the  corresponding  class of Kemper  Mutual
Funds in accordance with the provisions below.

Class A Shares.  Class A shares of the  Kemper  Mutual  Funds and  shares of the
Money Market Funds listed under "Special  Features -- Class A Shares -- Combined
Purchases"  above may be  exchanged  for each other at their  relative net asset
values.  Shares of Money  Market Funds and Kemper Cash  Reserves  Fund that were
acquired by purchase (not including  shares  acquired by dividend  reinvestment)
are subject to the applicable sales charge on exchange.  Series of Kemper Target
Equity Fund are available on exchange  only during the Offering  Period for such
series  as  described  in  the  applicable  prospectus.  Cash  Equivalent  Fund,
Tax-Exempt California Money Market Fund, Cash Account Trust, Investors Municipal
Cash Fund and Investors  Cash Trust are available on exchange but only through a
financial services firm having a services agreement with KDI.

Class A shares of a Fund purchased under the Large Order NAV Purchase  Privilege
may be exchanged  for Class A shares of any Kemper Mutual Fund or a Money Market
Fund under the exchange privilege  described above without paying any contingent
deferred sales charge at the time of exchange. If the Class A shares received on
exchange are redeemed  thereafter,  a  contingent  deferred  sales charge may be
imposed in accordance with the foregoing  requirements  provided that the shares
redeemed  will retain their  original cost and purchase date for purposes of the
contingent deferred sales charge.

Class B Shares. Class B shares of a Fund and Class B shares of any Kemper Mutual
Fund listed under "Special Features -- Class A Shares -- Combined Purchases" may
be exchanged for each other at their  relative net asset values.  Class B shares
may be exchanged  without any contingent  deferred sales charge being imposed at
the time of exchange.  For purposes of the contingent deferred sales charge that
may be imposed upon the redemption of the shares  received on exchange,  amounts
exchanged retain their original cost and purchase date.

Class C Shares. Class C shares of a Fund and Class C shares of any Kemper Mutual
Fund listed under "Special Features -- Class A Shares -- Combined Purchases" may
be exchanged for each other at their  relative net asset values.  Class C shares
may be exchanged without a contingent deferred sales charge being imposed at the
time of exchange.  For determining  whether there is a contingent deferred sales
charge that may be imposed upon the redemption of the Class C shares received by
exchange, amounts exchanged retain their cost and purchase.

General.  Shares of a Kemper  Mutual  Fund with a value in excess of  $1,000,000
(except  Kemper Cash Reserves  Fund)  acquired by exchange  from another  Kemper
Mutual Fund, or from a Money Market Fund, may not be exchanged  thereafter until
they have been owned for 15 days (the "15 Day Hold  Policy").  The Fund reserves
the right to invoke the 15-Day Hold Policy of  exchanges of  $1,000,000  or less
if, in the  Investment  Manager's  judgment,  the exchange  activity may have an
adverse effect on the fund. In particular, a pattern of exchanges that coincides
with a  "market  timing"  strategy  may be  disruptive  to the  Kemper  fund and
therefore may be subject to the 15-Day Hold Policy.  For purposes of determining
whether the 15 Day Hold Policy  applies to a particular  exchange,  the value of
the shares to be exchanged  shall be computed by aggregating the value of shares
being  exchanged for all accounts under common  control,  direction,  or advice,
including without limitation, accounts administered by a financial services firm
offering market timing, asset allocation or similar services. The total value of
shares being exchanged must at least equal the minimum investment requirement of
the Kemper Fund into which they are being exchanged. Exchanges are made based on
relative  dollar  values of the shares  involved  in the  exchange.  There is no
service  fee for an  exchange;  however,  dealers or other  firms may charge for
their services in effecting exchange transactions. Exchanges will be effected by
redemption  of shares of the fund held and purchase of shares of the other fund.
For federal income tax purposes, any such


                                       41
<PAGE>

exchange constitutes a sale upon which a gain or loss may be realized, depending
upon  whether the value of the shares  being  exchanged is more or less than the
shareholder's  adjusted cost basis.  Shareholders  interested in exercising  the
exchange  privilege  may obtain  prospectuses  of the other funds from  dealers,
other firms or KDI.  Exchanges may be accomplished by a written request to KSvC,
Attention:   Exchange  Department,   P.O.  Box  419557,  Kansas  City,  Missouri
64141-6557, or by telephone if the shareholder has given authorization. Once the
authorization  is on file, the Shareholder  Service Agent will honor requests by
telephone at  1-800-621-1048,  subject to the  limitations  on  liability  under
"Purchase,   Repurchase   and  Redemption  of  Shares  --  General."  Any  share
certificates  must be deposited  prior to any  exchange of such  shares.  During
periods  when it is  difficult  to  contact  the  Shareholder  Service  Agent by
telephone,  it may be difficult to use the  telephone  exchange  privilege.  The
exchange  privilege is not a right and may be suspended,  terminated or modified
at any time. Except as otherwise permitted by applicable  regulations,  60 days'
prior written  notice of any  termination  or material  change will be provided.
Exchanges  may only be made for Kemper  Funds that are  eligible for sale in the
shareholder's state of residence.  Currently, Tax-Exempt California Money Market
Fund is available  for sale only in California  and the  portfolios of Investors
Municipal Cash Fund are available for sale only in certain states.

Systematic Exchange  Privilege.  The owner of $1,000 or more of any class of the
shares of a Fund, a Kemper  Mutual Fund or Money Market Fund may  authorize  the
automatic  exchange  of a  specified  amount  ($100  minimum) of such shares for
shares of the same class of another Kemper Fund. If selected,  exchanges will be
made  automatically  until the privilege is terminated by the shareholder or the
other Kemper Fund.  Exchanges are subject to the terms and conditions  described
above  under  "Exchange  Privilege"  except that the $1,000  minimum  investment
requirement  for the Kemper Fund  acquired on exchange is not  applicable.  This
privilege may not be used for the exchange of shares held in certificated form.

EXPRESS-Transfer.  EXPRESS-Transfer  permits  the  transfer  of  money  via  the
Automated  Clearing  House  System  (minimum  $100 and maximum  $50,000)  from a
shareholder's bank, savings and loan, or credit union account to purchase shares
in a Fund.  Shareholders  can also  redeem  shares  (minimum  $100  and  maximum
$50,000)  from their Fund  account  and  transfer  the  proceeds  to their bank,
savings and loan, or credit union checking account. Shares purchased by check or
through  EXPRESS-Transfer  or Bank Direct Deposit may not be redeemed under this
privilege  until such shares have been owned for at least 10 days.  By enrolling
in EXPRESS-Transfer, the shareholder authorizes the Shareholder Service Agent to
rely upon  telephone  instructions  from any person to  transfer  the  specified
amounts  between the  shareholder's  Fund  account and the  predesignated  bank,
savings  and  loan or  credit  union  account,  subject  to the  limitations  on
liability under "Purchase, Repurchase and Redemption of Shares -- General." Once
enrolled in  EXPRESS-Transfer,  a  shareholder  can  initiate a  transaction  by
calling Kemper Shareholder  Services toll free at 1-800-621-1048  Monday through
Friday,  8:00 a.m. to 3:00 p.m.  Chicago time.  Shareholders  may terminate this
privilege  by sending  written  notice to KSvC,  P.O.  Box 419415,  Kansas City,
Missouri   64141-6415.   Termination  will  become  effective  as  soon  as  the
Shareholder  Service  Agent has had a  reasonable  time to act upon the request.
EXPRESS-Transfer   cannot  be  used  with  passbook   savings  accounts  or  for
tax-deferred plans such as Individual Retirement Accounts ("IRAs").

Bank Direct  Deposit.  A shareholder  may purchase  additional  shares of a Fund
through an automatic  investment program.  With the Bank Direct Deposit Purchase
Plan ("Bank Direct Deposit"),  investments are made  automatically  (minimum $50
and maximum $50,000) from the shareholder's  account at a bank, savings and loan
or credit union into the shareholder's Fund account. By enrolling in Bank Direct
Deposit,  the  shareholder  authorizes  the Fund and its  agents to either  draw
checks or initiate  Automated  Clearing  House  debits  against  the  designated
account at a bank or other financial institution. This privilege may be selected
by  completing  the  appropriate  section  on  the  Account  Application  or  by
contacting the Shareholder  Service Agent for  appropriate  forms. A shareholder
may  terminate  his or her Plan by  sending  written  notice to KSvC,  P.O.  Box
419415,  Kansas City,  Missouri  64141-6415.  Termination by a shareholder  will
become  effective  within  thirty days after the  Shareholder  Service Agent has
received the request.  A Fund may immediately  terminate a shareholder's Plan in
the event that any item is unpaid by the  shareholder's  financial  institution.
The Funds may terminate or modify this privilege at any time.

                                       42
<PAGE>

Payroll Direct Deposit and Government  Direct Deposit.  A shareholder may invest
in a Fund through  Payroll Direct Deposit or Government  Direct  Deposit.  Under
these programs,  all or a portion of a shareholder's net pay or government check
is  automatically  invested in a Fund account each payment period. A shareholder
may terminate  participation  in these  programs by giving written notice to the
shareholder's employer or government agency, as appropriate.  (A reasonable time
to act is  required.)  A Fund  is not  responsible  for  the  efficiency  of the
employer or government  agency making the payment or any financial  institutions
transmitting payments.

Systematic  Withdrawal  Plan. The owner of $5,000 or more of a class of a Fund's
shares at the  offering  price (net  asset  value  plus,  in the case of Class A
shares,  the initial  sales charge) may provide for the payment from the owner's
account of any requested  dollar amount up to $50,000 to be paid to the owner or
a designated  payee monthly,  quarterly,  semiannually  or annually.  The $5,000
minimum account size is not applicable to Individual  Retirement  Accounts.  The
minimum  periodic  payment is $100.  The  maximum  annual  rate at which Class B
shares,  Class A shares  purchased under the Large Order NAV Purchase  Privilege
and Class C shares in their first year  following  the  purchase may be redeemed
under a systematic withdrawal plan is 10% of the net asset value of the account.
Shares are redeemed so that the payee will  receive  payment  approximately  the
first of the month.  Any income and capital gain dividends will be automatically
reinvested at net asset value. A sufficient number of full and fractional shares
will be redeemed to make the designated payment.  Depending upon the size of the
payments  requested  and  fluctuations  in the net  asset  value  of the  shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust the account.

The purchase of Class A shares while  participating  in a systematic  withdrawal
plan will  ordinarily be  disadvantageous  to the investor  because the investor
will be paying a sales  charge on the  purchase  of shares at the same time that
the investor is redeeming shares upon which a sales charge may have already been
paid. Therefore, a Fund will not knowingly permit additional investments of less
than $2,000 if the investor is at the same time making  systematic  withdrawals.
KDI will waive the  contingent  deferred  sales charge on redemptions of Class A
shares  purchased under the Large Order NAV Purchase  Privilege,  Class B shares
and Class C shares made pursuant to a systematic  withdrawal  plan. The right is
reserved to amend the systematic  withdrawal  plan on 30 days' notice.  The plan
may be terminated at any time by the investor or the Funds.


Tax-Sheltered   Retirement   Plans.  The  Shareholder   Service  Agent  provides
retirement plan services and documents and KDI can establish  investor  accounts
in any of the following types of retirement plans:

o           Traditional,  Roth  and  Education  Individual  Retirement  Accounts
("IRAs").  This  includes  Savings  Incentive  Match Plan for Employees of Small
Employers ("SIMPLE"),  IRA accounts and Simplified Employee Pension Plan ("SEP")
IRA accounts and prototype documents.

o           403(b)(7)  Custodial  Accounts.  This type of plan is  available  to
employees of most non-profit organizations.

o        Prototype  money  purchase  pension  and  profit-sharing  plans  may be
adopted by employers.  The maximum annual  contribution  per  participant is the
lesser of 25% of compensation or $30,000.


Brochures  describing  the above plans as well as model defined  benefit  plans,
target benefit plans, 457 plans, 401(k) plans, SIMPLE 401(k) plans and materials
for  establishing  them are available  from the  Shareholder  Service Agent upon
request.  The brochures for plans with the Fund's custodian describe the current
fees payable for its services as custodian.  Investors should consult with their
own tax advisers before establishing a retirement plan.


ADDITIONAL TRANSACTION INFORMATION

General.  Banks and other  financial  services firms may provide  administrative
services  related to order  placement and payment to facilitate  transactions in
shares of a Fund for their clients, and KDI may pay them a transaction fee up to
the level of the  discount or  commission  allowable  or payable to dealers,  as
described  above.  Banks or other  financial  services  firms may be  subject to
various federal and state laws regarding the


                                       43
<PAGE>

services  described above and may be required to register as dealers pursuant to
state law.  If banking  firms were  prohibited  from  acting in any  capacity or
providing any of the described services,  management would consider what action,
if any,  would be  appropriate.  KDI  does not  believe  that  termination  of a
relationship with a bank would result in any material adverse  consequences to a
Fund.

KDI may, from time to time,  pay or allow to firms a 1% commission on the amount
of shares of a Fund sold by the firm  under the  following  conditions:  (i) the
purchased shares are held in a Kemper IRA account, (ii) the shares are purchased
as a direct  "roll  over" of a  distribution  from a qualified  retirement  plan
account maintained on a participant subaccount record keeping system provided by
Kemper Service Company ("KSvC"), (iii) the registered representative placing the
trade  is a  member  of  ProStar,  a  group  of  persons  designated  by  KDI in
acknowledgment  of their  dedication to the employee  benefit plan area and (iv)
the purchase is not otherwise subject to a commission.

In addition to the discounts or commissions described above, KDI will, from time
to  time,  pay  or  allow  additional  discounts,   commissions  or  promotional
incentives, in the form of cash, to firms that sell shares of the Funds. In some
instances, such discounts,  commissions or other incentives will be offered only
to certain firms that sell or are expected to sell during specified time periods
certain  minimum  amounts of shares of the Funds or other funds  underwritten by
KDI.

Orders for the  purchase of shares of a Fund will be  confirmed at a price based
on the net asset value of that Fund next determined  after receipt by KDI of the
order  accompanied  by  payment.  However,  orders  received by dealers or other
financial services firms prior to the determination of net asset value (see "Net
Asset Value") and received by KDI prior to the close of its business day will be
confirmed at a price based on the net asset value  effective on that day ("trade
date").  [CHECK  INDIVIDUAL  FUNDS: The Funds reserve the right to determine the
net asset value more  frequently than once a day if deemed  desirable.]  Dealers
and other financial  services firms are obligated to transmit  orders  promptly.
Collection  may take  significantly  longer for a check drawn on a foreign  bank
than for a check drawn on a domestic bank. Therefore, if an order is accompanied
by a check drawn on a foreign  bank,  funds must  normally be  collected  before
shares will be purchased. See "Purchase and Redemption of Shares."

Investment  dealers  and other  firms  provide  varying  arrangements  for their
clients to purchase  and redeem the Funds'  shares.  Some may  establish  higher
minimum  investment  requirements  than set forth above.  Firms may arrange with
their clients for other investment or  administrative  services.  Such firms may
independently  establish and charge additional amounts to their clients for such
services,  which charges would reduce the clients'  return.  Firms also may hold
the Funds'  shares in nominee or street name as agent for and on behalf of their
customers. In such instances, the Funds' transfer agent will have no information
with  respect to or control  over the  accounts of specific  shareholders.  Such
shareholders  may obtain access to their  accounts and  information  about their
accounts only from their firm.  Certain of these firms may receive  compensation
from the Funds through the Shareholder Service Agent for recordkeeping and other
expenses relating to these nominee  accounts.  In addition,  certain  privileges
with respect to the purchase and  redemption  of shares or the  reinvestment  of
dividends may not be available through such firms. Some firms may participate in
a  program  allowing  them  access  to their  clients'  accounts  for  servicing
including,  without  limitation,  transfers of  registration  and dividend payee
changes; and may perform functions such as generation of confirmation statements
and disbursement of cash dividends. Such firms, including affiliates of KDI, may
receive  compensation  from the Funds through the Shareholder  Service Agent for
these  services.  This  Statement of  Additional  Information  should be read in
connection with such firms' material regarding their fees and services.

The Funds  reserve the right to withdraw all or any part of the offering made by
this Statement of Additional  Information and to reject purchase  orders.  Also,
from time to time, each Fund may  temporarily  suspend the offering of shares of
any  Fund or  class  of a Fund  to new  investors.  During  the  period  of such
suspension,  persons who are already  shareholders of a class of a Fund normally
are  permitted to continue to purchase  additional  shares of such class or Fund
and to have dividends reinvested.

Shareholders  should direct their inquiries to Kemper Service Company,  811 Main
Street, Kansas City, Missouri 64105-2005 or to the firm from which they received
this Statement of Additional Information.

                                       44
<PAGE>

Initial Sales Charge Alternative -- Class A Shares. The public offering price of
Class A shares for purchasers  choosing the initial sales charge  alternative is
the net asset value plus a sales charge, as set forth below.

<TABLE>
<CAPTION>
                                                              Sales Charge

                                                 As a                As a             Allowed to Dealers as a
                                            Percentage of      Percentage of Net           Percentage of
Amount of Purchase                          Offering Price      Amount Invested*           Offering Price
------------------                          --------------      ----------------           --------------

<S>                                                <C>                 <C>                  <C>
Less than $50,000                                  5.75%               6.10%                5.20%

$50,000 but less than $100,000                     4.50                4.71                 4.00

$100,000 but less than $250,000                    3.50                3.63                 3.00

$250,000 but less than $500,000                    2.60                2.67                 2.25

$500,000 but less than $1 million                  2.00                2.04                 1.75

$1 million and over                                0.00**              0.00**               ***
</TABLE>

*        Rounded to the nearest one-hundredth percent.

**       Redemption  of shares  may be subject to a  contingent  deferred  sales
         charge as discussed below.

***      Commission is payable by KDI as discussed below.

Each Fund receives the entire net asset value of all of its Class A shares sold.
Kemper Distributors, Inc. ("KDI"), the Funds' principal underwriter, retains the
sales charge on sales of Class A shares from which it allows  discounts from the
applicable  public  offering price to investment  dealers,  which  discounts are
uniform for all  dealers in the United  States and its  territories.  The normal
discount allowed to dealers is set forth in the above table.  Upon notice to all
dealers  with  whom it has  sales  agreements,  KDI may  reallow  up to the full
applicable  sales charge,  as shown in the above table,  during  periods and for
transactions  specified in such notice and such  reallowances  may be based upon
attainment of minimum sales levels. During periods when 90% or more of the sales
charge is reallowed,  such dealers may be deemed to be underwriters as that term
is defined in the 1933 Act.

Class A shares  of each Fund can be  purchased  at net  asset  value in  certain
circumstances. (See the Funds' prospectus for details).

KDI may in its  discretion  compensate  investment  dealers  or other  financial
services  firms in  connection  with the sale of Class A shares of a Fund at net
asset value in accordance with the Large Order NAV Purchase  Privilege up to the
following amounts:  1.00% of the net asset value of shares sold on amounts up to
$5 million, 0.50% on the next $45 million and 0.25% on amounts over $50 million.
The  commission  schedule  will be reset on a  calendar  year basis for sales of
shares pursuant to the Large Order NAV Purchase  Privilege to employer sponsored
employee benefit plans using the subaccount  recordkeeping system made available
through KSvC. For purposes of determining the appropriate  commission percentage
to be applied to a particular  sale,  KDI will  consider the  cumulative  amount
invested by the  purchaser in a Fund and other Kemper  Mutual Funds listed under
"Special Features -- Class A Shares -- Combined Purchases,"  including purchases
pursuant  to the  "Combined  Purchases,"  "Letter  of  Intent"  and  "Cumulative
Discount"  features  referred  to above,  including  Class R Shares  of  certain
Scudder Funds. The privilege of purchasing Class A shares of a Fund at net asset
value under the Large Order NAV Purchase  Privilege is not  available if another
net asset value purchase privilege also applies.

