File No. 33-26149 CIK #844165
Securities and Exchange CommissionWashington, D. C. 20549
Post-Effective
Amendment No. 6
to
Form S-6
For Registration under the Securities Act of 1933
of Securities of Unit Investment Trusts Registered
on Form N-8B-2
Kemper Bond Enhanced Securities Trust, Series 14
Name and executive office address of Depositor:
Kemper Unit Investment Trusts
(a service of Kemper Securities, Inc.)
77 West Wacker - 29th Floor
Chicago, Illinois 60601
Name and complete address of agent for service:
Robert K. Burke
77 West Wacker - 29th Floor
Chicago, Illinois 60601
( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on April 28, 1995
pursuant to paragraph (b) of Rule 485.
KEMPER BOND ENHANCED SECURITIES TRUST(FORMERLY KEMPER DOUBLE PLAY
TRUST)
PART ONE
This Prospectus contains information about prior issued
Series of the Kemper Bond Enhanced Securities Trust. Each Series
of Trust attempts to protect Unitholders' capital by investing a
portion of its portfolio in certificates representing "zero
coupon" U.S. Treasury obligations (such obligations evidence the
right to receive a fixed payment at a future date from the U.S.
Government and are backed by the full faith and credit of the
U.S. Government). The remainder of each Series' portfolio is
invested in a Kemper mutual fund. Certain Series of the Trust
have a portion of their portfolios invested in Kemper Small
Capitalization Equity Fund (formerly named Summit Fund) whose
objective is maximum appreciation of investors' capital. Certain
Series of the Trust have a portion of their portfolios invested
in Kemper Growth Fund, whose objective is growth of capital
through professional management and diversification of investment
securities having potential for capital appreciation. Other
Series of the Trust have a portion of their portfolios invested
in Kemper Total Return Fund whose objective is to obtain the
highest total return, a combination of income and capital
appreciation, consistent with reasonable risk. Information about
specific Series is included in Part Two of the Prospectus, which
must also be provided to purchasers of units of such Series.
Minimum purchase of any Series is 5,000 Units or $5,000,
whichever is less, except the minimum for Uniform Gifts to Minors
Act or Uniform Transfers to Minors Act accounts is $1,000 and for
IRA accounts is $250.
Units of the Trust are not deposits of, or guaranteed by any
bank, and Units are not federally insured or otherwise protected
by the Federal Deposit Insurance Corporation and involve
investment risk including loss of principal.
SPONSOR: KEMPER UNIT INVESTMENT TRUSTS,a Service of Kemper
Securities, Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The investor is advised to read and retain both parts of this
Prospectus for future reference.
The date of this Part One is that datewhich is set forth in Part
Two of the Prospectus
<TABLE>
TABLE OF CONTENTS
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PAGE
<S> <C>
SUMMARY
1
THE TRUST
3
PORTFOLIOS
4
Zero Coupon Treasuries
4
Kemper Small Capitalization Equity Fund
5
Kemper Total Return Fund
10
Kemper Growth Fund.
15
INVESTMENT CONSIDERATIONS
20
PUBLIC OFFERING OF UNITS
22
DISTRIBUTIONS TO UNITHOLDERS
25
DISTRIBUTION REINVESTMENT
26
TAX STATUS
27
RIGHTS OF UNITHOLDERS
29
REDEMPTION
31
PORTFOLIO SUPERVISION
33
RETIREMENT PLANS
34
ADMINISTRATION OF THE TRUST
35
THE SPONSORAL OPINIONS
40
INDEPENDENT AUDITORS
40
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KEMPER BOND ENHANCED SECURITIES TRUST(FORMERLY KEMPER DOUBLE PLAY
TRUST)
SUMMARY
The Trust. Each Series of the Kemper Bond Enhanced
Securities Trust (the "Trust") is a unit investment trust
consisting of a portfolio of certificates representing "zero
coupon" U.S. Treasury bonds and shares of one Kemper Fund. Each
Kemper Fund is an open-end, diversified management investment
company, commonly known as a mutual fund.
The objective of each Series of the Trust is to protect
Unitholders' capital by investing a portion of its portfolio in
"zero coupon" U.S. Treasury bonds either directly ("STRIPS") or
by investing in securities evidencing "zero coupon" U.S. Treasury
bonds, for example, Certificates of Accrual on Treasury
Securities ("CATS") or Treasury Investment Growth Receipts
("TIGR's"), such securities being referred to herein as the
"Treasury Obligations." The remainder of each Series' portfolio
is invested in a Kemper mutual fund. Certain Series of the Trust
have a portion of their portfolios invested in Kemper Summit
Fund, whose objective is maximum appreciation of investors'
capital. Certain Series of the Trust have a portion of their
portfolios invested in Kemper Growth Fund, whose objective is
growth of capital through professional management and
diversification of investment securities having potential for
capital appreciation. Other Series of the Trust have a portion
of their portfolios invested in Kemper Total Return Fund whose
objective is to obtain the highest total return, a combination of
income and capital appreciation, consistent with reasonable risk.
In addition, some Series of the Trust had original termination
dates of approximately 10 years while other Series of the Trust
had original termination dates of approximately 5 years and were
initially designated as Short-Intermediate Term Trusts.
Information about specific Series is included in Part Two of the
Prospectus, which must also be provided to purchasers of Units of
such Series. Collectively, the Treasury Obligations and Fund
shares in each Series are referred to herein as the "Securities."
See the "Schedules of Investments" in Part Two. U.S. Treasury
bonds evidence the right to receive a fixed payment at a future
date from the U.S. Government and are backed by the full faith
and credit of the U.S. Government. The guarantee of the U.S.
Government does not apply to the market value of the Treasury
Obligations or the Units of any Series of the Trust, whose net
asset values will fluctuate and, prior to maturity, may be more
or less than a purchaser's acquisition cost. There is, of
course, no guarantee that the objective of any Series of the
Trust will be achieved.
Each Unit of a Series represents an undivided fractional
interest in all the Securities deposited in that Series of the
Trust. Each Series of the Trust has been organized so that
purchasers of Units should receive, at the termination of the
Series an amount per Unit at least equal to $1.00, even if the
Fund therein never paid a dividend and the value of the Fund
shares in such Series were to drop to zero, which the Sponsor
considers highly unlikely. This feature of the Trust provides
Unitholders who purchase Units at a price of $1.00 or less per
Unit with total principal protection, including any sales charges
paid, although they might forego any earnings on the amount
invested.
The Treasury Obligations deposited in each Series of the
Trust on the Initial Date of Deposit will mature on the dates
shown for the specific Series shown in Part Two of the
Prospectus. The Treasury Obligations in each Series have a
maturity value equal to $1.00 per Unit. The Fund shares
deposited in the Trust's portfolios have no fixed maturity date
and the net asset value of the shares will fluctuate. See
"Portfolios."
The Kemper Small Capitalization Equity Fund (formerly named
Kemper Summit Fund) shares deposited in each Small Capitalization
Equity Series of the Trust represent an interest in a portfolio
of equity securities, mainly common stocks and securities
convertible into or exchangeable for common stocks. Since many
of the securities in the Kemper Small Capitalization Equity Fund
portfolio may be considered speculative in nature, substantially
greater than the average market volatility and investment risk
may be involved.
The Kemper Growth Fund (the "Growth Fund") shares deposited
in the Growth Series of the Trust represent an interest in a
portfolio of common stocks and securities convertible into or
exchangeable for common stocks. The Growth Fund's investment
policy may involve a somewhat greater risk than is inherent in
the ordinary investment security.
The Kemper Total Return Fund shares deposited in each Total
Return Series of the Trust represent an interest in a portfolio
of fixed income and equity securities, mainly common stocks and
securities convertible into or exchangeable for common stocks.
The percentage of Fund assets invested in fixed income and equity
securities will vary from time to time depending upon the
judgment of the Fund's management as to general market and
economic conditions, trends in yields and interest rates and
changes in fiscal or monetary policies.
An investment in Units of a Series of the Trust should be
made with an understanding of the risks which such an investment
may entail. The value of the portfolio of each Series and hence
of the Units thereof, during the period prior to maturity of such
Series, may be more or less than the price paid for the Units.
The value of the underlying Treasury Obligations in each Series
will fluctuate inversely with changes in interest rates and the
value of the Fund shares in each Series will fluctuate as the
value of the securities in its portfolio increases or decreases.
The Treasury Obligations are subject to substantially greater
price fluctuations during periods of changing interest rates than
are securities of comparable quality which make regular interest
payments. See "Investment Considerations." Certain economic
environments during certain periods, together with the fiscal
measures adopted to attempt to deal with them, have resulted in
wide fluctuations in interest rates and, thus, in the value of
fixed rate debt obligations generally and long term obligations
in particular and have produced sharp rises and declines in the
stock market, reflecting the unsettled nature of the economy due
to such factors. The Sponsor cannot predict the degree to which
such fluctuations will continue in the future.
Public Offering Price. The secondary market Public Offering
Price per Unit of each Series is based upon a pro rata share of
the bid prices of the Treasury Obligations and the net asset
value of the Fund shares in such Series of the Trust plus or
minus a pro rata share of cash, if any, held in the Principal
Account or owned by such Series of the Trust, plus a maximum
sales charge of 5% (equivalent to 5.263% of the net amount
invested) for "regular" Series and 4% (equivalent to 4.167% of
the net amount invested) for Short-Intermediate Term Series. The
minimum purchase is 5,000 Units or $5,000, whichever is less,
except that the minimum for Uniform Gifts to Minors Act (UGMA)
and Uniform Transfers to Minors Act (UTMA) accounts is $1,000 and
the minimum for Individual Retirement Accounts is $250. The
sales charge is reduced on a graduated scale for sales involving
at least $100,000 or 100,000 Units and will be applied on
whichever basis is more favorable to the investor.
Dividend and Capital Gains Distributions. Distributions of
any net income, other than amortized discount, will be made
annually in the case of the Small Capitalization Equity Series,
semi-annually for the Growth Series and quarterly for the Total
Return Series. Distributions of realized capital gain, if any,
received by any Series of the Trust will be made whenever the
Fund in such Series makes such a distribution. Income with
respect to the amortization of original issue discount on the
Treasury Obligations will not be distributed currently, although
Unitholders will be subject to income tax at ordinary income
rates as if a distribution had occurred. See "Tax Status."
Additionally, upon termination of a Series of the Trust, the
Trustee will distribute, upon surrender of Units for redemption,
to each Unitholder his pro rata share of such Series' assets,
less expenses, in the manner set forth under "Distributions to
Unitholders."
Reinvestment. Each Unitholder will, unless they elect to
receive cash payments, have distributions of principal (including
the proceeds received upon the maturity of the Treasury
Obligations in a Series of the Trust at termination), capital
gains, if any, and income made by a Series of the Trust,
automatically invested in shares of the Fund originally deposited
in such Series. Such distributions will be reinvested without
charge to the participant on each applicable Distribution Date.
See "Distribution Reinvestment."
Market for Units. While under no obligation to do so, the
Sponsor intends to maintain a market for Units of each Series of
the Trust and to offer to repurchase such Units at prices which
are based on the aggregate bid side evaluation of the Treasury
Obligations and the aggregate net asset value of the Fund shares
in such Series of the Trust. If a secondary market is not
maintained, a Unitholder may dispose of Units through redemption
by the Trustee at prices based upon the aggregate bid price of
the Treasury Obligations and the aggregate net asset value of the
Fund shares in such Series of the Trust.
THE TRUST
Kemper Bond Enhanced Securities Trust, Small Capitalization
Equity Series, Growth Series and Total Return Series
(collectively the "Trust") consist of a Series of unit investment
trusts which were created under the laws of the State of Missouri
pursuant to Trust Indenture (the "Agreements") between Kemper
Unit Investment Trusts, a service of Kemper Securities, Inc., as
Sponsor, and Investors Fiduciary Trust Company, as Trustee. For
information regarding the relationship of Kemper Unit Investment
Trusts and Investors Fiduciary Trust Company, see "The Sponsor."
With the deposit of the Securities, the Sponsor established
a percentage relationship between the principal amounts of
Treasury Obligations and Fund shares in each Series' Portfolio.
Since the prices of the underlying Fund shares and Treasury
Obligations will fluctuate daily, the ratio, on a cost basis, may
also change daily. The maturity value of the Treasury
Obligations and the portion of a Fund share represented by each
Unit will not change.
Each Series of the Trust has been organized so that
purchasers of Units should receive, at the termination of the
Series, an amount per Unit at least equal to $1.00, even if the
Fund in such Series never paid a dividend and the value of the
Fund shares in such Series were to drop to zero, which the
Sponsor considers highly unlikely. To the extent that Units of a
Series of the Trust are redeemed, the aggregate value of the
Securities in such Series will be reduced and the undivided
fractional interest represented by each outstanding Unit of such
Series will increase. See "Redemption."
PORTFOLIOS
Zero Coupon Treasuries;. The Treasury Obligations deposited
in each Series of the Trust consist of U.S. Treasury bonds which
have been stripped of their unmatured interest coupons or such
coupons, or receipts or certificates evidencing such bonds or
coupons (such as CATS or TIGR's). CATS and TIGR's (and other
similar securities) are certificates that represent receipts of
ownership of the payments that comprise a Government bond. The
underwriters of such certificates purchase a U.S. Treasury bond
and place such bond in an irrevocable trust with a custodian
bank, and the custodian bank then issues receipts that evidence
ownership of the semi-annual coupon payments and the final
principal payment of the bond. The actual Treasury securities
that are used to create CATS or TIGR's (and other similar
securities) are held in book entry form at the custodian. U.S.
Treasury bonds evidence the right to receive a fixed payment at a
future date from the U.S. Government and are backed by the full
faith and credit of the U.S. Government. Treasury Obligations
are purchased at a deep discount because the buyer obtains only
the right to a fixed payment at a fixed date in the future and
does not receive any periodic interest payments. The effect of
owning deep discount bonds which do not make current interest
payments (such as the Treasury Obligations) is that a fixed yield
is earned not only on the original investment but also, in
effect, on all earnings during the life of the discount
obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income
on such obligations at a rate as high as the implicit yield on
the discount obligations, but at the same time eliminates the
holder's ability to reinvest at higher rates in the future. For
this reason, the Treasury Obligations are subject to
substantially greater price fluctuations during periods of
changing interest rates than are securities of comparable quality
which make regular interest payments.
Certain Series of the Trust initially had termination dates
of approximately 10 years while other Series of the Trust
initially had termination dates of approximately 5 years and were
designated as Short-Intermediate Term Trusts. Because the
Treasury Obligations in the longer term Series have more time to
accrete in value before maturity, they could be purchased at a
much lower price. The effect of being able to acquire the
Treasury Obligations at a lower price is to permit more of such
Series' portfolios to be invested in shares of the Mutual Fund
included in the portfolio of such Series.
