<PAGE> 1
0
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1995
1933 ACT REGISTRATION NO. 33-29371
1940 ACT REGISTRATION NO. 811-05829
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 7 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 8 /X/
</TABLE>
(Check appropriate box or boxes)
------------------
KEMPER GLOBAL INCOME FUND
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C>
120 South LaSalle Street, Chicago, Illinois 60603
(Address of Principal Executive Office) (Zip Code)
</TABLE>
Registrant's Telephone Number, including Area Code: (312) 781-1121
<TABLE>
<S> <C>
Philip J. Collora, Vice President and Secretary With a copy to:
Kemper Global Income Fund Charles F. Custer
120 South LaSalle Street Vedder, Price, Kaufman & Kammholz
Chicago, Illinois 60603 222 North LaSalle Street
(Name and Address of Agent for Service) Chicago, Illinois 60601
</TABLE>
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Rule 24f-2 Notice for Registrant's fiscal period ended December 31,
1994 was filed on or about February 27, 1995.
It is proposed that this filing will become effective (check appropriate
box)
/ / immediately upon filing pursuant to paragraph (b)
/X/ on March 1, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1) of Rule 485.
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
KEMPER GLOBAL INCOME FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART A
OF FORM N-1A AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER
OF FORM N-1A LOCATION IN PROSPECTUS
<S> <C> <C>
1. Cover Page............................... Cover Page
2. Synopsis................................. Summary; Summary of Expenses; Supplement to
Prospectus
3. Condensed Financial Information.......... Financial Highlights; Performance; Supplement
to Prospectus
4. General Description of Registrant........ Summary; Investment Objectives and Policies;
Capital Structure
5. Management of the Fund................... Summary; Investment Manager and
Underwriter
5A. Management's Discussion of Fund
Performance.............................. Performance
6. Capital Stock and Other Securities....... Summary; Investment Objectives and Policies;
Dividends and Taxes; Net Asset Value;
Purchase of Shares; Capital Structure
7. Purchase of Securities Being Offered..... Summary; Purchase of Shares; Investment
Manager and Underwriter; Special Features;
Supplement to Prospectus
8. Redemption or Repurchase................. Summary; Redemption or Repurchase of Shares
9. Pending Legal Proceedings................ Inapplicable
</TABLE>
<PAGE> 3
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
SUPPLEMENT TO PROSPECTUS
DATED MARCH 1, 1995
CLASS I SHARES
Kemper Global Income Fund (the "Global Fund") and Kemper International Fund
(the "International Fund") (collectively, the "Funds") currently offer four
classes of shares to provide investors with different purchasing options.
These are Class A, Class B and Class C shares, which are described in the
prospectus, and Class I shares, which are described in the prospectus as
supplemented hereby.
Class I shares are available for purchase exclusively by the following
investors: (a) tax-exempt retirement plans of Kemper Financial Services, Inc.
("KFS") and its affiliates; and (b) the following investment advisory clients
of KFS and its investment advisory affiliates (including Kemper Asset
Management Company ("KAMCO")) that invest at least $1 million in a Fund: (1)
unaffiliated benefit plans (other than individual retirement accounts and
self-directed retirement plans); (2) unaffiliated banks and insurance companies
purchasing for their own accounts; and (3) endowment funds of unaffiliated
non-profit organizations. Class I shares currently are available for purchase
only from Kemper Distributors, Inc. or Kemper Clearing Corp., affiliates of KFS
and KAMCO. Share certificates are not available for Class I shares.
The primary distinctions among the classes of each Fund's shares lie in their
initial and contingent deferred sales charge schedules and in their ongoing
expenses, including asset-based sales charges in the form of Rule 12b-1
distribution fees. Class I shares are offered at net asset value without an
initial sales charge and are not subject to a contingent deferred sales charge
or a Rule 12b-1 distribution fee. Also, there is no administrative services
fee charged to Class I shares. As a result of the relatively lower expenses
for Class I shares, the level of income dividends per share (as a percentage of
net asset value) and, therefore, the overall investment return, will be higher
for Class I shares than for Class A, Class B and Class C shares.
The following information for the Class I shares supplements the "Summary of
Expenses" section of the prospectus.
<PAGE> 4
SUMMARY OF EXPENSES
SHAREHOLDER TRANSACTION EXPENSES(applicable to both Funds)CLASS I
-------
<TABLE>
<S> <C>
Maximum Sales Charge on Purchases
(as a percentage of offering price) . . . . . . . . . . . . None
Maximum Sales Charge on Reinvested Dividends. . . . . . . . . None
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . None
Deferred Sales Charge (as a percentage of redemption proceeds)None
</TABLE>
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL
ANNUAL FUND OPERATING EXPENSES FUND FUND
(as a percentage of average net assets)
<S> <C> <C>
Management Fees (restated). . . . . . . . .75% .75%
12b-1 Fees . . . . . . . . . . . . . . . None None
Other Expenses (estimated). . . . . . . . .25% .26%
------ ------------
Total Operating Expenses. . . . . . . . . 1.00% 1.01%
====== ============
</TABLE>
<TABLE>
EXAMPLE FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
You would pay Global Fund $10 $32 $55 $122
the following International Fund $10 $32 $56 $124
expenses on a
$1,000
investment
assuming (1)
5% annual
return and (2)
redemption at
the end of each
time period:
</TABLE>
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in Class I shares of a Fund will
bear directly or indirectly.
As discussed in the prospectus under "Investment Manager and Underwriter,"
effective May 31, 1994, the investment management fee for each Fund changed.
"Management Fees" have been restated based Upon the new management fee.
"Other Expenses" for Class I shares, which were not available for
purchase prior to May 31, 1994, have been estimated for the current fiscal
year.
The Example assumes a 5% annual rate of return pursuant to requirements of the
Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of past or future performance of either Fund.
The Example should not be considered to be a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
March 1, 1995
KGIF-1I (3/95)
<PAGE> 5
<TABLE>
<S> <C>
TABLE OF CONTENTS
- ------------------------------------------------
Summary 1
- ------------------------------------------------
Summary of Expenses 2
- ------------------------------------------------
Financial Highlights 4
- ------------------------------------------------
Investment Objectives and Policies 6
- ------------------------------------------------
Investment Manager and Underwriter 16
- ------------------------------------------------
Dividends and Taxes 19
- ------------------------------------------------
Net Asset Value 21
- ------------------------------------------------
Purchase of Shares 21
- ------------------------------------------------
Redemption or Repurchase of Shares 26
- ------------------------------------------------
Special Features 30
- ------------------------------------------------
Performance 33
- ------------------------------------------------
Capital Structure 35
- ------------------------------------------------
Account Application
- ------------------------------------------------
</TABLE>
This combined prospectus contains information about each of the Funds that a
prospective investor should know before investing and should be retained for
future reference. A Statement of Additional Information dated March 1, 1995, has
been filed with the Securities and Exchange Commission and is incorporated
herein by reference. It is available upon request without charge from the Funds
at the address or telephone number on this cover or the firm from which this
prospectus was received.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. INVESTMENT IN A
FUND'S SHARES INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
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.
(LOGO)
KEMPER
GLOBAL INCOME
FUND
KEMPER
INTERNATIONAL
FUND
PROSPECTUS MARCH 1, 1995
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
120 South LaSalle Street, Chicago, Illinois 60603
1-800-621-1048
The objective of Kemper Global Income Fund is to provide high current income
consistent with prudent total return asset management. The Fund pursues its
objective by investing primarily in investment grade foreign and domestic fixed
income securities.
The objective of Kemper International Fund is to seek a total return, a
combination of capital growth and income, principally through an internationally
diversified portfolio of equity securities.
There is no assurance that either Fund's objective will be achieved.
<PAGE> 6
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603, TELEPHONE 1-800-621-1048
SUMMARY
INVESTMENT OBJECTIVES. Kemper Global Income Fund (the "Global Fund") is an
open-end, non-diversified, management investment company. The Global Fund's
investment objective is to provide high current income consistent with prudent
total return asset management. The Fund pursues its objective by investing
primarily in a portfolio of investment grade foreign and domestic fixed income
securities. The Global Fund may also engage in options, financial futures,
delayed delivery and foreign currency transactions and may lend its portfolio
securities.
Kemper International Fund (the "International Fund") is an open-end, diversified
management investment company. The International Fund's investment objective is
to seek a total return, a combination of capital growth and income, principally
through an internationally diversified portfolio of equity securities. Under
normal circumstances, more than 80% of the International Fund's total assets
will be invested in non-U.S. issuers. The International Fund also may engage in
options, financial futures and foreign currency transactions. See "Investment
Objectives and Policies."
RISK FACTORS. Each Fund may invest without limit in securities of foreign
issuers. Foreign investments involve risk and opportunity considerations not
typically associated with investing in United States companies. The U.S. Dollar
value of a foreign security tends to decrease when the value of the U.S. Dollar
rises against the foreign currency in which the security is denominated and
tends to increase when the value of the U.S. Dollar falls against such currency.
Thus, the U.S. Dollar value of foreign securities in a Fund's portfolio, and the
Fund's net asset value, may change in response to changes in currency exchange
rates even though the value of the foreign securities in local currency terms
may not have changed. While a Fund's investments in foreign securities will
principally be in developed countries, the Fund may invest a portion of its
assets in developing or "emerging" markets, which involve exposure to economic
structures that are generally less diverse and mature than in the United States,
and to political systems that may be less stable. As a "non-diversified"
investment company, the Global Fund will be able to invest a relatively high
percentage of its assets in a limited number of issuers, therefore making the
Fund more susceptible to a single economic, political or regulatory occurrence
than a diversified company. Thus, an investment in either Fund should not be
considered as a complete investment program. There are special risks associated
with options, financial futures and foreign currency transactions and there is
no assurance that use of those investment techniques will be successful. Each
Fund's returns and net asset value will fluctuate. See "Investment Objectives
and Policies."
PURCHASES AND REDEMPTIONS. Each Fund provides investors with the option of
purchasing shares in the following ways:
<TABLE>
<S> <C>
Class A Shares................ Offered at net asset value plus a maximum sales charge of 4.5% of
the offering price for the Global Fund and 5.75% of the offering
price for the International Fund. Reduced sales charges apply to
purchases of $100,000 or more for the Global Fund and $50,000 or
more for the International Fund. The redemption within one year
of Class A shares purchased at net asset value under the Large
Order NAV Purchase Privilege may be subject to a 1% contingent
deferred sales charge.
Class B Shares................ Offered at net asset value, subject to a Rule 12b-1 distribution
fee and a contingent deferred sales charge that declines from 4%
to zero on certain redemptions made within six years of purchase.
Class B shares automatically convert into Class A shares (which
have lower ongoing expenses) six years after purchase.
Class C Shares................ Offered at net asset value without an initial or contingent
deferred sales charge, but subject to a Rule 12b-1 distribution
fee. Class C shares do not convert into another class.
</TABLE>
1
<PAGE> 7
Each class of shares represents interests in the same portfolio of investments
of a Fund. The minimum initial investment is $1,000 and investments thereafter
must be at least $100. Shares are redeemable at net asset value, which may be
more or less than original cost, subject, in the case of Class A shares
purchased under the Large Order NAV Purchase Privilege and for Class B shares,
to any applicable contingent deferred sales charge. See "Purchase of Shares" and
"Redemption or Repurchase of Shares."
INVESTMENT MANAGER AND UNDERWRITER. Kemper Financial Services, Inc. ("KFS") is
each Fund's investment manager. KFS is paid an investment management fee by each
Fund at the annual rate ranging from .75 of 1% to .62 of 1% of its average daily
net assets. Kemper Distributors, Inc. ("KDI"), an affiliate of KFS, is principal
underwriter and administrator for each Fund. For Class B and Class C shares, KDI
receives a Rule 12b-1 distribution fee of .75% of average daily net assets. KDI
also receives the amount of any contingent deferred sales charges paid on the
redemption of shares. The expenses of each Fund, and of other investment
companies investing in foreign securities, can be expected to be higher than for
investment companies investing primarily in domestic securities since the costs
of operation are higher, including custody and transaction costs for foreign
securities and investment management fees. Administrative services are provided
to shareholders under an administrative services agreement with KDI. Each Fund
pays an administrative services fee at the annual rate of up to .25 of 1% of
average daily net assets of each class of the Fund, which KDI pays to financial
services firms. See "Investment Manager and Underwriter."
DIVIDENDS. The Global Fund normally distributes monthly dividends of net
investment income, the International Fund normally distributes annual dividends
of net investment income and each Fund distributes any net realized short-term
and long-term capital gains annually. Income and capital gain dividends of a
Fund are automatically reinvested in additional shares of that Fund, without a
sales charge, unless the investor makes a different election. See "Dividends and
Taxes."
GENERAL. In the opinion of the staff of the Securities and Exchange Commission,
the use of this combined prospectus may make each Fund liable for any
misstatement or omission in this prospectus regardless of the particular Fund to
which it pertains.