Deferred  Sales Charge  Alternative  -- Class B Shares.  Investors  choosing the
deferred sales charge alternative may purchase Class B shares at net asset value
per share without any sales charge at the time of purchase. Since Class B shares
are  being  sold  without  an  initial  sales  charge,  the full  amount  of the
investor's  purchase  payment  will be invested in Class B shares for his or her
account.  A contingent  deferred sales charge may be imposed


                                       45
<PAGE>

upon  redemption of Class B shares.  See  "Redemption or Repurchase of Shares --
Contingent Deferred Sales Charge -- Class B Shares."

KDI  compensates  firms  for  sales of  Class B shares  at the time of sale at a
commission rate of up to 3.75% of the amount of Class B shares purchased. KDI is
compensated by each Fund for services as distributor  and principal  underwriter
for Class B shares. See "Investment Manager and Underwriter."

Purchase of Class C Shares. The public offering price of the Class C shares of a
Fund is the next determined net asset value. No initial sales charge is imposed.
Since Class C shares are sold without an initial sales  charge,  the full amount
of the investor's purchase payment will be invested in Class C shares for his or
her  account.  A  contingent  deferred  sales  charge  may be  imposed  upon the
redemption  of Class C shares if they are redeemed  within one year of purchase.
See  "Redemption or Repurchase of Shares -- Contingent  Deferred Sales Charge --
Class C Shares." KDI currently advances to firms the first year distribution fee
at a rate of 0.75% of the purchase  price of such shares.  For periods after the
first  year,  KDI  currently  intends to pay firms for sales of Class C shares a
distribution  fee, payable  quarterly,  at an annual rate of 0.75% of net assets
attributable  to Class C shares  maintained  and  serviced  by the firm.  KDI is
compensated by each Fund for services as distributor  and principal  underwriter
for Class C shares. See "Investment Manager and Underwriter."

General.  Banks and other  financial  services firms may provide  administrative
services  related to order  placement and payment to facilitate  transactions in
shares of a Fund for their clients, and KDI may pay them a transaction fee up to
the level of the  discount or  commission  allowable  or payable to dealers,  as
described  above.  Banks or other  financial  services  firms may be  subject to
various federal and state laws regarding the services described above and may be
required  to register  as dealers  pursuant to state law. If banking  firms were
prohibited  from  acting  in any  capacity  or  providing  any of the  described
services,  management would consider what action,  if any, would be appropriate.
KDI does not believe that termination of a relationship with a bank would result
in any material adverse consequences to a Fund.

KDI may, from time to time,  pay or allow to firms a 1% commission on the amount
of shares of the Fund sold under the  following  conditions:  (i) the  purchased
shares are held in a Kemper IRA  account,  (ii) the  shares are  purchased  as a
direct "roll over" of a distribution  from a qualified  retirement  plan account
maintained on a participant  subaccount  record keeping system provided by KSvC,
(iii) the registered  representative placing the trade is a member of ProStar, a
group of persons  designated by KDI in acknowledgment of their dedication to the
employee benefit plan area; and (iv) the purchase is not otherwise  subject to a
commission.

In addition to the discounts or commissions described above, KDI will, from time
to  time,  pay  or  allow  additional  discounts,   commissions  or  promotional
incentives, in the form of cash, to firms that sell shares of the Funds. In some
instances, such discounts,  commissions or other incentives will be offered only
to certain firms that sell or are expected to sell during specified time periods
certain minimum  amounts of shares of the Funds, or other funds  underwritten by
KDI.

Orders for the  purchase of shares of a Fund will be  confirmed at a price based
on the net asset value of that Fund next determined  after receipt by KDI of the
order  accompanied  by  payment.  However,  orders  received by dealers or other
financial services firms prior to the determination of net asset value (see "Net
Asset Value") and received by KDI prior to the close of its business day will be
confirmed at a price based on the net asset value  effective on that day ("trade
date").  The Funds  reserve  the right to  determine  the net asset  value  more
frequently  than once a day if deemed  desirable.  Dealers  and other  financial
services firms are obligated to transmit  orders  promptly.  Collection may take
significantly  longer for a check drawn on a foreign bank than for a check drawn
on a domestic bank. Therefore,  if an order is accompanied by a check drawn on a
foreign bank, funds must normally be collected before shares will be purchased.

Investment  dealers  and other  firms  provide  varying  arrangements  for their
clients to purchase  and redeem the Funds'  shares.  Some may  establish  higher
minimum  investment  requirements  than set forth above.  Firms may arrange with
their clients for other investment or  administrative  services.  Such firms may
independently  establish and charge additional amounts to their clients for such
services,  which charges would reduce the clients'  return.  Firms also may hold
the Funds'  shares in nominee or street name as agent for and on behalf of their
customers. In such instances, the Funds' transfer agent will have no information
with  respect to or control


                                       46
<PAGE>

over the accounts of specific shareholders.  Such shareholders may obtain access
to their  accounts and  information  about their  accounts only from their firm.
Certain of these  firms may  receive  compensation  from the Funds  through  the
Shareholder Service Agent for recordkeeping and other expenses relating to these
nominee accounts.  In addition,  certain privileges with respect to the purchase
and redemption of shares or the  reinvestment  of dividends may not be available
through such firms. Some firms may participate in a program allowing them access
to  their  clients'  accounts  for  servicing  including,   without  limitation,
transfers of registration and dividend payee changes;  and may perform functions
such  as  generation  of  confirmation   statements  and  disbursement  of  cash
dividends.  Such firms,  including  affiliates of KDI, may receive  compensation
from the Funds through the Shareholder  Service Agent for these  services.  This
Statement  of  Additional  Information  should be read in  connection  with such
firms' material regarding their fees and services.

The Funds  reserve the right to withdraw  all or any part of the  offering  made
pursuant to the prospectus and to reject  purchase  orders.  Also,  from time to
time, each Fund may temporarily  suspend the offering of any class of its shares
to new investors. During the period of such suspension,  persons who are already
shareholders  of such class of such Fund  normally are  permitted to continue to
purchase additional shares of such class and to have dividends reinvested.

Shareholders  should direct their inquiries to Kemper Service Company,  811 Main
Street, Kansas City, Missouri 64105-2005 or to the firm from which they received
the prospectus.

[FOR  EACH  OF  Kemper   International   Fund;  Kemper  Global  Discovery  Fund;
Kemper-Dreman  High Return Equity Fund;  Kemper  Aggressive  Growth Fund; Kemper
Technology  Fund:  From  September 25, 2000 through  December 31, 2000,  for the
above-listed   funds,   Kemper   Distributors,   Inc.  ("KDI"),   the  principal
underwriter,  intends to reallow to certain  firms the  applicable  sales charge
with respect to Class A shares purchased for self-directed Individual Retirement
Accounts  ("IRA  accounts")  during the Special  Offering  Period (not including
Class A shares acquired at net asset value).  IRA accounts include  Traditional,
Roth and Education  IRAs,  Savings  Incentive  Match Plan for Employees of Small
Employers  ("SIMPLE") IRA accounts and Simplified  Employee Pension Plan ("SEP")
IRA accounts. Firms entitled to the full reallowance during the Special Offering
Period are those firms which allow KDI to participate in a special  promotion of
self-directed  IRA accounts,  with other fund complexes,  sponsored by the firms
during the Special Offering Period. ]

Dividends.  Each Fund normally distributes dividends of net investment income as
follows:  annually for the Aggressive Growth, Classic Growth, Growth, Small Cap,
Technology and  Value+Growth  Funds;  semi-annually  for the Blue Chip Fund; and
quarterly  for the Total Return  Fund.  Each Fund  distributes  any net realized
short-term  and  long-term  capital  gains  at  least  annually.  The  quarterly
distribution  to  shareholders  of the Total Return Fund may include  short-term
capital gains.

Each Fund may at any time vary its foregoing dividend practices and,  therefore,
reserves  the  right  from  time to time to  either  distribute  or  retain  for
reinvestment  such of its net  investment  income  and  its net  short-term  and
long-term  capital  gains as its  Board  determines  appropriate  under the then
current circumstances. In particular, and without limiting the foregoing, a Fund
may make additional  distributions of net investment  income or capital gain net
income in order to satisfy the minimum  distribution  requirements  contained in
the Internal Revenue Code (the "Code").

Dividends  paid by a Fund as to each class of its shares will be  calculated  in
the same  manner,  at the same  time and on the same  day.  The  level of income
dividends per share (as a percentage of net asset value) will be lower for Class
B and  Class C shares  than  for  Class A shares  primarily  as a result  of the
distribution   services  fee   applicable   to  Class  B  and  Class  C  shares.
Distributions  of capital  gains,  if any,  will be paid in the same portion for
each class.

                                       47
<PAGE>

Income and  capital  gain  dividends,  if any,  for a Fund will be  credited  to
shareholder accounts in full and fractional shares of the same class of the Fund
at net asset value except that, upon written request to the Shareholder  Service
Agent, a shareholder may select one of the following options:

(1) To  receive  income  and  short-term  capital  gain  dividends  in cash  and
long-term capital gain dividends in shares of the same class at net asset value;
or

(2) To receive both income and capital gain dividends in cash.

Any  dividends of a Fund that are  reinvested  normally  will be  reinvested  in
shares of the same class of that same Fund. However, upon written request to the
Shareholder  Service  Agent,  a  shareholder  may elect to have  Fund  dividends
invested  in shares of the same  class of another  Kemper  Fund at the net asset
value  of  such  class  of such  other  fund.  See  "Purchase,  Repurchase,  and
Redemption of Shares",  "Special Features--Class A Shares--Combined  Purchases",
for a list of such other  Kemper  Funds.  To use this  privilege  of investing a
Fund's dividends in shares of another Kemper Fund,  shareholders must maintain a
minimum  account value of $1,000 in the Fund  distributing  the  dividends.  The
Funds will  reinvest  dividend  checks (and future  dividends) in shares of that
same Fund and class if checks are returned as undeliverable. Dividends and other
distributions  of  [the/a]  Fund in the  aggregate  amount  of $10 or  less  are
automatically  reinvested in shares of the Fund unless the shareholder  requests
that such policy not be applied to the shareholder's account.


Performance Information

A Fund may advertise  several types of  performance  information  for a class of
shares,  including "yield" and "average annual total return" and "total return."
Performance  information  will be computed  separately  for each class.  Each of
these figures is based upon historical  results and is not representative of the
future  performance  of any class of a Fund. A Fund with fees or expenses  being
waived or absorbed by Scudder Kemper may also advertise performance  information
before and after the effect of the fee waiver or expense absorption.

A Fund's historical  performance or return for a class of shares may be shown in
the form of "average  annual total  return" and "total  return"  figures.  These
various  measures of performance are described  below.  Performance  information
will be computed separately for each class.

Each Fund's average annual total return quotation is computed in accordance with
a standardized  method  prescribed by rules of the SEC. The average annual total
return for a Fund for a specific  period is found by first taking a hypothetical
$1,000 investment  ("initial  investment") in the Fund's shares on the first day
of the  period,  adjusting  to deduct the maximum  sales  charge (in the case of
Class A shares),  and computing the "redeemable value" of that investment at the
end of the period. The redeemable value in the case of Class B or Class C shares
includes the effect of the applicable  contingent deferred sales charge that may
be imposed at the end of the period. The redeemable value is then divided by the
initial  investment,  and this quotient is taken to the Nth root (N representing
the number of years in the period) and 1 is subtracted from the result, which is
then  expressed as a  percentage.  The  calculation  assumes that all income and
capital gains dividends paid by the Fund have been reinvested at net asset value
on the  reinvestment  dates during the period.  Average  annual total return may
also be calculated without deducting the maximum sales charge.

Calculation of a Fund's total return is not subject to a  standardized  formula,
except when calculated for purposes of the Fund's  "Financial  Highlights" table
in the Fund's financial statements and prospectus.  Total return performance for
a specific period is calculated by first taking an investment  (assumed below to
be $10,000)  ("initial  investment")  in a Fund's shares on the first day of the
period, either adjusting or not adjusting to deduct the maximum sales charge (in
the case of Class A shares), and computing the "ending value" of that investment
at the end of the period.  The total return  percentage  is then  determined  by
subtracting  the  initial  investment  from the ending  value and  dividing  the
remainder by the initial  investment  and expressing the result as a percentage.
The  ending  value  in the case of  Class B and  Class C  shares  may or may not
include the effect of the applicable  contingent  deferred sales charge that may
be imposed at the end of the period. The calculation assumes that all income and
capital gains dividends paid by the Fund have been reinvested at net asset value
on


                                       48
<PAGE>

the reinvestment dates during the period.  Total return may also be shown as the
increased  dollar value of the  hypothetical  investment over the period.  Total
return calculations that do not include the effect of the sales charge for Class
A shares or the contingent  deferred sales charge for Class B and Class C shares
would be reduced if such charge were included.  Total return figures for Class A
shares for various periods are set forth in the tables below.

Average  annual  total  return and total  return  figures  measure  both the net
investment  income  generated by, and the effect of any realized and  unrealized
appreciation  or  depreciation  of,  the  underlying  investments  in  a  Fund's
portfolio for the period referenced, assuming the reinvestment of all dividends.
Thus,  these figures  reflect the change in the value of an investment in a Fund
during a specified  period.  Average  annual  total return will be quoted for at
least the one-,  five- and ten-year  periods ending on a recent calendar quarter
(or if such  periods  have  not yet  elapsed,  at the  end of a  shorter  period
corresponding to the life of the Fund for performance purposes).  Average annual
total return  figures  represent the average annual  percentage  change over the
period in question.  Total return figures represent the aggregate  percentage or
dollar value change over the period in question.

A Fund's  performance  figures  are based upon  historical  results  and are not
representative of future performance. Each Fund's Class A shares are sold at net
asset value plus a maximum sales charge of 5.75% of the offering price.  Class B
shares and Class C shares are sold at net asset  value.  Redemptions  of Class B
shares may be subject to a  contingent  deferred  sales charge that is 4% in the
first year following the purchase, declines by a specified percentage thereafter
and becomes zero after six years. Redemption of Class C shares may be subject to
a 1%  contingent  deferred  sales charge in the first year  following  purchase.
Average annual total return  figures do, and total return  figures may,  include
the effect of the  contingent  deferred  sales charge for the Class B shares and
Class C  shares  that  may be  imposed  at the end of the  period  in  question.
Performance  figures for the Class B shares and Class C shares not including the
effect of the applicable contingent deferred sales charge would be reduced if it
were included.  Returns and net asset value will  fluctuate.  Factors  affecting
each Fund's performance  include general market  conditions,  operating expenses
and  investment  management.  Any  additional  fees charged by a dealer or other
financial  services  firm would reduce the returns  described  in this  section.
Shares of each Fund are  redeemable  at the then current net asset value,  which
may be more or less than original cost.

A Fund's  performance  may be  compared to that of the  Consumer  Price Index or
various  unmanaged  bond  indexes  including,  but not  limited  to, the Salomon
Brothers High Grade Corporate Bond Index,  the Lehman  Brothers  Adjustable Rate
Index, the Lehman Brothers Aggregate Bond Index, the Lehman Brothers Government/
Corporate  Bond Index,  the Salomon  Brothers  Long-Term  High Yield Index,  the
Salomon  Brothers 30 Year GNMA Index and the Merrill Lynch Market Weighted Index
and may also be compared to the performance of other mutual funds or mutual fund
indexes with similar  objectives and policies as reported by independent  mutual
fund reporting services such as Lipper Analytical  Services,  Inc.  (""Lipper").
Lipper  performance  calculations are based upon changes in net asset value with
all dividends reinvested and do not include the effect of any sales charges.

Information may be quoted from publications such as Morningstar,  Inc., The Wall
Street Journal, Money Magazine, Forbes, Barron's,  Fortune, The Chicago Tribune,
USA Today, Institutional Investor and Registered Representative. Also, investors
may want to compare the historical returns of various  investments,  performance
indexes of those investments or economic  indicators,  including but not limited
to stocks, bonds,  certificates of deposit and other bank products, money market
funds and U.S. Treasury obligations. Bank product performance may be based upon,
among other things, the BANK RATE MONITOR National Index? or various certificate
of deposit indexes. Money market fund performance may be based upon, among other
things,  the  IBC/Donoghue's  Money  Fund  Report?  or  Money  Market  Insight?,
reporting  services  on  money  market  funds.   Performance  of  U.S.  Treasury
obligations may be based upon,  among other things,  various U.S.  Treasury bill
indexes.  Certain of these  alternative  investments  may offer  fixed  rates of
return and  guaranteed  principal and may be insured.  Economic  indicators  may
include, without limitation, indicators of market rate trends and cost of funds,
such as Federal Home Loan Bank Board 11th District Cost of Funds Index ("COFI").

                                       49
<PAGE>

A Fund may depict the historical performance of the securities in which the Fund
may invest over periods  reflecting  a variety of market or economic  conditions
either alone or in comparison with alternative investments,  performance indexes
of those  investments  or  economic  indicators.  A Fund may also  describe  its
portfolio holdings and depict its size or relative size compared to other mutual
funds,  the number and  make-up of its  shareholder  base and other  descriptive
factors concerning the Fund.

Each Fund's  returns and net asset value will fluctuate and shares of a Fund are
redeemable by an investor at the then current net asset value, which may be more
or less than original cost.  Redemption of Class B shares and Class C shares may
be subject to a contingent deferred sales charge as described above.  Additional
information  about each Fund's  performance also appears in its Annual Report to
Shareholders, which is available without charge from the applicable Fund.

The figures below show  performance  information  for various  periods.  The net
asset values and returns of each class of shares of the Funds will fluctuate. No
adjustment has been made for taxes payable on dividends.  The periods  indicated
were ones of fluctuating securities prices and interest rates.

Performance figures for Class B and C shares for the period May 31, 1994 through
each Fund's most recent fiscal year end reflect the actual  performance of these
classes of  shares.  Returns  for Class B and C shares for the period  beginning
with  the  inception  date of each  Fund's  Class A shares  to May 31,  1994 are
derived from the historical  performance of Class A shares,  adjusted to reflect
the operating expenses  applicable to Class B and C shares,  which may be higher
or lower than those of Class A shares. The performance figures are also adjusted
to reflect the maximum  sales charge of 5.75% for Class A shares and the maximum
current  contingent  deferred  sales  charge of 4% for Class B shares and 1% for
Class C shares.

The returns in the chart below assume reinvestment of distributions at net asset
value  and  represent  both  actual  past   performance   figures  and  adjusted
performance figures of the Class B and C shares of each Fund as described above;
they do not guarantee future results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.

KEMPER AGGRESSIVE GROWTH FUND -- AS OF SEPTEMBER 30, 2000

AVERAGE ANNUAL TOTAL             Class A          Class B            Class C
RETURNS                          Shares           Shares             Shares

Life of Class(+)                        %                 %                  %

One Year                                %                 %                  %

(+) Since December 31, 1996 for Class A, B and C shares.


KEMPER VALUE+GROWTH FUND -- AS OF NOVEMBER 30, 2000

AVERAGE ANNUAL TOTAL             Class A           Class B           Class C
RETURNS                          Shares            Shares             Shares

Life of Class(+)                       %                 %                  %

Three Years                            %                 %                  %

One Year                               %                 %                  %

(+) Since October 16, 1995 for Class A, B and C shares.