Kemper Small Capitalization Equity Fund;. The portfolios of
certain Series of the Trust, in addition to Treasury Obligations,
also contain shares of Kemper Small Capitalization Equity Fund
(formerly the Summit Fund) ("Small Cap Fund"). Small Cap Fund is
an open-end, diversified management investment company, commonly
known as a mutual fund. Small Cap Fund's objective is maximum
appreciation of investors' capital. Small Cap Fund's investments
normally consist mainly of common stocks and securities
convertible into or exchangeable for common stocks. Small Cap
Fund may also invest a small portion of its assets in put and
call options and foreign securities, purchase and sell financial
futures contracts, engage in foreign currency transactions and
lend its portfolio securities. The shares of Small Cap Fund
deposited in such Series of the Trust are maintained on the books
of Small Cap Fund's transfer agent.
Small Cap Fund Information. Small Cap Fund was initially
organized as a business trust under the laws of Massachusetts on
October 24, 1985. Effective January 31, 1986, Small Cap Fund,
pursuant to a reorganization, succeeded to the assets and
liabilities of Kemper Summit Fund, Inc., a Maryland corporation
organized in 1968 and in 1991 changed its name to Small
Capitalization Equity Fund. Small Cap Fund may issue an
unlimited number of shares of beneficial interest. While only
shares of a single Series ("Portfolio") are presently being
offered, the Board of Trustees may authorize the issuance of
additional Portfolios if deemed desirable, each with its own
investment objectives, policies and restrictions. Since Small
Cap Fund may offer multiple Portfolios, it is known as a "series
company." Shares of a Portfolio have equal noncumulative voting
rights and equal rights with respect to dividends, assets and
liquidation of such Portfolios. Shares are fully paid and
nonassessable when issued, are transferable without restriction
and have no preemptive or conversion rights.
Small Cap Fund has followed the practice of distributing
annually substantially all of its net investment income and any
net realized capital gains after the close of its fiscal year.
Small Cap Fund intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue
Code and, if so qualified, will not be liable for Federal income
taxes to the extent its earnings are distributed.
Important financial information, such as net investment
income, expenses and dividends, along with the independent public
accountants' report appear in Small Cap Fund's Part B, Statement
of Additional Information, which may be obtained by calling (312)
781-1121 or by writing to: Kemper Small Cap Fund at 120 S.
LaSalle Street, Chicago, Illinois, 60603.
Small Cap Fund's Objective and Policies. Small Cap Fund's
objective is maximum appreciation of investors' capital. Current
income will not be a significant factor. Small Cap Fund is
designed primarily for investors with substantial resources and
the investment experience to consider their shares as a long-term
investment involving financial risk commensurate with potential
substantial gains.
Small Cap Fund seeks attractive areas for investment
opportunity arising from such factors as technological advances,
new marketing methods, and changes in our economy and population.
Management believes that such investment opportunities may be
found among the following:
(1) Companies engaged in high technology fields
such as electronics, computers, computer peripheral
equipment, nuclear energy, metallurgy, medicine, radiation,
graphic arts and oceanography.
(2) Companies having a significantly
improved
earnings outlook as the result of changed economic
environment, acquisitions, mergers, new management, changed
corporate strategy or product innovation.
(3) Companies supplying new or rapidly
growing
services to consumers and businesses in such fields as
automation, data processing, communications, marketing and
finance.
(4) Companies which are unseasoned or embryonic,
to a limited extent.
Small Cap Fund's investment portfolio will normally consist
primarily of common stocks and securities convertible into or
exchangeable for common stocks, including warrants and rights.
Small Cap Fund may also invest to a limited degree in preferred
stocks and debt securities when they are believed to offer
opportunities for capital growth. Small Cap Fund may also
purchase options on securities and index options, may purchase
and sell financial futures contracts and options on financial
futures contracts, may purchase foreign securities and engage in
foreign currency transactions and may at times lend its portfolio
securities. When a temporary defensive position is deemed
advisable, it may, without limit, invest in high-grade senior
securities and securities of the U.S. Government and its
instrumentalities or retain cash or cash equivalents.
In the selection of investments, long-term capital
appreciation will take precedence over short range market
fluctuations. Small Cap Fund does not intend to engage actively
in trading for short-term profits, though 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, Small Cap Fund will make
long-term (as defined in the Internal Revenue Code in order to
qualify for long-term capital gains tax treatment) 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 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
shares or other factors could affect the portfolio turnover rate.
Since many of the securities in Small Cap 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 Small Cap Fund's objective of maximum capital appreciation
will be achieved. Small Cap Fund has adopted certain investment
restrictions which are presented in its Part B, Statement of
Additional Information, and which, together with its investment
objective and policies, cannot be changed without approval by
holders of a majority of Small Cap Fund's outstanding voting
shares.
Options Transactions. Small Cap Fund may invest up to five
percent of its assets in put and call options. A put option
gives the holder (buyer) the right to sell a security at a
specified price (the exercise price) at any time until a certain
date (the expiration date). A call option gives the holder
(buyer) the right to purchase a security at a specified price
(the exercise price) at any time until a certain date (the
expiration date). Small Cap Fund will only invest in options
which are traded on securities exchanges and for which it pays a
premium (cost of option). As part of its options transactions,
Small Cap Fund may also purchase options on securities indices.
Options on securities indices are similar to options on a
security except that, rather than the right to take or make
delivery of a security at a specified price, an option on a
securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater
than, in the case of a call, or less than, in the case of a put,
the exercise price of the option. In connection with its foreign
securities investments, Small Cap Fund may also purchase foreign
currency options. Small Cap Fund may enter into closing
transactions, exercise its options or permit them to expire.
Financial Futures Transactions. Small Cap Fund may engage
in financial futures transactions. Financial futures contracts
are commodity contracts which obligate the long or short holder
to take or make delivery of a specified quantity of a financial
instrument, such as a security, or the cash value of a securities
index, during a specified future period at a specified price. In
connection with its foreign securities investments, Small Cap
Fund may also engage in foreign currency financial futures
transactions. Although some financial futures contracts call for
making or taking delivery of the underlying securities, in most
cases these obligations are closed out before delivery. The
closing of such a contractual obligation is accomplished by
purchasing or selling an identical offsetting futures contract.
Such a transaction cancels the obligation under the original
contract to make or take delivery. Other financial futures
contracts, such as futures contracts on a securities index, by
their terms call for cash settlements.
There are risks associated with the use of financial futures
contracts because there may be an imperfect correlation between
the price movements of the futures contracts and price movements
of the securities which the Fund owns or intends to purchase.
Small Cap Fund could lose money on the financial futures
contracts and also on the price of such securities. If a liquid
secondary market did not exist when Small Cap Fund wished to
close out a financial futures contract, it would not be able to
do so and would continue to be required to make daily cash
payments of variation margin in the event of adverse price
movements. If the investment manager's judgment about the
general direction of interest rates or markets is wrong, the
overall performance may be poorer than if no such contracts had
been entered into. The costs incurred in connection with futures
transactions could also adversely affect Small Cap Fund's
performance.
Small Cap Fund may also purchase and write call and put
options on financial futures contracts in an attempt to hedge
against market risks. An option purchased by Small Cap Fund may
expire worth less in which case Small Cap Fund would lose the
premium paid for it. Small Cap Fund may engage in futures
transactions only on commodities exchanges or boards of trade.
Small Cap Fund will not engage in transactions in financial
futures contracts or options for speculation, but only in an
attempt to hedge against market conditions affecting the values
of securities which Small Cap Fund owns or intends to purchase.
Lending of Portfolio Securities. Consistent with applicable
regulatory requirements, Small Cap Fund may lend its portfolio
securities (principally to broker-dealers) without limit where
such loans are callable at any time and are continuously secured
by collateral (cash or U.S. government securities) equal to no
less than the market value, determined daily, of the securities
loaned. Small Cap Fund will receive amounts equal to dividends or
interest on the securities loaned. It will also earn income for
having made the loan. Any cash collateral pursuant to these
loans will be invested in short-term money market instruments.
Management will limit such lending to not more than one-third of
the value of Small Cap Fund's total assets. Apart from lending
its securities and acquiring debt securities of a type
customarily purchased by financial institutions, Small Cap Fund
will not make loans to other persons.
Foreign Securities. Although Small Cap Fund will invest
primarily in securities that are publicly traded in the United
States, it has the discretion to invest a portion of its assets
in foreign securities that are traded principally in securities
markets outside the United States. Small Cap Fund currently
limits investment in foreign securities not publicly traded in
the United States to less than 10% of its total assets. Small
Cap Fund may also invest in U.S. dollar denominated American
Depositary Receipts which are traded in the United States.
Foreign securities present certain risks in addition to those
presented by domestic securities, including risks associated with
currency fluctuations, possible imposition of foreign
governmental regulations or taxes adversely affecting portfolio
securities, and generally different degrees of liquidity, market
volatility and availability of information. However, Small Cap
Fund intends to invest in foreign securities only when the
potential benefits to it are deemed to outweigh those risks. In
connection with its foreign securities investments, Small Cap
Fund may, to a limited extent, engage in foreign currency
exchange transactions, purchase foreign currency options and
purchase and sell foreign currency futures contracts. More
complete information concerning foreign securities and related
techniques is contained under "Investment Policies and Techniques
- - Foreign Securities and Foreign Currency Transactions" in the
Small Cap Fund Part B, Statement of Additional Information.
Net Asset Value of Small Cap Fund. The net asset value per
share is determined by calculating the total value of Small Cap
Fund's assets, which will normally be composed chiefly of
investment securities, deducting total liabilities and dividing
the result by the number of shares outstanding. Portfolio
securities which are traded on a national securities exchange or
securities listed on the NASDAQ National Market are valued at the
last sale price on the exchange or market where primarily traded
or listed or, if there is no recent sale price available, at the
last current bid quotation. Portfolio securities that are
primarily traded on foreign securities exchanges are generally
valued at the preceding closing values of such securities on such
exchanges. Securities not so traded or listed are valued at the
last current bid quotation if market quotations are available.
Fixed income securities are valued by using market quotations, or
independent pricing services which use prices provided by market
makers or estimates of market values obtained from yield data
relating to instruments or securities with similar
characteristics. Options are valued at the last sale price unless
the bid price is higher or the asked price is lower, in which
event such bid or asked price is used. Financial futures are
valued at the settlement price established each day by the board
of trade or exchange on which they are traded. Other securities,
including restricted securities, and other assets are valued at
fair value as determined in good faith by the Board of Trustees.
For purposes of determining Small Cap Fund's net asset value, all
assets and liabilities initially expressed in foreign currency
values will be converted into United States dollar values at the
mean between the bid and offered quotations of such currencies
against United States dollars as last quoted by any recognized
dealer. If an event were to occur, after the value of a Small
Cap Fund instrument was so established but before the net asset
value per share was determined which was likely to materially
change the net asset value, then that Small Cap Fund instrument
would be valued using fair value considerations by the Board of
Trustees or its delegates. On each day the New York Stock
Exchange (the "Exchange") is open for trading, the net asset
value is determined as of the close of the Exchange (normally
3:00 p.m. Chicago time).
Investment Manager and Underwriter of the Fund. Kemper
Financial Services, Inc. ("KFS"), a wholly-owned subsidiary of
Kemper Financial Companies, ("KFC") is an affiliate of the
Sponsor of the Trust and is also the investment adviser of Small
Cap Fund and provides Small Cap Fund with continuous professional
investment supervision. KFS is also the principal underwriter of
Small Cap Fund and acts as agent of Small Cap Fund in the sale of
its shares. KFS has been engaged in the management of investment
funds for more than 40 years. KFS provides investment advice and
manages investment portfolios for the Kemper Insurance Companies
and other corporate, pension, profit-sharing and individual
accounts and acts as investment adviser or principal underwriter
for 26 open-end and six closed-end investment companies, with 59
separate investment portfolios. Kemper Financial Companies is a
financial services holding company which is a subsidiary of
Kemper Corporation, a diversified insurance and financial
services holding company.
Responsibility for overall management of Small Cap Fund
rests with its trustees and officers. Professional investment
supervision is provided by KFS. The investment management
agreement provides that KFS shall act as Small Cap Fund's
investment adviser, manage its investments and provide it with
various services and facilities.
As compensation for the services and facilities furnished,
Small Cap Fund pays a base annual management fee, payable
monthly, at the rate of .65 of 1% of the average daily net assets
of Small Cap Fund. The base fee will be subject to upward or
downward adjustment between .35 and .95 of 1% on the basis of the
investment performance of Small Cap Fund compared with the
performance of Standard & Poor's Index of 500 Stocks (the
"Index").
More detailed information, which is included in Small Cap
Fund's Part B, Statement of Additional Information, is available
from the Sponsor and will be supplied without charge upon
request. However, Unitholders should be aware that, since they
own their shares of Small Cap Fund through the Trust, such shares
will not be eligible to participate in Small Cap Fund's other
features, such as exchange privilege, letter of intent, etc.
These special features are, however, available with respect to
shares in reinvestment accounts and are described in the
prospectus of the Kemper mutual funds designated as available for
reinvestment.
Kemper Total Return Fund;. The portfolios of certain Series
of the Trust also contain, in addition to Treasury Obligations,
shares of Kemper Total Return Fund ("Total Return Fund"). Total
Return Fund is an open-end, diversified management investment
company, commonly known as a mutual fund. Total Return Fund's
objective is to obtain the highest total return, a combination of
income and capital appreciation, consistent with reasonable risk.
Total Return Fund's investment will normally consist of fixed
income securities (bonds and other debt securities) and equity
securities (stocks). The shares of Total Return Fund deposited in
such Series of the Trust are maintained on the books of Total
Return Fund's transfer agent.
Total Return Fund Information. Total Return Fund was
organized as a business trust under the laws of Massachusetts on
October 24, 1985. Effective January 31, 1986, Total Return 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 the Balanced Income Fund, Inc. until 1972 and as Supervised
Investors Income Fund, Inc. until 1977. Total Return Fund may
issue an unlimited number of shares of beneficial interest.
While only shares of a single Series ("Portfolio") are presently
being offered, the Board of Trustees may authorize the issuance
of additional Portfolios if deemed desirable, each with its own
investment objectives, policies and restrictions. Since Total
Return Fund may offer multiples Portfolios, it is known as a
"Series company." Shares of a Portfolio have equal
non-cumulative voting rights and equal rights with respect to
dividends, assets and liquidation of such Portfolio. Shares are
fully paid and nonassessable when issued, are transferable
without restriction and have no preemptive or conversion rights.
Total Return Fund has followed the practice of distributing
quarterly substantially all of its net investment income and
distributes any net realized capital gains after the close of its
fiscal year. Total Return Fund intends to continue to qualify as
a regulated investment company under Subchapter M of the Internal
Revenue Code and, if so qualified, will not be liable for Federal
income taxes to the extent its earnings are distributed.
Important financial information, such as net investment
income, expenses and dividends, along with the independent public
accountants' report appear in Total Return Fund's annual report
to shareholders. Copies of Total Return Fund's annual report to
shareholders and its Part B, Statement of Additional Information,
may be obtained without charge by calling (312) 781-1121 or by
writing to: Kemper Total Return Fund at 120 S. LaSalle Street,
Chicago, Illinois, 60603.