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------- ------------------------- ----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO BOTH
FUNDS)(1)
Maximum Sales Charge on Purchases (as a percentage
of offering price)................................ 4.5%/5.75 *(2) None None
Maximum Sales Charge on Reinvested Dividends........ None None None
Redemption Fees..................................... None None None
Exchange Fee........................................ None None None
Deferred Sales Charge (as a percentage of redemption
proceeds)......................................... None(3) 4% during the first year, None
3% during the second and
third years, 2% during
the fourth and fifth
years and 1% in the sixth
year
*5.75% applies to the International Fund only.
</TABLE>
- ---------------
(1) Investment dealers and other firms may independently charge additional fees
for shareholder transactions or for advisory services; please see their
materials for details.
(2) Reduced sales charges apply to purchases of $100,000 (for the Global Fund)
or $50,000 (for the International Fund) or more. See "Purchase of
Shares--Initial Sales Charge Alternative--Class A Shares."
(3) The redemption within one year of shares purchased at net asset value under
the Large Order NAV Purchase Privilege may be subject to a 1% contingent
deferred sales charge. See "Purchase of Shares--Initial Sales Charge
Alternative--Class A Shares."
2
<PAGE> 8
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL
FUND FUND
------ -------------
<S> <C> <C>
CLASS A SHARES
Management Fees (restated).................................................... .75% .74%
12b-1 Fees.................................................................... None None
Other Expenses................................................................ .78% .79%
---- ----
Total Operating Expenses...................................................... 1.53% 1.53%
===== =========
CLASS B SHARES
Management Fees (restated).................................................... .75% .74%
12b-1 Fees(4)................................................................. .75% .75%
Other Expenses (estimated).................................................... .81% 1.09%
--- ----
Total Operating Expenses...................................................... 2.31% 2.58%
===== =========
</TABLE>
- ---------------
(4) Long-term shareholders may pay more than the economic equivalent of the
maximum initial sales charges permitted by the National Association of
Securities Dealers, although KDI believes that it is unlikely because of the
automatic conversion feature described under "Purchase of Shares--Deferred
Sales Charge Alternative--Class B Shares."
<TABLE>
<S> <C> <C>
CLASS C SHARES
Management Fees (restated).................................................... .75% .74%
12b-1 Fees(5)................................................................. .75% .75%
Other Expenses (estimated).................................................... .78% 1.03%
--- ----
Total Operating Expenses...................................................... 2.28% 2.52%
===== ======
</TABLE>
- ---------------
(5) As a result of the accrual of 12b-1 fees, long-term shareholders may pay
more than the economic equivalent of the maximum initial sales charges
permitted by the National Association of Securities Dealers.
EXAMPLE
<TABLE>
<CAPTION>
CLASS A SHARES FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a Global Fund $60 $ 91 $125 $219
$1,000 investment, assuming (1) 5% annual International Fund $72 $103 $136 $229
return and (2) redemption at the end of each
time period:
<CAPTION>
CLASS B SHARES(6)
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a Global Fund $53 $ 92 $134 $227
$1,000 investment, assuming (1) 5% annual International Fund $56 $100 $147 $242
return and (2) redemption at the end of each
time period:
You would pay the following expenses on the Global Fund $23 $ 72 $124 $227
same investment, assuming no redemption: International Fund $26 $ 80 $137 $242
</TABLE>
- ---------------
(6) Assumes conversion to Class A shares six years after purchase and was
calculated based upon the assumption that the shareholder was an owner of
the shares on the first day of the first year and the contingent deferred
sales charge was applied as follows: 1 year (3%), 3 years (2%), 5 years (1%)
and 10 years (0%). See "Redemption or Repurchase of Shares--Contingent
Deferred Sales Charge--Class B Shares" for more information regarding the
calculation of the contingent deferred sales charge.
<TABLE>
<CAPTION>
CLASS C SHARES
<S> <C> <C> <C> <C> <C>
You would pay the following expenses on a Global Fund $23 $71 $122 $262
$1,000 investment, assuming (1) 5% annual International Fund $26 $78 $134 $286
return and (2) redemption at the end of each
time period:
</TABLE>
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. Effective May 31, 1994, the investment management fee for each Fund
changed. "Management Fees" have been restated based upon the new management fee.
"Other Expenses" for Class B shares and Class C shares, which were not available
for purchase prior to May 31, 1994, have been estimated for the current fiscal
year. The Example assumes a 5% annual rate of return pursuant to requirements of
the Securities and Exchange Commission. This hypothetical rate of return is not
intended to be representative of past or future performance of either Fund. The
Example should not be considered to be a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
3
<PAGE> 9
FINANCIAL HIGHLIGHTS
The tables below show financial information for each Fund expressed in terms of
one share outstanding throughout the period. The information in the table for
each Fund is covered by the report of the Fund's independent auditors. The
report for each Fund is contained in its Registration Statement and is available
from that Fund. The financial statements contained in each Fund's 1994 Annual
Report to Shareholders are incorporated herein by reference and may be obtained
by writing or calling that Fund.
GLOBAL FUND
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, JULY 1, 1993 TO YEAR ENDED JUNE 30, OCTOBER 1, 1989 TO
CLASS A SHARES 1994 DECEMBER 31, 1993 1993 1992 1991(A) JUNE 30, 1990
- --------------- ------------ ----------------- ----------------- ----------------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $ 9.29 9.21 9.44 9.26 9.98 9.00
- ------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income .60 .27 .72 .76 .94 .60
- ------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions (.74) .16 )(.17 .22 -- .70
- ------------------------------------------------------------------------------------------------------------------------
Total from investment
operations (.14) .43 .55 .98 .94 1.30
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net
investment income .38 -- .72 .73 1.22 .32
- ------------------------------------------------------------------------------------------------------------------------
Distribution from net
realized gain on
investments -- .05 .06 .07 .44 --
- ------------------------------------------------------------------------------------------------------------------------
Distribution in excess
of net realized
gain on investments -- .06 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Tax return of capital
distribution .22 .24 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends .60 .35 .78 .80 1.66 .32
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 8.55 9.29 9.21 9.44 9.26 9.98
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): (1.47) 4.73 6.16 10.77 9.30 14.74
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS (%):
Expenses 1.53 1.29 1.52 1.53 1.60 1.64
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 6.67 5.75 7.87 8.32 9.17 9.23
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1994 TO MAY 31, 1994 TO
DECEMBER 31, 1994 DECEMBER 31, 1994
CLASS B AND C SHARES CLASS B CLASS C
----------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $8.70 $8.70
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .30 .30
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency
transactions (.14) (.14)
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .16 .16
- ------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .19 .19
- ------------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution .11 .11
- ------------------------------------------------------------------------------------------------------------------------
Total dividends .30 .30
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.56 $8.56
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 1.89 1.91
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 2.27 2.23
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 5.89 5.93
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, JULY 1, 1993 TO YEAR ENDED JUNE 30, OCTOBER 1, 1989 TO
ALL CLASSES 1994 DECEMBER 31, 1993 1993 1992 1991(A) JUNE 30, 1990
------------ ----------------- ----------------- ----------------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA:
Net assets at end of
period (in
thousands) $170,700 83,021 78,068 71,790 58,631 28,391
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate (%) 378 484 372 292 346 444
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 10
INTERNATIONAL FUND
<TABLE>
<CAPTION>
OCT. 1
TO YEAR ENDED
YEAR ENDED OCTOBER 31, OCT. 31, SEPTEMBER 30,
CLASS A SHARES 1994 1993 1992 1991 1990 1989 1988 1987 1986 1986 1985
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period $ 10.56 8.17 8.76 9.52 9.94 9.35 9.19 8.92 12.41 7.68 6.96
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income -- .03 .22 .13 .15 .15 .07 .12 .02 .20 .09
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments
and foreign
currency .86 2.54 (.67) .31 .23 .80 1.78 .34 (.23) 5.02 1.23
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations .86 2.57 (.45) .44 .38 .95 1.85 .46 (.21) 5.22 1.32
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net
investment income -- .18 -- .11 .08 .22 .11 -- .29 .08 .11
- ---------------------------------------------------------------------------------------------------------------------------------
Distribution from net
realized gain on
investments .29 -- .14 1.09 .72 .14 1.58 .19 2.99 .41 .49
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends .29 .18 .14 1.20 .80 .36 1.69 .19 3.28 .49 .60
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 11.13 10.56 8.17 8.76 9.52 9.94 9.35 9.19 8.92 12.41 7.68
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 8.32 32.08 (5.17) 5.38 4.16 10.48 24.89 4.60 (2.57) 72.18 20.86
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
(%):(B)
Expenses 1.54 1.69 1.36 1.41 1.20 1.08 1.08 1.06 1.23 1.05 1.26
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income .02 .37 2.61 1.42 1.66 1.48 1.04 1.09 1.79 2.43 1.43
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1994 TO MAY 31, 1994 TO
OCTOBER 31, 1994 OCTOBER 31, 1994
CLASS B AND C SHARES CLASS B CLASS C
---------------- ----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $10.58 $10.58
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.04) (.04)
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency .55 .55
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations .51 .51
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.09 $11.09
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 4.82 4.82
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 2.58 2.52
- ------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (.97) (.91)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ALL CLASSES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUPPLEMENTAL DATA:
Net assets at end of period
(in thousands) $418,282 289,898 165,890 184,946 200,730 170,304 176,915 176,666 176,947 184,832 50,131
- -----------------------------
Portfolio turnover rate (%) 103 156 143 209 191 79 89 144 349 149 135
- -----------------------------
</TABLE>
NOTES:
(a) Per share data for the Global Fund for the fiscal year ended June 30, 1991
were determined based upon average shares outstanding.
(b) Under the investment management agreement in effect through July 17, 1990,
the investment manager reimbursed the International Fund when operating
expenses exceeded certain limitations. Effective July 18, 1990, the
International Fund entered into a new investment management agreement which
changed the limitation; no expense reimbursement was made in 1991, 1992,
1993 or 1994.
5
<PAGE> 11
Ratios have been determined on an annualized basis. Total return is not
annualized and does not reflect the effect of any sales charges. The Funds are
organized as separate Massachusetts business trusts. As discussed under
"Investment Manager and Underwriter," effective May 31, 1994, the investment
management fee for each Fund changed, resulting in a potentially lower fee for
each Fund.
INVESTMENT OBJECTIVES AND POLICIES
The following information sets forth each Fund's investment objective and
policies. Each Fund's returns and net asset value will fluctuate and there is no
assurance that a Fund will achieve its objective.
GLOBAL FUND. The objective of the Global Fund is to provide high current income
consistent with prudent total return asset management. In seeking to achieve its
objective, the Fund will invest primarily in investment grade foreign and
domestic fixed income securities. In managing the Fund's portfolio to provide a
high level of current income, the investment manager will also be seeking to
protect net asset value and to provide investors with a total return, which is
measured by changes in net asset value as well as income earned. In so managing
the Fund's portfolio in an effort to reduce volatility and increase returns, the
investment manager may, as is discussed more fully below, adjust the Fund's
portfolio across various global markets, maturity ranges, quality ratings and
issuers based upon its view of interest rates and other market conditions
prevailing throughout the world.
As a global fund, the Fund may invest in securities issued by any issuer and in
any currency and may hold foreign currency. Under normal market conditions, as a
fundamental policy, at least 65% of the Fund's assets will be invested in the
securities of issuers located in at least three countries, one of which may be
the United States. Securities of issuers within a given country may be
denominated in the currency of another country, or in multinational currency
units such as the European Currency Unit ("ECU"). Since the Fund invests in
foreign securities, the net asset value of the Fund will be affected by
fluctuations in currency exchange rates. See "Special Risk Factors" below.
The Fund may seek to capitalize on investment opportunities presented throughout
the world and in international financial markets influenced by the increasing
interdependence of economic cycles and currency exchange rates. Currently, more
than 50% of the value of the world's debt securities is represented by
securities denominated in currencies other than the U.S. Dollar. Over the past
ten years, debt securities offered by certain foreign governments provided
higher investment returns than U.S. Government debt securities. Such returns
reflect interest rates prevailing in those countries and the effect of gains and
losses in the denominated currencies, which have had a substantial impact on
investment in foreign fixed income securities. The relative performance of
various countries' fixed income markets historically has reflected wide
variations relating to the unique characteristics of each country's economy.
Year-to-year fluctuations in certain markets have been significant, and negative
returns have been experienced in various markets from time to time. The
investment manager believes that investment in a global portfolio can provide
investors with more opportunities for attractive returns than investment in a
portfolio comprised exclusively of U.S. debt securities. Also, the flexibility
to invest in fixed income markets around the world can reduce risk since, as
noted above, different world markets have often performed, at a given time, in
radically different ways.