KEMPER BLUE CHIP FUND

KEMPER GROWTH FUND

KEMPER SMALL CAP EQUITY FUND

                                       50
<PAGE>

KEMPER TECHNOLOGY FUND

KEMPER TOTAL RETURN FUND

Performance figures for Class B and C shares for the period May 31, 1994 through
each Fund's most recent fiscal year end reflect the actual  performance of these
classes of  shares.  Returns  for Class B and C shares for the period  beginning
with  the  inception  date of each  Fund's  Class A shares  to May 31,  1994 are
derived from the historical  performance of Class A shares,  adjusted to reflect
the operating expenses  applicable to Class B and C shares,  which may be higher
or lower than those of Class A shares. The performance figures are also adjusted
to reflect the maximum  sales charge of 5.75% for Class A shares and the maximum
current  contingent  deferred  sales  charge of 4% for Class B shares and 1% for
Class C shares.

The returns in the chart below assume reinvestment of distributions at net asset
value  and  represent  both  actual  past   performance   figures  and  adjusted
performance figures of the Class B and C shares of each Fund as described above;
they do not guarantee future results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.

<TABLE>
<CAPTION>
KEMPER BLUE CHIP FUND - AS OF OCTOBER 31, 2000*

AVERAGE ANNUAL                              Class A                 Class B                 Class C
TOTAL RETURNS                                Shares                  Shares                  Shares

<S>                                             <C>                     <C>                      <C>
Life of Class(+)                                %                       %                        %
Ten Years                                       %                       %                        %
Five Years                                      %                       %                        %
One Year                                        %                       %                        %
(+) Since  November 23, 1987 for Class A shares.  Since May 31, 1994 for Class B
    and Class C shares.

KEMPER GROWTH FUND - AS OF SEPTEMBER 30, 2000*

AVERAGE ANNUAL                              Class A                 Class B                 Class C
TOTAL  RETURNS                               Shares                  Shares                  Shares

Life of Class(+)                                 %                      %                       %
Ten Years                                        %                      %                       %
Five Years                                       %                      %                       %
One Year                                         %                      %                       %
(+) Since  April 4, 1966 for Class A shares.  Since May 31, 1994 for Class B and
    Class C shares.

KEMPER SMALL CAP EQUITY FUND - AS OF SEPTEMBER 30, 2000*

AVERAGE ANNUAL                               Class A                Class B                 Class C
TOTAL RETURNS                                Shares                  Shares                  Shares

Life of Class(+)                                 %                      %                         %
Ten Years                                        %                      %                         %
Five Years                                       %                      %                         %
One Year                                         %                      %                         %
(+) Since  February 20, 1969 for Class A shares.  Since May 31, 1994 for Class B
    and Class C shares.

KEMPER TECHNOLOGY FUND - AS OF OCTOBER 31, 2000*

AVERAGE ANNUAL                               Class A                Class B                 Class C
TOTAL RETURNS                                Shares                  Shares                  Shares

Life of Class(+)                            %                          %                       %
Ten Years                                   %                          %                       %
Five Years                                  %                          %                       %

                                       51
<PAGE>

One Year                                    %                          %                       %

(+) Since  September 7, 1948 for Class A shares.  Since May 31, 1994 for Class B
    and Class C shares.

KEMPER TOTAL RETURN FUND - AS OF OCTOBER 31, 2000*

AVERAGE ANNUAL                               Class A                Class B                 Class C
TOTAL RETURNS                                Shares                  Shares                  Shares

Life of Class(+)                                   %                    %                        %
Ten Years                                          %                    %                        %
Five Years                                         %                   %                         %
One Year                                           %                    %                        %

(+) Since  March 2, 1964 for Class A shares.  Since May 31, 1994 for Class B and
    Class C shares.
</TABLE>

* Because Class B and C shares were not  introduced  for each Fund until May 31,
1994,  the total return for Class B and C shares for the periods  prior to their
introduction  is based upon the performance of Class A shares from the inception
date of each Fund's Class A shares through May 31, 1994.  Actual  performance of
Class B and C shares is shown beginning May 31, 1994.

KEMPER CLASSIC GROWTH FUND - AS OF OCTOBER 31, 2000

Performance figures for Class A, B and C shares for the period April 16, 1998 to
October 31,  1999  reflect the actual  performance  of these  classes of shares.
Returns  for Class A, B and C shares for the period  September  9, 1996 to April
16, 1998 are derived from the historical performance of Class S shares, adjusted
to reflect the operating expenses  applicable to Class A, B and C shares,  which
may be higher or lower than those of Class S shares. The performance figures are
also  adjusted to reflect the maximum  sales  charge of 5.75% for Class A shares
and the current contingent deferred sales charge of 4% for Class B shares and 1%
for Class C shares.

The returns in the chart below assume reinvestment of distributions at net asset
value  and  represent  both  actual  past   performance   figures  and  adjusted
performance  figures  of the  Class A, B and C shares  of the Fund as  described
above;  they do not guarantee  future results.  Investment  return and principal
value will fluctuate so that an investor's shares,  when redeemed,  may be worth
more or less than their original cost.

       Average Annual Total Return for the periods ended October 31, 2000

                                     One Year                Life of Class*

          Class A                       %                          %
          Class B                       %                          %
          Class C                       %                          %

* Because Class A, B and C shares were not introduced  until April 16, 1998, the
total  return  for  Class  A, B and C  shares  for the  period  prior  to  their
introduction  is  based  upon  the  performance  of  Class  S  shares  from  the
commencement of investment operations, September 9, 1996 through April 16, 1998.
Actual performance of Class A, B and C shares is shown beginning April 16, 1998.

FOOTNOTES FOR ALL FUNDS

(1)  The  Initial  Investment  and  adjusted  amounts  for  Class A shares  were
     adjusted  for the maximum  initial  sales  charge at the  beginning  of the
     period,  which is 5.75%.  The  Initial  Investment  for Class B and Class C
     shares was not  adjusted.  Amounts were adjusted for Class B shares for the
     contingent  deferred  sales  charge  that may be  imposed at the end of the
     period based upon the schedule for shares sold  currently,  see "Redemption
     or Repurchase of Shares" in the  prospectus.  No  adjustments  were made to
     Class C shares. Amounts were adjusted for Class C shares for the contingent
     deferred sales charge that may be imposed for periods less than one year.

(2)  Includes short-term capital gain dividends, if any.

Investors  may want to compare  the  performance  of a Fund to  certificates  of
deposit  issued by banks  and other  depository  institutions.  Certificates  of
deposit may offer fixed or variable  interest  rates and principal is guaranteed
and may be insured.  Withdrawal  of deposits  prior to maturity will normally be
subject to a penalty.


                                       52
<PAGE>

Rates offered by banks and other  depository  institutions are subject to change
at any time  specified by the issuing  institution.  Information  regarding bank
products may be based upon,  among other things,  the BANK RATE MONITOR National
Index(TM) for certificates of deposit,  which is an unmanaged index and is based
on stated rates and the annual  effective  yields of  certificates of deposit in
the ten largest  banking  markets in the United  States,  or the CDA  Investment
Technologies,  Inc.  Certificate of Deposit Index,  which is an unmanaged  index
based on the average monthly yields of certificates of deposit.

Investors  also may want to compare  the  performance  of a Fund to that of U.S.
Treasury  bills,  notes or bonds.  Treasury  obligations  are issued in selected
denominations.  Rates of Treasury  obligations are fixed at the time of issuance
and payment of principal  and interest is backed by the full faith and credit of
the U.S. Treasury. The market value of such instruments will generally fluctuate
inversely  with  interest  rates prior to  maturity  and will equal par value at
maturity.  Information  regarding the performance of Treasury obligations may be
based upon,  among other  things,  the Towers Data  Systems U.S.  Treasury  Bill
index,  which is an  unmanaged  index  based  on the  average  monthly  yield of
treasury bills maturing in six months.  Due to their short maturities,  Treasury
bills generally experience very low market value volatility.

Investors  may want to  compare  the  performance  of a Fund,  such as the Total
Return Fund, to the performance of a hypothetical  portfolio weighted 60% in the
Standard & Poor's 500 Stock Index (an unmanaged index  generally  representative
of the U.S.  stock market) and 40% in the Lehman  Brothers  Government/Corporate
Bond Index (an unmanaged index  generally  representative  of  intermediate  and
long-term  government and investment grade corporate debt  securities).  See the
footnotes  above for a more complete  description  of these  indexes.  The Total
Return  Fund  may  invest  in both  equity  and  fixed  income  securities.  The
percentage  of assets  invested in each type of security  will vary from time to
time in the discretion of the Fund's investment manager and will not necessarily
approximate the 60%/40% weighting of this hypothetical index.

Investors may want to compare the  performance of a Fund to that of money market
funds.  Money  market  funds seek to maintain a stable net asset value and yield
fluctuates.  Information  regarding the performance of money market funds may be
based  upon,  among  other  things,  IBC/Donoghue's  Money  Fund  Averages  (All
Taxable). As reported by IBC/Donoghue's,  all investment results represent total
return  (annualized  results for the period net of management fees and expenses)
and  one  year   investment   results  are  effective   annual  yields  assuming
reinvestment of dividends.

The following  tables compare the performance of the Class A shares of the Funds
over various  periods  with that of other  mutual  funds  within the  categories
described below according to data reported by Lipper Analytical  Services,  Inc.
("Lipper"), New York, New York, which is a mutual fund reporting service. Lipper
performance figures are based on changes in net asset value, with all income and
capital gain dividends  reinvested.  Such calculations do not include the effect
of any sales charges. Future performance cannot be guaranteed.  Lipper publishes
performance  analyses on a regular  basis.  Each category  includes funds with a
variety of  objectives,  policies  and market  and credit  risks that  should be
considered in reviewing these rankings.

                                Fund Organization

The Funds are open-end management  investment  companies,  organized as separate
business trusts under the laws of Massachusetts.  The Aggressive Growth Fund was
organized  as a business  trust  under the laws of  Massachusetts  on October 3,
1996.  The Blue Chip Fund was  organized  as a business  trust under the laws of
Massachusetts on May 28, 1987. The Growth Fund was organized as a business trust
under the laws of Massachusetts on October 24, 1985 and,  effective  January 31,
1986,  that Fund  pursuant  to a  reorganization  succeeded  to the  assets  and
liabilities  of Kemper Growth Fund,  Inc., a Maryland  corporation  organized in
1965.  The Small Cap Fund was  organized  as a business  trust under the laws of
Massachusetts  on October 24, 1985 and,  effective  January 31, 1986,  that Fund
pursuant to a  reorganization  succeeded to the assets and liabilities of Kemper
Summit Fund, Inc., a Maryland  corporation  organized in 1968. Prior to February
1, 1992,  the Small Cap Fund was known as "Kemper  Summit Fund." The  Technology
Fund was  organized  as a  business  trust  under the laws of  Massachusetts  on
October 24, 1985 as  Technology  Fund and changed its name to Kemper  Technology
Fund effective  February 1, 1988.  Effective  January 31, 1986,  Technology Fund
pursuant  to a  reorganization  succeeded  to  the  assets  and  liabilities  of
Technology Fund, Inc., a Maryland corporation originally organized as a Delaware
corporation in 1948.  Technology  Fund was known as Television  Fund, Inc.


                                       53
<PAGE>

until 1950 and as Television-Electronics Fund, Inc. until 1968. The Total Return
Fund was  organized  as a  business  trust  under the laws of  Massachusetts  on
October  24,  1985 and,  effective  January 31,  1986,  that Fund  pursuant to a
reorganization  succeeded to the assets and  liabilities  of Kemper Total Return
Fund, Inc., a Maryland corporation  organized in 1963. The Total Return Fund was
known as Balanced  Income  Fund,  Inc.  until 1972 and as  Supervised  Investors
Income Fund, Inc. until 1977. The Value+Growth  Fund was organized as a business
trust  under the laws of  Massachusetts  on June 14,  1995 under the name Kemper
Value Plus Growth Fund and does business as Kemper  Value+Growth  Fund.  Classic
Growth  Fund  is  an  open-end   diversified   series  of  Investment  Trust,  a
Massachusetts  business  trust  established  under a Declaration  of Trust dated
September  20, 1984,  as amended.  The name of the Trust was changed,  effective
April 16, 1998, from Scudder Classic Growth Fund. The Trust's authorized capital
consists of an  unlimited  number of shares of  beneficial  interest,  par value
$0.01 per share. The Trust's shares are currently divided into four classes, the
Scudder Shares, Kemper Classic Growth Fund Class A, B and C Shares.

The Technology  Fund may in the future seek to achieve its investment  objective
by pooling  its assets  with  assets of other  mutual  funds for  investment  in
another   investment   company   having  the  same   investment   objective  and
substantially  the same investment  policies and  restrictions as such Fund. The
purpose of such an arrangement is to achieve  greater  operational  efficiencies
and to reduce  costs.  It is expected that any such  investment  company will be
managed by Scudder Kemper in substantially  the same manner as the corresponding
Fund. Shareholders of a Fund will be given at least 30 days' prior notice of any
such investment,  although they will not be entitled to vote on the action. Such
investment  would be made only if the  Trustees  determine  it to be in the best
interests of the respective Fund and its shareholders.

Currently,  each Fund (other than  Classic  Growth  Fund) offers four classes of
shares.  These  are  Class A,  Class B and  Class C  shares,  as well as Class I
shares,  which have different expenses,  which may affect  performance.  Class I
shares are available  for purchase  exclusively  by the following  categories of
institutional  investors:  (1)  tax-exempt  retirement  plans  (Profit  Sharing,
401(k),  Money  Purchase  Pension and Defined  Benefit  Plans) of Scudder Kemper
Investments,  Inc.  ("Scudder  Kemper") and its affiliates and rollover accounts
from those  plans;  (2) the  following  investment  advisory  clients of Scudder
Kemper and its investment advisory affiliates that invest at least $1 million in
a Fund:  unaffiliated  benefit plans, such as qualified  retirement plans (other
than  individual  retirement  accounts  and  self-directed   retirement  plans);
unaffiliated  banks and insurance  companies  purchasing for their own accounts;
and   endowment   funds   of   unaffiliated   non-profit   organizations;    (3)
investment-only accounts for large qualified plans, with at least $50 million in
total  plan  assets or at least  1000  participants;  (4)  trust  and  fiduciary
accounts  of trust  companies  and bank trust  departments  providing  fee based
advisory  services  that  invest at least $1 million in a Fund on behalf of each
trust; and (5) policy holders under Zurich-American Insurance Group's collateral
investment  program  investing  at least  $200,000 in a Fund and (6)  investment
companies  managed by Scudder Kemper that invest  primarily in other  investment
companies.  The  Board of  Trustees  of a Fund may  authorize  the  issuance  of
additional classes and additional Portfolios if deemed desirable,  each with its
own investment objectives, policies and restrictions.  Since the Funds may offer
multiple Portfolios,  each is known as a "series company." Shares of a Fund have
equal  noncumulative  voting  rights except that Class B and Class C shares have
separate  and  exclusive  voting  rights with  respect to each Fund's Rule 12b-1
Plan.  Shares of each class also have equal  rights with  respect to  dividends,
assets  and  liquidation  of such  Fund  subject  to any  preferences  (such  as
resulting from different Rule 12b-1 distribution  fees), rights or privileges of
any  classes  of  shares of the  Fund.  Shares  of each Fund are fully  paid and
nonassessable  when issued,  are  transferable  without  restriction and have no
preemptive  or  conversion  rights.  The Funds are not  required  to hold annual
shareholder meetings and do not intend to do so. However, they will hold special
meetings as required or deemed desirable for such purposes as electing trustees,
changing fundamental policies or approving an investment  management  agreement.
Subject to the Agreement and Declaration of Trust of each Fund, shareholders may
remove  trustees.  If  shares  of more  than  one  Portfolio  for any  Fund  are
outstanding,  shareholders will vote by Portfolio and not in the aggregate or by
class except when voting in the aggregate is required,  under the 1940 Act, such
as for the election of trustees or when voting by class is appropriate.

The Funds  generally  are not required to hold  meetings of their  shareholders.
Under the  Agreement  and  Declaration  of Trust of each Fund  ("Declaration  of
Trust"),  however,  shareholder  meetings  will be held in


                                       54
<PAGE>

connection with the following  matters:  (a) the election or removal of trustees
if a meeting is called for such  purpose;  (b) the  adoption of any contract for
which shareholder  approval is required by the 1940 Act); (c) any termination of
the Fund or a class to the extent and as provided in the  Declaration  of Trust;
(d) any amendment of the  Declaration of Trust (other than  amendments  changing
the name of the Fund,  supplying any  omission,  curing any ambiguity or curing,
correcting or supplementing  any defective or inconsistent  provision  thereof);
and (e) such  additional  matters as may be required by law, the  Declaration of
Trust,  the By-laws of the Fund, or any registration of the Fund with the SEC or
any  state,  or as  the  trustees  may  consider  necessary  or  desirable.  The
shareholders also would vote upon changes in fundamental  investment objectives,
policies or restrictions.

Each trustee serves until the next meeting of  shareholders,  if any, called for
the purpose of electing  trustees and until the election and  qualification of a
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described  below) or a majority
of the  trustees.  In  accordance  with the 1940 Act (a) each  Fund  will hold a
shareholder  meeting  for the  election  of trustees at such time as less than a
majority of the  trustees  have been elected by  shareholders,  and (b) if, as a
result  of a vacancy  in the Board of  Trustees,  less  than  two-thirds  of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.

Trustees  may be removed  from  office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the  written  request  of the  holders  of not less than 10% of the
outstanding  shares.  Upon the written request of ten or more  shareholders  who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding  shares of a Fund stating that such  shareholders  wish to
communicate  with the  other  shareholders  for the  purpose  of  obtaining  the
signatures necessary to demand a meeting to consider removal of a trustee,  each
Fund has undertaken to disseminate  appropriate  materials at the expense of the
requesting shareholders.

Each Fund's  Declaration  of Trust  provides  that the presence at a shareholder
meeting in person or by proxy of at least 30% of the shares  entitled to vote on
a matter shall  constitute a quorum.  Thus, a meeting of  shareholders of a Fund
could  take  place  even  if  less  than a  majority  of the  shareholders  were
represented  on its  scheduled  date.  Shareholders  would  in  such  a case  be
permitted to take action which does not require a larger vote than a majority of
a quorum,  such as the election of trustees and ratification of the selection of
auditors.  Some matters  requiring a larger vote under the Declaration of Trust,
such as termination or  reorganization  of a Fund and certain  amendments of the
Declaration of Trust, would not be affected by this provision; nor would matters
which  under the 1940 Act require  the vote of a  "majority  of the  outstanding
voting securities" as defined in the 1940 Act.

Each Fund's Declaration of Trust  specifically  authorizes the Board of Trustees
to terminate  the Fund or any  Portfolio or class by notice to the  shareholders
without shareholder approval.

Under Massachusetts law,  shareholders of a Massachusetts  business trust could,
under certain  circumstances,  be held  personally  liable for  obligations of a
Fund. The Declaration of Trust,  however,  disclaims  shareholder  liability for
acts or obligations of each Fund and requires that notice of such  disclaimer be
given in each agreement, obligation, or instrument entered into or executed by a
Fund or the Fund's  trustees.  Moreover,  the  Declaration of Trust provides for
indemnification  out of  Fund  property  for  all  losses  and  expenses  of any
shareholder  held personally  liable for the obligations of a Fund and each Fund
will be covered by  insurance  which the  trustees  consider  adequate  to cover
foreseeable  tort claims.  Thus, the risk of a shareholder  incurring  financial
loss on account of shareholder  liability is considered by Scudder Kemper remote
and not material,  since it is limited to circumstances in which a disclaimer is
inoperative and such Fund itself is unable to meet its obligations.

Master/feeder structure


The Board has the discretion to retain the current distribution  arrangement for
[the/each] Fund while  investing in a master fund in a  master/feeder  structure
fund as described below.