Total Return Fund's Investment Objective and Policies. The
objective of Total Return Fund is to obtain the highest total
return, a combination of income and capital appreciation,
consistent with reasonable risk. Total Return Fund will
emphasize liberal current income in seeking its objective. Total
Return Fund's investments will normally consist of fixed income
and equity securities. Fixed income securities will include
bonds and other debt securities and preferred stocks, some of
which may have a call on common stock through attached warrants
or a conversion privilege. The percentage of assets invested in
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. Total Return Fund may
also purchase options on securities and index options, may
purchase and sell financial futures contracts and options on
financial futures contracts, may purchase foreign securities and
engage in foreign currency transactions and may at times lend its
portfolio securities. Total Return Fund may invest in fixed
income securities which are in the lower rating categories and
those which are unrated.
Total Return 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.
There can be no assurance that Total Return Fund's objective
can be achieved or that its shareholders will be protected from
the risk of loss inherent in security ownership.
Total Return Fund will not normally engage in the trading of
securities for the purpose of realizing short-term profits, but
it will adjust its portfolio as considered advisable in view of
prevailing or anticipated market conditions and its investment
objective. Accordingly, Total Return Fund may sell portfolio
securities in anticipation of a rise in interest rates and
purchase securities in anticipation of a decline in interest
rates. Frequency of portfolio turnover will not be a limiting
factor should Total Return Fund's investment adviser deem it
desirable to purchase or sell securities.
Total Return Fund has adopted certain investment
restrictions which are presented in the Part B, Statement of
Additional Information, and which, together with the investment
objective and policies of Total Return Fund, cannot be changed
without approval by holders of a majority of its outstanding
voting shares.
Options and Financial Futures Transactions. Total Return
Fund may invest up to five percent of its assets in put and call
options. A put option gives the holder (buyer) the right to sell
a security at a specified price (the exercise price) at any time
until a certain date (the expiration date). A call option gives
the holder (buyer) the right to purchase a security at a
specified price (the exercise price) at any time until a certain
date (the expiration date). Total Return Fund will only invest in
options that are traded on securities exchanges and for which it
pays a premium (cost of option). As part of its options
transactions, Total Return Fund may also purchase options on
securities indices. Options on securities indices are similar to
options on a security except that, rather than the right to take
or make delivery of a security at a specified price, an option on
a securities index gives the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater
than, in the case of a call, or less than, in the case of a put,
the exercise price of the option. In connection with its foreign
securities investments, Total Return Fund may also purchase
foreign currency options. Total Return Fund will only invest in
options which are traded on securities exchanges and for which it
pays a premium (cost of option). Total Return Fund may enter
into closing transactions, exercise its options or permit them to
expire.
Financial Futures Transactions. Total Return Fund may
engage in financial future transactions. Financial futures
contracts are commodity contracts which obligate the long or
short holder to take or make delivery of a specified quantity of
a financial instrument, such as a security or the cash value of a
securities index, during a specified future period at a specified
price. In connection with its foreign securities investments,
Total Return Fund may also engage in foreign currency financial
future transactions. Although some financial futures contracts
call for making or taking delivery of the underlying securities,
in most cases these obligations are closed out before delivery.
The closing of a contractual obligation is accomplished by
purchasing or selling an identical offsetting futures contract.
Such a transaction cancels the obligation under the original
contract to make or take delivery. Other financial futures
contracts, such as futures contracts on a securities index, by
their terms call for cash settlements. Total Return Fund may
engage in financial futures transactions as an attempt to hedge
against market risks.
At the time the Total Return Fund enters into a futures
contract, it is required to deposit with its custodian, on behalf
of the broker, a specified amount of cash or eligible securities,
called "initial margin." The initial margin required for a
futures contract is set by the exchange on which the contract is
traded. Subsequent payments, called "variation margin," to and
from the broker are made on a daily basis as the market price of
the futures contract fluctuates.
The Total Return Fund may engage in financial futures
transactions as an attempt to hedge against market risks. For
example, when the near-term market view is bearish but the
portfolio composition is judged satisfactory for the longer term,
exposure to temporary declines in the market may be reduced by
entering into futures contracts to sell securities or the cash
value of a securities index. Conversely, where the near-term
view is bullish, but the Total Return Fund is believed to be well
positioned for the longer term with a high cash position, the
Total Return Fund can hedge against market increases by entering
into futures contracts to buy securities or the cash value of a
securities index. In either case, the use of futures contracts
would tend to reduce portfolio turnover and facilitate the Total
Return Fund's pursuit of its investment objective.
There are risks associated with the use of financial futures
contracts because there may be an imperfect correlation between
the price movements of the futures contracts and price movements
of the securities which Total Return Fund owns or intends to
purchase. Total Return Fund could lose money on the financial
futures contracts and also on the price of such securities. If a
liquid secondary market did not exist when Total Return Fund
wished to close out a financial futures contract, it would not be
able to do so and would continue to be required to make daily
cash payments of variation margin in the event of adverse price
movements. If KFS' judgment about the general direction of
interest rates or markets is wrong, the overall performance may
be poorer than if no such contracts had been entered into. The
costs incurred in connection with futures transactions could
adversely affect Total Return Fund's performance.
Total Return Fund may also purchase and write call and put
options on financial futures contracts in an attempt to hedge
against market risks. An option purchased by Total Return Fund
may expire worth less in which case Total Return Fund would lose
the premium paid for it. Total Return Fund may engage in futures
transactions only on commodities exchanges or boards of trade.
Total Return Fund will not engage in transactions in financial
futures contracts or options for speculation, but only as an
attempt to hedge against market conditions affecting the values
of securities which Total Return Fund owns or intends to
purchase.
Lending of Portfolio Securities. Consistent with applicable
regulatory requirements, Total Return Fund may lend its portfolio
securities (principally to broker-dealers) without limit where
such loans are callable at any time and are continuously secured
by collateral (cash or U.S. government securities) equal to no
less than the market value, determined daily, of the securities
loaned. Total Return Fund will receive amounts equal to
dividends or interest on the securities loaned. It will also
earn income for having made the loan. Any cash collateral
pursuant to these loans will be invested in short-term money
market instruments. Management will limit such lending to not
more than one-third of the value of Total Return Fund's total
assets. Apart from lending its securities and acquiring debt
securities of a type customarily purchased by financial
institutions, Total Return Fund will not make loans to other
persons.
Foreign Securities. Although the Total Return Fund will
invest primarily in securities that are publicly traded in the
United States, it has the discretion to invest a portion of its
assets in foreign securities that are traded principally in
securities markets outside the United States. The Total Return
Fund currently limits investment in foreign securities not
publicly traded in the United States to less than 10% of its
total assets. The Total Return Fund may also invest in U.S.
dollar denominated American Depositary Receipts which are traded
in the United States and are not subject to the preceding
limitations. Foreign securities present certain risks in
addition to those presented by domestic securities, including
risks associated with currency fluctuations, possible imposition
of foreign governmental regulations or taxes adversely affecting
portfolio securities, and generally different degrees of
liquidity, market volatility and availability of information.
However, the Total Return Fund intends to invest in foreign
securities only when the potential benefits to it are deemed to
outweigh those risks. In connection with its foreign securities
investments, the Total Return Fund may, to a limited extent,
engage in foreign currency exchange transactions, purchase
foreign currency options and purchase and sell foreign currency
futures contracts. More complete information concerning foreign
securities and related techniques is contained under "Investment
Policies and Techniques - Foreign Securities and Foreign Currency
Transactions" in the Total Return Fund's Part B, Statement of
Additional Information.
Net Asset Value of Total Return Fund. The net asset value
per share is determined by calculating the total value of Total
Return Fund's assets, which will normally be composed chiefly of
investment securities, deducting total liabilities and dividing
the result by the number of shares outstanding. Portfolio
securities that are traded on a national securities exchange or
securities listed on the NASDAQ National Market are valued at the
last sale price on the exchange or market where primarily traded
or listed or, if there is no recent sale, at the last current bid
quotation. Portfolio securities that are primarily traded on
foreign securities exchanges are generally valued at the
preceding closing values of such securities on their respective
exchanges where primarily traded. Securities not so traded or
listed are valued at the last current bid quotation if market
quotations are available. Fixed income securities are valued by
using market quotations, or independent pricing services which
use prices provided by market makers or estimates of market
values obtained from yield data relating to instruments or
securities with similar characteristics. Equity options are
valued at the last sale price unless the bid price is higher or
the asked price is lower, in which event such bid or asked price
is used. Financial futures are valued at the settlement price
established each day by the board of trade or exchange on which
they are traded. Other securities, including restricted
securities, and other assets are valued at fair value as
determined in good faith by the Board of Trustees. For purposes
of determining the Fund's net asset value, all assets and
liabilities initially expressed in foreign currency values will
be converted into United States dollar values at the mean between
the bid and offered quotations of such currencies against United
States dollars as last quoted by any recognized dealer. If an
event were to occur, after the value of a Total Return Fund
instrument was so established but before the net asset value per
share is determined which was likely to materially change the net
asset value, then that Total Return Fund instrument would be
valued using fair value considerations by the Board of Trustees
or its delegates. On each day the New York Stock Exchange (the
"Exchange") is open for trading, the net asset value is
determined as of the close of the Exchange (normally 3:00 P.M.
Chicago time).
Investment Manager and Underwriter of Total Return Fund.
Kemper Financial Services, Inc. ("KFS"), a wholly-owned
subsidiary of Kemper Financial Companies, is an affiliate of the
Sponsor of the Trust and is the investment adviser of Total
Return Fund and provides Total Return Fund with continuous
professional investment supervision. KFS is also the principal
underwriter of Total Return Fund and acts as agent of Total
Return Fund in the sale of its shares. KFS has been engaged in
the management of investment funds for more than 40 years. KFS
provides investment advice and manages investment portfolios for
the Kemper Insurance Company and other corporate, pension,
profit-sharing and individual accounts and acts as investment
adviser or principal underwriter for 26 open-end and six
closed-end investment companies with 59 separate portfolios.
Kemper Financial Companies is a financial services holding
company which is a subsidiary of Kemper Corporation, a
diversified insurance and financial services holding company.
Responsibility for overall management of Total Return Fund
rests with its trustees and officers. Professional investment
supervision is provided by KFS. The investment management
agreement provides that KFS shall act as Total Return Fund's
investment adviser, manage its investments and provide it with
various services and facilities. Total Return Fund pays an
investment management fee, payable monthly, at the annual rate of
.65 of 1% of the first $200,000,000 of the average daily net
assets, .55 of 1% on the next $300,000,000 of the average daily
net assets and .45 of 1% of average daily net assets over
$500,000,000.
More detailed information, which is included in Total Return
Fund's Part B, Statement of Additional Information, is available
from the Sponsor and will be supplied without charge upon
request. However, Unitholders should be aware that, since they
own their shares of Total Return Fund through the Trust, such
shares will not be eligible to participate in Total Return Fund's
other features, such as exchange privilege, letter of intent,
etc. These special features are, however, available with respect
to shares in reinvestment accounts and are described in the
prospectus of the Kemper mutual funds designated as available for
reinvestment.
Kemper Growth Fund.; Certain Series of the Trust also
contains shares of the Growth Fund. The Growth Fund is an
open-end diversified management investment company, commonly
known as a mutual fund. The Growth Fund's objective is growth of
capital through professional management and diversification of
investment securities having potential for capital appreciation.
The Growth Fund invests primarily in common stocks but can invest
in any securities with potential for capital growth. The Growth
Fund may also invest a small portion of its assets in put and
call options, purchase and sell financial futures contracts,
purchase foreign securities and engage in related foreign
currency transactions and lend its portfolio securities. The
shares of the Growth Fund deposited in Series 13 of the Trust are
maintained on the books of the Growth Fund's transfer agent.
Growth Fund Information. The Growth Fund was organized as a
business trust under the laws of Massachusetts on October 24,
1985. Effective January 31, 1986, the Growth Fund, pursuant to a
reorganization, succeeded to the assets and liabilities of Kemper
Growth Fund, Inc., a Maryland corporation organized in 1965. The
Growth Fund may issue an unlimited number of shares of beneficial
interest in one or more Series or "Portfolios." While only
shares of a single Portfolio are presently being offered, the
Board of Trustees may authorize the issuance of additional
Portfolios if deemed desirable, each with its own investment
objectives, policies and restrictions. Since the Growth Fund
may offer multiple Portfolios, it is known as a "Series company."
Shares of a Portfolio have equal noncumulative voting rights and
equal rights with respect to dividends, assets and liquidation of
such Portfolios. Shares are fully paid and nonassessable when
issued, are transferable without restriction and have no
preemptive or conversion rights.
The Growth Fund has followed the practice of distributing
semi-annually substantially all of its net investment income and
any net realized capital gains after the close of its fiscal
year. The Growth Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code and, if so qualified, will not be liable for federal
income taxes to the extent its earnings are distributed.
Important financial information for the Growth Fund, such as
net investment income, expenses and dividends, along with the
independent public accountants' report appear in the Growth
Fund's 1988 Annual Report to shareholders, which may be obtained
without charge by calling (312) 781-1121 or by writing to: Kemper
Growth Fund at 120 South LaSalle Street, Chicago, Illinois 60603.
Growth Fund's Investment Objective and Policies. The Growth
Fund's objective is growth of capital through professional
management and diversification of investments in securities it
believes to have possibilities for capital appreciation. There
is no assurance that this objective will be realized. In seeking
to obtain capital appreciation, the Growth Fund may trade to some
degree in securities for the short term. To this extent, the
Growth Fund will be engaged in trading operations based on
short-term market considerations as distinct from long-term
investment based upon fundamental valuation of securities.
However, the Growth Fund will emphasize fundamental research in
attempting to identify under-valued situations which it is hoped
will appreciate over the longer term. The Growth Fund's
investment policy may involve a somewhat greater risk than is
inherent in the ordinary investment security.
The annual turnover rate of the Growth Fund's portfolio may
vary from year to year, and may also be affected by cash
requirements for redemptions and repurchases of Growth Fund
shares, and by the necessity of maintaining the Growth Fund as a
regulated investment company under the Internal Revenue Code in
order to receive certain favorable tax treatment.
In seeking to achieve its objective, it will be the Growth
Fund's policy to invest primarily in securities which it believes
offer the potential for increasing the Growth 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, such as bonds and preferred
stocks.
The Growth Fund may also purchase options on securities and
index options, may purchase and sell financial futures contracts
and options on financial futures contracts, may purchase foreign
securities and engage in related foreign currency transactions
and may at times lend its portfolio securities. There may also be
times when a significant portion of the Growth Fund's assets may
be held temporarily in cash or defensive type securities,
depending upon management's analysis of business and economic
conditions and the outlook for security prices.
Some of the factors the Growth 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.