The Fund will allocate its assets among securities of various issuers,
geographic regions, and currency denominations in a manner that is consistent
with its objective based upon relative interest rates among currencies, the
outlook for changes in these interest rates, and anticipated changes in
worldwide exchange rates. In considering these factors, a country's economic and
political state, including such factors as inflation rate, growth prospects,
global trade patterns and government policies, will be evaluated.
It is currently anticipated that the Fund's assets will be invested principally
within Australia, Canada, Japan, New Zealand, the United States and Western
Europe, and in securities denominated in the currencies of these countries or
denominated in multinational currency units such as the ECU. The Fund may also
acquire securities and currency in less developed countries and in developing
countries.
The Fund may invest in debt securities of supranational entities denominated in
any currency. A supranational entity is an entity designated or supported by the
national governments of two or more countries to promote
6
<PAGE> 12
economic reconstruction or development. Examples of supranational entities
include, among others, the World Bank, the European Investment Bank and the
Asian Development Bank. The Fund may, in addition, invest in debt securities
denominated in the ECU of an issuer in any country (including supranational
issuers). The Fund is further authorized to invest in "semi-governmental
securities," which are debt securities issued by entities owned by either a
national, state or equivalent government or are obligations of such a government
jurisdiction that are not backed by its full faith and credit and general taxing
powers.
The Fund is authorized to invest in the securities of any foreign or domestic
issuer. Investments by the Fund in fixed income securities may include
obligations issued or guaranteed by United States or foreign governments
(including foreign states, provinces and municipalities) or their agencies and
instrumentalities; obligations issued or guaranteed by supranational entities;
debt obligations of foreign and domestic corporations, banks and other business
organizations; and other foreign and domestic debt securities such as
convertible securities and preferred stocks, cash and cash equivalents and
repurchase agreements. Under normal market conditions, the Fund, as a
fundamental policy, will invest at least 65%, and may invest up to 100%, of its
total assets in fixed income securities. Some of the Fund's fixed income
securities may be convertible into common stock or be traded together with
warrants for the purchase of common stock, and the Fund may convert such
securities into equities and hold them as equity upon conversion. Investments
may include securities issued by enterprises that have undergone or are
currently undergoing privatization.
The securities in which the Fund may invest will be "investment grade"
securities. Investment grade securities are those rated at the time of purchase
within the four highest grades assigned by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Corporation ("S&P") or IBCA Limited (including
its affiliate IBCA, Inc.) ("IBCA"); or that are unrated but are of comparable
quality in the opinion of the investment manager. Most foreign fixed income
securities are unrated. The characteristics of the securities in the Fund's
portfolio, such as the maturity and the type of issuer, will affect yields and
yield differentials, which vary over time. The actual yield realized by the
investor is subject, among other things, to the Fund's expenses and the
investor's transaction costs.
When the investment manager deems it appropriate to invest for temporary
defensive purposes, such as during periods of adverse market conditions, or when
relative yields in other securities are not deemed attractive, part or all of
the Fund's assets may be invested in cash (including foreign currency) or cash
equivalent short-term obligations, either rated as high quality or considered to
be of comparable quality in the opinion of the investment manager, including,
but not limited to, certificates of deposit, commercial paper, short-term notes,
obligations issued or guaranteed by the U.S. Government or any of its agencies
or instrumentalities, and repurchase agreements secured thereby. In particular,
for defensive purposes a larger portion of the Fund's assets may be invested in
U.S. Dollar-denominated obligations to reduce the risks inherent in non-U.S.
Dollar-denominated assets.
The 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 the Fund's
investment objective. Accordingly, the Fund may sell portfolio securities in
anticipation of a rise in interest rates and purchase securities for inclusion
in its portfolio in anticipation of a decline in interest rates.
The Fund may purchase and sell options on securities, index options, financial
futures contracts and options on financial futures contracts, may enter into
forward foreign currency exchange contracts, foreign currency options and
foreign currency futures contracts and options thereon and may engage in delayed
delivery transactions. See "Additional Investment Information" below.
INTERNATIONAL FUND. The International Fund seeks a total return, a combination
of capital growth and income, principally through an internationally diversified
portfolio of equity securities. Investments may be made for capital growth or
for income or any combination thereof for the purpose of achieving a high
overall return. There is no limitation on the percentage or amount of the Fund's
assets that may be invested in growth or income, and therefore at any particular
time the investment emphasis may be placed solely or primarily on growth of
capital or on income. While the Fund invests principally in equity securities of
non-U.S. issuers, it may also invest in convertible and debt securities and
foreign currencies. The Fund invests primarily in non-U.S. issuers, and under
7
<PAGE> 13
normal circumstances more than 80% of the Fund's total assets will be invested
in non-U.S. issuers. In determining whether the Fund will be invested for
capital growth or income, the investment manager analyzes the international
equity and fixed income markets and seeks to assess the degree of risk and level
of return that can be expected from each market. See "Special Risk Factors."
In pursuing its objective, the Fund invests primarily in common stocks of
established non-U.S. companies believed to have potential for capital growth,
income or both. However, there is no requirement that the Fund invest
exclusively in common stocks or other equity securities. The Fund may invest in
any other type of security including, but not limited to, convertible securities
(including warrants), preferred stocks, bonds, notes and other debt securities
of companies (including Euro-currency instruments and securities) or obligations
of domestic or foreign governments and their political subdivisions. When the
investment manager believes that the total return potential in debt securities
equals or exceeds the potential return on equity securities, the Fund may
substantially increase its holdings in such debt securities. The Fund may
establish and maintain reserves for defensive purposes or to enable it to take
advantage of buying opportunities. The Fund's reserves may be invested in
domestic as well as foreign short-term money market instruments including, but
not limited to, government obligations, certificates of deposit, bankers'
acceptances, time deposits, commercial paper, short-term corporate debt
securities and repurchase agreements.
The Fund makes investments in various countries. Under normal circumstances,
business activities in not less than three different foreign countries will be
represented in the Fund's portfolio. The Fund may, from time to time, have more
than 25% of its assets invested in any major industrial or developed country
which in the view of the investment manager poses no unique investment risk. The
Fund may purchase securities of companies, wherever organized, that have their
principal activities and interests outside the United States. Investments may
include securities issued by enterprises that have undergone or are currently
undergoing privatization. Under exceptional economic or market conditions
abroad, the Fund may, for defensive purposes, invest all or a major portion of
its assets in U.S. Government obligations or securities of companies
incorporated in and having their principal activities in the United States. The
Fund may also invest its reserves in domestic short-term money-market
instruments as described above.
In determining the appropriate distribution of investments among various
countries and geographic regions, the investment manager ordinarily considers
such factors as prospects for relative economic growth among foreign countries;
expected levels of inflation; relative price levels of the various capital
markets; government policies influencing business conditions; the outlook for
currency relationships and the range of individual investment opportunities
available to the international investor. Currently, more than 60% of the market
capitalization of equity securities are represented by securities in currencies
other than the U.S. Dollar.
Generally, the Fund will not trade in securities for short-term profits but,
when circumstances warrant, securities may be sold without regard to the length
of time held.
The Fund may purchase and write (sell) options and engage in financial futures
and foreign currency transactions. See "Additional Investment Information"
below.
SPECIAL RISK FACTORS. There are risks inherent in investing in any security,
including shares of each Fund. The investment manager attempts to reduce risk
through fundamental research; however, there is no guarantee that such efforts
will be successful and each Fund's returns and net asset value will fluctuate
over time. There are special risks associated with each Fund's investments that
are discussed below.
Foreign securities involve currency risks. The U.S. Dollar value of a foreign
security tends to decrease when the value of the U.S. Dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the U.S. Dollar falls against such currency. Fluctuations in
exchange rates may also affect the earning power and asset value of the foreign
entity issuing the security. Dividend and interest payments may be repatriated
based on the exchange rate at the time of disbursement or payment, and
restrictions on capital flows
8
<PAGE> 14
may be imposed. Losses and other expenses may be incurred in converting between
various currencies in connection with purchases and sales of foreign securities.
Foreign securities may be subject to foreign government taxes that reduce their
attractiveness. Other risks of investing in such securities include political or
economic instability in the country involved, the difficulty of predicting
international trade patterns and the possible imposition of exchange controls.
The prices of such securities may be more volatile than those of domestic
securities and the markets for such securities may be less liquid. In addition,
there may be less publicly available information about foreign issuers than
about domestic issuers. Many foreign issuers are not subject to uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers. There is generally less regulation of stock
exchanges, brokers, banks and listed companies abroad than in the United States.
With respect to certain foreign countries, there is a possibility of
expropriation or diplomatic developments that could affect investment in these
countries.
EMERGING MARKETS. While a Fund's investments in foreign securities will
principally be in developed countries, a Fund may make investments in developing
or "emerging" countries, which involve exposure to economic structures that are
generally less diverse and mature than in the United States, and to political
systems that may be less stable. A developing country or emerging market country
can be considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the United States, Canada, Japan, Australia, New
Zealand, Hong Kong, Singapore and most Western European countries. Currently,
investing in many emerging markets may not be desirable or feasible because of
the lack of adequate custody arrangements for a Fund's assets, overly burdensome
repatriation and similar restrictions, the lack of organized and liquid
securities markets, unacceptable political risks or other reasons. As
opportunities to invest in securities in emerging markets develop, a Fund may
expand and further broaden the group of emerging markets in which it invests. In
the past, markets of developing countries have been more volatile than the
markets of developed countries; however, such markets often have provided higher
rates of return to investors. The investment manager believes that these
characteristics can be expected to continue in the future.
Many of the risks described above relating to foreign securities generally will
be greater for emerging markets than for developed countries. For instance,
economies in individual developing markets may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross domestic product,
rates of inflation, currency depreciation, capital reinvestment, resource
self-sufficiency and balance of payments positions. Many emerging markets have
experienced substantial rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain developing markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries with which they
trade.
Also, the securities markets of developing countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure, regulatory and
accounting standards in many respects are less stringent than in the United
States and other developed markets. There also may be a lower level of
monitoring and regulation of developing markets and the activities of investors
in such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States; this is particularly true with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
Such settlement problems may cause emerging market securities to be illiquid.
The inability of a Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result
9
<PAGE> 15
either in losses to a Fund due to subsequent declines in value of the portfolio
security or, if a Fund has entered into a contract to sell the security, could
result in possible liability to the purchaser. Certain emerging markets may lack
clearing facilities equivalent to those in developed countries. Accordingly,
settlements can pose additional risks in such markets and ultimately can expose
a Fund to the risk of losses resulting from a Fund's inability to recover from a
counterparty.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading securities may cease or may be
substantially curtailed and prices for a Fund's portfolio securities in such
markets may not be readily available. A Fund's portfolio securities in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the Board of Trustees.
Investment in certain emerging market securities is restricted or controlled to
varying degrees. These restrictions or controls may at times limit or preclude
foreign investment in certain emerging market securities and increase the costs
and expenses of a Fund. Emerging markets may require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
emerging market's balance of payments, the market could impose temporary
restrictions on foreign capital remittances.
FIXED INCOME. Since most foreign fixed income securities are not rated, a Fund
will invest in foreign fixed income securities based on KFS's analysis without
relying on published ratings. Since such investments will be based upon KFS's
analysis rather than upon published ratings, achievement of a Fund's goals may
depend more upon the abilities of KFS than would otherwise be the case.
The value of the fixed income securities held by a Fund, and thus the net asset
value of the Fund's shares, generally will fluctuate with (a) changes in the
perceived creditworthiness of the issuers of those securities, (b) movements in
interest rates, and (c) changes in the relative values of the currencies in
which a Fund's investments in fixed income securities are denominated with
respect to the U.S. Dollar. The extent of the fluctuation will depend on various
factors, such as the average maturity of a Fund's investments in foreign fixed
income securities, and the extent to which a Fund hedges its interest rate,
credit and currency exchange rate risks. Many of the foreign fixed income
obligations in which a Fund will invest will have long maturities. A longer
average maturity generally is associated with a higher level of volatility in
the market value of such securities in response to changes in market conditions.
Investments in sovereign debt, including Brady Bonds, involve special risks.
Brady Bonds are debt securities issued under a plan implemented to allow debtor
nations to restructure their outstanding commercial bank indebtedness. Foreign
governmental issuers of debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or pay
interest when due. In the event of default, there may be limited or no legal
recourse in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Political conditions, especially a sovereign entity's
willingness to meet the terms of its fixed income securities, are of
considerable significance. Also, there can be no assurance that the holders of
commercial bank loans to the same sovereign entity may not contest payments to
the holders of sovereign debt in the event of default under commercial bank loan
agreements. In addition, there is no bankruptcy proceeding with respect to
sovereign debt on which a sovereign has defaulted, and a Fund may be unable to
collect all or any part of its investment in a particular issue.