A master/feeder fund structure is one in which a fund (a "feeder fund"), instead
of investing  directly in a portfolio of securities,  invests most or all of its
investment  assets in a separate  registered  investment  company


                                       55
<PAGE>

(the  "master  fund")  with  substantially  the same  investment  objective  and
policies as the feeder fund.  Such a structure  permits the pooling of assets of
two or  more  feeder  funds,  preserving  separate  identities  or  distribution
channels  at the feeder fund level.  Based on the  premise  that  certain of the
expenses of operating an investment  portfolio are  relatively  fixed,  a larger
investment  portfolio may eventually achieve a lower ratio of operating expenses
to average net assets.  An existing  investment  company is able to convert to a
feeder fund by selling all of its  investments,  which  involves  brokerage  and
other  transaction  costs  and  realization  of a  taxable  gain or loss,  or by
contributing its assets to the master fund and avoiding  transaction  costs and,
if proper procedures are followed, the realization of taxable gain or loss.

                               Investment manager

Scudder Kemper Investments,  Inc. (the "Investment  Manager"),  345 Park Avenue,
New York,  NY, an  investment  counsel firm,  acts as investment  adviser to the
[Fund / Funds]. This organization,  the predecessor of which is Scudder, Stevens
& Clark, Inc., is one of the most experienced investment counsel firms in the U.
S. It was  established  as a  partnership  in 1919 and pioneered the practice of
providing  investment  counsel to individual  clients on a fee basis. In 1928 it
introduced the first no-load  mutual fund to the public.  In 1953 the Investment
Manager  introduced  Scudder  International  Fund,  Inc.,  the first mutual fund
available in the U.S.  investing  internationally  in  securities  of issuers in
several foreign  countries.  The predecessor firm reorganized from a partnership
to a  corporation  on June 28,  1985.  On December 31,  1997,  Zurich  Insurance
Company ("Zurich") acquired a majority interest in the Investment  Manager,  and
Zurich  Kemper  Investments,  Inc.,  a  Zurich  subsidiary,  became  part of the
Investment  Manager.  The  Investment  Manager's  name changed to Scudder Kemper
Investments,  Inc. On September 7, 1998,  the  businesses  of Zurich  (including
Zurich's 70% interest in Scudder Kemper) and the financial  services  businesses
of  B.A.T  Industries  p.l.c.  ("B.A.T")  were  combined  to  form a new  global
insurance and financial  services  company  known as Zurich  Financial  Services
Group. By way of a dual holding company  structure,  former Zurich  shareholders
initially owned  approximately 57% of Zurich Financial  Services Group, with the
balance initially owned by former B.A.T  shareholders.  On October 17, 2000, the
dual-headed  holding  company  structure  of Zurich  Financial  Services  Group,
comprised of Allied  Zurich  p.l.c.  in the United  Kingdom and Zurich Allied in
Switzerland,  was unified into a single Swiss holding company,  Zurich Financial
Services.

Founded in 1872, Zurich is a multinational,  public corporation  organized under
the laws of  Switzerland.  Its home  office is  located  at  Mythenquai  2, 8002
Zurich,  Switzerland.  Historically,  Zurich's  earnings  have resulted from its
operations as an insurer as well as from its ownership of its  subsidiaries  and
affiliated  companies  (the  "Zurich  Insurance  Group").  Zurich and the Zurich
Insurance  Group provide an extensive  range of insurance  products and services
and have branch offices and  subsidiaries  in more than 40 countries  throughout
the world.

The principal  source of the Investment  Manager's  income is professional  fees
received  from  providing  continuous  investment  advice.  Today,  it  provides
investment  counsel for many individuals and institutions,  including  insurance
companies,   colleges,  industrial  corporations,   and  financial  and  banking
organizations  as well as  providing  investment  advice  to over  [XX] open and
closed-end mutual funds.

The Investment  Manager  maintains a large research  department,  which conducts
continuous   studies  of  the  factors  that  affect  the  position  of  various
industries, companies and individual securities. The Investment Manager receives
published  reports and statistical  compilations from issuers and other sources,
as  well as  analyses  from  brokers  and  dealers  who  may  execute  portfolio
transactions  for the  Investment  Manager's  clients.  However,  the Investment
Manager regards this  information and material as an adjunct to its own research
activities.  The Investment Manager's  international  investment management team
travels  the  world,   researching  hundreds  of  companies.  In  selecting  the
securities  in  which  the  [Fund /  Funds]  may  invest,  the  conclusions  and
investment  decisions  of the  Investment  Manager with respect to the Funds are
based primarily on the analyses of its own research department.

Certain  investments  may be  appropriate  for a fund and also for other clients
advised by the  Investment  Manager.  Investment  decisions for a fund and other
clients are made with a view to achieving their respective investment objectives
and after consideration of such factors as their current holdings,  availability
of cash for investment and the size of their investments generally.  Frequently,
a particular  security may be bought or sold


                                       56
<PAGE>

for only one client or in different amounts and at different times for more than
one but less than all clients. Likewise, a particular security may be bought for
one or more clients when one or more other clients are selling the security.  In
addition,  purchases  or sales of the same  security may be made for two or more
clients on the same day.  In such event,  such  transactions  will be  allocated
among the clients in a manner believed by the Investment Manager to be equitable
to each. In some cases, this procedure could have an adverse effect on the price
or amount  of the  securities  purchased  or sold by a fund.  Purchase  and sale
orders for a fund may be combined with those of other clients of the  Investment
Manager in the  interest of  achieving  the most  favorable  net results to that
fund.

In certain cases, the investments for a fund are managed by the same individuals
who manage one or more other mutual  funds  advised by the  Investment  Manager,
that have similar names,  objectives and investment  styles. You should be aware
that the Funds are likely to differ from these other mutual funds in size,  cash
flow pattern and tax matters.  Accordingly,  the holdings and performance of the
Funds can be expected to vary from those of these other mutual funds.

The Funds (other than the  Aggressive  Growth Fund,  Classic Growth Fund and the
Small Cap Fund) pay Scudder Kemper investment  management fees, payable monthly,
at 1/12 of the annual  rates shown  below.  The  Aggressive  Growth Fund and the
Small Cap Fund each pay a base annual  management fee, payable  monthly,  at the
annual rate of 0.65% of the average daily net assets of the Fund.  This base fee
is  subject  to upward or  downward  adjustment  on the basis of the  investment
performance  of the Class A shares of the Fund compared with the  performance of
the Standard & Poor's 500 Stock Index as described  herein.  After the effect of
the adjustment, the management fee rate for the Aggressive Growth Fund may range
between 0.45% and 0.85% and the  management  fee rate for the Small Cap Fund may
range between 0.35% and 0.95%.


                                                  Blue Chip,
                                                    Growth,
                                                  Technology
                                                   and Total            Value+
                                                    Return              Growth
Average Daily Net Assets                             Funds               Fund
----------------------------------------------------------               ----

$0 - $250 million                                    0.58%               0.72%
$250 million - $1 billion                            0.55                0.69
$1 billion - $2.5 billion                            0.53                0.66
$2.5 billion - $5 billion                            0.51                0.64
$5 billion - $7.5 billion                            0.48                0.60
$7.5 billion - $10 billion                           0.46                0.58
$10 billion - $12.5 billion                          0.44                0.56
Over $12.5 billion                                   0.42                0.54

The  Small  Cap Fund  pays a base  annual  investment  management  fee,  payable
monthly,  at the rate of 0.65% of the average daily net assets of the Fund. This
base fee is  subject  to  upward  or  downward  adjustment  on the  basis of the
investment  performance  of the Class A shares of the Fund as compared  with the
performance  of the Standard & Poor's 500 Stock Index (the  "Index").  The Small
Cap Fund will pay an  additional  monthly fee at an annual rate of 0.05% of such
average daily net assets for each percentage point (fractions to be prorated) by
which the  performance  of the Class A shares  of the Fund  exceeds  that of the
Index for the immediately preceding twelve months; provided that such additional
monthly  fee shall not exceed  1/12 of 0.30% of the  average  daily net  assets.
Conversely, the compensation payable by the Small Cap Fund will be reduced by an
annual rate of 0.05% of such average daily net assets for each percentage  point
(fractions to be prorated) by which the performance of the Class A shares of the
Fund falls below that of the Index,  provided that such reduction in the monthly
fee shall not exceed 1/12 of 0.30% of the  average net assets.  The total fee on
an annual basis can range from 0.35% to 0.95% of average  daily net assets.  The
Small Cap  Fund's  investment  performance  during any  twelve  month  period is
measured by the percentage difference between (a) the opening


                                       57
<PAGE>

net asset  value of one Class A share of the Fund and (b) the sum of the closing
net asset  value of one  Class A share of the Fund plus the value of any  income
and  capital  gain  dividends  on such share  during  the  period  treated as if
reinvested  in Class A  shares  of the  Fund at the  time of  distribution.  The
performance  of the  Index is  measured  by the  percentage  change in the Index
between  the  beginning  and  the  end of the  twelve  month  period  with  cash
distributions  on the  securities  which  comprise  the Index  being  treated as
reinvested  in the Index at the end of each month  following  the payment of the
dividend.  Each monthly  calculation of the incentive  portion of the fee may be
illustrated as follows:  if over the preceding twelve month period the Small Cap
Fund's adjusted net asset value applicable to one Class A share went from $10.00
to $11.00 (10% appreciation),  and the Index, after adjustment, went from 100 to
104 (or only 4%), the entire  incentive  compensation  would have been earned by
Scudder  Kemper.  On the other hand, if the Index rose from 100 to 110 (10%), no
incentive fee would have been payable. A rise in the Index from 100 to 116 (16%)
would have  resulted  in the  minimum  monthly  fee of 1/12 of 0.35%.  Since the
computation  is not cumulative  from year to year, an additional  management fee
may be payable with respect to a particular year,  although the Small Cap Fund's
performance  over some longer period of time may be less  favorable than that of
the Index.  Conversely, a lower management fee may be payable in a year in which
the performance of the Fund's Class A shares' is less favorable than that of the
Index,  although  the  performance  of the Fund's  Class A shares  over a longer
period of time might be better than that of the Index.

The Aggressive Growth Fund pays a base annual investment management fee, payable
monthly,  at the rate of 0.65 of 1% of the average daily net assets of the Fund.
This base fee is subject to upward or  downward  adjustment  on the basis of the
investment  performance  of the Class A shares of the Fund as compared  with the
performance  of the  Standard  & Poor's  500  Stock  Index  (the  "Index").  The
Aggressive  Growth Fund will pay an additional  monthly fee at an annual rate of
0.02% of such average daily net assets for each percentage  point  (fractions to
be prorated) by which the  performance of the Class A shares of the Fund exceeds
that of the Index for the  immediately  preceding  twelve months;  provided that
such additional  monthly fee shall not exceed 1/12 of 0.20% of the average daily
net assets.  Conversely,  the compensation payable by the Aggressive Growth Fund
will be reduced by an annual rate of 0.02% of such average  daily net assets for
each percentage point (fractions to be prorated) by which the performance of the
Class A shares of the Fund falls  below that of the  Index,  provided  that such
reduction  in the  monthly fee shall not exceed 1/12 of 0.20% of the average net
assets.  The  total fee on an annual  basis  can  range  from  0.45% to 0.85% of
average daily net assets.  The Aggressive Growth Fund's  investment  performance
during any twelve month period is measured by the percentage  difference between
(a) the opening net asset value of one Class A share of the Fund and (b) the sum
of the  closing  net asset value of one Class A share of the Fund plus the value
of any income and capital gain dividends on such share during the period treated
as if reinvested in Class A shares of the Fund at the time of distribution.  The
performance  of the  Index is  measured  by the  percentage  change in the Index
between  the  beginning  and  the  end of the  twelve  month  period  with  cash
distributions  on the  securities  which  comprise  the Index  being  treated as
reinvested  in the Index at the end of each month  following  the payment of the
dividend.  Each monthly  calculation of the incentive  portion of the fee may be
illustrated as follows: if over the preceding twelve month period the Aggressive
Growth Fund's adjusted net asset value applicable to one Class A share went from
$10.00 to $11.50 (15% appreciation),  and the Index, after adjustment, went from
100 to 104 (or only 4%),  the  entire  incentive  compensation  would  have been
earned by Scudder  Kemper.  On the other hand, if the Index rose from 100 to 115
(15%), no incentive fee would have been payable. A rise in the Index from 100 to
125 (25%) would have resulted in the minimum monthly fee of 1/12 of 0.45%. Since
the  computation is not cumulative  from year to year, an additional  management
fee may be payable with respect to a particular  year,  although the  Aggressive
Growth Fund's  performance over some longer period of time may be less favorable
than that of the Index.  Conversely,  a lower management fee may be payable in a
year in which the  performance  of the Fund's  Class A shares is less  favorable
than that of the Index,  although the  performance  of the Fund's Class A shares
over a longer period of time might be better than that of the Index.


The Classic Growth Fund will pay the Adviser an annual fee equal to 0.70% of the
Fund's average daily net assets,  payable  monthly,  provided the Fund will make
such  interim  payments as may be  requested by the Adviser not to exceed 75% of
the  amount  of the fee then  accrued  on the  books  of the  Fund  and  unpaid.
Effective  April 16, 1998,  the Adviser  agreed to waive 0.25% of its management
fee  until  December  31,  1998.

                                       58
<PAGE>

For the fiscal period  September 9, 1996  (commencement of operations) to August
31, 1997, the Adviser did not impose any portion of its management fee amounting
to $164,645.  For the fiscal year ended August 31,  1998,  the Adviser  waived a
portion  of its  management  fee  amounting  to  $281,142,  and the fee  imposed
amounted to $371,001.  For the fiscal year ended  August 31,  1999,  the Adviser
waived a portion  of its  management  fee  amounting  to  $466,794,  and the fee
imposed  amounted to $840,228.  For the two month period ended October 31, 1999,
the Adviser waived a portion of its management fee amounting to $96,046, and the
fee imposed  amounted to  $172,882,  of which  $86,750 was unpaid at October 31,
1999.  The Adviser has agreed to continue to waive 0.25% of its  management  fee
until December 31, 2000.


The investment management fees paid by each Fund for its last three fiscal years
are shown in the table below.


<TABLE>
<CAPTION>
Fund                                     Fiscal 2000                 Fiscal 1999           Fiscal 1998
----                                     -----------                 -----------           -----------

<S>                                                                  <C>                   <C>
Aggressive                                                           $241,000              98,000^(3)

Blue Chip                                                            $4,172,000            3,104,000

Classic Growth

Growth                                                               $14,408,000           14,891,000

Small Cap                                                            $2,966,000            3,519,000^(4)

Technology                                                           $10,608,000           6,842,000

Total Return                                                         $19,069,000           18,088,000

Value+Growth                                                         $1,171,000            906,000
</TABLE>

^(1)     Fee was increased $1,000 from $36,000 base fee; for the period December
         31, 1996 (commencement of operations) to September 30, 1997.

^(2)      Fee was decreased $2,617,000 from $5,810,000 base fee.
^(3)      Fee was decreased $9,000 from $107,000 base fee.
^(4)      Fee was decreased $2,791,000 from $6,310,000 base fee.


The Manager may serve as adviser to other funds with  investment  objectives and
policies  similar  to those of the Funds  that may have  different  distribution
arrangements or expenses, which may affect performance.

Code of Ethics

The Funds,  the Investment  Manager and principal  underwriter have each adopted
codes of ethics under rule 17j-1 of the  Investment  Company Act. Board members,
officers of the Funds and  employees  of the  Investment  Manager and  principal
underwriter are permitted to make personal  securities  transactions,  including
transactions  in securities  that may be purchased or held by the  [Fund/Funds],
subject to  requirements  and  restrictions  set forth in the applicable Code of
Ethics.  The  Investment  Manager's  Code  of  Ethics  contains  provisions  and
requirements  designed to identify  and address  certain  conflicts  of interest
between  personal  investment  activities and the interests of the Funds.  Among
other things, the Investment Manager's Code of Ethics prohibits certain types of
transactions  absent prior approval,  imposes time periods during which personal
transactions may not be made in certain securities,  and requires the submission
of  duplicate  broker   confirmations  and  quarterly  reporting  of  securities
transactions.  Additional  restrictions  apply to portfolio  managers,  traders,
research  analysts  and others  involved  in the  investment  advisory  process.
Exceptions to these and other  provisions of the  Investment  Manager's  Code of
Ethics may be granted in particular  circumstances  after review by  appropriate
personnel.


ADMINISTRATIVE SERVICES. Administrative services are provided to each Fund under
an administrative services agreement ("administrative  agreement") with KDI. KDI
bears all its  expenses of  providing  services  pursuant to the  administrative
agreement between KDI and each Fund, including the payment of service fees. Each
Fund pays KDI an administrative services fee, payable monthly, at an annual rate
of up to 0.25% of  average  daily net  assets of Class A, B and C shares of each
Fund.


                                       59
<PAGE>

KDI enters into related arrangements with various  broker-dealer firms and other
service or administrative firms ("firms"),  that provide services and facilities
for their customers or clients who are shareholders of a Fund. The firms provide
such office  space and  equipment,  telephone  facilities  and  personnel  as is
necessary or beneficial for providing information and services to their clients.
Such services and assistance may include,  but are not limited to,  establishing
and  maintaining  accounts  and  records,  processing  purchase  and  redemption
transactions,  answering  routine  inquiries  regarding the Fund,  assistance to
clients in changing dividend and investment  options,  account  designations and
addresses  and such other  services  as may be agreed upon from time to time and
permitted by applicable  statute,  rule or regulation.  For Class A shares,  KDI
pays each firm a service fee, normally payable  quarterly,  at an annual rate of
up to 0.25% of the net assets in Fund  accounts  that it maintains  and services
attributable to Class A shares commencing with the month after investment.  With
respect  to Class B and  Class C shares,  KDI  currently  advances  to firms the
first-year  service fee at a rate of up to 0.25% of the  purchase  price of such
shares.  For periods after the first year, KDI currently  intends to pay firms a
service fee at an annual rate of up to 0.25%  (calculated  monthly and  normally
paid  quarterly)  of the net assets  attributable  to Class B and Class C shares
maintained  and serviced by the firm and the fee continues  until  terminated by
KDI or the Fund.  Firms to which service fees may be paid include  affiliates of
KDI.  KDI may,  from time to time,  from its own  resources  pay  certain  firms
additional amounts for ongoing  administrative  services and assistance provided
to their customers and clients who are shareholders of the Trusts.  In addition,
effective  January  1,  2000 with  respect  to  assets  for  which KDI  provides
administrative  services,  each Fund will pay KDI an administrative services fee
of 0.15% of such assets.

The following information concerns the administrative  services fee paid by each
Fund for the last three fiscal years.

<TABLE>
<CAPTION>
                                Administrative Service Fees Paid by Fund
                                ----------------------------------------

                                                                               Service Fees Paid    Service Fees Paid
                                                                               by Administrator     by Administrator to
Fund            Fiscal Year     Class A         Class B          Class C           to Firms          Affiliated firms
----            -----------     -------         -------          -------           --------          ----------------

<S>                <C>          <C>         <C>               <C>             <C>                 <C>
Aggressive         2000
                   1999*          $0        $0                $0              $139,000             $0
                   1998*        $2,000      $1,000            $0              $80,000              $0

Blue Chip          2000
                   1999       $1,166,000    $581,000          $83,000         $1,629,000           $0
                   1998        $879,000     $394,000          $44,000         $1,311,000           $5,000


                    Administrative Service Fees Paid by Fund
                    ----------------------------------------

                                                                                   Service Fees Paid    Service Fees Paid
                                                                                    by Administrator    by Administrator to
Fund              Fiscal Year      Class A           Class B          Class C           to Firms         Affiliated firms
----              -----------      -------           -------          -------           --------         ----------------


Growth                 2000
                       1999         $4,587,000     $1,333,000       $58,000          $6,146,000           $26,000
                       1998         $4,274,000     $1,829,000       $47,000          $6,179,000           $37,000

Small Cap              2000
                       1999         $1,207,000     $396,000         $26,000          $1,664,000           $0
                       1998         $1,407,000     $614,000         $33,000          $2,071,000           $5,000

Technology             2000
                       1999         $2,834,000     $633,000         $92,000          $3,738,000           $6,000
                       1998         $1,763,000     $284,000         $32,000          $2,114,000           $5,000

Total Return           2000
                       1999         $6,635,000     $2,043,000       $87,000          $8,476,000           $11,000
                       1998         $5,353,000     $2,504,000       $56,000          $7,976,000           $17,000

                                       60
<PAGE>

Value+Growth           2000
                       1999          $200,000      $174,000         $19,000          $391,000             $0
                       1998          $152,000      $130,000         $10,000          $299,000             $0

</TABLE>

+        For the period  December  31,  1996  (commencement  of  operations)  to
         September 30, 1997.