Options Transactions. The Growth Fund may invest up to five
percent of its net assets in put and call options. A put option
gives the holder (buyer) the right to sell a security at a
specified price (the exercise price) at any time until a certain
date (the expiration date). A call option gives the holder
(buyer) the right to purchase a security at a specified price
(the exercise price) at any time until a certain date (the
expiration date). The Growth Fund will only invest in options
that are traded on securities exchanges and for which it pays a
premium (cost of option). As part of its options transactions,
the Growth Fund may also purchase options on securities indices
in an attempt to hedge against market conditions affecting the
values of securities that the Growth Fund owns or intends to
purchase, and not for speculation. Options on securities indices
are similar to options on a security except that, rather than the
right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right
to receive, upon exercise of the option, an amount of cash if the
closing level of the securities index upon which the option is
based is greater than, in the case of a call, or less than, in
the case of a put, the exercise price of the option. In
connection with its foreign securities investments, the Growth
Fund may also purchase foreign currency options. The Growth Fund
may enter into closing transactions, exercise its options or
permit them to expire.
Financial Futures Transactions. The Growth Fund may engage
in financial futures transactions. Financial futures contracts
are commodity contracts which obligate the long or short holder
to take or make delivery of a specified quantity of a financial
instrument, such as a security, or the cash value of a securities
index during a specified future period at a specified price. In
connection with its foreign securities investments, the Growth
Fund may also engage in a foreign currency financial futures
transactions. Although some financial futures contracts call for
making or taking delivery of the underlying securities, in most
cases these obligations are closed out before delivery. The
closing of such a contractual obligation is accomplished by
purchasing or selling an identical offsetting futures contract.
Such a transaction cancels the obligation under the original
contract to make or take delivery. Other financial futures
contracts, such as futures contracts on a securities index, by
their terms call for cash settlements.
At the time the Growth Fund enters into a futures contract,
it is required to deposit with its custodian, on behalf of the
broker, a specified amount of cash or eligible securities, called
"initial margin." The initial margin required for a futures
contract is set by the exchange on which the contract is traded.
Subsequent payments, called "variation margin," to and from the
broker are made on a daily basis as the market price of the
futures contract fluctuates.
The Growth Fund may engage in financial futures transactions
as an attempt to hedge against market risks. For example, when
the near-term market view is bearish but the portfolio
composition is judged satisfactory for the longer term, exposure
to temporary declines in the market may be reduced by entering
into futures contracts to sell securities or the cash value of a
securities index. Conversely, where the near-term view is
bullish, but the Growth Fund is believed to be well positioned
for the longer term with a high cash position, the Growth Fund
can hedge against market increases by entering into futures
contracts to buy securities or the cash value of a securities
index. In either case, the use of futures contracts would tend
to reduce portfolio turnover and facilitate the Growth Fund's
pursuit of its investment objective.
There are risks associated with the use of financial futures
contracts because there may be an imperfect correlation between
the price movements of the futures contracts and price movements
of the securities which the Growth Fund owns or intends to
purchase. The Growth Fund could lose money on the financial
futures contracts and also on the price of such securities. The
degree of difference in price movements between futures contracts
and the securities being hedged depends upon such things as
differences between the securities being hedged and the
securities underlying the futures contracts and variations in
speculative market demand for futures contracts and the
underlying securities. If a liquid secondary market did not
exist when the Growth Fund wished to close out a financial
futures contract, it would not be able to do so and would have to
continue making daily cash payments of variation margin in the
event of adverse price movements. If the investment manager's
judgment about the general direction of markets is wrong, the
overall performance may be poorer than if no such contracts had
been entered into. The costs incurred in connection with futures
transactions could also adversely affect the Growth Fund's
performance.
The Growth Fund may also purchase and write call and put
options on financial futures contracts in an attempt to hedge
against market risks. An option on a futures contract gives the
purchaser the right, but not the obligation, to assume a position
in a futures contract at a specified exercise price at any time
during the period of the option. Upon exercise, the writer
(seller) of the option delivers the futures contract to the
holder (buyer) at the exercise price. An option purchased by the
Growth Fund may expire worth less in which case the Growth Fund
would lose the premium paid for it.
The Growth Fund may engage in futures transactions only on
commodities exchanges or boards of trade. The Growth Fund will
not engage in transactions in financial futures contracts or
related options for speculation, but only as an attempt to hedge
against market conditions affecting the values of securities
which the Growth Fund owns or intends to purchase.
Lending of Portfolio Securities. Consistent with applicable
regulatory requirements, the Growth Fund may lend its portfolio
securities (principally to broker-dealers) without limit where
such loans are callable at any time and are continuously secured
by collateral (cash or United States government securities) equal
to no less than the market value, determined daily, of the
securities loaned. The Growth Fund will receive amounts equal to
dividends or interest on the securities loaned. It will also
earn income for having made the loan. Any cash collateral
pursuant to these loans will be invested in short-term money
market instruments. Management will limit such lending to not
more than one-third of the value of the Growth Fund's total
assets. Apart from lending its securities and acquiring debt
securities of a type customarily purchased by financial
institutions, the Growth Fund will not make loans to other
persons.
Foreign Securities. Although the Growth Fund will invest
primarily in securities that are publicly traded in the United
States, it has the discretion to invest a portion of its assets
in foreign securities that are traded principally in securities
markets outside the United States. The Growth Fund currently
limits investments in foreign securities not publicly traded in
the United States to less than 10% of its total assets. The
Growth Fund may also invest in U.S. dollar denominated American
Depositary Receipts which are traded in the United States and are
not subject to the preceding limitations. Foreign securities
present certain risks in addition to those presented by domestic
securities, including risks associated with currency
fluctuations, possible imposition of foreign governmental
regulations or taxes adversely affecting portfolio securities and
generally different degrees of liquidity, market volatility and
availability of information. However, the Growth Fund intends to
invest in foreign securities only when the potential benefits to
it are deemed to outweigh those risks. In connection with its
foreign securities investments, the Growth Fund may, to a limited
extent, engage in foreign currency exchange transactions,
purchase foreign currency options and purchase and sell foreign
currency futures contracts. More complete information concerning
foreign securities and related techniques is contained under
"Investment Policies and Techniques - Foreign Securities and
Foreign Currency Transactions" in the Growth Fund's Part B,
Statement of Additional Information.
Net Asset Value of Growth Fund. The net asset value per
share is determined by calculating the total value of the Growth
Fund's assets, which will normally be composed chiefly of
investment securities, deducting total liabilities and dividing
the result by the number of shares outstanding. Portfolio
securities which are traded on a national securities exchange or
securities listed on the NASDAQ National Market are valued at the
last sale price on the exchange or market where primarily traded
or listed or, if there is no recent sale price available, at the
last current bid quotation. Portfolio securities that are
primarily traded on foreign securities exchanges are generally
valued at the preceding closing values of such securities on
their respective exchanges where primarily traded. Securities
not so traded or listed are valued at the last current bid
quotation if market quotations are available. Fixed income
securities are valued by using market quotations, or independent
pricing services that use prices provided by market makers or
estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics. Options
are valued at the last sale price unless the bid price is higher
or the asked price is lower, in which event such bid or asked
price is used. Financial futures are valued at the settlement
price established each day by the board of trade or exchange on
which they are traded. Other securities, including restricted
securities, and other assets are valued at fair value as
determined in good faith by the board of Trustees. For purposes
of determining the Growth Fund's net asset value, all assets and
liabilities initially expressed in foreign currency values will
be converted into United States dollar values at the mean between
the bid and offered quotations of such currencies against United
States dollars as last quoted by any recognized dealer. If an
event were to occur, after the value of an instrument was so
established but before the net asset value per share was
determined, which was likely to materially change the net asset
value, then that instrument would be valued using fair value
considerations by the Board of Trustees or its delegates. On
each day the New York Stock Exchange (the "Exchange") is open for
trading, the net asset value is determined as of the close of the
Exchange (normally, 3:00 p.m. Chicago time).
Investment Manager and Underwriter of Growth Fund. Kemper
Financial Services, Inc. ("KFS"), a wholly-owned subsidiary of
Kemper Financial Companies, Inc. ("KFC"), is an affiliate of the
Sponsor of the Trust and is the investment manager of the Growth
Fund and provides the Growth Fund with continuous professional
investment supervision. KFS is also the principal underwriter of
the Growth Fund and acts as agent of the Growth Fund in the sale
of its shares. KFS has more assets under management than any
other Chicago based investment manager and is one of the largest
investment managers in the country. KFS has been engaged in the
management of investment funds for more than 40 years. KFS
provides investment advice and manages investment portfolios for
the Kemper Insurance Companies and other corporate, pension,
profit sharing and individual accounts and acts as investment
adviser or principal underwriter for 26 open-end and six
closed-end investment companies, with 59 investment portfolios.
KFC is a financial services holding company which is a subsidiary
of Kemper Corporation, a diversified insurance and financial
services holding company.
Responsibility for overall management of the Growth Fund
rests with its trustees and officers. Professional investment
supervision is provided by KFS. The investment management
agreement provides that KFS shall act as the Growth Fund's
investment adviser, manage its investments and provide it with
various services and facilities.
The Growth Fund pays an investment management fee, payable
monthly, at the annual rate of .65 of 1% of the first
$200,000,000 of average daily net assets, .55 of 1% of the next
$300,000,000 of average daily net assets and .45 of 1% of average
daily net assets over $500,000,000.
More detailed information, which is included in the Growth
Fund's Part B, Statement of Additional Information, is available
from the Sponsor and will be supplied without charge upon
request. However, Unitholders should be aware that, since they
own their shares of the Growth Fund through the Trust, such
shares will not be eligible to participate in the Growth Fund's
other features, such as exchange privilege, letter of intent,
etc. These special features are, however, available with respect
to shares in reinvestment accounts and are described in the
prospectus of the Kemper mutual funds designated as available for
reinvestment.
INVESTMENT CONSIDERATIONS
Investors should be aware of certain other considerations
before making a decision to invest in any Series of the Trust
described herein.
KFS, which is an affiliate of the Sponsor, is also the
investment adviser and principal underwriter of the Funds
deposited in these Series of the Trust. Shares of the Funds were
purchased for deposit in the appropriate Series of the Trust
pursuant to an exemptive order of the Securities and Exchange
Commission. Under the terms of the exemptive order, the Sponsor
has agreed to take certain steps to ensure that each Series'
investment in Fund shares is equitable to all parties and
particularly that the interests of the Unitholders of such Series
are protected. Because KFS is an affiliate of the Trust's
Sponsor, the Funds have agreed to waive any sales charge on
shares sold to the Trust, since the Sponsor is receiving a
portion of the sales charge on all Units sold. Furthermore, the
Sponsor has agreed to waive its usual fee for acting as Evaluator
of the Trust's portfolios with respect to that portion of the
portfolios comprised of Fund shares, since information with
respect to the price of the Funds' shares is readily available to
it. In addition, the Trust Agreement requires the Trustee to
vote all share of a Fund held in a Series of the Trust in the
same manner and ratio on all proposals as the vote of owners of
fund shares not held by such Series of the Trust.
The value of a Fund's shares, like the value of the Treasury
Obligations, will fluctuate over the life of a Series of the
Trust and may be more or less than the price at which they were
deposited in the Trust. The Funds' shares may appreciate or
depreciate in value (or pay dividends) depending on the full
range of economic and market influences affecting the securities
in which it is invested and the success of the Funds' managements
in anticipating or taking advantages of such opportunities as may
occur. However, the Sponsor believes that, upon termination of
each Series of the Trust, even if the Fund shares deposited in
such Series are worth less, an event which the Sponsor considers
highly unlikely, the Treasury Obligations will provide sufficient
principal to at least equal $1.00 per Unit. This feature of the
Trust provides Unitholders with principal protection, although
they might forego any earnings on the amount invested.
Unless a Unitholder purchases Units of a Series of the Trust
on a date when the value of the Units is $1.00 or less and unless
the Treasury Obligations remain in such Series of the Trust,
total distributions, including distributions made upon
termination of such Series of the Trust, may be less than the
amount paid for a Unit.
A Series of the Trust may be terminated prior to the
maturity of the Treasury Obligations if, due to declines in the
value of the Securities or sales of Securities to meet
redemptions or for other reasons, the aggregate net asset value
of the Series is less than 20% of the aggregate amount deposited
in such Series.
Each Series of the Trust consists of the Securities listed
under "Schedules of Investments" in Part Two as may continue to
be held from time to time in such Series.
The Trustee has no power to vary the investments of any
Series, i.e., the Trustee will have no managerial power to take
advantage of market variations to improve a Unitholder's
investment but may dispose of Securities only under limited
circumstances. Of course, the portfolios of the Mutual Funds
included in each Series will be changing as the portfolio
managers of such funds attempt to achieve the Mutual Fund's
objective. See "Portfolio Supervision."
To the best of the Sponsor's knowledge, there is no
litigation pending as of the Date of this Part One of the
Prospectus in respect of any Security which might reasonably be
expected to have a material adverse effect on the Trust or any
Series of the Trust. At any time, litigation may be instituted
on a variety of grounds with respect to the Securities at any
time, although the Sponsor has no reason to believe that any
litigation is imminent. The Sponsor is unable to predict whether
any such litigation will be instituted, or if instituted, whether
such litigation might have a material adverse effect on the Trust
or a Series of the Trust.
PUBLIC OFFERING OF UNITS
Public Offering Price. The Public Offering Price if based
on the aggregate bid side evaluation of the Treasury Obligations
and the net asset value of the Fund shares in the Series'
portfolio, plus or minus cash, if any, in the Principal Account
held or owed by such Series, plus the applicable sales charge,
divided by the number of outstanding Units of the Series.
Pursuant to the terms of agreements with the Evaluator, certain
investment banking firms have agreed to supply prices which, in
their opinion, reflect their assessment of the market value of
the Treasury Obligations included in each Series' Portfolio. The
Evaluator utilizes such prices to assist it in determining the
Public Offering Price per Unit.
The minimum purchase of any Series of the Trust is 1,000
Units or $1,000, whichever is less, except the minimum for
Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to
Minors Act (UTMA) accounts is $1,000 and the minimum for IRA
accounts is $250. The sales charge applicable to quantity
purchases is reduced on a graduated scale for sales to any
investor of at least $100,000 or 100,000 Units and will be
applied on whichever basis is more favorable to the investor.