Foreign investment in certain sovereign debt is restricted or controlled to
varying degrees, including requiring governmental approval for the repatriation
of income, capital or proceed of sales by foreign investors. These restrictions
or controls may at times limit or preclude foreign investment in certain
sovereign debt or increase the costs and expenses of a Fund. A significant
portion of the sovereign debt in which a Fund may invest is issued as part of
debt restructuring and such debt is to be considered speculative. There is a
history of defaults with respect to commercial bank loans by public and private
entities issuing Brady Bonds. All or a portion of the interest payments and/or
principal repayment with respect to Brady Bonds may be uncollateralized.
PRIVATIZED ENTERPRISES. The governments of certain foreign countries have, to
varying degrees, embarked on privatization programs contemplating the sale of
all or part of their interests in state enterprises. A Fund's
10
<PAGE> 16
investments in the securities of privatized enterprises include privately
negotiated investments in a government- or state-owned or controlled company or
enterprise that has not yet conducted an initial equity offering, investments in
the initial offering of equity securities of a state enterprise or former state
enterprise and investments in the securities of a state enterprise following its
initial equity offering.
In certain jurisdictions, the ability of foreign entities, such as a Fund, to
participate in privatizations may be limited by local law, or the price or terms
on which the Fund may be able to participate may be less advantageous than for
local investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.
In the case of the enterprises in which a Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of stockholders, even
after the initial equity offerings by those enterprises. The sale of some
portion or all of those blocks could have an adverse effect on the price of the
stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or former
state enterprises go through an internal reorganization or management. Such
reorganizations are made in an attempt to better enable these enterprises to
compete in the private sector. However, certain reorganizations could result in
a management team that does not function as well as the enterprise's prior
management and may have a negative effect on such enterprise. In addition, the
privatization of an enterprise by its government may occur over a number of
years, with the government continuing to hold a controlling position in the
enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which a Fund may invest
enjoy the protection of and receive preferential treatment from the respective
sovereigns that own or control them. After making an initial equity offering
these enterprises may no longer have such protection or receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition.
DEPOSITORY RECEIPTS. For many foreign securities, there are U.S. Dollar
denominated ADRs, which are bought and sold in the United States and are issued
by domestic banks. ADRs represent the right to receive securities of foreign
issuers deposited in the domestic bank or a correspondent bank. ADRs do not
eliminate all the risk inherent in investing in the securities of foreign
issuers, such as changes in foreign currency exchange rates. However, by
investing in ADRs rather than directly in foreign issuers' stock, a Fund avoids
currency risks during the settlement period. In general, there is a large,
liquid market in the United States for most ADRs. The Funds may also invest in
European Depository Receipts ("EDRs"), which are receipts evidencing an
arrangement with a European bank similar to that for ADRs and are designed for
use in the European securities markets. EDRs are not necessarily denominated in
the currency of the underlying security.
The Global Fund has registered as a "non-diversified" investment company so that
it will be able to invest more than 5% of its assets in the obligations of an
issuer, subject to the diversification requirements of Subchapter M of the
Internal Revenue Code applicable to the Fund. This allows the Global Fund, as to
50% of its assets, to invest more than 5% of its assets, but not more than 25%,
in the fixed income securities of an individual foreign government or corporate
issuer. Currently, the Fund does not intend to invest more than 5% of its assets
in any individual corporate issuer. Since the Fund may invest a relatively high
percentage of its assets in the obligations of a limited number of issuers, the
Fund may be more susceptible to any single economic, political or regulatory
occurrence than a diversified investment company. See "Investment Restrictions"
in the Statement of Additional Information.
As noted above, the Global Fund may invest in securities that are rated within
the four highest grades by S&P, Moody's or IBCA or, if unrated, are of
comparable quality as determined by the investment manager. Securities rated
within the four highest grades are generally considered to be "investment
grade." Like higher rated securities,
11
<PAGE> 17
securities rated in the fourth grade are considered to have adequate capacity to
pay principal and interest, although they may have fewer protective provisions
than higher rated securities and thus may be adversely affected by severe
economic circumstances and are considered to have speculative characteristics.
The characteristics of the rating categories are described in the Statement of
Additional Information under "Appendix--Ratings of Investments."
Since interest rates vary with changes in economic, market, political and other
conditions, there can be no assurance that past interest rates are indicative of
future rates. The values of fixed income securities in a Fund's portfolio will
fluctuate depending upon market factors and inversely with current interest rate
levels.
Each Fund may engage in options, financial futures and foreign currency
transactions and the Global Fund may engage in delayed delivery transactions and
may lend its portfolio securities. For a description of special risks associated
with these investment techniques, see "Additional Investment Information" below.
ADDITIONAL INVESTMENT INFORMATION. The portfolio turnover rates for the Funds
are listed under "Financial Highlights." The Funds will have increased
opportunities to adjust their portfolios across various markets and may
experience a high portfolio turnover rate (over 100%), which involves
correspondingly greater brokerage commissions or other transaction costs. Higher
portfolio turnover may result in the realization of greater net short-term
capital gains. In order to continue to qualify as a regulated investment company
for federal income tax purposes, less than 30% of the annual gross income of a
Fund must be derived from the sale or other disposition of securities and
certain other investments held by the Fund for less than three months. See
"Dividends and Taxes" in the Statement of Additional Information.
The Global Fund may take full advantage of the entire range of maturities of
fixed income securities and may adjust the average maturity of its portfolio
from time to time, depending upon its assessment of relative yields on
securities of different maturities and its expectations of future changes in
interest rates. Thus, the average maturity of the Fund's portfolio may be
relatively short (under five years, for example) at some times and relatively
long (over 10 years, for example) at other times. Generally, since shorter term
debt securities tend to be more stable than longer term debt securities, the
portfolio's average maturity will be shorter when interest rates are expected to
rise and longer when interest rates are expected to fall. Since in most foreign
markets debt securities generally are issued with maturities of ten years or
less, it is currently anticipated that the average maturity of the Fund's
portfolio will normally be in the intermediate range (three to ten years).
The Global Fund may not borrow money except as a temporary measure for
extraordinary or emergency purposes, and then only in an amount up to one-third
of the value of its total assets, in order to meet redemption requests without
immediately selling any portfolio securities or other assets. If, for any
reason, the current value of the Fund's total assets falls below an amount equal
to three times the amount of its indebtedness from money borrowed, the Fund
will, within three days (not including Sundays and holidays), reduce its
indebtedness to the extent necessary. The Fund will not borrow for leverage
purposes. The Fund may pledge up to 15% of its total assets to secure any such
borrowings. The International Fund may not borrow money except for temporary or
emergency purposes (but not for the purchase of investments) and then only in an
amount not to exceed 5% of its net assets. The Fund may not pledge its assets in
an amount exceeding the amount of the borrowings secured by such pledge.
A Fund will not purchase illiquid securities, including repurchase agreements
maturing in more than seven days, if, as a result thereof, more than 15% of the
Fund's net assets valued at the time of the transaction would be invested in
such securities. See "Investment Policies and Techniques--Over-the-Counter
Options" in the Statement of Additional Information for a description of the
extent to which over-the-counter traded options are in effect considered as
illiquid for purposes of each Fund's limit on illiquid securities.
Each Fund has adopted certain fundamental investment restrictions which are
presented in the Statement of Additional Information and which, together with
the investment objective and any policies of the Fund specifically designated in
this prospectus as fundamental, cannot be changed without approval by holders of
a majority of its outstanding voting shares. As defined in the Investment
Company Act of 1940, this means the lesser of the vote of (a) 67% of the shares
of the Fund present at a meeting where more than 50% of the outstanding shares
are present
12
<PAGE> 18
in person or by proxy; or (b) more than 50% of the outstanding shares of the
Fund. Policies of a Fund that are neither designated as fundamental nor
incorporated into any of the fundamental investment restrictions referred to
above may be changed by the Board of Trustees of the applicable Fund without
shareholder approval.
OPTIONS AND FINANCIAL FUTURES TRANSACTIONS. Each Fund may deal in options on
securities, securities indexes and foreign currencies, which options may be
listed for trading on a national securities exchange or traded over-the-counter.
Each Fund may write (sell) covered call options and secured put options on up to
25% of its net assets and may purchase put and call options provided that no
more than 5% of its net assets may be invested in premiums on such options. A
Fund will not enter into any futures contracts or options on futures contracts
if the aggregate of the market value of the outstanding futures contracts of the
Fund and futures contracts subject to outstanding options written by the Fund
would exceed 50% of the total assets of the Fund.
A call option gives the purchaser the right to buy, and the writer the
obligation to sell, the underlying security or other asset at the exercise price
during the option period. A put option gives the purchaser the right to sell,
and the writer the obligation to buy, the underlying security or other asset at
the exercise price during the option period. The writer of a covered call owns
securities or other assets that are acceptable for escrow and the writer of a
secured put invests an amount not less than the exercise price in eligible
securities or other assets to the extent that it is obligated as a writer. If a
call written by a Fund is exercised, the Fund foregoes any possible profit from
an increase in the market price of the underlying security or other asset over
the exercise price plus the premium received. In writing puts, there is a risk
that a Fund may be required to take delivery of the underlying security or other
asset at a disadvantageous price.
Over-the-counter traded options ("OTC options") differ from exchange traded
options in several respects. They are transacted directly with dealers and not
with a clearing corporation, and there is a risk of non-performance by the
dealer as a result of the insolvency of such dealer or otherwise, in which event
a Fund may experience material losses. However, in writing options the premium
is paid in advance by the dealer. OTC options are available for a greater
variety of securities and other assets, and a wider range of expiration dates
and exercise prices, than are exchange traded options.
Each Fund may engage in financial futures transactions. Financial futures
contracts are commodity contracts that obligate the long or short holder to take
or make delivery of a specified quantity of a financial instrument, such as a
security, or an amount of a foreign currency, or the cash value of a securities
index during a specified future period at a specified price. A Fund will "cover"
futures contracts sold by the Fund and maintain in a segregated account certain
liquid assets in connection with futures contracts purchased by the Fund as
described under "Investment Policies and Techniques" in the Statement of
Additional Information.
The Funds may engage in financial futures transactions and may use index options
in an attempt to hedge against the effects of fluctuations in interest rates and
other market conditions. 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 Fund is believed to be
well positioned for the longer term with a high cash position, the 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
Fund's pursuit of its investment objective. Also, if the Fund owned long-term
bonds and interest rates were expected to rise, it could sell financial futures
contracts or the cash value of a securities index. If interest rates did
increase, the value of the bonds in the Fund would decline, but this decline
would be offset in whole or in part by an increase in the value of the Fund's
futures contracts or the cash value of the securities index. If, on the other
hand, long-term interest rates were expected to decline, the Fund could hold
short-term debt securities and benefit from the income earned by holding such
securities, while at the same time the Fund could purchase futures contracts on
long-term bonds or the cash value of a securities index. Thus, the Fund could
take advantage of the anticipated rise in the value of long-term bonds without
actually buying them. The
13
<PAGE> 19
futures contracts and short-term debt securities could then be liquidated and
the cash proceeds used to buy long-term bonds.
Futures contracts entail risks. If the investment manager's judgment about the
general direction of interest rates, markets or exchange rates is wrong, the
overall performance may be poorer than if no such contracts had been entered
into. There may be an imperfect correlation between movements in prices of
futures contracts and portfolio assets being hedged. In addition, the market
prices of futures contracts may be affected by certain factors. If participants
in the futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the assets and futures market could result. Price
distortions also could result if investors in futures contracts decide to make
or take delivery of underlying securities or other assets rather than engage in
closing transactions because of the resultant reduction in the liquidity of the
futures market. In addition, because, from the point of view of speculators,
margin requirements in the futures market are less onerous than margin
requirements in the cash market, increased participation by speculators in the
futures market could cause temporary price distortions. Due to the possibility
of price distortions in the futures market and because of the imperfect
correlation between movements in the prices of securities or other assets and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment manager still may not result in a successful hedging
transaction. If any of these events should occur, a Fund could lose money on the
financial futures contracts and also on the value of its portfolio assets. The
costs incurred in connection with futures transactions could reduce a Fund's
return.
Index options involve risks similar to those risks relating to transactions in
financial futures contracts described above. Also, an option purchased by a Fund
may expire worthless, in which case the Fund would lose the premium paid
therefor.
A Fund may engage in futures transactions only on commodities exchanges or
boards of trade. A Fund will not engage in transactions in index options,
financial futures contracts or related options for speculation, but only as an
attempt to hedge against changes in interest rates or market conditions
affecting the values of securities or other assets that the Fund owns or intends
to purchase.
FOREIGN CURRENCY TRANSACTIONS. Each Fund may engage in foreign currency
transactions in connection with its investments in foreign securities. The Funds
will not speculate in foreign currency exchange. The value of the foreign
securities investments of a Fund measured in U.S. Dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. Each Fund will conduct its foreign
currency exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders (usually large
commercial banks) and their customers.
When a Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the U.S. Dollar cost
or proceeds, as the case may be. By entering into a forward contract in U.S.
Dollars for the purchase or sale of the amount of foreign currency involved in
an underlying security transaction, the Fund is able to protect itself against a
possible loss between trade and settlement dates resulting from an adverse
change in the relationship between the U.S. Dollar and such foreign currency.