*        Amounts shown after expense waiver.

KDI also may provide  some of the above  services  and may retain any portion of
the fee  under  the  administrative  agreement  not paid to firms to  compensate
itself  for  administrative  functions  performed  for a  Fund.  Currently,  the
administrative  services  fee  payable to KDI is based only upon Fund  assets in
accounts  for which  there is a firm  listed  on the  Fund's  records  and it is
intended that KDI will pay all the administrative  services fee that it receives
from a Fund to firms in the form of service fees.  The effective  administrative
services  fee  rate to be  charged  against  all  assets  of a Fund  while  this
procedure is in effect will depend upon the proportion of Fund assets that is in
accounts  for which there is a firm of record.  The Board of Trustees of a Fund,
in its  discretion,  may approve basing the fee to KDI on all Fund assets in the
future.

Certain trustees or officers of a Fund are also directors or officers of Scudder
Kemper or KDI as indicated under "Officers and Trustees."


CUSTODIAN,  TRANSFER AGENT AND SHAREHOLDER  SERVICE AGENT. State Street Bank and
Trust Company, 225 Franklin Street,  Boston,  Massachusetts 02110, as custodian,
has  custody  of all  securities  and  cash  of each  Fund.  It  attends  to the
collection of principal and income,  and payment for and  collection of proceeds
of securities bought and sold by each Fund.  Investors  Fiduciary Trust Company,
801 Pennsylvania Avenue,  Kansas City,  Missouri,  64105 ("IFTC") is each Fund's
transfer agent and dividend-paying  agent. Pursuant to a services agreement with
IFTC, Kemper Service Company ("KSvC"), an affiliate of Scudder Kemper, serves as
"Shareholder  Service  Agent" of each Fund and, as such,  performs all of IFTC's
duties as transfer  agent and dividend  paying agent.  IFTC receives as transfer
agent,  and pays to KSvC as follows:  prior to January 1, 1999,  annual  account
fees at a maximum rate of $6 per account plus  account set up,  transaction  and
maintenance  charges,  annual fees associated with the contingent deferred sales
charge  (Class B only) and  out-of-pocket  expense  reimbursement  and effective
January 1, 1999, annual account fees of $10.00 ($18.00 for retirement  accounts)
plus set up charges,  annual fees associated with the contingent  deferred sales
charges  (Class  B  only),  an  asset-based  fee  of  0.08%  and   out-of-pocket
reimbursement.  The  following  shows  for  each  Fund's  2000  fiscal  year the
shareholder service fees IFTC remitted to KSvC.


Fund                                         Fees IFTC Paid to KSvC
----                                         ----------------------

Aggressive                       $
Blue Chip                        $
Growth                           $
Small Cap                        $
Technology                       $
Total Return                     $
Value+Growth                     $


INDEPENDENT  AUDITORS  AND  REPORTS  TO  SHAREHOLDERS.  The  Funds'  independent
auditors,  Ernst & Young LLP, 233 South Wacker Drive,  Chicago,  Illinois 60606,
audit and report on the  Funds'  annual  financial  statements,  review  certain
regulatory reports and the Funds' federal income tax returns,  and perform other
professional accounting,  auditing, tax and advisory services when engaged to do
so by the Funds.  Shareholders will receive annual audited financial  statements
and semi-annual unaudited financial statements.

LEGAL COUNSEL.  Vedder,  Price,  Kaufman & Kammholz,  222 North LaSalle  Street,
Chicago, Illinois 60601, serves as legal counsel to the Funds.


                                       61
<PAGE>


                              Trustees and Officers

The  officers  and trustees of the Funds,  their birth  dates,  their  principal
occupations and their affiliations,  if any, with the Advisor and KDI are listed
below. All persons named as trustees also serve in similar  capacities for other
funds advised by the Adviser.

All Funds:

The  officers  and  trustees  of the Fund,  their  birthdates,  their  principal
occupations  and their  affiliations,  if any, with Scudder  Kemper and KDI, are
listed  below.  All persons named as officers and trustees also serve in similar
capacities for other funds advised by the Adviser.

JOHN W. BALLANTINE  (2/16/46),  Trustee,  1500 North Lake Shore Drive,  Chicago,
Illinois;  First  Chicago NBD  Corporation/The  First  National Bank of Chicago:
1996-1998 Executive Vice President and Chief Risk Management Officer;  1995-1996
Executive Vice President and Head of International Banking;  1992-1995 Executive
Vice President, Chief Credit and Market Risk Officer.

LEWIS A. BURNHAM  (1/8/33),  Trustee,  16410 Avila  Boulevard,  Tampa,  Florida;
Retired; formerly,  Partner, Business Resources Group; formerly,  Executive Vice
President, Anchor Glass Container Corporation.

LINDA  C.  COUGHLIN  (1/1/52),   Trustee*,   Two  International  Place,  Boston,
Massachusetts; Managing Director, Scudder Kemper.

DONALD L.  DUNAWAY  (3/8/37),  Trustee,  7515  Pelican  Bay  Boulevard,  Naples,
Florida;  Retired;  formerly,  Executive Vice President,  A.O. Smith Corporation
(diversified manufacturer).

ROBERT B. HOFFMAN (12/11/36), Trustee, 800 North Lindbergh Boulevard, St. Louis,
Missouri;   Vice  Chairman  and  Chief  Financial   Officer,   Monsanto  Company
(agricultural,  pharmaceutical and nutritional/food  products);  formerly,  Vice
President,  Head of International  Operations,  FMC Corporation (manufacturer of
machinery and chemicals).

DONALD R. JONES  (1/17/30),  Trustee,  182 Old Wick Lane,  Inverness,  Illinois;
Retired;  Director,  Motorola,  Inc.  (manufacturer of electronic  equipment and
components);  formerly,  Executive Vice President and Chief  Financial  Officer,
Motorola, Inc.

THOMAS W. LITTAUER  (4/26/55),  Trustee and Vice President*,  Two  International
Place, Boston, Massachusetts;  Managing Director, Scudder Kemper; formerly, Head
of Broker Dealer Division of an unaffiliated  investment  management firm during
1997; prior thereto,  President of Client Management Services of an unaffiliated
investment management firm from 1991 to 1996.

SHIRLEY D. PETERSON (9/3/41), Trustee, 401 Rosemont Avenue, Frederick, Maryland;
President, Hood College; formerly, Partner, Steptoe & Johnson (attorneys); prior
thereto,  Commissioner,  Internal  Revenue  Service;  prior  thereto,  Assistant
Attorney General, U.S. Department of Justice; Director, Bethlehem Steel Corp.

WILLIAM P. SOMMERS  (7/22/33),  Trustee,  24717 Harbour View Drive,  Ponte Vedra
Beach,  Florida;  Consultant  and  Director,  SRI  International  (research  and
development);   prior  thereto,  President  and  Chief  Executive  Officer,  SRI
International;   prior  thereto,  Executive  Vice  President,  Iameter  (medical
information  and  educational  service  provider);  prior  thereto,  Senior Vice
President  and Director,  Booz,  Allen & Hamilton  Inc.  (management  consulting
firm); Director, PSI Inc., Evergreen Solar, Inc. and Litton Industries.

MARK S. CASADY  (9/21/60),  President*,  345 Park  Avenue,  New York,  New York;
Managing Director,  Scudder Kemper; formerly,  Institutional Sales Manager of an
unaffiliated mutual fund distributor.

PHILIP J. COLLORA (11/15/45), Vice President and Secretary*, 222 South Riverside
Plaza, Chicago, Illinois; Senior Vice President and Assistant Secretary, Scudder
Kemper.

ANN M. McCREARY (11/6/56), Vice President*, 345 Park Avenue, New York, New York;
Managing Director, Scudder Kemper.

KATHRYN L. QUIRK  (12/3/52),  Vice  President*,  345 Park Avenue,  New York, New
York; Managing Director, Scudder Kemper.

                                       62
<PAGE>

LINDA J. WONDRACK (9/12/64),  Vice President*,  Two International Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.

JOHN  R.  HEBBLE  (6/27/58),   Treasurer*,   Two  International  Place,  Boston,
Massachusetts; Senior Vice President, Scudder Kemper.

BRENDA LYONS (2/21/63) Assistant  Treasurer*,  Two International  Place, Boston,
Massachusetts; Senior Vice President, Scudder Kemper.

CAROLINE  PEARSON  (4/1/62),  Assistant  Secretary*,  Two  International  Place,
Boston,   Massachusetts;   Senior  Vice  President,  Scudder  Kemper;  formerly,
Associate, Dechert Price & Rhoads (law firm) 1989 to 1997.

MAUREEN  E. KANE  (2/14/62),  Assistant  Secretary*,  Two  International  Place,
Boston, Massachusetts;  Vice President, Scudder Kemper; formerly, Assistant Vice
President  of  an  unaffiliated   investment  management  firm;  prior  thereto,
Associate  Staff  Attorney  of  an  unaffiliated   investment  management  firm;
Associate, Peabody & Arnold (law firm).

Aggressive Growth Fund:

WILLIAM F. TRUSCOTT (9/14/60), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.

SEWALL HODGES (1/9/55),  Vice President*,  345 Park Avenue,  New York, New York;
Senior Vice President, Scudder Kemper.

Blue Chip Fund:

WILLIAM F. TRUSCOTT (9/14/60), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.

TRACY MCCORMICK (9/27/54), Vice President*,  222 South Riverside Plaza, Chicago,
Illinois; Managing Director, Scudder Kemper.

Growth Fund:

WILLIAM F. TRUSCOTT (9/14/60), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.

VALERIE MALTER (7/25/58), Vice President*,  345 Park Avenue, New York, New York;
Managing Director, Scudder Kemper.

GEORGE P. FRAISE (9/28/64), Vice President*, 222 South Riverside Plaza, Chicago,
Illinois; Senior Vice President, Scudder Kemper.

Small Capitalization Equity Fund:

WILLIAM F. TRUSCOTT (9/14/60), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.

JESUS A. CABRERA (12/25/61),  Vice President*,  Two International Place, Boston,
Massachusetts; Vice President, Scudder Kemper.

Technology Fund:

WILLIAM F. TRUSCOTT (9/14/60), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.

JAMES BURKART (2/16/47),  Vice President*,  222 South Riverside Plaza,  Chicago,
Illinois; Vice President, Scudder Kemper.

Total Return Fund:

WILLIAM F. TRUSCOTT (9/14/60), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.

GARY A.  LANGBAUM  (12/16/48),  Vice  President*,  222  South  Riverside  Plaza,
Chicago, Illinois; Managing Director, Scudder Kemper.

                                       63
<PAGE>

Value+Growth Fund:

WILLIAM F. TRUSCOTT (9/14/60), Vice President*, Two International Place, Boston,
Massachusetts; Managing Director, Scudder Kemper.

DONALD E. HALL (8/22/52),  Vice President*,  Two  International  Place,  Boston,
Massachusetts; Managing Director, Scudder Kemper.

*    Interested persons of the Fund as defined in the 1940 Act.

     The trustees and officers who are "interested  persons" as designated above
     receive no compensation  from the Funds. The table below shows amounts paid
     or accrued to those  trustees who are not designated  "interested  persons"
     during each Fund's 1999 fiscal year except that the information in the last
     column is for calendar year 1999.

Aggregate Compensation From Funds

<TABLE>
<CAPTION>
                                                                                                          Total
                                                                                                      Compensation
                                                                                                      From Fund and
                                                                                                      Kemper Fund
                                                                                                         Complex
Name of Trustee       Aggressive   Blue Chip   Growth   Small Cap     Tech     Total        Value         Paid
                                                                               Return       Growth      Trustees**

<S>                     <C>           <C>        <C>        <C>       <C>       <C>           <C>          <C>
John W. Ballantine
Lewis A. Burnham
Donald L. Dunaway*
Robert B. Hoffman
Donald R. Jones
Shirley D. Peterson
William P. Sommers
</TABLE>

*    Includes deferred fees. Pursuant to deferred  compensation  agreements with
     Kemper funds deferred  amounts accrue  interest  monthly at a rate equal to
     the yield of Zurich Money Funds -- Zurich Money Market Fund. Total deferred
     amounts (including  interest thereon) payable from the Kemper Funds through
     each Fund's fiscal year are $0, $13,500, $34,800, $21,900, $25,600, $37,900
     and $2,100 for Mr. Dunaway for the  Aggressive,  Blue Chip,  Growth,  Small
     Cap, Technology, Total Return and Value+Growth Funds, respectively.

**   Includes  compensation for service on the boards of 26 Kemper funds with 48
     fund  portfolios.  Each trustee  currently serves as a trustee of 26 Kemper
     funds with 45 fund portfolios.

As of December  31, 2000,  the  officers and trustees of the Funds,  as a group,
owned  less  than 1% of the then  outstanding  shares of each Fund and no person
owned of record 5% or more of the  outstanding  shares of any class of any Fund,
except the persons indicated in the charts below.

<TABLE>
<CAPTION>
Kemper Aggressive Growth Fund

-------------------------------------------------------------------------------------------------------------
                NAME                                CLASS                            PERCENTAGE
                ----                                -----                            ----------
-------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                                 <C>

-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

Kemper Growth Fund

-------------------------------------------------------------------------------------------------------------
                NAME                                CLASS                            PERCENTAGE
                ----                                -----                            ----------
-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

Kemper Small Capitalization Equity Fund


                                       64
<PAGE>

-------------------------------------------------------------------------------------------------------------
                NAME                                CLASS                            PERCENTAGE
                ----                                -----                            ----------
-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

Kemper Total Return Fund

-------------------------------------------------------------------------------------------------------------
                NAME                                CLASS                            PERCENTAGE
                ----                                -----                            ----------
-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

Kemper Value + Growth Fund

-------------------------------------------------------------------------------------------------------------
                NAME                                CLASS                            PERCENTAGE
                ----                                -----                            ----------
-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

Kemper Technology Fund

-------------------------------------------------------------------------------------------------------------
                NAME                                CLASS                            PERCENTAGE
                ----                                -----                            ----------
-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------
</TABLE>

*        For the period December 31, 1998  (commencement of operations)  through
         August 31, 1999.]

         Class A Shares.  KDI receives no compensation  from the [Fund/Funds] as
principal  underwriter  for Class A shares and pays all expenses of distribution
of  [each/the]  Fund's  Class A shares  under  the  distribution  agreement  not
otherwise paid by dealers or other financial  services firms. As indicated under
"Purchase,  Repurchase  and  Redemption of Shares," KDI retains the sales charge
upon the purchase of shares and pays or allows concessions or discounts to firms
for the sale of [each/the] Fund's shares. The following information concerns the
underwriting  commissions paid in connection with the distribution of [each/the]
Fund's Class A shares for the fiscal years noted.

*        From 11/1/94 to 9/30/95.
**       From 3/15/95 to 8/31/95.
*        Amounts paid from January 1, 1997 through November 30, 1997.
**       For the period of May 6, 1998 (commencement of operations) to September
         30, 1998.
***      For the period of January 30, 1998 to September 30, 1998.
(1)      No  contingent  deferred  sales  charges  have been  imposed on Class C
         shares purchased prior to April 1, 1996.
*        Amounts paid from January 1, 1997 through November 30, 1997.

                                       65
<PAGE>

**       Amounts paid from May 6, 1998 (commencement of operations) to September
         30, 1998.
***      Amounts shown are after expense waiver.

PRINCIPAL  UNDERWRITER.  Pursuant  to  separate  underwriting  and  distribution
services  agreements  ("distribution  agreements"),  Kemper  Distributors,  Inc.
("KDI"), 222 South Riverside Plaza,  Chicago,  Illinois,  60606, an affiliate of
Scudder Kemper,  is the principal  underwriter and distributor for the shares of
each  Fund  and acts as agent of each  Fund in the  continuous  offering  of its
shares.  KDI  bears all its  expenses  of  providing  services  pursuant  to the
distribution  agreements,  including the payment of any  commissions.  Each Fund
pays the cost for the prospectus and  shareholder  reports to be set in type and
printed for existing shareholders,  and KDI, as principal underwriter,  pays for
the printing and  distribution  of copies  thereof used in  connection  with the
offering of shares to  prospective  investors.  KDI also pays for  supplementary
sales literature and advertising costs.

Class A  Shares.  KDI  receives  no  compensation  from the  Funds as  principal
underwriter  for Class A shares and pays all  expenses of  distribution  of each
Fund's Class A shares under the  distribution  agreements  not otherwise paid by
dealers or other  financial  services  firms.  As indicated  under  "Purchase of
Shares,"  KDI retains the sales  charge upon the  purchase of shares and pays or
allows concessions or discounts to firms for the sale of each Fund's shares. The
following  information concerns the underwriting  commissions paid in connection
with the distribution of each Fund's Class A shares for the fiscal years noted.

<TABLE>
<CAPTION>
                                          Commissions Retained by     Commissions Underwriter    Commissions Paid to Kemper
Fund                     Fiscal Year            Underwriter              Paid to All Firms             Affiliated Firms

<S>                         <C>                   <C>                         <C>                       <C>
Aggressive                  2000
                            1999                  $31,000                     $146,000                          $0
                            1998                  $32,000                     $323,000                      $5,000

Blue Chip                   2000
                            1999                 $159,000                     $930,000                          $0
                            1998                 $183,000                   $1,286,000                      $6,000

Growth                      2000
                            1999                 $238,000                   $1,220,000                      $6,000
                            1998                 $326,000                   $1,998,000                      $5,000

Small Cap                   2000
                            1999                  $65,000                     $384,000                          $0
                            1998                 $154,000                     $875,000                          $0

Technology                  2000
                            1999                 $393,000                   $1,170,000                          $0
                            1998                 $163,000                     $824,000                      $7,000

Total Return                2000
                            1999                 $257,000                   $1,241,000                          $0
                            1998                 $233,000                   $2,219,000                      $6,000

Value+Growth                2000
                            1999                  $38,000                     $262,000                          $0
                            1998                  $61,000                     $462,000                          $0
</TABLE>

+        For the period  December  31,  1996  (commencement  of  operations)  to
         September 30, 1997.

Class B Shares and Class C Shares. Each Fund has adopted a plan under Rule 12b-1
(the "Rule 12b-1  Plan")  that  provides  for fees  payable as an expense of the
Class B shares and Class C shares  that are used by KDI to

                                       66
<PAGE>

pay for distribution and services for those classes. Because 12b-1 fees are paid
out of fund assets on an ongoing basis, they will, over time,  increase the cost
of an investment and cost more than other types of sales charges.

For its services under the distribution agreement,  KDI receives a fee from each
Fund under a Rule 12b-1 Plan,  payable  monthly,  at the annual rate of 0.75% of
average daily net assets of each Fund attributable to Class B shares.  This fee,
pursuant  to the 12b-1 Plan,  is accrued  daily as an expense of Class B shares.
KDI also receives any  contingent  deferred sales  charges.  See  "Redemption or
Repurchase of  Shares--Contingent  Deferred Sales  Charge--Class  B Shares." KDI
currently  compensates firms for sales of Class B shares at a commission rate of
3.75%.