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY
0-2.99 Years 3-4.99 Years
PERCENT PERCENT PERCENT PERCENT
OF OF NET OF OF NET
OFFERING AMOUNT PRICE AMOUNT
PRICE INVESTED OFFERING INVESTED
<S> <C> <C> <C> <C> <C> <C>
Less that $100,000 2.00% 2.041% 3.00% 3.093%
$100,000 to $499,999 1.75 1.781 2.50 2.564
$500,000 to $999,999 1.50 1.523 2.00 2.041
$1,000,000 or more Negotiated Negotiated
5-10 Years
PERCENT PERCENT
OF OF
OFFERING NET AMOUNT
PRICE INVESTED
<C> <C> <C>
5.00% 5.263%
4.00 4.167
3.00 3.093
Negotiated
</TABLE>
The reduced sales charges as shown on the chart above will
apply to all purchase of Units on any one day by the same
purchaser from the same dealer, and for this purpose, purchases
of Units of any Series of this Trust will be aggregated with
concurrent purchases of Units of any other unit investment trust
that may be offered by the Sponsor. Additionally, Units
purchased in the name of a spouse or child (under 21) of such
purchaser will be deemed to be additional purchases by such
purchaser. The reduced sales charge will also be applicable to a
trust or other fiduciary purchasing for a single trust estate or
single fiduciary account.
The Sponsor intends to permit its officers, directors and
employees and any NASD registered representative to purchase
Units of any Series of the Trust without a sales charge and
without meeting the Trust's normal minimum investment
requirement, although a transaction processing fee may be
imposed. Such Units are sold for investment only and on condition
that they will not be resold except through redemption by the
Trustee or repurchase by the Sponsor.
The foregoing evaluations and computations shall be made as
of the evaluation time stated under "Essential Information" in
Part Two on each business day, effective for all sales made
during the preceding 24-hour period.
Payment for Units must be made on or before the fifth
business day following purchase. If a Unitholder desires to have
certificates representing Units purchased, such certificates will
be delivered as soon as possible following his written request
therefor. For information with respect to redemption of Units
purchased, but as to which certificates requested have not been
received, see "Redemption" below.
Comparison of Public Offering Price and Redemption Price.
The Public Offering Price of Units and the Redemption Price are
determined on the basis of the bid prices of the Treasury
Obligations in such Series. The Fund shares in each Series are
valued on net asset value for both the secondary markets and for
purposes of redemptions. The Public Offering Price per 1,000
Units, on the date shown on the cover of Part Two, which includes
the sales charge, exceeded the Redemption Price by the amount
shown under "Essential Information" in Part Two. The bid and
offering prices of the Treasury Obligations and the net asset
value of the Fund shares in each Series is expected to vary. For
this reason and others, including the fact that the Public
Offering Price of each Series includes the sales charge, the
amount realized by a Unitholder upon redemption at any time prior
to the scheduled termination of a Series of the Trust may be less
than $1.00 per Unit.
Distribution of Units. Units of a Series acquired by the
Sponsor in the secondary market will be offered to the public by
this Prospectus at the then current Public Offering Price, which
is based on the bid prices of the Securities in such Series.
Minimum purchase is 1,000 Units or $1,000, whichever is less,
except that the minimum for UGMA and UTMA accounts is $1,000 and
the minimum for IRA accounts is $250.
Units will be sold through dealers who are members of the
National Association of Securities Dealers, Inc. and through
other financial institutions. Sales may be made to or through
dealers at prices which represent discounts from the Public
Offering Price as set forth below. Certain commercial banks are
making Units of the Trust available to their customers on an
agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks in the amounts
shown in the table below. Under the Glass-Steagall Act, banks are
prohibited from underwriting Trust Units; however, the
Glass-Steagall Act does permit certain agency transactions and
the banking regulators have indicated that these particular
agency transactions are permitted under such Act. In addition,
state securities laws on this issue may differ from the
interpretations of Federal law expressed herein and banks and
financial institutions may be required to register as dealers
pursuant to state law. The Sponsor reserves the right to change
the discounts set forth below from time to time. In addition to
such discounts, the Sponsor may, from time to time, pay or allow
an additional discount, in the form of cash or other
compensation, to dealers employing registered representatives who
sell, during a specified time period, a minimum dollar amount of
Units of one or more Series of the Trust and other unit
investment trusts underwritten by the Sponsor. The difference
between the discount and the sales charge will be retained by the
Sponsor.
<TABLE>
<CAPTION>
DOLLAR WEIGHTED AVERAGE YEARS TO MATURITY
<S> <C> <C> <C>
Ticket Size* 0-2.99 Years 3-4.99 Years 5-10 Years
Less than $100,000 1.25% 2.00% 4.00%
$100,000 to $499,999 1.00 1.50 3.00
$500,000 to $999,999 1.00 1.25 2.00
1,000,000 or more Negotiated Negotiated Negotiated
________________
</TABLE>
*The breakpoint discounts are also applied on a Unit basis
utilizing a breakpoint equivalent in the above table of $1.00 per
Unit.
The Sponsor reserves the right to reject, in whole or in
part, any order for the purchase of Units.
Profits of Sponsor. The Sponsor may realize profits or
sustain losses while maintaining a secondary market in the Units
of each Series of Trust, in the amount of any difference between
the prices at which it buys Units of such Series and the prices
at which the Units of such Series are resold (after allowing for
the discount), or the prices at which it buys such Units and the
prices at which the Sponsor redeems such Units (based on the bid
side of the Securities in that Series of the Trust), as the case
may be.
Cash, if any, received by a dealer from Unitholders prior to
the settlement date for a purchase of Units of any Series may be
used in such dealer's business subject to the limitations of Rule
15c3-3 under the Securities Exchange Act of 1934 and may be of
benefit to the dealer.
Market for Units. While not obligated to do so, the Sponsor
intends to, subject to change at any time, maintain a market for
Units of such Series of Trust offered hereby and to continuously
offer to purchase said Units at prices, determined by the
Evaluator, based on the aggregate bid prices of the underlying
Treasury Obligations and the net asset value of the Fund shares
in each Series of the Trust.
The offering price of any Units resold by the Sponsor or any
dealer will be in accord with that described in the currently
effective Prospectus describing such Units. Any profit or loss
resulting from the resale of such Units, after allowance of a
discount to the dealer or other entity which initiates the
transaction, will belong to the Sponsor. The Sponsor may suspend
or discontinue purchases of Units of any Series at any time, and
from time to time, without notice.
DISTRIBUTIONS TO UNITHOLDERS
The Trustee will distribute any net income (other than
amortized discount) received with respect to any of the
Securities in a Series of the Trust, on each applicable
Distribution Date to Unitholders of record of such Series on the
preceding Record Date. See "Essential Information" in Part Two.
Proceeds received on the sale of any Securities in a Series of
Trust, to the extent not used to meet redemptions of Units of
such Series or pay expenses, will be distributed annually on the
Distribution Date to Unitholders of record of such Series on the
preceding Record Date. Income with respect to the original issue
discount on the Treasury Obligations in a Series of the Trust
will not be distributed currently, although Unitholders of such
Series will be subject to income tax as if a distribution had
occurred. See "Tax Status."
Each Series' Record Dates and Distribution Dates were
established so as to occur on or shortly after the dividend
payment dates of the Fund deposited in such Series. Kemper Small
Capitalization Equity Fund normally distributes annually all of
its net investment income and any net realized capital gains in
November after the close of its fiscal year at the end of
September. The Growth Fund normally distributes semi-annually
all of its net investment income and any net realized gains in
November after the close of its fiscal year at the end of
September. Kemper Total Return Fund normally makes quarterly
income distributions in February, May, August and November and
one distribution of any net realized capital gains in November,
after the close of its fiscal year at the end of October.
Under regulations issued by the Internal Revenue Service,
the Trustee is required to withhold a specified percentage of any
distribution made by the Trust if the Trustee has not been
furnished the Unitholder's tax identification number in the
manner required by such regulations. Any amount so withheld is
transmitted to the Internal Revenue Service and may be recovered
by the Unitholder under certain circumstances by contacting the
Trustee, otherwise the amount may be recoverable only when filing
a tax return. Under normal circumstances the Trustee obtains the
Unitholder's tax identification number from the selling broker.
However, a Unitholder should examine his or her statements from
the Trustee to make sure that the Trustee has been provided a
certified tax identification number in order to avoid this
possible "back-up withholding." In the event the Trustee has not
been previously provided such number, one should be provided as
soon as possible.
Within a reasonable time after a Series of the Trust is
terminated, each Unitholder of such Series will, upon surrender
of his Units for redemption, receive: (i) the number of shares of
the appropriate Fund attributable to his Units, which will be
distributed "in kind" directly to him, rather than redeemed, (ii)
a pro rata share of the amounts realized upon the disposition of
the Treasury Obligations and (iii) a pro rata share of any other
assets of such Series of the Trust, less expenses of the Series.
Not less than 60 days prior to the termination of a Series of the
Trust, Unitholders will be offered the option of having the
proceeds from the disposition of the Treasury Obligations in such
Series invested, at the net asset value on the date such proceeds
become available to that Series of the Trust, in additional
shares of the Fund originally deposited in such Series. Unless a
Unitholder indicates that he wishes to reinvest such amounts,
they will be paid in cash, as indicated above. A Unitholder may,
of course, at any time after the shares are distributed to his
account, instruct the Fund in which he is invested to redeem all
or a portion of the shares in his account or take advantage of
the exchange privilege to move his or her account to another
Kemper mutual fund. Shares of Small Cap Fund, Growth Fund or
Total Return Fund, as more fully described in their prospectuses,
will be redeemed at the then current net asset value without any
redemption charge.
DISTRIBUTION REINVESTMENT
Kemper Financial Services, Inc. is also the Investment
Manager and Principal Underwriter of Kemper Growth Fund, Kemper
Small Cap Fund, Kemper Total Return Fund and other Kemper mutual
funds. Each Unitholder of a Series of the Trust will have
distributions of principal, capital gains, if any, or income or
any of these made by a Series of the Trust automatically invested
in shares of the Fund deposited in that Series of the Trust at
such Fund's net asset value next computed, unless he indicates at
the time of purchase, or subsequently notifies the Program Agent
(see below) in writing, that he wishes to receive cash payments.
Reinvestment by the Trust in Fund shares can only be made after
the Trust receives a distribution from the Fund and will occur at
a time later than if the Fund shares were owned directly.
Additional information with respect to the investment
objective and the management of each of the Funds is contained in
its prospectus, which can be obtained from the Sponsor or any
firm making Units of the Trust available upon request.
Unitholders who are receiving distributions in cash may
elect to participate in distribution reinvestment by filing with
the Program Agent an election to have such distributions
reinvested without charge. Such election must be received by the
Program Agent at least ten days prior to the Record Date
applicable to any distribution in order to be in effect for such
Record Date. Any such election shall remain in effect until a
subsequent notice is received by the Program Agent. See
"Distributions to Unitholders."
The Program Agent is Investors Fiduciary Trust Company. All
inquiries concerning participation in distribution reinvestment
should be directed to the Kemper Service Company, service agent
for the Program Agent at P.O. Box 419430, Kansas City, Missouri
64173-0216, telephone (816) 474-8786.
Exchange Privilege. Subject to the following limitations,
shares held in a Unitholder's reinvestment account may be
exchanged for shares of certain other Kemper mutual funds at
relative net asset values. The exchange privilege does not apply
to the shares of the underlying fund in the Trust's portfolio,
only to a Unitholder's reinvestment account. The exchange
privilege is not a right and may be denied or modified.
The total value of shares being exchanged must at least
equal the minimum investment requirement of the fund into which
they are being exchanged (generally $1,000). 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
expediting 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
exchange constitutes a sale upon which a gain or loss will 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 KFS. Exchanges may be accomplished by a
written request to Kemper Mutual Funds, Attention: Exchange
Department, P.O. Box 419557, Kansas City, Missouri 64141-6557, or
by telephone if a preauthorized exchange authorization, as
provided on the account application, is on file with Kemper
Service Company. Once the telephone authorization is on file,
Kemper Service Company will honor requests by any person by
telephone at 1-800-231-5142. Any certificates for shares must be
deposited prior to any exchange of such shares.
In addition, shares held in reinvestment accounts may be
entitled to participate in other features offered by the Kemper
Funds if authorized or requested by the shareholder. Unitholders
should inquire of their financial services representative about
such features or consult the prospectus for the Kemper Fund in
their reinvestment account.
TAX STATUS
The following is a general discussion of certain of the
federal income tax consequences of the purchase, ownership and
disposition of the units of a Trust. The summary is limited to
investors who hold Units as "Capital Assets" (generally, property
held for investment) within the meaning of Section 1221 of the
Internal Revenue Code of 1986 (the "Code"). Unitholders should
consult their tax advisors in determining the federal, state,
local and other tax consequences of the purchase, ownership and
deposition of Units in a Trust.
At the time of closing of the various Series of the Trust,
Chapman and Cutler, counsel for the Sponsor, rendered an opinion
under then existing law substantially to the effect that:
1. The Series of the Trust are not associations
taxable as corporations for Federal income tax purposes;
each Unitholder will be treated as the owner of a pro rata
portion of the assets of the appropriate Series of the Trust
under the Code; and each Unitholder will be considered to
have received his pro rata share of income derived from each
Trust asset when such income is received by a Trust.
2. Each Unitholder will have a taxable event when a
Trust disposes of a Security (whether by sale, exchange,
redemption, or payment at maturity) or upon the sale or
redemption of Units by such Unitholder. The price a
Unitholder pays for his Units, including sales charges, is
allocated among his pro rata portion of each Security held
by a Trust (in proportion to the fair market values thereof
on the date the Unitholder purchases his Units) in order to
determine his initial cost for his pro rata portion of each
Security held by a Trust. The Treasury Obligations held by
the Trusts are treated as stripped bonds and be treated as
bonds issued at an original issue discount as of the date a
Unitholder purchased his Units. Because the Treasury
Obligations represent interests in "stripped" U.S. Treasury
bonds, a Unitholder's initial cost for his pro rata portion
of each Treasury Obligation held by the Trusts shall be
treated as its "purchase price" by the Unitholder. Original
issue discount is effectively treated as interest for
federal income tax purposes and the amount of original issue
discount in this case is generally the difference between
the bond's purchase price and its stated redemption price at
maturity. A Unitholder will be required to include in gross
income for each taxable year the sum of his daily portions
of original issue discount attributable to the Treasury
Obligations held by the Trusts as such original issue
discount accrues and will in general be subject to federal
income tax with respect to the total amount of such original
issue discount that accrues for such year even though the
income is not distributed to the Unitholders during such
year to the extent it is not less than a "de minimis" amount
as determined under a Treasury Regulation issued on
December 28, 1992 relating to stripped bonds. To the extent
the amount of such discount is less than the respective "de
minimis" amount, such discount shall be treated as zero. In
general, original issue discount accrues daily under a
constant interest rate method which takes into account the
semi-annual compounding of accrued interest. In the case of
the Treasury Obligations, this method will generally result
in an increasing amount of income to the Unitholder each
year. Unitholders should consult their tax advisors
regarding the federal income tax consequences and accretion
of original issue discount under the stripped bond rules.
3. A Unitholder's portion of gain, if any, upon the
sale or redemption of Units or the disposition of Securities
held by a Trust will generally be considered a capital gain
except in the case of a dealer or a financial institution
and will be long-term if the Unitholder has held his Units
for more than one year. A Unitholder's portion of loss, if
any, upon the sale or redemption of Units or the disposition
of Securities held by a Trust will generally be considered a
capital loss except in the case of a dealer or financial
institution and will be long-term if the Unitholder has held
his Units for more than one year. Unitholders should
consult their tax advisors regarding the recognition of such
capital gains and losses for federal income tax purposes.