However, this tends to limit potential gains which might result from a positive
change in such currency relationships. Each Fund may also hedge its foreign
currency exchange rate risk by engaging in currency financial futures and
options transactions.
When the investment manager believes that the currency of a particular foreign
country may suffer a substantial decline against the U.S. Dollar, it may enter
into a forward contract to sell an amount of foreign currency approximating the
value of some or all of a Fund's portfolio securities denominated in such
foreign currency. In this situation the Fund may, in the alternative, enter into
a forward contract to sell a different foreign currency for a fixed U.S. Dollar
amount where the investment manager believes that the U.S. Dollar value of the
currency to be sold
14
<PAGE> 20
pursuant to the forward contract will fall whenever there is a decline in the
U.S. Dollar value of the currency in which portfolio securities of the Fund are
denominated ("cross-hedge"). The forecasting of short-term currency market
movement is extremely difficult and whether such a short-term hedging strategy
will be successful is highly uncertain.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a contract. Accordingly, it may be
necessary for a Fund to purchase additional currency on the spot market (and
bear the expense of such purchase) if the market value of the security is less
than the amount of foreign currency the Fund is obligated to deliver when a
decision is made to sell the security and make delivery of the foreign currency
in settlement of a forward contract. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver.
Each Fund will not speculate in foreign currency exchange. The Funds do not
enter into forward contracts or maintain a net exposure in such contracts where
the Fund would be obligated to deliver an amount of foreign currency in excess
of the value of the Fund's portfolio securities or other assets (a) denominated
in that currency or (b), in the case of a "cross-hedge," denominated in a
currency or currencies that the investment manager believes will have price
movements that tend to correlate closely with that currency. There is no
limitation as to the percentage of the Global Fund's assets that may be
committed to forward contracts for the purchase of a foreign currency; the
International Fund does not intend to enter into such forward contracts if it
would have more than 15% of the value of its total assets committed to such
contracts. A Fund segregates cash or liquid high-grade securities in an amount
not less than the value of the Fund's total assets committed to forward foreign
currency exchange contracts entered into for the purchase of a foreign currency.
If the value of the securities segregated declines, additional cash or
securities are added so that the segregated amount is not less than the amount
of the Fund's commitments with respect to such contracts. A Fund generally does
not enter into a forward contract with a term longer than one year.
RISK CONSIDERATIONS. The Statement of Additional Information contains further
information about the characteristics, risks and possible benefits of options,
futures and foreign currency transactions. See "Investment Policies and
Techniques" in the Statement of Additional Information. The principal risks are:
(a) possible imperfect correlation between movements in the prices of options or
futures contracts and movements in the prices of the securities or currencies
hedged or used for cover; (b) lack of assurance that a liquid secondary market
will exist for any particular option or futures contract at any particular time;
(c) the need for additional skills and techniques beyond those required for
normal portfolio management; (d) losses on futures contracts resulting from
market movements not anticipated by the investment manager; and (e) the possible
need to defer closing out certain options or futures contracts in order to
continue to qualify for beneficial tax treatment afforded "regulated investment
companies" under the Internal Revenue Code.
DELAYED DELIVERY TRANSACTIONS. The Global Fund may purchase or sell portfolio
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions involve a commitment by the Fund to purchase or sell
securities with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price or yield to the Fund at
the time of entering into the transaction. The value of fixed income securities
to be delivered in the future will fluctuate as interest rates vary. Because the
Fund is required to set aside cash or liquid high grade securities at least
equal in value to its commitments to purchase when-issued or delayed delivery
securities, flexibility to manage the Fund's investments may be limited if
commitments to purchase when-issued or delayed delivery securities were to
exceed 25% of the value of its assets.
To the extent the Global Fund engages in when-issued or delayed purchases, it
will do so for the purpose of acquiring portfolio securities consistent with the
Fund's investment objective and policies and not for the purpose of investment
leverage or to speculate in interest rate changes. The Fund will only make
commitments to purchase securities on a when-issued or delayed basis with the
intention of actually acquiring the securities, but the Fund reserves the right
to sell these securities before the settlement date if deemed advisable.
15
<PAGE> 21
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Global 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 segregated collateral (cash or U.S. Government
securities) equal to no less than the market value, determined daily, of the
securities loaned. The Fund will receive amounts equal to dividends or interest
on the securities loaned. It also will earn income for having made the loan. Any
cash collateral pursuant to these loans will be invested in short-term money
market instruments. As with other extensions of credit, there are risks of delay
in recovery or even loss of rights in the collateral should the borrower of the
securities fail financially. However, the loans would be made only to firms
deemed by the Fund's investment manager to be of good standing, and when the
Fund's investment manager believes the potential earnings to justify the
attendant risk. Management will limit such lending to not more than one-third of
the value of the Global Fund's total assets.
INVESTMENT MANAGER AND UNDERWRITER
INVESTMENT MANAGER. Kemper Financial Services, Inc. ("KFS"), 120 South LaSalle
Street, Chicago, Illinois 60603, is the investment manager of each Fund and
provides each Fund with continuous professional investment supervision. KFS is
one of the largest investment managers in the country and has been engaged in
the management of investment funds for more than forty-five years. KFS and its
affiliates provide investment advice and manage investment portfolios for the
Kemper Funds, the Kemper insurance companies, Kemper Corporation and other
corporate, pension, profit-sharing and individual accounts representing
approximately $60 billion under management. KFS acts as investment manager or
principal underwriter for 24 open-end and seven closed-end investment companies,
with 56 separate investment portfolios representing more than 3 million
shareholder accounts. KFS is a wholly owned subsidiary of Kemper Financial
Companies, Inc., which is a financial services holding company that is more than
95% owned by Kemper Corporation, a diversified insurance and financial services
holding company.
Responsibility for overall management of each Fund rests with its Board of
Trustees and officers. Professional investment supervision is provided by KFS.
The investment management agreements provide that KFS shall act as each Fund's
investment adviser, manage its investments and provide it with various services
and facilities. KFS will utilize the services of Kemper Investment Management
Company Limited, 1 Fleet Place, London EC4M 7RQ, a wholly owned subsidiary of
KFS, with respect to foreign securities investments of the Funds including
analysis, research, execution and trading services.
Gordon K. Johns and J. Patrick Beimford, Jr. are the co-portfolio managers of
the Global Fund. Mr. Johns has served in this capacity since the Fund commenced
operations in October 1989 and Mr. Beimford has served in this capacity since
September 1993. Mr. Johns joined Kemper Investment Management Company Limited
("KIMCO") in September 1988 and is currently an Executive Vice President of KFS,
a Director and Managing Director of KIMCO and a Vice President of the Fund. As
reflected above, KIMCO is an affiliate of KFS that provides services to KFS with
respect to the Fund's foreign investments. He received a B.A. in law from
Balliol College in Oxford, United Kingdom. Mr. Beimford joined KFS in April 1976
and is currently an Executive Vice President and Head of the Fixed Income
Department of KFS and a Vice President of the Fund. He received a B.S.I.M. in
Business from Purdue University, Lafayette, Indiana, and an M.B.A. in Finance
from the University of Chicago, Chicago, Illinois. Mr. Beimford is a Chartered
Financial Analyst.
KFS has a Fixed Income Investment Committee that determines overall investment
strategy for fixed income portfolios managed by KFS. The Fixed Income Committee
is currently comprised of the following members: J. Patrick Beimford, Jr., Frank
E. Collecchia, George Klein, Michael A. McNamara, Christopher J. Mier, Frank J.
Rachwalski, Jr., Harry E. Resis, Jr., Robert H. Schumacher, John E. Silvia,
Kenneth T. Urbaszewski and Christopher T. Vincent. The portfolio managers work
together as a team with the Fixed Income Committee and various fixed income
analysts and traders to manage the Fund's investments. Analysts provide market,
economic and financial research and analysis that is used by the Fixed Income
Committee to establish broad parameters for fixed income portfolios, including
duration and cash levels. In addition, credit research by analysts is used by
portfolio managers in selecting securities appropriate for the Fund's policies.
The KFS International Fixed Income Investments area, directed by Gordon K.
Johns, provides research and analysis regarding foreign investments to the
16
<PAGE> 22
portfolio managers. After investment decisions are made, fixed income traders
execute the portfolio manager's instructions through various broker-dealer
firms.
Dennis H. Ferro is the portfolio manager for the International Fund and has
served in this capacity since he joined KFS in March 1994. He is currently an
Executive Vice President of KFS. Prior to coming to KFS, Mr. Ferro was
President, Managing Director and Chief Investment Officer of an international
investment advisory firm. He received a B.A. in Political Science from Villanova
University, Villanova, Pennsylvania and an M.B.A. in Finance from St. Johns
University, Jamaica, New York. Mr. Ferro is a Chartered Financial Analyst.
KFS has an Equity Investment Committee that determines overall investment
strategy for equity portfolios managed by KFS. The Equity Investment Committee
is currently comprised of the following members: Daniel J. Bukowski, Tracy
McCormick Chester, C. Beth Cotner, James H. Coxon, Richard A. Goers, Karen A.
Hussey, Frank D. Korth, Gary A. Langbaum, James R. Neel and Thomas M. Regner.
The portfolio managers work as a team with the Equity Investment Committee and
various equity analysts and equity traders to manage the Fund's investments.
Equity analysts--through research, analysis and evaluation--work to develop
investment ideas appropriate for the Fund. These ideas are studied and debated
by the Equity Investment Committee and, if approved, are added to a list of
eligible investments. The portfolio managers use the list of eligible
investments to help them structure the Fund's portfolio in a manner consistent
with the Fund's objective. The KFS International Equity Investments area,
directed by Dennis H. Ferro, provides research and analysis regarding foreign
investments to the portfolio managers. After investment decisions are made,
equity traders execute the portfolio manager's instructions through various
broker-dealer firms.
Each Fund pays KFS an investment management fee, payable monthly, at the annual
rate of .75 of 1% of the first $250 million of its average daily net assets, .72
of 1% of average daily net assets between $250 million and $1 billion, .70 of 1%
of average daily net assets between $1 billion and $2.5 billion, .68 of 1% of
average daily net assets between $2.5 billion and $5 billion, .65 of 1% of
average daily net assets between $5 billion and $7.5 billion, .64 of 1% of
average daily net assets between $7.5 billion and $10 billion, .63 of 1% of
average daily net assets between $10 billion and $12.5 billion and .62 of 1% of
its average daily net assets over $12.5 billion. Before May 31, 1994, the Funds
paid KFS under a different schedule that is described in the Statement of
Additional Information. The expenses of each Fund, and of other investment
companies investing in foreign securities, can be expected to be higher than for
investment companies investing primarily in domestic securities since the costs
of operation are higher, including custody and transaction costs for foreign
securities and investment management fees.
PRINCIPAL UNDERWRITER. Pursuant to an underwriting and distribution services
agreement ("distribution agreement") with each Fund, Kemper Distributors, Inc.
("KDI"), an affiliate of KFS, is the principal underwriter and distributor of
each Fund's shares and acts as agent of each Fund in the sale of its shares. KDI
bears all its expenses of providing services pursuant to the distribution
agreement, including the payment of any commissions. KDI provides for the
preparation of advertising or sales literature and bears the cost of printing
and mailing prospectuses to persons other than shareholders. KDI bears the cost
of qualifying and maintaining the qualification of Fund shares for sale under
the securities laws of the various states and each Fund bears the expense of
registering its shares with the Securities and Exchange Commission. KDI may
enter into related selling group agreements with various broker-dealers,
including affiliates of KDI, that provide distribution services to investors.
KDI also may provide some of the distribution services. Before February 1, 1995,
KFS was the Funds' principal underwriter and distributor.
CLASS A SHARES. KDI receives no compensation from the Fund as principal
underwriter for Class A shares and pays all expenses of distribution of each
Fund's Class A shares under the distribution agreement not otherwise paid by
dealers or other financial services firms. As indicated under "Purchase of
Shares," KDI retains the sales charge upon the purchase of shares and pays or
allows concessions or discounts to firms for the sale of Fund shares.
CLASS B SHARES. For its services under the distribution agreement, KDI receives
a fee from each Fund, payable monthly, at the annual rate of .75 of 1% of
average daily net assets of each Fund attributable to Class B shares. This
17
<PAGE> 23
fee is accrued daily as an expense of Class B shares. KDI also receives any
contingent deferred sales charges. See "Redemption or Repurchase of
Shares--Contingent Deferred Sales Charge--Class B Shares." KDI currently
compensates firms for sales of Class B shares at a commission rate of 3.75%.
CLASS C SHARES. For its services under the distribution agreement, KDI receives
a fee from each Fund, payable monthly, at the annual rate of .75 of 1% of
average daily net assets of each Fund attributable to Class C shares. This fee
is accrued daily as an expense of Class C shares. KDI currently pays firms for
sales of Class C shares a distribution fee, payable quarterly, at an annual rate
of .75 of 1% of net assets attributable to Class C shares maintained and
serviced by the firm. A firm becomes eligible for the distribution fee based
upon assets in accounts in the month of purchase and the fee continues until
terminated by KDI or a Fund.