For its services under the distribution agreement,  KDI receives a fee from each
Fund under a Rule 12b-1 Plan,  payable  monthly,  at the annual rate of 0.75% of
average daily net assets of each Fund attributable to Class C shares.  This fee,
pursuant  to the Rule  12b-1  Plan,  is  accrued  daily as an expense of Class C
shares.  KDI currently  advances to firms the first year  distribution  fee at a
rate of 0.75% of the  purchase  price of Class C shares.  For periods  after the
first year,  KDI currently pays firms for sales of Class C shares a distribution
fee, payable quarterly, at an annual rate of 0.75% of net assets attributable to
Class C shares  maintained and serviced by the firm and the fee continues  until
terminated by KDI or a Fund.  KDI also receives any  contingent  deferred  sales
charges.  See  "Redemption  or Repurchase of  Shares--Contingent  Deferred Sales
Charges--Class C Shares".

Expenses of the Funds and of KDI in connection with the Rule 12b-1 Plans for the
Class B and Class C Shares are set forth below. A portion of the marketing sales
and operating expenses shown below could be considered overhead expense.

<TABLE>
<CAPTION>
                       Distribution           Contingent          Total        Commissions
                       Fees Paid by            Deferred     Commissions Paid     Paid by
Fund Class    Fiscal      Fund to            Sales Charges    by Underwriter  Underwriter  to
B Shares       Year     Underwriter         to Underwriter      to Firms      Affiliated Firms
--------       ----     -----------         --------------      --------      ----------------

<S>             <C>      <C>                 <C>              <C>                 <C>
Aggressive      2000
                1999     $100,000(a)            $89,000         $283,000          $0
                1998        $28,000             $28,000         $337,000          $0

Blue Chip        2000
Blue Chip        1999    $1,173,000            $643,000       $2,051,000          $0
                 1998    $1,198,000            $293,000       $2,266,000          $0

Growth           2000
                 1999    $4,238,000          $1,428,000       $2,138,000          $0
                 1998    $5,791,000          $1,180,000       $2,647,000          $0

Small Cap        2000
                 1999    $1,225,000            $481,000         $721,000          $0
                 1998    $1,938,000            $438,000       $1,229,000          $0

Technology       2000
</TABLE>


                        Other Distribution Expenses Paid by Underwriter
                        -----------------------------------------------
                                                            Misc.
Fund Class         Advertising  Prospectus Marketing and  Operating    Interest
B Shares         and Literature  Printing  Sales Expenses  Expenses    Expenses
--------         --------------  --------  --------------  --------    --------

Aggressive        $25,623      $2,931       $66,040      $19,784       $90,803
                  $31,000      $3,000       $65,000      $29,000       $31,000


Blue Chip        $177,922     $11,384      $474,444      $70,127      $817,908
Blue Chip        $289,000     $34,000      $598,000     $113,000      $482,000


Growth           $215,196     $24,910      $552,766      $93,237     ($551,313)
                 $355,000     $31,000      $731,000     $124,000     ($318,000)


Small Cap         $81,411      $9,525      $203,603      $40,323      $296,956
                 $165,000     $14,000      $334,000      $66,000      $397,000

Technology
                                        67
<PAGE>

<TABLE>
<CAPTION>
<S>             <C>      <C>                 <C>              <C>                 <C>
                 1999    $1,930,000            $555,000       $3,383,000          $0
                 1998      $884,000            $273,000       $1,248,000          $0

Total Return     2000
                 1999    $6,179,000          $1,406,000       $3,461,000          $0
                 1998    $7,774,000          $1,259,000       $3,718,000          $0

Value+Growth     2000
                 1999   $448,000(a)            $173,000         $386,000          $0
                 1998     $345,000              $86,000         $697,000          $0
</TABLE>



                 $217,770     $17,780      $650,080     $100,802      $641,408
                 $167,000     $19,000      $340,000      $68,000      $404,000


Total Return     $337,430     $22,366      $901,664     $126,892     ($745,251)
                 $484,000     $57,000    $1,008,000     $171,000     ($373,000)


Value+Growth      $38,592      $3,577      $104,968      $13,460      $241,870
                  $96,000     $10,000      $183,000      $40,000 $   1,213,000

+        For the period  December  31,  1996  (commencement  of  operations)  to
         September 30, 1997.

(a)      Amounts shown after expense waiver.

                                       68
<PAGE>

<TABLE>
<CAPTION>
                              Distribution      Contingent    Total Distribution      Distribution Fee
                              Fees Paid by       Deferred        Fees Paid by              Paid by
Fund Class        Fiscal         Fund to      Sales Charges       Underwriter         Underwriter to
C Shares           Year        Underwriter    to Underwriter      to Firms            Affiliated Firms
--------           ----        -----------    --------------      --------            ----------------

<S>                <C>         <C>               <C>               <C>                      <C>
Aggressive         2000
                   1999        $20,000(a)        $3,000            $43,000                  $0
                   1998           $6,000         $1,000            $21,000                  $0

Blue Chip          2000
                   1999         $220,000         $6,000           $240,000                  $0
                   1998         $134,000         $6,000           $140,000                  $0

Growth             2000
                   1999         $185,000         $3,000           $181,000                  $0
                   1998         $148,000         $3,000           $148,000                  $0

Small Cap          2000
                   1999          $90,000         $3,000            $87,000                  $0
                   1998         $106,000         $4,000            $97,000                  $0

Technology         2000
                   1999         $288,000         $7,000           $366,000                  $0
                   1998         $108,000         $2,000           $104,000                  $0

Total Return       2000
                   1999         $269,000        $22,000           $289,000                  $0
                   1998         $167,000         $5,000           $173,000                  $0

Value+Growth       2000
                   1999        $16,000(a)        $3,000                 $0                  $0
                   1998           $9,000         $3,000            $31,000                  $0

</TABLE>

<TABLE>
<CAPTION>
                           Other Distribution Expenses Paid by Underwriter

                                                               Misc.
                 Advertising     Prospectus   Marketing and   Operating      Interest
                and Literature    Printing   Sales Expenses    Expenses      Expenses
                --------------    --------   --------------    --------      --------

<S>                <C>            <C>           <C>            <C>             <C>
Aggressive         $9,743         $1,122        $26,028        $11,812         $8,720
                   $6,000         $1,000        $12,000         $3,000         $4,000


Blue Chip         $41,606         $2,798       $113,295        $23,261        $42,205
                  $56,000         $7,000       $111,000        $30,000        $27,000


Growth            $20,988         $2,432        $56,162        $15,800        $59,625
                  $29,000         $3,000        $59,000        $19,000        $51,000


Small Cap         $13,215         $1,542        $33,915        $14,540        $35,369
                  $24,000         $2,000        $48,000        $19,000        $29,000


Technology        $53,868         $4,478       $164,379        $30,590        $41,886
                  $33,000         $4,000        $67,000        $22,000        $31,000


Total Return      $49,088         $3,766       $140,116        $26,728        $66,561
                  $42,000         $5,000        $90,000        $24,000        $53,000


Value+Growth       $8,352           $823        $24,051         $2,659        $13,853
                  $12,000         $1,000        $24,000         $9,000        $11,000
</TABLE>

+        For the period  December  31,  1996  (commencement  of  operations)  to
         September 30, 1997.
*        For the period February 15, 1996 to November 30, 1996.
(a)      Amount shown after expense waiver.

Rule 12b-1 Plan.  If a Rule 12b-1 Plan (the "Plan") is  terminated in accordance
with its terms, the obligation of a Fund to make payments to KDI pursuant to the
Plan will cease and the Fund will not be required to make any payments  past the
termination  date.  Thus,  there is no legal  obligation for the Fund to pay any
expenses  incurred

                                       69
<PAGE>

by KDI in  excess  of its  fees  under a Plan,  if for any  reason  the  Plan is
terminated in accordance with its terms. Future fees under a Plan may or may not
be sufficient to reimburse KDI for its expenses incurred.

Each distribution agreement and Rule 12b-1 Plan continues in effect from year to
year so long as such continuance is approved for each class at least annually by
a vote of the Board of Trustees of the Fund,  including the Trustees who are not
interested  persons  of the Fund and who have no  direct or  indirect  financial
interest in the agreement.  Each agreement automatically terminates in the event
of its assignment and may be terminated for a class at any time without  penalty
by a Fund or by KDI upon 60 days' notice.  Termination by a Fund with respect to
a class may be by vote of a majority of the Board of Trustees,  or a majority of
the Trustees who are not  interested  persons of the Fund and who have no direct
or  indirect  financial  interest  in  the  agreement,  or a  "majority  of  the
outstanding  voting  securities"  of the class of the Fund, as defined under the
1940 Act. The agreement may not be amended for a class to increase the fee to be
paid by a Fund with respect to such class without  approval by a majority of the
outstanding  voting  securities  of such  class  of the  Fund  and all  material
amendments  must in any event be approved by the Board of Trustees in the manner
described  above  with  respect  to  the  continuation  of  the  agreement.  The
provisions  concerning  the  continuation,  amendment  and  termination  of  the
distribution  agreement are on a Fund by Fund basis and for each Fund on a class
by class basis.

                                      TAXES


Each Fund intends to continue to qualify as a regulated investment company under
Subchapter  M of the Code and, if so  qualified,  will not be liable for federal
income taxes to the extent its earnings are distributed. Such qualification does
not involve  governmental  supervision or management of investment  practices or
policy.

A regulated  investment  company  qualifying  under  Subchapter M of the Code is
required  to  distribute  to its  shareholders  at least  90% of its  investment
company taxable income (including net short-term  capital gain) and generally is
not subject to federal income tax to the extent that it distributes annually its
investment  company taxable income and net realized  capital gains in the manner
required under the Code. Long-term capital gain dividends received by individual
shareholders are taxed at a maximum rate of 20% on gains realized by a Fund from
securities held more than 12 months.

A 4% excise  tax is imposed on the  excess of the  required  distribution  for a
calendar year over the  distributed  amount for such calendar year. The required
distribution  is the  sum of 98% of a  Fund's  net  investment  income  for  the
calendar  year plus 98% of its capital gain net income for the  one-year  period
ending October 31, plus any  undistributed  net investment income from the prior
calendar year, plus any undistributed  capital gain net income from the one year
period ended October 31 of the prior calendar year,  minus any  overdistribution
in  the  prior  calendar   year.  For  purposes  of  calculating   the  required
distribution,  foreign  currency gains or losses  occurring after October 31 are
taken into account in the following  calendar year. Each Fund intends to declare
or distribute  dividends during the appropriate  periods of an amount sufficient
to  prevent  imposition  of the 4% excise  tax.  If any net  realized  long-term
capital gains in excess of net realized  short-term  capital losses are retained
by a Fund for reinvestment, requiring federal income taxes to be paid thereon by
a Fund,  the Fund  intends to elect to treat such  capital  gains as having been
distributed to  shareholders.  As a result,  each  shareholder  will report such
capital gains as long-term capital gains, will be able to claim a relative share
of  federal  income  taxes  paid by the Fund on such  gains as a credit  against
personal  federal  income tax  liability,  and will be entitled to increase  the
adjusted tax basis on Fund shares by the difference  between a pro rata share of
such gains owned and the individual tax credit.

A shareholder  who redeems shares of a Fund will recognize  capital gain or loss
for federal income tax purposes measured by the difference  between the value of
the  shares  redeemed  and the  adjusted  cost  basis  of the  shares.  Any loss
recognized  on the  redemption  of Fund  shares  held six months or less will be
treated  as  long-term  capital  loss to the  extent  that the  shareholder  has
received any long-term  capital gain dividends on such shares. A shareholder who
has  redeemed  shares of a Fund or other  Kemper  Mutual Fund listed above under
"Special  Features--Class  A  Shares--Combined  Purchases" (other than shares of
Kemper Cash Reserves  Fund not


                                       70
<PAGE>

acquired by exchange  from another  Kemper  Mutual Fund) may reinvest the amount
redeemed  at net asset  value at the time of the  reinvestment  in shares of any
Fund or in shares of a Kemper Mutual Fund within six months of the redemption as
described  above  under   "Redemption  or  Repurchase  of   Shares--Reinvestment
Privilege."  If redeemed  shares were  purchased  after October 3, 1989 and were
held less than 91 days,  then the lesser of (a) the sales  charge  waived on the
reinvested  shares,  or (b) the sales charge incurred on the redeemed shares, is
included in the basis of the reinvested  shares and is not included in the basis
of the redeemed  shares.  If a shareholder  realized a loss on the redemption or
exchange  of a Fund's  shares and  reinvests  in shares of the same Fund 30 days
before or after the redemption or exchange,  the  transactions may be subject to
the wash sale rules  resulting in a postponement of the recognition of such loss
for federal  income tax  purposes.  An exchange of a Fund's shares for shares of
another fund is treated as a redemption and  reinvestment for federal income tax
purposes upon which gain or loss may be recognized.

A Fund may  invest  in  shares  of  certain  foreign  corporations  which may be
classified under the Code as passive foreign investment companies ("PFICs").  If
a Fund receives a so-called  "excess  distribution"  with respect to PFIC stock,
the Fund itself may be subject to a tax on a portion of the excess distribution.
Certain  distributions  from a PFIC as well as  gains  from the sale of the PFIC
shares are treated as "excess  distributions." In general, under the PFIC rules,
an excess  distribution  is treated as having  been  realized  ratably  over the
period  during which the Fund held the PFIC shares.  The Fund will be subject to
tax on the portion, if any, of an excess distribution that is allocated to prior
Fund  taxable  years and an interest  factor will be added to the tax, as if the
tax had been payable in such prior taxable years. Excess distributions allocated
to the current  taxable year are  characterized  as ordinary income even though,
absent application of the PFIC rules,  certain excess  distributions  might have
been classified as capital gain.

A Fund may make an  election  to mark to  market  its  shares  of these  foreign
investment  companies in lieu of being subject to U.S.  federal income taxation.
At the end of each taxable year to which the  election  applies,  the Fund would
report as  ordinary  income  the  amount by which the fair  market  value of the
foreign  company's stock exceeds the Fund's adjusted basis in these shares;  any
mark to market losses and any loss from an actual disposition of shares would be
deductible  as  ordinary  loss to the  extent  of any net mark to  market  gains
included in income in prior years.  The effect of the election would be to treat
excess  distributions  and gain on  dispositions as ordinary income which is not
subject to a fund level tax when  distributed  to  shareholders  as a  dividend.
Alternatively,  a Fund may elect to  include as income and gain its share of the
ordinary earnings and net capital gain of certain foreign  investment  companies
in lieu of being taxed in the manner described above.

Equity  options   (including  covered  call  options  on  portfolio  stock)  and
over-the-counter  options on debt securities written or purchased by a Fund will
be  subject  to tax under  Section  1234 of the  Code.  In  general,  no loss is
recognized by a Fund upon payment of a premium in  connection  with the purchase
of a put or call option.  The  character of any gain or loss  recognized  (i.e.,
long-term or short-term) will generally  depend,  in the case of a lapse or sale
of the option,  on the Fund's holding period for the option,  and in the case of
an exercise of a put option,  on the Fund's  holding  period for the  underlying
stock.  The  purchase  of a put option may  constitute  a short sale for federal
income  tax  purposes,  causing  an  adjustment  in the  holding  period  of the
underlying stock or substantially  identical stock in the Fund's portfolio. If a
Fund writes a put or call option,  no gain is  recognized  upon its receipt of a
premium. If the option lapses or is closed out, any gain or loss is treated as a
short-term  capital gain or loss. If a call option is  exercised,  any resulting
gain or loss is a short-term or long-term  capital gain or loss depending on the
holding period of the underlying  stock. The exercise of a put option written by
a Fund is not a taxable transaction for the Fund.

Many futures  contracts and certain foreign currency forward  contracts  entered
into by a Fund and all listed non-equity  options written or purchased by a Fund
(including  options on  futures  contracts  and  options  on  broad-based  stock
indices) will be governed by Section 1256 of the Code.  Absent a tax election to
the contrary, gain or loss attributable to the lapse, exercise or closing out of
any such position  generally will be treated as 60% long-term and 40% short-term
capital gain or loss, and on the last trading day of the Fund's fiscal year, all
outstanding  Section 1256 positions will be marked to market (i.e. treated as if
such  positions  were closed out at their closing  price on such day),  with any
resulting  gain or loss  recognized as 60% long-term and 40%  short-term.  Under
Section 988 of the Code,  discussed  below,  foreign  currency gain or loss from
foreign  currency-


                                       71
<PAGE>

related  forward  contracts and similar  financial  instruments  entered into or
acquired  by  a  Fund  will  be  treated  as  ordinary  income.   Under  certain
circumstances, entry into a futures contract to sell a security may constitute a
short sale for federal income tax purposes, causing an adjustment in the holding
period of the underlying  security or a substantially  identical security in the
Fund's portfolio.

Positions  of a Fund which  consist of at least one stock and at least one other
position with respect to a related  security  which  substantially  diminishes a
Fund's risk of loss with  respect to such stock could be treated as a "straddle"
which is governed by Section 1092 of the Code,  the operation of which may cause
deferral of losses,  adjustments  in the holding  periods of stock or securities
and conversion of short-term  capital losses into long-term  capital losses.  An
exception to these  straddle  rules exists for certain  "qualified  covered call
options" on stock written by the Fund.

Positions  of a Fund which  consist of at least one  position  not  governed  by
Section 1256 and at least one futures or forward  contract or non-equity  option
governed by Section  1256 which  substantially  diminishes a Fund's risk of loss
with  respect to such  other  position  will be  treated as a "mixed  straddle."
Although  mixed  straddles are subject to the straddle  rules of Section 1092 of
the Code,  certain tax  elections  exist for them which reduce or eliminate  the
operation  of these  rules.  The Fund  intends to monitor  its  transactions  in
options and futures and may make certain tax elections in connection  with these
investments.

Notwithstanding any of the foregoing,  recent tax law changes may require a Fund
to  recognize  gain  (but  not  loss)  from  a  constructive   sale  of  certain
"appreciated financial positions" if a Fund enters into a short sale, offsetting
notional  principal  contract,  futures or  forward  contract  transaction  with
respect  to  the  appreciated  position  or  substantially  identical  property.
Appreciated  financial positions subject to this constructive sale treatment are
interests (including options,  futures and forward contracts and short sales) in
stock,  partnership  interests,  certain  actively traded trust  instruments and
certain debt instruments.  Constructive sale treatment of appreciated  financial
positions  does not apply to certain  transactions  closed in the 90-day  period
ending with the 30th day after the close of the Fund's  taxable year, if certain
conditions are met.

Similarly,  if a  Fund  enters  into a  short  sale  of  property  that  becomes
substantially  worthless,  the Fund will be required to  recognize  gain at that
time as though  it had  closed  the short  sale.  Future  regulations  may apply
similar treatment to other strategic  transactions with respect to property that
becomes substantially worthless.

Under the Code,  gains or losses  attributable to fluctuations in exchange rates
which  occur  between  the  time  a  Fund  accrues  receivables  or  liabilities
denominated in a foreign  currency and the time the Fund actually  collects such
receivables, or pays such liabilities,  generally are treated as ordinary income
or ordinary loss. Similarly,  on disposition of debt securities denominated in a
foreign currency,  and on disposition of certain options,  futures contracts and
forward contracts,  gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition  are also treated as ordinary gain or loss.  These gains
or losses,  referred  to under the Code as  "Section  988" gains or losses,  may
increase or decrease the amount of a Fund's investment company taxable income to
be distributed to its shareholders as ordinary income

Dividends from domestic corporations are expected to comprise a substantial part
of each Fund's  gross  income.  To the extent that such  dividends  constitute a
portion of a Fund's gross income,  a portion of the income  distributions of the
Fund may be eligible for the deduction for dividends  received by  corporations.
Shareholders will be informed of the portion of dividends which so qualify.  The
dividends-received  deduction is reduced to the extent the shares of a Fund with
respect to which the dividends are received are treated as  debt-financed  under
federal  income tax law, and is  eliminated if either those shares or the shares
of the Fund are  deemed to have been held by a Fund or the  shareholder,  as the
case may be, for less than 46 days during the 90-day  period  beginning  45 days
before the shares become ex-dividend.