4. The Code provides that "miscellaneous itemized
deductions" are allowable only to the extent that they
exceed two percent of an individual taxpayer's adjusted
gross income. Miscellaneous itemized deductions subject to
this limitation under present law include a Unitholder's pro
rata share of expenses paid by a Trust, including fees of
the Trustee and the Evaluator but does not include
amortizable bond premium on Treasury Obligations held by a
Trust.
Because Unitholders are deemed to directly own a pro rata
portion of the Kemper Fund shares in such Series as discussed
above, Unitholders are advised to read the discussion of tax
consequences set forth in the prospectus for such Kemper Fund.
Distibutions declared by the Kemper Fund on such Fund shares in
October, November or December that are held by the Trust and paid
during the following January will be treated as having been
received by Unitholders on December 31 in the year such
distributions were declared. Long-term capital gain
distributions on the Kemper Fund shares in a Series are taxable
to the Unitholders of such Series as long-term capital gains
regardless of how long a person has been a Unitholder of such
Series. If a Unitholder holds his Units for six months or less
or if the appropriate Series of the Trust holds shares of a
Kemper Fund for six months or less, any loss incurred by a
Unitholder related to the disposition of such shares will be
treated as a long-term capital loss to the extent of any
long-term capital gain distributions received (or deemed to have
been received) with respect to such shares. Unitholders will be
notified annually of the amounts of original issue discount,
income dividends and long-term capital gain distributions
includable in the Unitholder's gross income and amounts of Trust
expenses which may be claimed as itemized deductions. For
taxpayers other than corporations, net capital gains are subject
to a maximum stated marginal tax rate of 28 percent. However, it
should be noted that legislative proposals are introduced from
time to time that affect relative differences at which ordinary
income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act")
raised tax rates on ordinary income while capital gains remain
subject to a 28% maximum stated rate for taxpayers other than
corporations. Because some or all capital gains are taxed at a
comparatively lower rate under the Tax Act, the Tax Act includes
a provision that recharacterizes capital gains as ordinary income
in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors
should consult with their tax advisers regarding the potential
effect of this provision on their investment in Units.
General. Each Unitholder will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to
certify that the Unitholder has not been notified that payments
to the Unitholder are subject to back-up withholding. If the
proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by
the Trusts to such Unitholder (including amounts received upon
the redemption of Units) will be subject to back-up withholding.
Distributions by a Trust will generally be subject to United
States income taxation and withholding in the case of Units held
by non-resident alien individuals, foreign corporations or other
non-United States persons (accrual of original issue discount on
the Treasury Obligations may not be subject to taxation or
withholding provided certain requirements are met). Such persons
should consult their tax advisers.
Unitholders will be notified annually of the amounts of
original issue discount, income and long-term capital gains
distributions includible in the Unitholder's gross income and the
amount of Trust expenses which may be claimed as itemized
deductions.
Dividend income, long-term capital gains and accrual of
original issue discount may also be subject to state and local
taxes. Foreign investors may be subject to different federal
income tax consequences than those described above. Investors
should consult their tax advisers for specific information on the
tax consequences of particular types of distributions.
Unitholders desiring to purchase Units for tax-deferred
plans and IRA's should consult their broker for details on
establishing such accounts. Units may also be purchased by
persons who already have self-directed plans established. See
"Retirement Plans."
Under the income tax laws of the State of Missouri the Trust
is not an association taxable as a corporation and the income of
each Series of the Trust will be treated as the income of the
Unitholders thereof.
RIGHTS OF UNITHOLDERS
Unitholders. A Unitholder is deemed to be a beneficiary of
the Series of the Trust which he purchased and is vested with all
right, title and interest in the appropriate Series of the Trust,
each of which was created by the Indenture. A Unitholder may at
any time tender his Units to the Trustee for redemption.
Ownership of Units. Ownership of Units of a Series of the
Trust will not be evidenced by certificates unless a Unitholder
or the Unitholder's registered broker/dealer makes a written
request to the Trustee. Units are transferable by making a
written request to the Trustee and, in the case of Units
evidenced by a certificate, by presenting and surrendering such
certificate to the Trustee properly endorsed or accompanied by a
written instrument or instruments of transfer which should only
be sent by registered or certified mail for the protection of the
Unitholder. Unitholders must sign such written request and such
certificate or transfer instrument, exactly as their names appear
on the records of the Trustee and on any certificate representing
the Units to be transferred. Such signatures must be guaranteed
by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature guarantee program in
addition to, or in substitution for, STAMP as may be accepted by
the Trustee.
Certificates will be issued in denominations of 1,000 Units
or any number of Units in excess thereof. The Trustee may
require a Unitholder to pay a reasonable fee, to be determined in
the sole discretion of the Trustee, for each certificate
re-issued or transferred and to pay any governmental charge that
may be imposed in connection with each such transfer or exchange.
The Trustee at the present time does not intend to charge for the
normal transfer or exchange of certificates. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to
the Trustee of satisfactory indemnity (generally amounting to 3%
of the market value of the Units), affidavit of loss, evidence of
ownership and payment of expenses incurred. Any mutilated
certificate must be presented to the Trustee before a substitute
certificate will be issued.
Statements to Unitholders. With each distribution, the
Trustee will furnish each Unitholder of a Series a statement of
the amount of income and the amount of other receipts of such
Series, if any, which are being distributed, expressed in each
case as a dollar amount per Unit.
The financial statements of each Series of the Trust are
required to be audited annually, at the Series' expense, by
independent certified public accountants designated by the
Sponsor, unless the Trustee determines that such an audit would
not be in the best interest of the Unitholders. The accountants'
report and the financial statements will be furnished by the
Trustee to any Unitholder of such Series upon written request.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a Unitholder of a Series, a
statement, covering the calendar year, setting forth the
following information as to such Series in reasonable detail:
(1) a summary of transactions in that Series of the Trust for
such year; (2) any Securities sold during the year and the
Securities held at the end of such year by such Series; (3) the
redemption price per 1,000 Units of such Series based upon a
computation thereof on the 31st day of December of such year (or
the last business day prior thereto); and (4) amounts of income
and capital gain of such Series during such year.
Rights of Unitholders. A Unitholder may at any time tender
Units to the Trustee for redemption. The death or incapacity of
any Unitholder will not operate to terminate the Trust or any
Series thereof nor entitle legal representatives or heirs to
claim an accounting or to bring any action or proceeding in any
court for partition or winding up of the Trust or any Series
thereof.
No Unitholder of a Series shall have the right to control
the operation and management of the Trust or any Series thereof
in any manner, except to vote with respect to amendment of the
Agreement or termination of the Trust or such Series.
REDEMPTION
A Unitholder who does not dispose of Units in the secondary
market described above may cause Units to be redeemed by the
Trustee by making a written request to the Trustee, Investors
Fiduciary Trust Company, P.O. Box 419430, Kansas City, Missouri
64173-2016 and, in the case of Units evidenced by a certificate,
by tendering such certificate to the Trustee, properly endorsed
or accompanied by a written instrument or instruments of transfer
in form satisfactory to the Trustee. Unitholders must sign the
request and such certificate or transfer instrument, exactly as
their names appear on the records of the Trustee and on any
certificate representing the Units to be redeemed. If the amount
of the redemption is $25,000 or less and the proceeds are payable
to the Unitholder(s) of record at the address of record, no
signature guarantee is necessary for redemptions by individual
account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is
always required, from corporations, executors, administrators,
trustees, guardians or associations. Signature guarantees, if
required, may only be obtained from a commercial bank or trust
company, savings and loan association or a member firm of a
national securities exchange. A certificate should only be sent
by registered or certified mail for the protection of the
Unitholder. Since tender of the certificate is required for
redemption when one has been issued, Units represented by a
certificate cannot be redeemed until the certificate representing
such Units has been received by the purchaser.
Redemption shall be made by the Trustee not later than the
seventh calendar day following the day on which a tender for
redemption is received, or if the seventh calendar day is not a
business day, on the first business day prior thereto (the
"Redemption Date") by payment of cash equivalent to the
Redemption Price, determined as set forth below under
"Computation of Redemption Price", as of the evaluation time
stated under "Essential Information" in Part Two, next following
such tender, multiplied by the number of Units being redeemed.
Any Units redeemed shall be cancelled and any undivided
fractional interest in that Series of the Trust extinguished. The
price received upon redemption during the period prior to the
maturity of a Series of the Trust may be more or less than the
price of the Units of such Series on the Initial Date of Deposit,
depending on the value of the Securities in the portfolio at the
time of redemption.
Under regulations issued by the Internal Revenue Service,
the Trustee is required to withhold a specified percentage of the
principal amount of a Unit redemption if the Trustee has not been
furnished the redeeming Unitholder's tax identification number in
the manner required by such regulations. Any amount so withheld
is transmitted to the Internal Revenue Service and may be
recovered by the Unitholder only when filing a tax return. Under
normal circumstances the Trustee obtains the Unitholder's tax
identification number from the selling broker. However, any time
a Unitholder elects to tender Units for redemption, such
Unitholder should make sure that the Trustee has been provided a
certified tax identification number in order to avoid this
possible "back-up withholding." In the event the Trustee has not
been previously provided such number, one must be provided at the
time redemption is requested.
Any amounts paid on redemption representing income shall be
withdrawn from the Income Account of such Series to the extent
that funds are available for such purpose. All other amounts
paid on redemption shall be withdrawn from the Principal Account
of such Series. The Trustee is empowered to sell Securities from
a Series in order to make funds available for the redemption of
Units of such Series. Such sale may be required when Securities
would not otherwise be sold and might result in lower prices than
might otherwise be realized. To the extent Securities are sold,
the size and diversity of that Series of the Trust will be
reduced.
As long as the Sponsor is making a market in Units of a
Series, prior to the close of business on the second succeeding
business day the Sponsor may purchase any Units of such Series
tendered to the Trustee by making payment, or arranging for
payment to be made therefore, to the Unitholder not later than
the day on which the Redemption Price would have been paid by the
Trustee. The Trustee is irrevocably authorized in its
discretion, if the Sponsor does not elect to purchase any Unit
tendered for redemption, in lieu of redeeming such Units, to sell
such Units in the over-the-counter market for the account of
tendering Unitholders at prices which will return to the
Unitholders amounts in cash, net after brokerage commissions,
transfer taxes and other charges, equal to or in excess of the
Redemption Price for such Units. In the event of any such sale,
the Trustee shall pay the net proceeds thereof to the Unitholders
on the day they would otherwise be entitled to receive payment of
the Redemption Price.
The right of redemption may be suspended and payment
postponed (1) for any period during which the New York Stock
Exchange is closed, other than customary weekend and holiday
closings, or during which (as determined by the Securities and
Exchange Commission) trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists
as a result of which disposal by the Trustee of Securities is not
reasonably practicable or it is not reasonably practicable to
fairly determine the value of the underlying Securities in
accordance with the Agreement; or (3) for such other period as
the Securities and Exchange Commission may by order permit. The
Trustee is not liable to any person in any way for any loss or
damage which may result from any such suspension or
postponement.
Computation of Redemption Price. The Redemption price for
Units of a Series of the Trust is computed by the Trustee as of
the evaluation time stated under "Essential Information" in Part
Two next occurring after the tendering of a Unit of such Series
for redemption and on any other business day desired by it, by
A. adding: (1) the cash on hand in that Series of
the Trust other than cash deposited in the Series to
purchase Securities not applied to the purchase of such
Securities; (2) the aggregate value of each issue of the
Securities held in that Series of the Trust, as determined
by the Evaluator on the basis of bid prices of the Treasury
Obligations and the net asset value of the Fund shares next
computed;and (3) dividends receivable on Fund shares in such
Series trading ex-dividend as of the date of computation;
and
B. deducting therefrom: (1) amounts representing any
applicable taxes or governmental charges payable out of that
Series of the Trust and for which no deductions have been
previously made for the purpose of additions to the Reserve
Account described under "Expenses of the Trust"; (2) an
amount representing estimated accrued expenses of the
Series, including but not limited to fees and expenses of
the Trustee (including legal and auditing fees), the
Evaluator and counsel, if any; (3) cash held for
distribution to Unitholders of record of such Series as of
the business day prior to the evaluation being made; and (4)
other liabilities incurred by such Series of the Trust; and
C. finally dividing the results of such computation
by the number of Units of such Series of the Trust
outstanding as of the date thereof.
PORTFOLIO SUPERVISION
The portfolios of the Series are not "managed" by the
Sponsor or the Trustee; their activities described herein are
governed solely by the provisions of the Agreement. The
Agreement provides that the Sponsor may (but need not) direct the
Trustee to dispose of a Security:
(1) upon the failure of the issuer to declare or
pay anticipated dividends or interest;
(2) upon the institution of a materially adverse
action or proceeding at law or in equity seeking to restrain
or enjoin the declaration or payment of dividends or
interest on any such Securities or the existence of any
other materially adverse legal question or impediment
affecting such Securities or the declaration or payment of
dividends or interest on the same; or
(3) upon the occurrence of any materially adverse
credit factors that, in the opinion of the Sponsor, make the
retention of such Securities detrimental to the interest of
the Unitholders.
The Trustee may sell Securities designated by the Sponsor,
or if not so directed, in its own discretion, for the purpose of
redeeming Units of a Series tendered for redemption and the
payment of expenses; provided, however, that an effort will be
made to maintain the initial proportionate relationship between
the maturity values of the Treasury Obligations and the number of
outstanding Units of such Series. Where the disposition is made
for purposes other than meeting redemptions, the Trustee will
dispose of Fund shares rather than Treasury Obligations from such
Series and if no shares are available, the Sponsor will pay such
fees so that the Trustee is not required to sell Treasury
Obligations.
RETIREMENT PLANS
The Kemper Bond Enhanced Securities Trust may be well suited
for purchase by Individual Retirement Accounts, Keogh plans,
pension funds and other qualified retirement plans, certain of
which are briefly described below.
Generally, capital gains and income received under each of
the foregoing plans are deferred from Federal taxation. All
distributions from such plans are generally treated as ordinary
income but may, in some cases, be eligible for special income
averaging or tax-deferred rollover treatment. Investors
considering participation in any such plan should review specific
tax laws related thereto and should consult their attorneys or
tax advisors with respect to the establishment and maintenance of
any such plan. Such plans are offered by brokerage firms and
other financial institutions. Each Trust will waive the $1,000
minimum investment requirement for accounts. The minimum
investment is $250 for tax-defined plans such as IRA accounts.
Fees and charges with respect to such plans may vary.