RULE 12b-1 PLAN. Since each distribution agreement provides for fees payable as
an expense of the Class B shares and the Class C shares that are used by KDI to
pay for distribution services for those classes, that agreement is approved and
reviewed separately for the Class B shares and the Class C shares in accordance
with Rule 12b-1 under the Investment Company Act of 1940, which regulates the
manner in which an investment company may, directly or indirectly, bear the
expenses of distributing its shares. The table below shows amounts paid in
connection with each Fund's Rule 12b-1 Plan during its 1994 fiscal year.+
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION FEES
EXPENSES PAID CONTINGENT DEFERRED
INCURRED BY BY FUND TO SALES CHARGES PAID
UNDERWRITER UNDERWRITER TO UNDERWRITER
------------------- ------------------ -------------------
FUND CLASS B CLASS C CLASS B CLASS C CLASS B
- -------------------------------------------- -------- ------- ------- ------- -------------------
<S> <C> <C> <C> <C> <C>
Global...................................... $134,000 8,000 146,000 0 107,000
International............................... $337,000 18,000 48,000 1,000 8,000
</TABLE>
- ---------------
+ Class B and Class C shares were first offered on May 31, 1994.
If a Rule 12b-1 Plan is terminated in accordance with its terms, the obligation
of a Fund to make payments to KDI pursuant to the Plan will cease and the Fund
will not be required to make any payments past the termination date. Thus, there
is no legal obligation for the Fund to pay any expenses incurred by KDI in
excess of its fees under a Plan, if for any reason the Plan is terminated in
accordance with its terms. Future fees under a Plan may or may not be sufficient
to reimburse KDI (or KFS as predecessor to KDI) for its expenses incurred.
ADMINISTRATIVE SERVICES. KDI also provides information and administrative
services for Fund shareholders pursuant to an administrative services agreement
("administrative agreement"). KDI enters into related arrangements with various
financial services firms, such as broker-dealer firms or banks ("firms"), that
provide services and facilities for their customers or clients who are
shareholders of the Fund. Such administrative services and assistance may
include, but are not limited to, establishing and maintaining shareholder
accounts and records, processing purchase and redemption transactions, answering
routine inquiries regarding the Fund and its special features and such other
services as may be agreed upon from time to time and permitted by applicable
statute, rule or regulation. KDI bears all its expenses of providing services
pursuant to the administrative agreement, including the payment of any service
fees. For services under the administrative agreement, each Fund pays KDI a fee,
payable monthly, at the annual rate of up to .25 of 1% of average daily net
assets of each class of the Fund. With respect to Class A shares, KDI then pays
each firm a service fee at an annual rate of (a) up to .15 of 1% of net assets
for the Global Fund and .25 of 1% of net assets for the International Fund of
those accounts in the Fund that it maintains and services attributable to Class
A shares acquired prior to October 1, 1993, and (b) up to .25 of 1% of net
assets of those accounts in each Fund that it maintains and services
attributable to Class A shares acquired on or after October 1, 1993. With
respect to Class B shares and Class C shares, KDI pays each firm a service fee,
payable quarterly, at an annual rate of up to .25 of 1% of net assets of those
accounts in the Fund that it maintains and services attributable to Class B
shares and Class C shares, respectively. Firms to which service fees may be paid
include broker-dealers affiliated with KDI. A firm becomes eligible for the
service fee based on assets in the accounts in the month following the month of
purchase (in the month of purchase for Class C shares) and the fee continues
18
<PAGE> 24
until terminated by KDI or the Fund. The fees are calculated monthly and paid
quarterly. KDI may advance to financial services firms the first year service
fee related to Class B shares sold by such firms at a rate of up to .25 of 1% of
the purchase price of such shares. As compensation therefor, KDI may retain the
administrative services fee paid by a Fund with respect to such shares for the
first year after purchase. Financial services firms will become eligible for
future service fees with respect to such shares commencing in the thirteenth
month following the month of purchase.
KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for each Fund. Currently, the
administrative services fee payable to KDI is based only upon Fund assets in
accounts for which there is a firm listed on a Fund's records and it is intended
that KDI will pay all the administrative services fee that it receives from each
Fund to firms in the form of service fees. The effective administrative services
fee rate to be charged against all assets of each Fund while this procedure is
in effect will depend upon the proportion of Fund assets that is in accounts for
which there is a firm of record as well as, with respect to the Class A shares
of the Global Fund, the date when shares representing such assets were
purchased.
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. The Chase Manhattan Bank, N.A., Chase
MetroTech Center, Brooklyn, New York 11245, as custodian, has custody of all
securities and cash of each Fund held outside the United States. Investors
Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas City, Missouri
64105, as custodian, and United Missouri Bank, n.a., Tenth and Grand Streets,
Kansas City, Missouri 64105 and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, as sub-custodians, have custody of
all securities and cash of each Fund maintained in the United States. They
attend to the collection of principal and income, and payment for and collection
of proceeds of securities bought and sold by each Fund. IFTC also is each Fund's
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Kemper Service Company, an affiliate of KFS, serves as "Shareholder
Service Agent" of each Fund and as such, performs all of IFTC's duties as
transfer agent and dividend-paying agent. For a description of shareholder
service agent fees payable to the Shareholder Service Agent, see "Investment
Manager and Underwriter" in the Statement of Additional Information.
PORTFOLIO TRANSACTIONS. KFS places all orders for purchases and sales of a
Fund's securities. Subject to seeking best execution of orders, KFS may consider
sales of shares of a Fund and other funds managed by KFS as a factor in
selecting broker-dealers. See "Portfolio Transactions" in the Statement of
Additional Information.
DIVIDENDS AND TAXES
DIVIDENDS. The Global Fund normally distributes monthly dividends of net
investment income, the International Fund normally distributes annual dividends
of net investment income, and each Fund distributes any net realized short-term
and long-term capital gains annually.
Dividends paid by a Fund as to each class of its shares will be calculated in
the same manner, at the same time and on the same day. The level of income
dividends per share (as a percentage of net asset value) will be lower for Class
B and Class C shares than for Class A shares primarily as a result of the
distribution services fee applicable to Class B and Class C shares.
Distributions of capital gains, if any, will be paid in the same amount for each
class.
Income dividends and capital gain dividends, if any, of a Fund will be credited
to shareholder accounts in full and fractional shares of the same class of that
Fund at net asset value except that, upon written request to the Shareholder
Service Agent, a shareholder may select one of the following options:
(1) To receive income and short-term capital gain dividends in cash and
long-term capital gain dividends in shares of the same class at net asset
value; or
(2) To receive income and capital gain dividends in cash.
19
<PAGE> 25
Any dividends of a Fund that are reinvested normally will be reinvested in
shares of the same class of that same Fund. However, upon written request to the
Shareholder Service Agent, a shareholder may elect to have dividends of a Fund
invested without sales charge in shares of the same class of another Kemper Fund
at the net asset value of such class of such other fund. See "Special
Features--Class A Shares--Combined Purchases" for a list of such other Kemper
Funds. To use this privilege of investing dividends of a Fund in shares of
another Kemper Fund, shareholders must maintain a minimum account value of
$1,000 in the Fund distributing the dividends and a minimum account value of
$1,000 in the Kemper Fund in which dividends are reinvested. The Funds will
reinvest dividend checks (and future dividends) in shares of that same Fund and
class if checks are returned as undeliverable.
TAXES. Each Fund intends to continue to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code ("Code") and, if so
qualified, will not be liable for federal income taxes to the extent its
earnings are distributed. Dividends derived from net investment income and net
short-term capital gains are taxable to shareholders as ordinary income and
long-term capital gain dividends are taxable to shareholders as long-term
capital gain regardless of how long the shares have been held and whether
received in cash or shares. Long-term capital gain dividends received by
individual shareholders are taxed at a maximum rate of 28%. Dividends declared
in October, November or December to shareholders of record as of a date in one
of those months and paid during the following January are treated as paid on
December 31 of the calendar year declared. It is anticipated that only a small
portion, if any, of the ordinary income dividends paid by either Fund will
qualify for the dividends received deduction available to corporate
shareholders.
A dividend received shortly after the purchase of shares reduces the net asset
value of the shares by the amount of the dividend and, although in effect a
return of capital, will be taxable to the shareholder. If the net asset value of
shares were reduced below the shareholder's cost by dividends representing gains
realized on sales of securities, such dividends would be a return of investment
though taxable as stated above.
The International Fund intends to continue to qualify for and make the election
permitted under Section 853 of the Code. If more than 50% of the value of the
Global Fund's total assets at the close of a fiscal year consists of foreign
securities, the Global Fund may make the election permitted under Section 853 of
the Code. If this election is made, shareholders will be able to claim a credit
or deduction on their income tax returns for, and will be required to treat as
part of the amounts distributed to them, their pro rata portion of the income
taxes paid by the Fund to foreign countries (which taxes relate primarily to
investment income). The shareholders of a Fund may claim a credit by reason of
that Fund's election, subject to certain limitations imposed by Section 904 of
the Code. Also, under the Code, no deduction for foreign taxes may be claimed by
individual shareholders who do not elect to itemize deductions on their federal
income tax returns; although such a shareholder may claim a credit for foreign
taxes and in any event will be treated as having taxable income in the amount of
the shareholder's pro rata share of foreign taxes paid by the Fund.
Gains and losses attributable to fluctuations in the value of foreign currencies
will be characterized generally as ordinary gain or loss under Section 988 of
the Code. For example, if a Fund sold a foreign bond and part of the gain or
loss on the sale were attributable to an increase or decrease in the value of a
foreign currency, then the currency gain or loss would be treated as ordinary
income or loss. If such transactions result in greater net ordinary income, the
dividends paid by the Fund will be increased; if the result of such transactions
is lower net ordinary income, a portion of dividends paid could be classified as
a return of capital.
Each Fund is required by law to withhold 31% of taxable dividends and redemption
proceeds paid to certain shareholders who do not furnish a correct taxpayer
identification number (in the case of individuals, a social security number) and
in certain other circumstances. Trustees of qualified retirement plans and
403(b)(7) accounts are required by law to withhold 20% of the taxable portion of
any distribution that is eligible to be "rolled over." The 20% withholding
requirement does not apply to distributions from Individual Retirement Accounts
("IRAs") or any part of a distribution that is transferred directly to another
qualified retirement plan, 403(b)(7) account, or IRA. Shareholders should
consult with their tax advisers regarding the 20% withholding requirement.
20
<PAGE> 26
After each transaction, shareholders will receive a confirmation statement
giving complete details of the transaction except that statements will be sent
quarterly for dividend reinvestment, periodic investment and redemption programs
and reinvestment programs for unit investment trusts underwritten by an
affiliate of KFS. Information for income tax purposes will be provided after the
end of the calendar year. Shareholders are encouraged to retain copies of their
account confirmation statements or year-end statements for tax reporting
purposes. However, those who have incomplete records may obtain historical
account transaction information at a reasonable fee.
NET ASSET VALUE
The net asset value per share of a Fund is determined separately for each class
by dividing the value of the Fund's net assets attributable to that class by the
number of shares of that class outstanding. The per share net asset value of the
Class B and Class C shares of a Fund will generally be lower than that of the
Class A shares of the Fund because of the higher expenses borne by the Class B
and Class C shares. Portfolio securities that are primarily traded on a domestic
securities exchange are valued at the last sale price on the exchange or, if
there is no recent last 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. A security that is listed or traded
on more than one exchange is valued at the quotation on the exchange determined
to be the primary market for such security by the Board of Trustees or its
delegates. 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. 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. Exchange
traded fixed income options are valued at the last sale price unless there is no
sale price, in which event current prices provided by market makers are used.
Over-the-counter traded fixed income options are valued based upon current
prices provided by market makers. Financial futures and options thereon are
valued at the settlement price established each day by the board of trade or
exchange on which they are traded. Other securities and assets are valued at
fair value as determined in good faith by the Board of Trustees. Because of the
need to obtain prices as of the close of trading on various exchanges throughout
the world, the calculation of net asset value does not necessarily take place
contemporaneously with the determination of the prices of a Fund's foreign
securities. For purposes of determining the Fund's net asset value, all assets
and liabilities initially expressed in foreign currency values will be converted
into U.S. Dollar values at the mean between the bid and offered quotations of
such currencies against U.S. Dollars as last quoted by any recognized dealer. If
an event were to occur after the value of a security 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 security 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 earlier of 3:00 p.m. Chicago time or the close of
the Exchange.
PURCHASE OF SHARES
ALTERNATIVE PURCHASE ARRANGEMENTS. Class A shares of each Fund are sold to
investors subject to an initial sales charge. Class B shares are sold without an
initial sales charge but are subject to higher ongoing expenses than Class A
shares and a contingent deferred sales charge payable upon certain redemptions.