Properly  designated  distributions of the excess of net long-term  capital gain
over net  short-term  capital  loss are  taxable to  shareholders  as  long-term
capital gain,  regardless of the length of time the shares of the Fund have been
held  by  such  shareholders.  Such  distributions  are  not  eligible  for  the
dividends-received  deduction.  Any loss realized upon the  redemption of shares
held at the time of  redemption  for six  months  or less will be  treated


                                       72
<PAGE>

as  a  long-term   capital  loss  to  the  extent  of  any  amounts  treated  as
distributions of long-term capital gain during such six-month period.

Distributions  of investment  company  taxable  income and net realized  capital
gains will be taxable as described above, whether received in shares or in cash.
Shareholders  electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the net asset value of a share on the reinvestment date.

All distributions of investment  company taxable income and net realized capital
gain,  whether  received  in  shares  or in  cash,  must  be  reported  by  each
shareholder on his or her federal income tax return. Dividends and capital gains
distributions  declared  in  October,   November  or  December  and  payable  to
shareholders  of record in such a month will be deemed to have been  received by
shareholders  on  December  31 if paid  during  January of the  following  year.
Redemptions of shares,  including  exchanges for shares of another Scudder fund,
may result in tax  consequences  (gain or loss) to the  shareholder and are also
subject to these reporting requirements.

The Funds  will be  required  to  report to the  Internal  Revenue  Service  all
distributions of taxable income and capital gains as well as gross proceeds from
the redemption or exchange of Fund shares,  except in the case of certain exempt
shareholders.  Under the backup  withholding  provisions  of Section 3406 of the
Code,  distributions  of taxable  income and capital gains and proceeds from the
redemption  or exchange of the shares of a regulated  investment  company may be
subject to  withholding  of federal income tax at the rate of 31% in the case of
non-exempt  shareholders  who fail to furnish the investment  company with their
taxpayer identification numbers and with required certifications regarding their
status under the federal income tax law. Withholding may also be required if the
Fund is notified by the IRS or a broker that the taxpayer  identification number
furnished by the shareholder is incorrect or that the shareholder has previously
failed to report interest or dividend income. If the withholding  provisions are
applicable,  any  such  distributions  and  proceeds,  whether  taken in cash or
reinvested in additional  shares,  will be reduced by the amounts required to be
withheld.

Shareholders of a Fund may be subject to state and local taxes on  distributions
received from a Fund and on redemptions of the Fund's shares.  Each distribution
is  accompanied  by a  brief  explanation  of  the  form  and  character  of the
distribution.  In January  of each year the Fund  issues to each  shareholder  a
statement of the federal income tax status of all distributions.

Each Fund is organized as a  Massachusetts  business trust and is not liable for
any income or franchise tax in the Commonwealth of Massachusetts,  provided that
it qualifies as a regulated investment company for federal income tax purposes.

An individual may make a deductible IRA  contribution  for any taxable year only
if (i) the individual is not an active  participant in an employer's  retirement
plan, or (ii) the  individual has an adjusted gross income below a certain level
($52,000 for married  individuals filing a joint return, with a phase-out of the
deduction for adjusted gross income between  $52,000 and $62,000;  $32,000 for a
single  individual,  with a phase-out for adjusted gross income between  $32,000
and  $42,000).  An  individual is not  considered  an active  participant  in an
employer's  retirement plan if the individual's  spouse is an active participant
in such a plan.  However,  in the  case of a joint  return,  the  amount  of the
deductible  contribution by the individual who is not an active participant (but
whose spouse is) is phased out for adjusted  gross income  between  $150,000 and
$160,000. However, an individual not permitted to make a deductible contribution
to an  IRA  for  any  such  taxable  year  may  nonetheless  make  nondeductible
contributions  up to $2,000 to an IRA (up to $2,000 per  individual  for married
couples if only one spouse has earned  income) for that year.  There are special
rules for  determining  how  withdrawals are to be taxed if an IRA contains both
deductible and nondeductible amounts. In general, a proportionate amount of each
withdrawal will be deemed to be made from nondeductible  contributions;  amounts
treated as a return of nondeductible  contributions  will not be taxable.  Also,
annual  contributions  may be made to a  spousal  IRA  even  if the  spouse  has
earnings  in a given  year if the  spouse  elects  to be  treated  as  having no
earnings (for IRA contribution purposes) for the year.

Distributions  by a Fund  result in a  reduction  in the net asset  value of the
Fund's  shares.  Should  a  distribution  reduce  the net  asset  value  below a
shareholder's cost basis, such distribution would nevertheless be taxable to


                                       73
<PAGE>

the  shareholder  as ordinary  income or capital gain as described  above,  even
though,  from an investment  standpoint,  it may  constitute a partial return of
capital. In particular, investors should consider the tax implications of buying
shares just prior to a distribution.  The price of shares purchased at that time
includes the amount of the forthcoming distribution. Those purchasing just prior
to a  distribution  will  then  receive a partial  return  of  capital  upon the
distribution, which will nevertheless be taxable to them.

Shareholders who are non-resident aliens are subject to U.S.  withholding tax on
ordinary income dividends  (whether received in cash or shares) at a rate of 30%
or such lower rate as  prescribed  by any  applicable  tax  treaty.  Trustees of
qualified  retirement  plans  and  403(b)(7)  accounts  are  required  by law to
withhold 20% of the taxable portion of any  distribution  that is eligible to be
"rolled over".  The 20% withholding  requirement does not apply to distributions
from Individual Retirement Accounts (IRAs) or any part of a distribution that is
transferred directly to another qualified retirement plan, 403(b)(7) account, or
IRA.  Shareholders  should  consult  with their tax Advisors  regarding  the 20%
withholding requirement.

After each  transaction,  shareholders  will  receive a  confirmation  statement
giving complete  details of the transaction  except that statements will be sent
quarterly  for  transactions  involving  reinvestment  of dividends and periodic
investment  and  redemption  programs.  Information  for  income  tax  purposes,
including,  when  appropriate,  information  regarding  any  foreign  taxes  and
credits,  will be provided after the end of the calendar year.  Shareholders are
encouraged to retain copies of their account confirmation statements or year-end
statements  for tax  reporting  purposes.  However,  those  who have  incomplete
records may obtain historical  account  transaction  information at a reasonable
fee.

When more than one shareholder resides at the same address,  certain reports and
communications  to be delivered to such shareholders may be combined in the same
mailing  package,  and  certain  duplicate  reports  and  communications  may be
eliminated. Similarly, account statements to be sent to such shareholders may be
combined in the same mailing  package or consolidated  into a single  statement.
However, a shareholder may request that the foregoing policies not be applied to
the shareholder's account.

The foregoing  discussion of U.S.  federal  income tax law relates solely to the
application of that law to U.S.  persons,  i.e., U.S. citizens and residents and
U.S. corporations, partnerships, trusts and estates. Each - - shareholder who is
not a U.S.  person  should  consider  the U.S. and foreign tax  consequences  of
ownership  of  shares  of  the  Fund,  including  the  possibility  that  such a
shareholder  may be subject to a U.S.  withholding tax at a rate of 30% (or at a
lower  rate under an  applicable  income  tax  treaty)  on amounts  constituting
ordinary income received by him or her, where such amounts are treated as income
from U.S. sources under the Code.

Dividend and interest  income  received by a Fund from sources  outside the U.S.
may  be  subject  to  withholding  and  other  taxes  imposed  by  such  foreign
jurisdictions. Tax conventions between certain countries and the U.S. may reduce
or eliminate these foreign taxes,  however,  and foreign countries  generally do
not impose taxes on capital gains respecting investments by foreign investors.

Shareholders  should  consult their tax advisors  about the  application  of the
provisions of tax law described in this  Statement of Additional  Information in
light of their particular tax situations.


PORTFOLIO TRANSACTIONS

Brokerage Commissions

Allocation of brokerage is supervised by the Investment Manager.

The  primary  objective  of the  Investment  Manager in  placing  orders for the
purchase and sale of securities  for a Fund is to obtain the most  favorable net
results, taking into account such factors as price, commission where applicable,
size of order,  difficulty  of  execution  and skill  required of the  executing
broker/dealer.   The   Investment   Manager   seeks  to  evaluate   the  overall
reasonableness of brokerage  commissions paid (to the extent applicable) through
the  familiarity  of the  Distributor  with  commissions  charged on  comparable
transactions,  as well as by  comparing  commissions  paid by a Fund to reported
commissions paid by others.  The Investment


                                       74
<PAGE>

Manager routinely reviews  commission rates,  execution and settlement  services
performed and makes internal and external comparisons.

A Fund's purchases and sales of fixed-income  securities are generally placed by
the Investment  Manager with primary market makers for these securities on a net
basis,  without any  brokerage  commission  being paid by a Fund.  Trading does,
however, involve transaction costs. Transactions with dealers serving as primary
market makers reflect the spread between the bid and asked prices.  Purchases of
underwritten  issues may be made, which will include an underwriting fee paid to
the underwriter.

When it can be done consistently with the policy of obtaining the most favorable
net results,  it is the Investment  Manager's practice to place such orders with
broker/dealers  who supply  research,  market and  statistical  information to a
Fund. The term "research, market and statistical information" includes advice as
to the value of  securities;  the  advisability  of investing in,  purchasing or
selling  securities;  the availability of securities or purchasers or sellers of
securities; and analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts.
The Investment  Manager is authorized when placing portfolio  transactions for a
Fund to pay a brokerage  commission in excess of that which another broker might
charge for executing the same  transaction on account of execution  services and
the receipt of  research,  market or  statistical  information.  The  Investment
Manager  may  place  orders  with  a   broker/dealer   on  the  basis  that  the
broker/dealer has or has not sold shares of a Fund. In effecting transactions in
over-the-counter securities,  orders are placed with the principal market makers
for the security being traded  unless,  after  exercising  care, it appears that
more favorable results are available elsewhere.

To the maximum extent feasible,  it is expected that the Investment Manager will
place orders for  portfolio  transactions  through the  Distributor,  which is a
corporation  registered as a  broker/dealer  and a subsidiary of the  Investment
Manager;  the  Distributor  will place orders on behalf of a Fund with  issuers,
underwriters or other brokers and dealers.  The Distributor will not receive any
commission, fee or other remuneration from a Fund for this service.

Although certain research,  market and statistical  services from broker/dealers
may be useful to [the/a] Fund and to the Investment  Manager,  it is the opinion
of the Investment  Manager that such information only supplements the Investment
Manager's  own  research  effort since the  information  must still be analyzed,
weighed, and reviewed by the Investment Manager's staff. Such information may be
useful to the Investment  Manager in providing  services to clients other than a
Fund,  and not  all  such  information  is used  by the  Investment  Manager  in
connection with a Fund. Conversely,  such information provided to the Investment
Manager by broker/dealers  through whom other clients of the Investment  Manager
effect  securities  transactions  may be useful  to the  Investment  Manager  in
providing services to [the/a] Fund.

The Board reviews, from time to time, whether the recapture for the benefit of a
Fund of some  portion  of the  brokerage  commissions  or  similar  fees paid by
[the/a] Fund on portfolio transactions is legally permissible and advisable.

[INSERT INDIVIDUAL  DISCLOSURE REGARDING BROKERAGE  COMMISSIONs PAID IN THE LAST
THREE YEARS.]

Portfolio Turnover

Portfolio  turnover  rate is  defined  by the SEC as the ratio of the  lesser of
sales or purchases to the monthly average value of such securities  owned during
the year,  excluding all securities  whose  remaining  maturities at the time of
acquisition were one year or less.

Higher levels of activity by [a/the] Fund result in higher transaction costs and
may also  result in taxes on  realized  capital  gains to be borne by the Fund's
shareholders.  Purchases and sales are made for [a/the] Fund whenever necessary,
in management's opinion, to meet a Fund's objective.

Portfolio  turnover  rates for the  three  most  recent  fiscal  periods  are as
follows:

[REPEAT  THE  FOLLOWING  TABLE AS NEEDED  FOR  ADDITIONAL  FUNDS  (EXCEPT  MONEY
FUNDS).]

                                       75
<PAGE>

[See Item  12(e) of Form N-1A - Also  explain  any  significant  variation  in a
fund's portfolio  turnover rates over the two most recently completed FYs or any
anticipated  variation in the portfolio turnover rate from that reported for the
last fiscal year in response to Item 9.]

--------------------------------------------------------------------------------
     Fund     Fiscal Year/Period      Fiscal Year/Period      Fiscal Year/Period
              Ended _____:            Ended _____:            Ended _____:

                             FINANCIAL STATEMENTS

The  financial  statements  appearing  in  [the/each]  Fund's  Annual  Report to
Shareholders  are  incorporated  herein by reference.  [The/Each]  Fund's Annual
Report accompanies this Statement of Additional Information.

                                       76
<PAGE>

APPENDIX--RATINGS OF INVESTMENTS


Standard & Poor's Corporation Bond Ratings


AAA.  Debt  rated AAA had the  highest  rating  assigned  by  Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.


AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A. Debt  rated A has a strong  capacity  to pay  interest  and  repay  principal
although it is somewhat more  susceptible  to the adverse  effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB.  Debt rated BBB is regarded as having an adequate  capacity to pay interest
and  repay  principal.   Whereas  it  normally  exhibits   adequate   protection
parameters,  adverse  economic  conditions  or changing  circumstances  are more
likely to lead to a weakened  capacity to pay interest and repay  principal  for
debt in this category than in higher rated categories.


BB, B, CCC, CC and C. Debt rated BB, B, CCC, CC and C is  regarded,  on balance,
as predominantly  speculative with respect to capacity to pay interest and repay
principal in  accordance  with the terms of the  obligation.  BB  indicates  the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some  quality and  protective  characteristics,  these are
outweighed by large uncertainties or major risk exposures to adverse conditions.


CI. The rating CI is  reserved  for income  bonds on which no  interest is being
paid.

D. Debt rated D is in  default,  and  payment of interest  and/or  repayment  of
principal is in arrears.


Moody's Investors Service, Inc., Bond Ratings

AAA. Bonds which are rated Aaa are judged to be of the best quality.  They carry
the  smallest  degree  of  investment  risk  and are  generally  referred  to as
"gilt-edge."  Interest  payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change,  such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.


Aa. Bonds which are rated Aa are judged to be of high quality by all  standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds.  They are rated lower than the best bonds  because  margins of protection
may not be as large as in Aaa securities or  fluctuation of protective  elements
may be of greater  amplitude or there may be other  elements  present which make
the long term risks appear somewhat larger than in Aaa securities.

A. Bonds which are rated A possess many favorable investment  attributes and are
to be considered as upper medium grade  obligations.  Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither  highly  protected nor poorly  secured.  Interest  payments and
principal  security  appear  adequate  for the present  but  certain  protective
elements may be lacking or may be  characteristically  unreliable over any great
length of time. Such bonds lack outstanding  investment  characteristics  and in
fact have speculative characteristics as well.

Ba.  Bonds  which are rated Ba are judged to have  speculative  elements;  their
future cannot be considered  as well assured.  Often the  protection of interest
and  principal  payments may be very  moderate and thereby not well  safeguarded
during  both  good  and bad  times  over the  future.  Uncertainty  of  position
characterizes bonds in this class.

B. Bonds  which are rated B  generally  lack  characteristics  of the  desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the contract over any long period of time may be small.

Caa.  Bonds  which are rated Caa are of poor  standing.  Such  issues  may be in
default or there may be present  elements of danger with respect to principal or
interest.

                                       77
<PAGE>

Ca. Bonds which are rated Ca represent  obligations  which are  speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C.  Bonds  which are rated C are the lowest  rated  class of bonds and issues so
rated can be regarded as having  extremely  poor prospects of ever attaining any
real investment standing.


Fitch Long-Term Debt Ratings

AAA
Highest credit  quality.  `AAA' ratings denote the lowest  expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment  of  financial  commitments.  This  capacity  is highly  unlikely  to be
adversely affected by foreseeable events.

AA
Very high credit  quality.  `AA' ratings denote a very low expectation of credit
risk.  They  indicate  very  strong  capacity  for timely  payment of  financial
commitments.  This  capacity  is not  significantly  vulnerable  to  foreseeable
events.

A
High credit  quality.  `A' ratings denote a low  expectation of credit risk. The
capacity for timely payment of financial  commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB
Good  credit  quality.  `BBB'  ratings  indicate  that there is  currently a low
expectation  of credit  risk.  The  capacity  for timely  payment  of  financial
commitments is considered adequate,  but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity.  This is the lowest
investment-grade category.

BB
Speculative.  `BB' ratings  indicate that there is a possibility  of credit risk
developing,  particularly  as the result of adverse  economic  change over time;
however,  business or financial alternatives may be available to allow financial
commitments  to be met.  Securities  rated in this  category are not  investment
grade.

B
Highly  speculative.  `B'  ratings  indicate  that  significant  credit  risk is
present,  but a limited  margin of safety  remains.  Financial  commitments  are
currently being met; however,  capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC, CC, C
High default risk. Default is a real possibility. Capacity for meeting financial
commitments is solely  reliant upon  sustained,  favorable  business or economic
developments.  A `CC'  rating  indicates  that  default  of  some  kind  appears
probable. `C' ratings signal imminent default.

DDD, DD, D
Default.  The  ratings  of  obligations  in this  category  are  based  on their
prospects  for  achieving  partial  or  full  recovery  in a  reorganization  or
liquidation  of  the  obligor.   While  expected   recovery  values  are  highly
speculative  and cannot be estimated with any precision,  the following serve as
general  guidelines.  'DDD' obligations have the highest potential for recovery,
around  90%-100% of  outstanding  amounts and accrued  interest.  'DD' indicates
potential  recoveries  in the  range of  50%-90%,  and 'D' the  lowest  recovery
potential, i.e., below 50%.

Entities  rated  in  this  category  have  defaulted  on  some  or all of  their
obligations.  Entities  rated 'DDD' have the highest  prospect for resumption of
performance  or  continued  operation  with or  without a formal  reorganization
process.  Entities  rated  'DD'  and  'D'  are  generally  undergoing  a  formal
reorganization or liquidation process;  those rated 'DD' are likely to satisfy a
higher portion of their outstanding obligations, while entities rated 'D' have a
poor prospect for repaying all obligations.

Fitch Short-Term Debt Ratings


                                       78
<PAGE>

F1
Highest  credit  quality.  Indicates  the Best  capacity  for timely  payment of
financial commitments;  may have an added "+" to denote any exceptionally strong
credit feature.

F2
Good credit  quality.  A  satisfactory  capacity for timely payment of financial
commitments,  but the  margin  of  safety  is not as great as in the case of the
higher ratings.

F3
Fair credit quality. The capacity for timely payment of financial commitments is
adequate;  however,  near-term  adverse  changes  could result in a reduction to
non-investment grade.

B
Speculative.  Minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.

C
High default risk. Default is a real possibility. Capacity for meeting financial
commitments is solely reliant upon a sustained,  favorable business and economic
environment.

D
Default. Denotes actual or imminent payment default.

COMMERCIAL PAPER RATINGS

Commercial  paper rated by Standard & Poor's  Ratings  Services  ("S&P") has the
following   characteristics:   Liquidity   ratios  are  adequate  to  meet  cash
requirements.  Long-term  senior  debt is rated "A" or  better.  The  issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow  have an  upward  trend  with  allowance  made for  unusual  circumstances.
Typically, the issuer's industry is well established and the issuer has a strong
position  within the industry.  The  reliability  and quality of management  are
unquestioned.  Relative  strength  or weakness  of the above  factors  determine
whether the issuer's commercial paper is rated A-1 or A-2.