Individual Retirement Account - IRA. Any individual over
age 70-1/2 may contribute the lesser of $2,000 or 100% of
compensation to an IRA annually. Such contributions are fully
deductible if the individual (and spouse if filing jointly) are
not covered by a retirement plan at work. The deductible amount
an individual may contribute to an IRA will be reduced $10 for
each $50 of adjusted gross income over $25,000 ($40,000 if
married, filing jointly or $0 if married, filing separately), if
either an individual or their spouse (if married, filing jointly)
is an active participant in an employer maintained retirement
plan. Thus, if an individual has adjusted gross income over
$35,000 ($50,000 if married, filing jointly or $0 if married,
filing separately) and if an individual or their spouse is an
active participant in an employer maintained retirement plan, no
IRA deduction is permitted. Under the Code, an individual may
make nondeductible contributions to the extent deductible
contributions are not allowed. All distributions from an IRA
(other than the return of certain excess contributions) are
treated as ordinary income for Federal income taxation purposes
provided that under the Code an individual need not pay tax on
the return of nondeductible contributions, the amount includable
in income for the taxable year is the portion of the amount
withdrawn for the taxable year as the individual's aggregate
nondeductible IRA contributions bear to the aggregate balance of
all IRAs of the individual.
A participant's interest in an IRA must be, or commence to
be, distributed to the participant not later than April 1 of the
calendar year following the year during which the participant
attains age 70-1/2. Distributions made before attainment of age
59-1/2, except in the case of the participant's death or
disability, or where the amount distributed is to be rolled over
to another IRA, or where the distributions are taken as a series
of substantially equal periodic payments over the participant's
life or life expectancy (or the joint lives or life expectancies
of the participant and the designated beneficiary) are generally
subject to a surtax in an amount equal to 10% of the
distribution. The amount of such periodic payments may not be
modified before the later of five years or attainment of age
59-1/2. Excess contributions are subject to an annual 6% excise
tax.
IRA applications, disclosure statements and trust agreements
are available from the Sponsor upon request.
Qualified Retirement Plans. Units of each Series of the
Trust may be purchased by qualified pension or profit sharing
plans maintained by corporations, partnerships or sole
proprietors. The maximum annual contribution for a participant
in a money purchase pension plan or to paired profit sharing and
pension plans is the lesser of 25% of compensation or $30,000.
Prototype plan documents for establishing qualified retirement
plans are available from the Sponsor upon request.
Excess Distributions Tax. In addition to the other taxes
due by reason of a plan distribution, a tax of 15% may apply to
certain aggregate distributions from IRAs, Keogh plans, and
corporate retirement plans to the extent such aggregate taxable
distributions exceed specified amounts (generally $150,000, as
adjusted) during a tax year. This 15% tax will not apply to
distributions on account of death, qualified domestic relations
orders or amounts rolled over to an eligible plan. In general,
for lump sum distributions the excess distribution over $750,000
(as adjusted) will be subject to the 15% tax.
The Trustee, Investors Fiduciary Trust Company, has agreed
to act as custodian for certain retirement plan accounts. An
annual fee of $12.00 per account, if not paid separately, will be
assessed by the Trustee and paid through the liquidation of
shares of the retirement account. An individual wishing IFTC to
act as custodian must complete a Kemper UIT/IRA application and
forward it along with a check made payable to Investors Fiduciary
Trust Company. Certificates for Units held in Individual
Retirement Accounts can not be issued.
ADMINISTRATION OF THE TRUST
The Trustee. The Trustee, Investors Fiduciary Trust
Company, is a trust company specializing in investment related
services, organized and existing under the laws of Missouri,
having its trust office at 21 West 10th Street, Kansas City,
Missouri 64105. The Trustee is subject to supervision and
examination by the Division of Finance of the State of Missouri
and the Federal Deposit Insurance Corporation. Investors
Fiduciary Trust Company is owned by State Street Boston
Corporation.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the portfolios. For information
relating to the responsibilities of the Trustee under the
Agreement, reference is made to the material set forth under
"Unitholders."
In accordance with the Agreement, the Trustee shall keep
records of all transactions at its office. Such records shall
include the name and address of, and the number of Units held by,
every Unitholder of such Series. Such books and records shall be
open to inspection by any Unitholder of such Series at all
reasonable times during the usual business hours. The Trustee
shall make such annual or other reports as may from time to time
be required under any applicable state or Federal statute, rule
or regulation. The Trustee shall keep a certified copy or
duplicate original of the Agreement on file in its office
available for inspection at all reasonable times during usual
business hours by any Unitholder of a Series, together with a
current list of the Securities held in such Series of the Trust.
Pursuant to the Agreement, the Trustee may employ one or more
agents for the purpose of custody and safeguarding of Securities
comprising the portfolios.
Under the Agreement, the Trustee or any successor trustee
may resign and be discharged of the trust created by the
Agreement by executing an instrument in writing and filing the
same with the Sponsor. The Trustee or successor trustee must
mail a copy of the notice of resignation to all Unitholders of
any affected Series then of record, not less than sixty days
before the date specified in such notice when such resignation is
to take effect. The Sponsor upon receiving notice of such
resignation is obligated to appoint a successor trustee promptly.
If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within thirty days
after notification, the retiring Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. In
case the Trustee becomes incapable of acting or is adjudged a
bankrupt or is taken over by public authorities, the Sponsor may
remove the Trustee and appoint a successor trustee as provided in
the Agreement. Notice of such removal and appointment shall be
mailed to each Unitholder of any affected Series by the Sponsor.
Upon execution of a written acceptance of such appointment by
such successor trustee, all the rights, powers, duties and
obligations of the Trustee shall vest in the successor.
The Trustee shall be a corporation organized under the laws
of the United States or any state thereof, which is authorized
under such laws to exercise trust powers. The Trustee shall have
at all times an aggregate capital, surplus and undivided profits
of not less than $2,000,000.
The Evaluator. Kemper Unit Investment Trusts, a service of
Kemper Securities, Inc., the Sponsor, also serves as Evaluator.
Pursuant to the terms of agreements with the Evaluator, certain
investment banking firms have agreed to supply prices which, in
their opinion, reflect their assessment of the market value of
the Treasury Obligations included in each Series' portfolio. The
Evaluator utilizes such prices to assist it in determining the
Public Offering Price per Unit of such Series. The Evaluator may
resign or be removed by the Trustee in which event the Trustee is
to use its best efforts to appoint a satisfactory successor.
Such resignation or removal shall become effective upon
acceptance of appointment by the successor evaluator. If upon
resignation of the Evaluator no successor has accepted
appointment within thirty days after notice of resignation, the
Evaluator may apply to a court of competent jurisdiction for the
appointment of a successor. Notice of such resignation or
removal and appointment shall be mailed by the Trustee to each
Unitholder.
Amendment and Termination. The Agreement may be amended
with respect to any Series by the Trustee and the Sponsor without
the consent of any of the Unitholders; (1) to cure any ambiguity
or to correct or supplement any provision which may be defective
or inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any
successor governmental agency; or (3) to make such provisions as
shall not adversely affect the interests of the Unitholders
thereof. The Agreement may also be amended with respect to any
Series, in any manner, by the Sponsor and the Trustee, or any of
the provisions thereof may be waived, with the consent of the
holders of Units representing 66-2/3% of the Units of such Series
then outstanding, provided that no such amendment or waiver will
reduce the interest of any Unitholder of such Series without the
consent of such Unitholder or reduce the percentage of Units
required to consent to any such amendment or waiver without the
consent of all Unitholders of such Series. In no event shall the
Agreement be amended to increase the number of Units of a Series
issuable thereunder, except in accordance with the provisions of
the Agreement. The Trustee shall promptly notify Unitholders of
the substance of any such amendment.
The Agreement provides that a Series of the Trust shall
terminate within 60 days after the maturity, redemption or other
disposition of the last of the Treasury Obligations held in such
Series of the Trust. If the value of a Series of the Trust shall
be less than the applicable minimum Series value stated under
"Essential Information" in Part Two (20% of the original
aggregate value of Securities deposited in such Series of the
Trust), the Trustee may, in its discretion, and shall, when so
directed by the Sponsor, terminate the Trust. Any Series of the
Trust may be terminated at any time by the holders of Units
representing 66-2/3% of the Units of such Series then
outstanding. In the event of termination, written notice thereof
will be sent by the Trustee to all Unitholders of such Series.
Within a reasonable period after termination, the Trustee will,
after paying all expenses and charges incurred by that Series of
the Trust and distribute to Unitholders of such Series (upon
surrender for cancellation of certificates for Units, if issued)
their pro rata share of the balances remaining in the income and
Principal Accounts of such Series.
Limitations on Liability. The Sponsor: The Sponsor is
liable for the performance of its obligations arising from its
responsibilities under the Agreement, but will be under no
liability to the Unitholders for taking any action or refraining
from any action in good faith pursuant to the Agreement or for
errors in judgment, except in cases of its own gross negligence,
bad faith or willful misconduct. The Sponsor shall not be liable
or responsible in any way for depreciation or loss incurred of
the sale of any Securities.
The Trustee: The Agreement provides that the Trustee shall
be under no liability for any action taken in good faith in
reliance upon prima facie properly executed documents or for the
disposition of monies, Securities or certificates, except by
reason of its own gross negligence, bad faith or willful
misconduct, nor shall the Trustee be liable or responsible in any
way for depreciation or loss incurred by reason of the sale by
the Trustee of any Securities. In the event that the Sponsor
shall fail to act, the Trustee may act and shall not be liable
for any such action taken by it in good faith. The Trustee shall
not be personally liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the
interest or dividends thereon. In addition, the Agreement
contains other customary provisions limiting the liability of the
Trustee. The Trustee, whose duties are ministerial, has not
participated in the selection of Securities for any Series of the
Trust.
The Evaluator: The Trustee and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no
responsibility for the accuracy thereof. The Agreement provides
that the determinations made by the Evaluator shall be made in
good faith upon the basis of the best information available to
it, provided, however, that the Evaluator shall be under no
liability to the Trustee or Unitholders for errors in judgment,
but shall be liable only for its gross negligence, lack of good
faith or willful misconduct.
Accounts. The Trustee will credit to an Income Account for
each Series any dividends received on the Fund shares therein.
All other receipts (e.g., return of principal, capital gains,
etc.) are credited to a Principal Account for such Series.
The Trustee may establish reserves (the "Reserve Account")
within each Series of the Trusts for state and local taxes, if
any, and any governmental charges payable out of such Series of
the Trust.
EXPENSES OF THE TRUST
The Sponsor will not charge the Trust or any Series thereof
an advisory fee and will receive no fee from the Trust or any
Series thereof for services performed as Sponsor. The Sponsor
will receive a portion of the sales commissions paid in
connection with the purchase of Units of each Series. The
Sponsor paid all the expenses of creating and establishing the
Series of the Trust, including the cost of the initial
preparation, printing and execution of the Prospectus, Agreement
and certificates, legal and accounting expenses, advertising and
selling expenses, payment of closing fees, the fee of the
Trustee, evaluation fees and other out-of-pocket expenses.
The Trustee receives for its services an annual fee at the
rate set forth under "Essential Information" in Part Two per
1,000 Units in each Series outstanding based on the largest
aggregate number of Units of such Series outstanding at any time
during the year. All dividends received and proceeds from the
sale of Securities from a Series not required to redeem Units of
such Series or other monies received by the Trustee on behalf of
such Series of the Trust shall be held in demand deposit accounts
which are non-interest bearing to Unitholders and are available
for use by the Trustee pursuant to normal banking procedures.
For evaluation of the Treasury Obligations in each Series of
the Trust, the Evaluator shall receive a fee calculated on an
annual rate as set forth under "Essential Information" in Part
Two, based upon the largest aggregate principal amount of
Treasury Obligations in such Series of the Trust at any time
during such year. The Trustee's annual fee and expenses shown
under "Essential Information" in Part Two includes the
Evaluator's fee. No fee is paid to the Evaluator with respect to
the Fund shares in any Series in the Trust.
The fees and expenses of the Trustee and the Evaluator are
deducted from the Income Account of each Series of the Trust to
the extent funds are available and then from the Principal
Account of such Series. Although the Sponsor believes there
should be sufficient income from the Fund distributions in each
Series to pay the Trust's fees with respect to such Series of the
Trust, in the event that any Series of the Trust does not have
sufficient income to pay such fees, then shares of the Fund in
such Series, if available, will be sold for that purpose. If no
shares are available, the Sponsor will pay such fees so that is
not required to sell Treasury Obligations, which would be
detrimental to the interests of Unitholders of such Series.
Either fee may be increased without approval of Unitholders by
amounts not exceeding a proportionate increase in the Consumer
Price Index entitled "All Services Less Rent," published by the
United States Department of Labor, or any equivalent index
substituted therefor.
The following additional charges are or may be incurred by
the Trust or any Series thereof: (a) fees for the Trustee's
extraordinary services; (b) expenses of the Trustee (including
legal and auditing expenses, but not including any fees and
expenses charged by any agent for custody and safeguarding of
Securities) and of counsel, if any; (c) various governmental
charges; (d) expenses and costs of any action taken by the
Trustee to protect the Trust or any Series thereof or the rights
and interests of the Unitholders thereof; (e) indemnification of
the Trustee for any loss, liability or expense incurred by it in
the administration of the Trust or any Series thereof not
resulting from gross negligence, bad faith or willful misconduct
on its part; (f) indemnification of the Sponsor for any loss,
liability or expense incurred in acting in that capacity without
gross negligence, bad faith or willful misconduct; and (g)
expenditures incurred in contacting Unitholders upon termination
of the Trust or any Series thereof. The fees and expenses set
forth herein are payable out of the Trust of each Series of and,
when owing to the Trustee, are secured by a lien on such Series.
Fees and expenses of each Series of the Trust shall be
deducted from the Income Account of such Series, or, to the
extent funds are not available in such Account, from the
Principal Account of such Series. The Trustee may withdraw from
the Principal Account or the Income Account of any Series of the
Trust such amounts, if any, as it deem necessary to establish a
reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of such Series of the Trust.
Amounts so withdrawn shall be credited to a separate account
maintained for the Trust known as the Reserve Account and shall
not be considered a part of such Series of the Trust when
determining the value of the Units thereof until such time as the
Trustee shall return all or any part of such amounts to the
appropriate account.
THE SPONSOR
The Sponsor, Kemper Unit Investment Trusts, with an office
at 77 West Wacker Drive, 29th Floor, Chicago, Illinois 60601,
(800) 621-5024, is a service of Kemper Securities, Inc. which is
a wholly-owned subsidiary of Kemper Financial Companies, Inc.,
which, in turn, is a wholly-owned subsidiary of Kemper
Corporation. The Sponsor will act as underwriter of any other
unit investment trust products developed by the Sponsor in the
future. As of January 31, 1994 the total stockholder equity of
Kemper Securities, Inc. was $261,673,436 (unaudited).
The foregoing information with regard to the Sponsor
relates to the Sponsor only and not to any Series of the Trust.
Such information is included in this Prospectus only for the
purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual
obligations with respect to the Series of the Trust. More
comprehensive financial information can be obtained upon request
from the Sponsor.