Class B shares automatically convert to Class A shares six years after issuance.
Class C shares are sold without an initial or a contingent deferred sales charge
but are subject to higher ongoing expenses than Class A shares and do not
convert into another class. When placing purchase orders, investors must specify
whether the order is for Class A, Class B or Class C shares.
The primary distinctions among the classes of each Fund's shares lie in their
initial and contingent deferred sales charge structures and in their ongoing
expenses, including asset-based sales charges in the form of Rule 12b-1
distribution fees. These differences are summarized in the table below. See,
also, "Summary of Expenses." Each
21
<PAGE> 27
class has distinct advantages and disadvantages for different investors, and
investors may choose the class that best suits their circumstances and
objectives.
<TABLE>
<CAPTION>
ANNUAL 12b-1 FEES
(AS A % OF AVERAGE DAILY
SALES CHARGE NET ASSETS) OTHER INFORMATION
--------------------------------- ------------------------ ---------------------------------
<S> <C> <C> <C>
Class A Maximum initial sales charge of None Initial sales charge waived or
4.5% (for the Global Fund) and reduced for certain purchases
5.75% (for the International
Fund) of the public offering
price
Class B Maximum contingent deferred sales 0.75% Shares convert to Class A shares
charge of 4% of redemption six years after issuance
proceeds; declines to zero after
six years
Class C None 0.75% No conversion feature
</TABLE>
The minimum initial investment for each Fund is $1,000 and the minimum
subsequent investment is $100. The minimum initial investment for an Individual
Retirement Account is $250 and the minimum subsequent investment is $50. Under
an automatic investment plan, such as Bank Direct Deposit, Payroll Direct
Deposit or Government Direct Deposit, the minimum initial and subsequent
investment is $50. These minimum amounts may be changed at any time in
management's discretion.
Share certificates will not be issued unless requested in writing. It is
recommended that investors not request share certificates unless needed for a
specific purpose. You cannot redeem shares by telephone or wire transfer or use
the telephone exchange privilege if share certificates have been issued. A lost
or destroyed certificate is difficult to replace and can be expensive to the
shareholder (a bond worth 2% or more of the certificate value is normally
required).
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES. The public offering of Class A
shares for purchasers of the Global Fund choosing the initial sales charge
alternative is the net asset value plus a sales charge, as set forth below.
<TABLE>
<CAPTION>
GLOBAL FUND--SALES CHARGE
----------------------------------------
ALLOWED
TO
DEALERS
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF OF NET OF
OFFERING ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE* PRICE
------ ------ ------
<S> <C> <C> <C>
Less than $100,000.................................. 4.50 % 4.71 % 4.00 %
$100,000 but less than $250,000..................... 3.50 3.63 3.00
$250,000 but less than $500,000..................... 2.60 2.67 2.25
$500,000 but less than $1 million................... 2.00 2.04 1.75
$1 million and over................................. 0.00 ** 0.00 ** ***
- ---------------
* Rounded to the nearest one-hundredth percent.
** Redemption of shares may be subject to a contingent deferred sales charge as discussed below.
*** Commission is payable by KDI as discussed below.
</TABLE>
22
<PAGE> 28
The public offering price of Class A shares for purchasers of the International
Fund choosing the initial sales charge alternative is the net asset value plus a
sales charge, as set forth below.
<TABLE>
<CAPTION>
INTERNATIONAL FUND--SALES CHARGE
----------------------------------------
ALLOWED
TO
DEALERS
AS A AS A AS A
PERCENTAGE PERCENTAGE PERCENTAGE
OF OF NET OF
OFFERING ASSET OFFERING
AMOUNT OF PURCHASE PRICE VALUE* PRICE
------ ------ ------
<S> <C> <C> <C>
Less than $50,000................................... 5.75 % 6.10 % 5.20 %
$50,000 but less than $100,000...................... 4.50 4.71 4.00
$100,000 but less than $250,000..................... 3.50 3.63 3.00
$250,000 but less than $500,000..................... 2.60 2.67 2.25
$500,000 but less than $1 million................... 2.00 2.04 1.75
$1 million and over................................. .00 ** .00 ** ***
- ---------------
* Rounded to the nearest one-hundredth percent.
** Redemption of shares may be subject to a contingent deferred sales charge as discussed below.
*** Commission is payable by KDI as discussed below.
</TABLE>
Each Fund receives the entire net asset value of all Class A shares sold. KDI,
the Funds' principal underwriter, retains the sales charge on sales of Class A
shares from which it allows discounts from the applicable public offering price
to investment dealers, which discounts are uniform for all dealers in the United
States and its territories. The normal discount allowed to dealers is set forth
in the above table. Upon notice to all dealers with whom it has sales
agreements, KDI may reallow up to the full applicable sales charge, as shown in
the above table, during periods and for transactions specified in such notice
and such reallowances may be based upon attainment of minimum sales levels.
During periods when 90% or more of the sales charge is reallowed, such dealers
may be deemed to be underwriters as that term is defined in the Securities Act
of 1933.
Class A shares of a Fund may be purchased at net asset value to the extent that
the amount invested represents the net proceeds from a redemption of shares of a
mutual fund for which KFS does not serve as investment manager ("non-Kemper
fund") provided that: (a) the investor has previously paid either an initial
sales charge in connection with the purchase of the non-Kemper fund shares
redeemed or a contingent deferred sales charge in connection with the redemption
of the non-Kemper fund shares, and (b) the purchase of Fund shares is made
within 90 days after the date of such redemption. To make such a purchase at net
asset value, the investor or the investor's dealer must, at the time of
purchase, submit a request that the purchase be processed at net asset value
pursuant to this privilege. The redemption of the shares of the non-Kemper fund
is, for federal income tax purposes, a sale upon which a gain or loss may be
realized.
Class A shares of a Fund may be purchased at net asset value by: (a) any
purchaser provided that the amount invested in the Fund or other Kemper Mutual
Funds listed under "Special Features--Class A Shares--Combined Purchases" totals
at least $1,000,000 including purchases of Class A shares pursuant to the
"Combined Purchases," "Letter of Intent" and "Cumulative Discount" features
described under "Special Features"; or (b) a participant-directed qualified
retirement plan described in Code Section 401(a) or a participant-directed
non-qualified deferred compensation plan described in Code Section 457 provided
in either case that such plan has not less than 200 eligible employees (the
"Large Order NAV Purchase Privilege"). Redemption within one year of shares
purchased under the Large Order NAV Purchase Privilege may be subject to a
contingent deferred sales charge. See "Redemption or Repurchase of
Shares--Contingent Deferred Sales Charge--Large Order NAV Purchase Privilege."
KDI may in its discretion compensate investment dealers or other financial
services firms in connection with the sale of Class A shares of each Fund to
employer sponsored employee benefit plans using the subaccount recordkeeping
system made available through KFS at net asset value in accordance with the
Large Order NAV Purchase Privilege up to the following amounts: 1.00% of the net
asset value of shares sold on amounts up to $5 million in any calendar year,
.50% on the next $5 million and .25% on amounts over $10 million in such
calendar year. KDI may in its discretion compensate investment dealers or other
financial services firms in connection with the sale of Class A shares of each
Fund to other purchasers at net asset value in accordance with the Large Order
23
<PAGE> 29
NAV Purchase Privilege up to the following amounts: .70% of the net asset value
of shares sold on amounts up to $3 million, .50% on the next $2 million and .25%
on amounts over $5 million. For purposes of determining the appropriate
commission percentage to be applied to a particular sale under the foregoing
schedules, KDI will consider the cumulative amount invested by the purchaser in
the Fund and other Kemper Mutual Funds listed under "Special Features--Class A
Shares--Combined Purchases," including purchases pursuant to the "Combined
Purchases," "Letter of Intent" and "Cumulative Discount" features referred to
above. The privilege of purchasing Class A shares of a Fund at net asset value
under the Large Order NAV Purchase Privilege is not available if another net
asset value purchase privilege is also applicable.
Class A shares may be sold to officers, trustees, directors, employees
(including retirees) and sales representatives of the Fund, its investment
manager, its principal underwriter or certain affiliated companies, for
themselves or members of their families, or to any trust, pension,
profit-sharing or other benefit plan for only such persons at net asset value
and in any amount. Class A shares may be sold at net asset value in any amount
to registered representatives and employees of broker-dealers having selling
group agreements with KDI and officers, directors and employees of service
agents of the Fund, for themselves or their spouses or dependent children, or to
any trust or pension, profit-sharing or other benefit plan for only such
persons. Class A shares may be sold at net asset value in any amount to selected
employees (including their spouses and dependent children) of banks and other
financial services firms that provide administrative services related to order
placement and payment to facilitate transactions in shares of each Fund for
their clients pursuant to an agreement with KDI or one of its affiliates. Only
those employees of such banks and other firms who as part of their usual duties
provide services related to transactions in Fund shares may purchase Fund Class
A shares at net asset value hereunder. Class A shares may also be sold at net
asset value in any amount to unit investment trusts underwritten by an affiliate
of KFS. In addition, unitholders of unit investment trusts underwritten by an
affiliate of KFS may purchase Fund Class A shares at net asset value through
reinvestment programs described in the prospectuses of such trusts which have
such programs. Class A shares of a Fund may be sold at net asset value through
certain investment advisers registered under the Investment Advisers Act of 1940
and other financial services firms that adhere to certain standards established
by KDI, including a requirement that such shares be sold for the benefit of
their clients participating in a "wrap account" or similar program under which
such clients pay a fee to the investment adviser or other firm. Such shares are
sold for investment purposes and on the condition that they will not be resold
except through redemption or repurchase by the Fund. Each Fund may also issue
Class A shares at net asset value in connection with the acquisition of the
assets of or merger or consolidation with another investment company, or to
shareholders in connection with the investment or reinvestment of income and
capital gain dividends.
The sales charge scale is applicable to purchases made at one time by any
"purchaser" which includes an individual; or an individual, his or her spouse
and children under the age of 21; or a trustee or other fiduciary of a single
trust estate or single fiduciary account; or an organization exempt from federal
income tax under Section 501(c)(3) or (13) of the Code; or a pension,
profit-sharing or other employee benefit plan whether or not qualified under
Section 401 of the Code; or other organized group of persons whether
incorporated or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase of redeemable
securities of a registered investment company at a discount. In order to qualify
for a lower sales charge, all orders from an organized group will have to be
placed through a single investment dealer or other firm and identified as
originating from a qualifying purchaser.
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES. Investors choosing the
deferred sales charge alternative may purchase Class B shares at net asset value
per share without any sales charge at the time of purchase. Since Class B shares
are being sold without an initial sales charge, the full amount of the
investor's purchase payment will be invested in Class B shares for his or her
account. A contingent deferred sales charge may be imposed upon redemption of
Class B shares. See "Redemption or Repurchase of Shares--Contingent Deferred
Sales Charge--Class B Shares."
KDI compensates firms for sales of Class B shares at the time of sale at a
commission rate of up to 3.75% of the amount of Class B shares purchased. KDI is
compensated by each Fund for services as distributor and principal underwriter
for Class B shares. See "Investment Manager and Underwriter."
24
<PAGE> 30
Class B shares of a Fund will automatically convert to Class A shares of the
same Fund six years after issuance on the basis of the relative net asset value
per share. The purpose of the conversion feature is to relieve holders of Class
B shares from the distribution services fee when they have been outstanding long
enough for KDI to have been compensated for distribution related expenses. For
purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and other distributions paid with respect to Class B
shares in a shareholder's Fund account will be converted to Class A shares on a
pro rata basis.
PURCHASE OF CLASS C SHARES. The public offering price of the Class C shares of a
Fund is the next determined net asset value. No initial or contingent deferred
sales charge is imposed. Since Class C shares are sold without an initial sales
charge, the full amount of the investor's purchase payment will be invested in
Class C shares for his or her account. KDI pays firms for sales of Class C
shares a distribution fee, payable quarterly, at an annual rate of .75 of 1% of
net assets attributable to Class C shares maintained and serviced by the firm.
KDI is compensated by each Fund as distributor and principal underwriter for
Class C shares. See "Investment Manager and Underwriter."
WHICH ARRANGEMENT IS BETTER FOR YOU? The decision as to which class of shares
provides a more suitable investment for an investor depends on a number of
factors, including the amount and intended length of the investment. Investors
making investments that qualify for reduced sales charges might consider Class A
shares. Investors who prefer not to pay an initial sales charge and who plan to
hold their investment for more than six years might consider Class B shares.
Investors who prefer not to pay an initial sales charge but who plan to redeem
their shares within six years might consider Class C shares. Orders for Class B
shares or Class C shares for $500,000 or more will be declined. Orders for Class
B shares or Class C shares by employer sponsored employee benefit plans using
the subaccount record keeping system made available through KFS will be invested
instead in Class A shares at net asset value where the combined subaccount value
in a Fund or other Kemper Mutual Funds listed under "Special Features--Class A
Shares--Combined Purchases" is in excess of $5 million including purchases
pursuant to the "Combined Purchases," "Letter of Intent" and "Cumulative
Discount" features described under "Special Features." For more information
about the three sales arrangements, consult your financial representative or the
Funds' Shareholder Service Agent. Financial services firms may receive different
compensation depending upon which class of shares they sell.