The ratings  Prime-1 and Prime-2 are the two highest  commercial  paper  ratings
assigned  by Moody's  Investors  Service,  Inc.  ("Moody's").  Among the factors
considered by it in assigning  ratings are the following:  (1) evaluation of the
management of the issuer;  (2) economic  evaluation of the issuer's  industry or
industries and an appraisal of  speculative-type  risks which may be inherent in
certain  areas;  (3)  evaluation  of  the  issuer's   products  in  relation  to
competition and customer  acceptance;  (4) liquidity;  (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years;  (7) financial
strength of a parent company and the relationships  which exist with the issuer;
and (8) recognition by the management of obligations which may be present or may
arise as a result of public  interest  questions and  preparations  to meet such
obligations.  Relative  strength  or weakness  of the above  factors  determines
whether the issuer's commercial paper is rated Prime-1 or 2.

Municipal Notes

Moody's: The highest ratings for state and municipal short-term  obligations are
"MIG 1," "MIG 2," and "MIG 3" (or "VMIG 1," "VMIG 2" and "VMIG 3" in the case of
an issue having a variable rate demand feature). Notes rated "MIG 1" or "VMIG 1"
are judged to be of the "best  quality".  Notes rated "MIG 2" or "VMIG 2" are of
"high  quality," with margins or protection  "ample  although not as large as in
the  preceding  group".  Notes  rated  "MIG  3" or  "VMIG  3" are of  "favorable
quality," with all security  elements  accounted for but lacking the strength of
the preceding grades.

S&P:  The  "SP-1"  rating  reflects  a "very  strong or strong  capacity  to pay
principal and interest". Notes issued with "overwhelming safety characteristics"
will be rated "SP-1+".  The "SP-2" rating reflects a "satisfactory  capacity" to
pay principal and interest.

Fitch:  The highest ratings for state and municipal  short-term  obligations are
"F-1+," "F-1," and "F-2".




                                       79

<PAGE>

                              KEMPER BLUE CHIP FUND

                            PART C. OTHER INFORMATION

<TABLE>
<CAPTION>
   Item 23.      Exhibits.
   --------      ---------

<S>               <C>                       <C>
                    (a)                     Amended and Restated Declaration of Trust
                                            (Incorporated by reference to Post-Effective Amendment No. 12 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            30, 1996.)

                    (b)                     By-laws
                                            (Incorporated by reference to Post-Effective Amendment No. 12 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            1, 1996.)

                   (c)(1)                   Text of Share Certificate.
                                            (Incorporated by reference to Post-Effective Amendment No. 12 to the
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            30, 1996)

                   (c)(2)                   Written Instrument Establishing and Designating Separate Classes of Shares
                                            (Incorporated by reference to Post-Effective Amendment No. 12 to the
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            30, 1996)

                   (d)(1)                   Investment Advisory Contracts (IMA) between the Registrant, on behalf of
                                            Kemper Blue Chip Fund, and Scudder Kemper Investments, Inc. dated September
                                            7, 1998.
                                            (Incorporated by reference to Post-Effective Amendment No. 15 to the
                                            Registrant's Registration Statement on Form N-1A which was filed on December
                                            3, 1998.)

                   (e)(1)                   Underwriting and Distribution Services Agreement between the Registrant, on
                                            behalf of Kemper Blue Chip Fund, and Kemper Distributors, Inc. dated
                                            September 7, 1998.
                                            (Incorporated by reference to Post-Effective Amendment No. 15 to the
                                            Registrant's Registration Statement on Form N-1A which was filed on December
                                            3, 1998.)

                    (f)                     Inapplicable.

                   (g)(1)                   Custodian Agreement between the Registrant, on behalf of Kemper Blue Chip
                                            Fund, and Investors Fiduciary Trust Company.
                                            (Incorporated by reference to Post-Effective Amendment No. 12 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            30, 1996.)

                   (g)(2)                   Foreign Custody Agreement between the Registrant, on behalf of Kemper Blue
                                            Chip Fund, and The Chase Manhattan Bank.
                                            (Incorporated by reference to Post-Effective Amendment No. 12 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            30, 1996.)

                   (h)(1)                   Agency Agreement.

<PAGE>

                                            (Incorporated by reference to Post-Effective Amendment No. 12 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            30, 1996.)

                   (h)(2)                   Administrative Services Agreement between the Registrant and Kemper
                                            Distributors, Inc. dated April 1, 1997.
                                            (Incorporated by reference to Post-Effective Amendment No. 14 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            27, 1998.)

                   (h)(3)                   Supplement to Agency Agreement between Registrant and Investors Fiduciary
                                            Trust Company dated June 1, 1997.
                                            (Incorporated by reference to Post-Effective Amendment No. 14 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            27, 1998.)

                   (h)(4)                   Fund Accounting Agreement between Kemper Blue Chip Fund and Scudder Fund
                                            Accounting Corporation dated December 31, 1997.
                                            (Incorporated by reference to Post-Effective Amendment No. 14 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            27, 1998.)

                    (i)                     Opinion of Legal Counsel to be filed by amendment.

                    (j)                     Report and Consent of Independent Auditors to be filed by amendment.

                    (k)                     Inapplicable.

                    (l)                     Inapplicable.

                   (m)(1)                   Rule 12b-1 Plan between Kemper Blue Chip Fund (Class B Shares) and Kemper
                                            Distributors, Inc. dated August 1, 1998.
                                            (Incorporated by reference to Post-Effective Amendment No. 15 to the
                                            Registrant's Registration Statement on Form N-1A which was filed on December
                                            3, 1998.)

                   (m)(2)                   Rule 12b-1 Plan between Kemper Blue Chip Fund (Class C Shares) and Kemper
                                            Distributors, Inc. dated September 7, 1998.
                                            (Incorporated by reference to Post-Effective Amendment No. 15 to the
                                            Registrant's Registration Statement on Form N-1A which was filed on December
                                            3, 1998.)

                    (n)                     Rule 18f-3 Plan.
                                            (Incorporated by reference to Post-Effective Amendment No. 14 to
                                            Registrant's Registration Statement on Form N-1A which was filed on January
                                            30, 1996.)
                    (p)                     Scudder Kemper Investments, Inc. and Kemper Distributors Code of Ethics to
                                            be filed by amendment.
</TABLE>


Item 24.          Persons Controlled by or under Common Control with Fund.
--------          --------------------------------------------------------

                  None
<PAGE>

Item 25.          Indemnification.
--------          ----------------

         Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 23(a) hereto, which is incorporated herein by reference) provides in
effect that the Registrant will indemnify its officers and trustees under
certain circumstances. However, in accordance with Section 17(h) and 17(i) of
the Investment Company Act of 1940 and its own terms, said Article of the
Agreement and Declaration of Trust does not protect any person against any
liability to the Registrant or its shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such trustee, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

         On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI Holding
Corp. ("ZKIH"), Zurich Kemper Investments, Inc. ("ZKI"), Scudder, Stevens &
Clark, Inc. ("Scudder") and the representatives of the beneficial owners of the
capital stock of Scudder ("Scudder Representatives") entered into a transaction
agreement ("Transaction Agreement") pursuant to which Zurich became the majority
stockholder in Scudder with an approximately 70% interest, and ZKI was combined
with Scudder ("Transaction"). In connection with the trustees' evaluation of the
Transaction, Zurich agreed to indemnify the Registrant and the trustees who were
not interested persons of ZKI or Scudder (the "Independent Trustees") for and
against any liability and expenses based upon any action or omission by the
Independent Trustees in connection with their consideration of and action with
respect to the Transaction. In addition, Scudder has agreed to indemnify the
Registrant and the Independent Trustees for and against any liability and
expenses based upon any misstatements or omissions by Scudder to the Independent
Trustees in connection with their consideration of the Transaction.

Item 26.          Business and Other Connections of Investment Adviser
--------          ----------------------------------------------------

                  Scudder Kemper Investments, Inc. has stockholders and
                  employees who are denominated officers but do not as such have
                  corporation-wide responsibilities. Such persons are not
                  considered officers for the purpose of this Item 26.


<PAGE>



<TABLE>
<CAPTION>
Name
----
                           Business and Other Connections of Board of Directors of Registrant's Adviser
                           ----------------------------------------------------------------------------

<S>                        <C>
Stephen R. Beckwith        Treasurer, Scudder Kemper Investments, Inc.**
                           Director, Kemper Service Company
                           Director, Vice President and Treasurer, Scudder Fund Accounting Corporation*
                           Director and Treasurer, Scudder Stevens & Clark Corporation**
                           Director and Chairman, Scudder Defined Contribution Services, Inc.**
                           Director and President, Scudder Capital Asset Corporation**
                           Director and President, Scudder Capital Stock Corporation**
                           Director and President, Scudder Capital Planning Corporation**
                           Director and President, SS&C Investment Corporation**
                           Director and President, SIS Investment Corporation**
                           Director and President, SRV Investment Corporation**
                           Director and Chairman, Scudder Threadneedle International Ltd.
                           Director, Scudder Kemper Holdings (UK) Ltd. oo
                           Director and President, Scudder Realty Holdings Corporation *
                           Director, Scudder, Stevens & Clark Overseas Corporation o
                           Director and Treasurer, Zurich Investment Management, Inc. xx
                           Director and Treasurer, Zurich Kemper Investments, Inc.

Lynn S. Birdsong           Director, Vice President and Chief Investment Officer, Scudder Kemper Investments, Inc. **
                           Director and Chairman, Scudder Investments (Luxembourg) S.A. #
                           Director, Scudder Investments (U.K.) Ltd. oo
                           Director and Chairman of the Board, Scudder Investments Asia, Ltd. ooo
                           Director and Chairman, Scudder Investments Japan, Inc. +
                           Senior Vice President, Scudder Investor Services, Inc.
                           Director and Chairman, Scudder Trust (Cayman) Ltd. @@@
                           Director, Scudder, Stevens & Clark Australia x
                           Director and Vice President, Zurich Investment Management, Inc. xx
                           Director and President, Scudder, Stevens & Clark Corporation **
                           Director and President, Scudder , Stevens & Clark Overseas Corporation o
                           Director, Scudder Threadneedle International Ltd.
                           Director, Korea Bond Fund Management Co., Ltd. @@

William H. Bolinder        Director, Scudder Kemper Investments, Inc.**
                           Member Group Executive Board, Zurich Financial Services, Inc. ##
                           Chairman, Zurich-American Insurance Company xxx

Nicholas Bratt             Director and Vice President, Scudder Kemper Investments, Inc.**
                           Vice President, Scudder MAXXUM Company***
                           Vice President, Scudder, Stevens & Clark Corporation**
                           Vice President, Scudder, Stevens & Clark Overseas Corporation o

Laurence W. Cheng          Director, Scudder Kemper Investments, Inc.**
                           Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
                           Director, ZKI Holding Corporation xx

Gunther Gose               Director, Scudder Kemper Investments, Inc.**
                           CFO, Member Group Executive Board, Zurich Financial Services, Inc. ##
                           CEO/Branch Offices, Zurich Life Insurance Company ##
<PAGE>

Rolf Huppi                 Director, Chairman of the Board, Scudder Kemper Investments, Inc.**
                           Member, Corporate Executive Board, Zurich Insurance Company of Switzerland ##
                           Director, Chairman of the Board, Zurich Holding Company of America xxx
                           Director, ZKI Holding Corporation xx

Harold D. Kahn             Chief Financial Officer, Scudder Kemper Investments, Inc.**

Kathryn L. Quirk           Director and Secretary, Scudder, Stevens & Clark Overseas Corporation o
                           Director, Vice President and Secretary, Scudder Defined Contribution Services, Inc.**
                           Director, Vice President and Secretary, Scudder Capital Asset Corporation**
                           Director, Vice President and Secretary, Scudder Capital Stock Corporation**
                           Director, Vice President and Secretary, Scudder Capital Planning Corporation**
                           Director, Vice President and Secretary, SS&C Investment Corporation**
                           Director, Vice President and Secretary, SIS Investment Corporation**
                           Director, Vice President and Secretary, SRV Investment Corporation**
                           Director, Vice President, Chief Legal Officer and Secretary, Scudder Financial Services,
                           Inc.*
                           Director, Korea Bond Fund Management Co., Ltd. @@
                           Director, Scudder Threadneedle International Ltd.
                           Director, Chairman of the Board and Secretary, Scudder Investments Canada, Ltd.
                           Director, Scudder Investments Japan, Inc. +
                           Director and Secretary, Scudder Kemper Holdings (UK) Ltd. oo
                           Director and Secretary, Zurich Investment Management, Inc. xx
                           Director, Secretary, Chief Legal Officer and Vice President, Kemper Distributors, Inc.

Edmond D. Villani          Director, President and Chief Executive Officer, Scudder Kemper Investments, Inc.**
                           Director, Scudder, Stevens & Clark Japan, Inc. ###
                           President and Director, Scudder, Stevens & Clark Overseas Corporation o
                           President and Director, Scudder, Stevens & Clark Corporation**
                           Director, Scudder Realty Advisors, Inc. @
                           Director, IBJ Global Investment Management S.A. Luxembourg, Grand-Duchy of Luxembourg
                           Director, Scudder Threadneedle International Ltd.  oo
                           Director, Scudder Investments Japan, Inc. +
                           Director, Scudder Kemper Holdings (UK) Ltd. oo
                           President and Director, Zurich Investment Management, Inc. xx
                           Director and Deputy Chairman, Scudder Investment Holdings, Ltd.
</TABLE>

         *        Two International Place, Boston, MA
         x        333 South Hope Street, Los Angeles, CA
         **       345 Park Avenue, New York, NY
         #        Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C.
                  Luxembourg B 34.564
         ***      Toronto, Ontario, Canada
         oo       20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
         ###      1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
         xx       222 S. Riverside, Chicago, IL
         o        Zurich Towers, 1400 American Ln., Schaumburg, IL
         +        P.O. Box 309, Upland House, S. Church St., Grand Cayman,
                  British West Indies
         ##       Mythenquai-2, P.O. Box CH-8022, Zurich, Switzerland


<PAGE>

Item 27.          Principal Underwriters.
--------          -----------------------

         (a)

         Kemper Distributors, Inc. acts as principal underwriter of the
         Registrant's shares and acts as principal underwriter of the Kemper
         Funds.

         (b)

         Information on the officers and directors of Kemper Distributors, Inc.,
         principal underwriter for the Registrant is set forth below. The
         principal business address is 222 South Riverside Plaza, Chicago,
         Illinois 60606.

<TABLE>
<CAPTION>
         (1)                               (2)                                     (3)


                                Positions and Offices with                   Positions and
         Name                   Kemper Distributors, Inc.                    Offices with Registrant
         ----                   -------------------------                    -----------------------

<S>      <C>                    <C>                                          <C>
         Thomas V. Bruns        President                                    None

         Linda C. Coughlin      Director and Vice Chairman                   None

         Kathryn L. Quirk       Director, Secretary, Chief Legal             Vice President
                                Officer and Vice President

         James J. McGovern      Chief Financial Officer and Treasurer        None

         Linda J. Wondrack      Vice President and Chief Compliance Officer  Vice President

         Paula Gaccione         Vice President                               None

         Michael E. Harrington  Managing Director                            None

         Todd N. Gierke         Assistant Treasurer                          None

         Philip J. Collora      Assistant Secretary                          Vice President and Secretary

         Diane E. Ratekin       Assistant Secretary                          None

         Mark S. Casady         Director and Chairman                        President

         Terrence S. McBride    Vice President                               None

         Robert Froelich        Managing Director                            None

         C. Perry Moore         Senior Vice President and Managing Director  None

         Lorie O'Malley         Managing Director                            None

         William F. Glavin      Managing Director                            None

         Gary N. Kocher         Managing Director                            None
<PAGE>

         Susan K. Crenshaw      Vice President                               None

         Johnston A. Norris     Managing Director and Senior Vice President  None

         John H. Robison, Jr.   Managing Director and Senior Vice President  None

         Robert J. Guerin       Vice President                               None

         Kimberly S. Nassar     Vice President                               None

         Scott B. David         Vice President                               None
</TABLE>

         (c)      Not applicable

Item 28.          Location of Accounts and Records
--------          --------------------------------

         Accounts, books and other documents are maintained at the offices of
the Registrant, the offices of Registrant's investment adviser, Scudder Kemper
Investments, Inc., 222 South Riverside Plaza, Chicago, Illinois 60606, at the
offices of the Registrant's principal underwriter, Kemper Distributors, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606 or, in the case of records
concerning custodial functions, at the offices of the custodian, State Street
Bank and Trust Company ("State Street"), 225 Franklin Street, Boston, MA 02110
or, in the case of records concerning transfer agency functions, at the offices
of State Street and of the shareholder service agent, Kemper Service Company,
811 Main Street, Kansas City, Missouri 64105.


Item 29.          Management Services.
--------          --------------------

                  Inapplicable.

Item 30.          Undertakings.
--------          -------------

                  Inapplicable.



<PAGE>



                           SIGNATURES
                           ----------

     Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant pursuant to Rule 485(a) under the
Securities Act of 1933 and has duly caused this amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Boston and the Commonwealth of Massachusetts on the
27h day of November, 2000.

                                         Kemper Blue Chip Fund
                                                   By: /s/ Mark S. Casady
                                                       ------------------
                                                       Mark S. Casady, President
                                                       (Chief Executive Officer)

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on November 27, 2000 on behalf of
the following persons in the capacities indicated.

<TABLE>
<S>                                         <C>                                          <C>

SIGNATURE                                   TITLE                                        DATE
---------                                   -----                                        ----

/s/ Thomas W. Littauer
--------------------------------------
Thomas W. Littauer*                         Chairman and Trustee                         November 27, 2000

/s/ John W. Ballantine
--------------------------------------
John W. Ballantine*                         Trustee                                      November 27, 2000

/s/ Lewis A. Burnham
--------------------------------------
Lewis A. Burnham*                           Trustee                                      November 27, 2000

/s/ Linda C. Coughlin
--------------------------------------
Linda C. Coughlin*                          Trustee                                      November 27, 2000

/s/ Donald L. Dunaway
--------------------------------------
Donald L. Dunaway*                          Trustee                                      November 27, 2000

/s/ Robert B. Hoffman
--------------------------------------
Robert B. Hoffman*                          Trustee                                      November 27, 2000

/s/ Donald R. Jones
--------------------------------------
Donald R. Jones*                            Trustee                                      November 27, 2000

/s/ Shirley D. Peterson
--------------------------------------
Shirley D. Peterson                         Trustee                                      November 27, 2000

/s/ William P. Sommers
--------------------------------------
William P. Sommers                          Trustee                                      November 27, 2000

/s/ John R. Hebble
--------------------------------------
John R. Hebble                              Treasurer (Chief Financial Officer)          November 27, 2000

</TABLE>


                                              By: /s/ Philip J. Collora
                                                  --------------------------
                                                  Philip J. Collora, Secretary**

     * *Philip J. Collora signs this document pursuant to powers of attorney
filed with Post-Effective Amendment No. 3 to the Registrant's Registration
Statement on Form N-1A filed on January 27, 1998 and Post-Effective Amendment
No. 5 to the Registration Statement filed December 3, 1999.

<PAGE>

                                                               File No. 33-17777
                                                               File No. 811-5357



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    EXHIBITS

                                       TO

                                    FORM N-1A

                         POST-EFFECTIVE AMENDMENT NO. 19
                            TO REGISTRATION STATEMENT

                                      UNDER

                           THE SECURITIES ACT OF 1933

                                       AND

                                AMENDMENT NO. 19

                            TO REGISTRATION STATEMENT

                                      UNDER

                       THE INVESTMENT COMPANY ACT OF 1940



                              KEMPER BLUE CHIP FUND


<PAGE>


                              KEMPER BLUE CHIP FUND

                                  EXHIBIT INDEX

                                      None







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