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters
relating to federal tax law were originally passed upon by
Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of
investments, appearing in Part Two in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report appearing in
Part Two and is included in reliance upon such report given upon
the authority of such firm as experts in accounting and
auditing.
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Part Two
Dated April 28, 1995
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY
IS A CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed unless
Accompanied by
Part One.
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Essential Information
As of March 17, 1995
Sponsor: Kemper Financial Services, Inc.
Evaluator: Kemper Unit Investment Trusts
Trustee: Investors Fiduciary Trust
Company
<TABLE>
<CAPTION>
General Information
<S>
<C>
Aggregate Maturity Value of the Treasury Obligations
in the Trust
$9,394,000
Aggregate Number of Shares of Kemper Total Return Fund
in the Trust
489,161.215
Number of Units
9,394,000
Fractional Undivided Interest in the Trust per Unit
1/9,394,000
Calculation of Public Offering Price:
Aggregate Value of Securities in the Trust
$11,891,563
Aggregate Value of Securities per 1,000 Units
$1,266
Net Cash per 1,000 Units
$-
Sales Charge 5.0% (5.263% of the net amount invested)
per 1,000 Units
$67
Public Offering Price per 1,000 Units
$1,333
Redemption Price per 1,000 Units
$1,266
</TABLE>
Discretionary Liquidation Amount The Trust may be
terminated if its
aggregate net asset
value is less
than 20% of the
aggregate amount
deposited in the Series
($2,213,688).
Date of Trust Agreement January 10, 1989
Mandatory Termination Date April 15, 1999
Trustee's Annual Fee and Expenses $2.211 ($.71 of which
represents
expenses) per 1,000
Units
outstanding. Expenses
include an
Evaluator Fee of $.10
per $1,000
principal amount of the
Treasury
Obligations.
Record Date Same as the underlying
Fund's record
date.
Distribution Date Promptly after the
underlying Fund's
distribution date.
CUSIP Number 488388-22-4
Evaluations for purpose of sale, purchase or redemption of Units
are made as
of 3:15 P.M. Central Time next following receipt of an order for
a sale or
purchase of Units or receipt by Investors Fiduciary Trust Company
of Units
tendered for redemption.
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
We have audited the accompanying statement of assets and
liabilities,
including the schedule of investments, of Kemper Bond Enhanced
Securities
Trust Series 14 - Total Return as of December 31, 1994, and the
related
statements of operations and changes in net assets for each of
the three years
in the period then ended. These financial statements are the
responsibility
of the Trust's sponsor. Our responsibility is to express an
opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audit to
obtain reasonable assurance about whether the financial
statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence
supporting the amounts and disclosures in the financial
statements. Our
procedures included confirmation of investments owned as of
December 31, 1994,
by correspondence with the custodial bank. An audit also
includes assessing
the accounting principles used and significant estimates made by
the sponsor,
as well as evaluating the overall financial statement
presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in
all material respects, the financial position of Kemper Bond
Enhanced
Securities Trust Series 14 - Total Return at December 31, 1994,
and the
results of its operations and the changes in its net assets for
each of the
three years in the period then ended, in conformity with
generally accepted
accounting principles.
Ernst & Young LLP
Kansas City, Missouri
April 14, 1995
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Statement of Assets and Liabilities
December 31, 1994
<TABLE>
<CAPTION>
<S> <C>
<C>
Assets
Investments, at value (cost $10,549,088)
$11,452,153
Cash
2,826
- -----------
Total assets
11,454,979
Liabilities and net assets
Accrued liabilities
3,680
Net assets, applicable to 9,524,000 Units
outstanding:
Cost of Trust assets $10,549,088
Unrealized appreciation 903,065
Distributable funds (854)
-----------
- -----------
Net assets
$11,451,299
===========
Net asset value per 1,000 Units
$1,202.36
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Statements of Operations
<TABLE>
<CAPTION>
Year ended
December 31
1994 1993
1992
<S> <C> <C>
<C>
----------- ----------
- ---------
Investment income:
Dividends - ordinary income $115,485 $111,564
$155,069
Interest 593,748 591,508
585,864
----------- ----------
- ---------
Total investment income 709,233 703,072
740,933
Expenses:
Trustee's fees and related expenses 18,167 19,778
21,346
Evaluator's fees 1,033 1,121
1,206
----------- ----------
- ---------
Total expenses 19,200 20,899
22,552
----------- ----------
- ---------
Net investment income 690,033 682,173
718,381
Realized and unrealized gain (loss)
on investments:
Capital gain dividend from Fund
shares - 595,450
251,618
Net realized gain 129,183 256,442
192,694
Unrealized appreciation
(depreciation) during the year (1,658,792) 45,590
(451,257)
----------- ----------
- ---------
Net gain (loss) on investments (1,529,609) 897,482
(6,945)
----------- ----------
- ---------
Net increase (decrease) in net assets
resulting from operations $(839,576) $1,579,655
$711,436
=========== ==========
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year ended
December 31
1994 1993
1992
<S> <C> <C>
<C>
----------- -----------
- -----------
Operations:
Net investment income $690,033 $682,173
$718,381
Capital gain dividend from Fund
shares - 595,450
251,618
Net realized gain 129,183 256,442
192,694
Unrealized appreciation
(depreciation) on investments
during the year (1,658,792) 45,590
(451,257)
----------- -----------
- -----------
Net increase (decrease) in net assets
resulting from operations (839,576) 1,579,655
711,436
Distributions to Unitholders (96,272) (686,862)
(384,392)
Capital transactions:
Redemption of 854,000 Units - -
(1,015,160)
Redemption of 884,000 Units - (1,149,487)
-
Redemption of 798,000 Units (985,396) -
-
----------- -----------
- -----------
Total decrease in net assets (1,921,244) (256,694)
(688,116)
Net assets:
Beginning of the year 13,372,543 13,629,237
14,317,353
----------- -----------
- -----------
End of the year (including
distributable funds applicable
to Trust Units of $(854),
$(1,085) and $(1,119) at
December 31, 1994, 1993 and
1992, respectively) $11,451,299 $13,372,543
$13,629,237
=========== ===========
===========
Trust Units outstanding at the end
of the year 9,524,000 10,322,000
11,206,000
=========== ===========
===========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Schedule of Investments
December 31, 1994
<TABLE>
<CAPTION>
Maturity Name of Issuer and
Market
Value Title of Security (1)
Value
<S> <C> <C>
<C>
----------- ---------------------------------------
- -----------
Corpus of U.S. Treasury Notes (stripped
of their interest paying coupons)
$9,524,000 maturing November 15, 1998
$7,078,046
===========
Shares
<S> <C> <C>
<C>
-----------
495,930.532 Kemper Total Return Fund
4,374,107
===========
- -----------
$11,452,153
===========
</TABLE>
Note to Schedule of Investments
1. The Treasury Obligations were purchased at a discount from
par value
because there is no stated interest income thereon (such
Securities often are
referred to as "zero coupon" bonds). Over the life of the
Treasury
Obligations the value should increase, so that upon maturity, the
holders
would receive 100% of the principal amount thereof.
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Notes to Financial Statements
1. Significant Accounting Policies
Valuation of Investments
The Treasury Obligations are stated at bid prices as determined
by Kemper Unit
Investment Trusts (A Service of Kemper Securities, Inc.), the
"Evaluator" of
the Trust. The bid price is determined based on (a) current bid
prices of the
Treasury Obligations, (b) current bid prices for comparable
Treasury
Obligations, (c) appraisal, or (d) any combination of the above.
Kemper Total Return Fund (the "Fund") shares are stated at net
asset value as
determined by Kemper Financial Services, Inc. Net asset value is
determined
by calculating the total value of the Fund's assets, which
normally will be
composed chiefly of investment securities, deducting total
liabilities and
dividing by the number of shares outstanding.
Cost of Investments
Cost of the Trust's Treasury Obligations is based on the offering
price of the
Treasury Obligations on the dates of deposit plus amortization of
original
issue discount and market discount or premium. Cost of fund
shares is based
on the net asset value of such shares on the dates of deposit.
The cost of
securities sold is determined using a method which approximates
average cost.
Investment Income
Fund dividends are recorded on the ex-dividend date. Interest
income consists
of amortization of original issue discount and market discount or
premium on
the Treasury Obligations.
2. Unrealized Appreciation
Following is an analysis of net unrealized appreciation at
December 31, 1994:
<TABLE>
<CAPTION>
<S>
<C>
Treasury Obligations
$294,371
Fund shares
608,694
--------
Net unrealized appreciation
$903,065
========
</TABLE>
<PAGE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Notes to Financial Statements (continued)
3. Transactions with Affiliates
From the inception of the Trust through January 31, 1995, the
Trustee,
Investors Fiduciary Trust Company (IFTC), was 50% owned by Kemper
Financial
Services, Inc., the Trust's sponsor and an affiliate of Kemper
Unit Investment
Trusts. On that date, State Street Boston Corporation acquired
IFTC. The
Trustee receives a fee, payable quarterly, at an annual rate of
$1.15 per
1,000 Units outstanding through December 31, 1994, based on the
largest
aggregate number of Units outstanding at any time during the
year.
The Evaluator receives a fee, payable quarterly, at an annual
rate of $.10 per
$1,000 principal amount of Treasury Obligations in the Trust,
based on the
highest aggregate principal amount of Treasury Obligations in the
Trust at any
time during the year.
The Fund has a management and an underwriting agreement with
Kemper Financial
Services, Inc. to provide management services and facilities.
The Fund pays
an annual management fee, payable monthly, at the rate of .65 of
1% of the
average daily net assets of the Fund up to $200,000,000, .55 of
1% on the next
$300,000,000 of the average daily net assets and .45 of 1% of the
average
daily net assets over $500,000,000.
4. Federal Income Taxes and Dividends to Unitholders
The Trust is not an association taxable as a corporation for
federal income
tax purposes. Each Unitholder is considered to be the owner of a
pro rata
portion of the Trust under Subpart E, Subchapter J of Chapter 1
of the
Internal Revenue Code of 1986, as amended. Accordingly, no
provision has been
made for federal income taxes.
5. Other Information
Cost to Investors
The cost to initial investors of Units of the Trust was based on
the aggregate
offering price of the Treasury Obligations and the net asset
value of the Fund
shares on the date of an investor's purchase, plus a sales charge
of 5.0% of
the Public Offering Price (equivalent to 5.263% of the net amount
invested).
The Public Offering Price for secondary market transactions is
based on the
aggregate bid prices of the Treasury Obligations and the net
asset value of
the Fund shares plus or minus a pro rata share of cash or
overdraft in the
Principal Account on the date of an investor's purchase, plus a
sales charge
of 5.0% of the Public Offering Price (equivalent to 5.263% of the
net amount
invested).
<PAGE>
<TABLE>
Kemper Bond Enhanced Securities Trust
Series 14 - Total Return
Notes to Financial Statements (continued)
5. Other Information (continued)
Selected data per 1,000 Units of the Trust outstanding during
each year -
<CAPTION>
Year ended
December 31
1994 1993
1992
<S> <C> <C>
<C>
--------- ---------
- ---------
Investment income - interest
and dividends $96.74 $76.58
$73.34
Expenses 2.62 2.23
2.23
--------- ---------
- ---------
Net investment income 94.12 74.35
71.11
Distributions to Unitholders (9.77) (65.82)
(34.00)
Net gain (loss) on investments (177.53) 70.77
(8.05)
--------- ---------
- ---------
Change in net asset value (93.18) 79.30
29.06
Net asset value:
Beginning of the year 1,295.54 1,216.24
1,187.18
--------- ---------
- ---------
End of the year, including
distributable funds $1,202.36 $1,295.54
$1,216.24
========= =========
=========
</TABLE>
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Independent
Auditors" and to the use of our report dated April 14, 1995 in
this Post-
Effective Amendment to the Registration Statement (Form S-6) and
related
Prospectus of Kemper Bond Enhanced Securities Trust Series 14 -
Total Return
dated April 28, 1995.
Ernst & Young LLP
Kansas City, Missouri
April 28, 1995
<PAGE>
Contents of Post-Effective AmendmentTo Registration Statement
This Post-Effective amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933,
The Registrant, Kemper Bond Enhanced Securities Trust, Series 14,
certifies that it meets all of the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago,
and State of Illinois, on the 27th day of April, 1995.
Kemper Bond Enhanced Securities
Trust, Series 14
Registrant
By: Kemper Unit Investment Trusts
(a service of Kemper
Securities, Inc.)
Depositor
By: Michael J. Thoms
Vice President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below on April 27, 1995 by the following persons, who constitute
a majority of the Board of Directors of Kemper Securities, Inc.
Signature Title
James R. Boris Chairman and Chief Executive Officer
James R. Boris
Stephen G. McConahey President and Chief Operating Officer
Stephen G. McConahey
Frank V. Geremia Senior Executive Vice President
Frank V. Geremia
David M. Greene Senior Executive Vice President
David M. Greene
Arthur J. McGivern Senior Executive Vice President and
Director
Arthur J. McGivern
Ramon Pecuch Senior Executive Vice President and
Director
Ramon Pecuch
Thomas R. Reedy Senior Executive Vice President and
Director
Thomas R. Reedy
Janet L. Reali Executive Vice President and Director
Janet L. Reali
Daniel D. Williams Executive Vice President and Treasurer
Daniel D. Williams
David B. Mathis Director
David B. Mathis
Stephen B. Timbers Director
Stephen B. Timbers
Donald F. Eller Director
Donald F. Eller
Michael J. Thoms
Michael J. Thoms signs this document pursuant to a Power of
Attorney filed with the Securities and Exchange Commission with
Amendment No. 1 to the Registration Statement on Form S-6 for
Kemper Defined Funds Series 28 (Registration No. 33-56779).
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted
from
Post-effective Amendment Number 7 to Form S-6 and is qualified in
its entirety by reference to such Post-effective Amendment to
Form S-6.
</LEGEND>
<SERIES>
<NUMBER> 14
<NAME> KEMPER BOND ENHANCED SECURITIES TRUST
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 10,549,088
<INVESTMENTS-AT-VALUE> 11,452,153
<RECEIVABLES> 0
<ASSETS-OTHER> 2,826
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,454,979
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,680
<TOTAL-LIABILITIES> 3,680
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,549,088
<SHARES-COMMON-STOCK> 9,524,000
<SHARES-COMMON-PRIOR> 10,322,000
<ACCUMULATED-NII-CURRENT> (854)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 903,065
<NET-ASSETS> 11,451,299
<DIVIDEND-INCOME> 115,485
<INTEREST-INCOME> 593,748
<OTHER-INCOME> 0
<EXPENSES-NET> 19,200
<NET-INVESTMENT-INCOME> 690,033
<REALIZED-GAINS-CURRENT> 129,183
<APPREC-INCREASE-CURRENT> (1,658,792)
<NET-CHANGE-FROM-OPS> (839,576)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (96,272)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 798,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,921,244)
<ACCUMULATED-NII-PRIOR> (1,085)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