GENERAL. Banks and other financial services firms may provide administrative
services related to order placement and payment to facilitate transactions in
shares of a Fund for their clients, and KDI may pay them a transaction fee up to
the level of the discount or commission allowable or payable to dealers as
described above. Banks currently are prohibited under the Glass-Steagall Act
from providing certain underwriting or distribution services. Banks or other
financial services firms may be subject to various state laws regarding the
services described above and may be required to register as dealers pursuant to
state law. If banking firms were prohibited from acting in any capacity or
providing any of the described services, management would consider what action,
if any, would be appropriate. Management does not believe that termination of a
relationship with a bank would result in any material adverse consequences to a
Fund.
In addition to the discounts or commissions described above, KDI will, from time
to time, pay or allow additional discounts, commissions or promotional
incentives, in the form of cash or other compensation, to firms that sell shares
of the Funds. Non-cash compensation includes luxury merchandise and trips to
luxury resorts. In some instances, such discounts, commissions or other
incentives will be offered only to certain firms that sell or are expected to
sell during specified time periods certain minimum amounts of shares of a Fund
or other funds underwritten by KDI.
Orders for the purchase of shares of a Fund will be confirmed at a price based
on the net asset value of that Fund next determined after receipt by KDI of the
order accompanied by payment. However, orders received by dealers or other firms
prior to the determination of net asset value (see "Net Asset Value") and
received by KDI prior to the close of its business day will be confirmed at a
price based on the net asset value effective on that day. The Funds reserve the
right to determine the net asset value more frequently than once a day if deemed
desirable. Dealers and other financial services firms are obligated to transmit
orders promptly. Collection may take significantly longer for a check drawn on a
foreign bank than for a check drawn on a domestic bank. Therefore, if an order
is accompanied by a check drawn on a foreign
25
<PAGE> 31
bank, funds must normally be collected before shares will be purchased. See
"Purchase and Redemption of Shares" in the Statement of Additional Information.
Investment dealers and other firms provide varying arrangements for their
clients to purchase and redeem Fund shares. Some may establish higher minimum
investment requirements than set forth above. Firms may arrange with their
clients for other investment or administrative services. Such firms may
independently establish and charge additional amounts to their clients for such
services, which charges would reduce the clients' return. Firms also may hold
Fund shares in nominee or street name as agent for and on behalf of their
customers. In such instances, the Funds' transfer agent will have no information
with respect to or control over accounts of specific shareholders. Such
shareholders may obtain access to their accounts and information about their
accounts only from their firm. Certain of these firms may receive compensation
from the Funds through the Shareholder Service Agent for recordkeeping and other
expenses relating to these nominee accounts. In addition, certain privileges
with respect to the purchase and redemption of shares or the reinvestment of
dividends may not be available through such firms. Some firms may participate in
a program allowing them access to their clients' accounts for servicing
including, without limitation, transfers of registration and dividend payee
changes; and may perform functions such as generation of confirmation statements
and disbursement of cash dividends. Such firms, including affiliates of KDI, may
receive compensation from the Funds through the Shareholder Service Agent for
these services. This prospectus should be read in connection with such firms'
material regarding their fees and services.
Each Fund reserves the right to withdraw all or any part of the offering made by
this prospectus and to reject purchase orders. Also, from time to time, a Fund
may temporarily suspend the offering of any class of its shares to new
investors. During the period of such suspension, persons who are already
shareholders of such class of such Fund normally are permitted to continue to
purchase additional shares of such class and to have dividends reinvested.
Shareholders should direct their inquiries to Kemper Service Company, 811 Main
Street, Kansas City, Missouri 64105-2005 or to the firm from which they received
this prospectus.
REDEMPTION OR REPURCHASE OF SHARES
GENERAL. Any shareholder may require the Fund to redeem his or her shares. When
shares are held for the account of a shareholder by the Fund's transfer agent,
the shareholder may redeem them by sending a written request with signatures
guaranteed to Kemper Mutual Funds, Attention: Redemption Department, P.O. Box
419557, Kansas City, Missouri 64141-6557. When certificates for shares have been
issued, they must be mailed to or deposited with the Shareholder Service Agent,
along with a duly endorsed stock power and accompanied by a written request for
redemption. Redemption requests and a stock power must be endorsed by the
account holder with signatures guaranteed by a commercial bank, trust company,
savings and loan association, federal savings bank, member firm of a national
securities exchange or other eligible financial institution. The redemption
request and stock power must be signed exactly as the account is registered
including any special capacity of the registered owner. Additional documentation
may be requested, and a signature guarantee is normally required, from
institutional and fiduciary account holders, such as corporations, custodians
(e.g., under the Uniform Transfers to Minors Act), executors, administrators,
trustees or guardians.
The redemption price for shares of a Fund will be the net asset value per share
of that Fund next determined following receipt by the Shareholder Service Agent
of a properly executed request with any required documents as described above.
Payment for shares redeemed will be made in cash as promptly as practicable but
in no event later than seven days after receipt of a properly executed request
accompanied by any outstanding share certificates in proper form for transfer.
When a Fund is asked to redeem shares for which it may not have yet received
good payment, it may delay transmittal of redemption proceeds until it has
determined that collected funds have been received for the purchase of such
shares, which will be up to 15 days from receipt by the Fund of the purchase
amount. The redemption within one year of Class A shares purchased at net asset
value under the Large Order NAV Purchase Privilege may be subject to a 1%
contingent deferred sales charge (see "Purchase of Shares") and the redemption
of Class B shares may be subject to a contingent deferred sales charge (see
"Contingent Deferred Sales Charge--Class B Shares" below).
26
<PAGE> 32
Because of the high cost of maintaining small accounts, the Funds reserve the
right to redeem an account (and, in the case of Class B shares, impose any
applicable contingent deferred sales charge) that falls below the minimum
investment level, currently $1,000, as a result of redemptions. Currently,
Individual Retirement Accounts and employee benefit plan accounts are not
subject to this procedure. A shareholder will be notified in writing and will be
allowed 60 days to make additional purchases to bring the account value up to
the minimum investment level before a Fund redeems the shareholder account. The
investment required to reach that level may be made at net asset value (without
any initial sales charge in the case of Class A shares).
Shareholders can request the following telephone privileges: expedited wire
transfer redemptions and EXPRESS-Transfer transactions (see "Special Features")
and exchange transactions for individual and institutional accounts and
pre-authorized telephone redemption transactions for certain institutional
accounts. Shareholders may choose these privileges on the account application or
by contacting the Shareholder Service Agent for appropriate instructions. Please
note that the telephone exchange privilege is automatic unless the shareholder
refuses it on the account application. Neither a Fund nor its agents will be
liable for any loss, expense or cost arising out of any telephone request
pursuant to these privileges, including any fraudulent or unauthorized request,
and THE SHAREHOLDER WILL BEAR THE RISK OF LOSS, so long as the Fund or its agent
reasonably believes, based upon reasonable verification procedures, that the
telephonic instructions are genuine. The verification procedures include
recording instructions, requiring certain identifying information before acting
upon instructions and sending written confirmations.
TELEPHONE REDEMPTIONS. If the proceeds of the redemption (prior to the
imposition of any contingent deferred sales charge in the case of Class B
shares) are $50,000 or less and the proceeds are payable to the shareholder of
record at the address of record, normally a telephone request or a written
request by any one account holder without signature guarantee is sufficient for
redemptions by individual or joint account holders, and trust, executor and
guardian account holders (excluding custodial accounts for gifts and transfers
to minors), provided the trustee, executor or guardian is named in the account
registration. Other institutional account holders and custodial accounts for
gifts and transfers to minors may exercise this special privilege of redeeming
shares by telephone request or written request without signature guarantee
subject to the same conditions as individual account holders and subject to the
limitations on liability described under "General" above, provided that this
privilege has been pre-authorized by the institutional account holder by written
instruction to the Shareholder Service Agent with signatures guaranteed.
Telephone requests may be made by calling 1-800-621-1048. Shares purchased by
check or through EXPRESS-Transfer or Bank Direct Deposit may not be redeemed
under this privilege of redeeming shares by telephone request until such shares
have been owned for at least 15 days. This privilege of expedited redemption of
shares by telephone request or by written request without a signature guarantee
may not be used to redeem shares held in certificated form and may not be used
if the shareholder's account has had an address change within 30 days of the
redemption request. During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to use the telephone
redemption privilege, although investors can still redeem by mail. The Funds
reserve the right to terminate or modify this privilege at any time.
REPURCHASES (CONFIRMED REDEMPTIONS). A request for repurchase may be
communicated by a shareholder through a securities dealer or other financial
services firm to KDI, which a Fund has authorized to act as its agent. There is
no charge by KDI with respect to repurchases; however, dealers or other firms
may charge customary commissions for their services. Dealers and other financial
services firms are obligated to transmit orders promptly. The repurchase price
will be the net asset value next determined after receipt of a request by KDI.
However, requests for repurchases received by dealers or other firms prior to
the determination of net asset value (see "Net Asset Value") and received by KDI
prior to the close of KDI's business day will be confirmed at the net asset
value effective on that day. The offer to repurchase may be suspended at any
time. Requirements as to stock powers, certificates, payments and delay of
payments are the same as for redemptions.
EXPEDITED WIRE TRANSFER REDEMPTIONS. If the account holder has given
authorization for expedited wire redemption to the account holder's brokerage or
bank account, shares of a Fund can be redeemed and proceeds sent by federal wire
transfer to a single previously designated account. Requests received by the
Shareholder Service Agent prior to the determination of net asset value will
result in shares being redeemed that day at the net asset
27
<PAGE> 33
value effective on that day and normally the proceeds will be sent to the
designated account the following business day. Delivery of the proceeds of a
wire redemption request of $250,000 or more may be delayed by the Fund for up to
seven days if KFS deems it appropriate under then current market conditions.
Once authorization is on file, the Shareholder Service Agent will honor requests
by telephone at 1-800-621-1048 or in writing, subject to the limitations on
liability described under "General" above. The Funds are not responsible for the
efficiency of the federal wire system or the account holder's financial services
firm or bank. The Funds currently do not charge the account holder for wire
transfers. The account holder is responsible for any charges imposed by the
account holder's firm or bank. There is a $1,000 wire redemption minimum
(including any contingent deferred sales charge). To change the designated
account to receive wire redemption proceeds, send a written request to the
Shareholder Service Agent with signatures guaranteed as described above or
contact the firm through which shares of the Fund were purchased. Shares
purchased by check or through EXPRESS-Transfer or Bank Direct Deposit may not be
redeemed by wire transfer until such shares have been owned for at least 15
days. Account holders may not use this privilege to redeem shares held in
certificated form. During periods when it is difficult to contact the
Shareholder Service Agent by telephone, it may be difficult to use the expedited
redemption privilege. The Funds reserve the right to terminate or modify this
privilege at any time.
CONTINGENT DEFERRED SALES CHARGE--LARGE ORDER NAV PURCHASE PRIVILEGE. A
contingent deferred sales charge of 1% may be imposed upon redemption of Class A
shares that are purchased under the Large Order NAV Purchase Privilege if they
are redeemed within one year of purchase. The charge will not be imposed upon
redemption of reinvested dividends or share appreciation. The charge is applied
to the value of the shares redeemed excluding amounts not subject to the charge.
The contingent deferred sales charge will be waived in the event of: (a)
redemptions by a participant-directed qualified retirement plan described in
Code Section 401(a) or a participant-directed non-qualified deferred
compensation plan described in Code Section 457; (b) redemptions by employer
sponsored employee benefit plans using the subaccount record keeping system made
available through KFS; (c) redemption of shares of a shareholder (including a
registered joint owner) who has died; (d) redemption of shares of a shareholder
(including a registered joint owner) who after purchase of the shares being
redeemed becomes totally disabled (as evidenced by a determination by the
federal Social Security Administration); and (e) redemptions under a Fund's
Systematic Withdrawal Plan at a maximum of 10% per year of the net asset value
of the account.
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES. A contingent deferred sales
charge may be imposed upon redemption of Class B shares. There is no such charge
upon redemption of any share appreciation or reinvested dividends on Class B
shares. The charge is computed at the following rates applied to the value of
the shares redeemed excluding amounts not subject to the charge.
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED
SALES
YEAR OF REDEMPTION AFTER PURCHASE CHARGE
------------------------------------------------------------------------ ----------
<S> <C>
First................................................................... 4%
Second.................................................................. 3%
Third................................................................... 3%
Fourth.................................................................. 2%
Fifth................................................................... 2%
Sixth................................................................... 1%
</TABLE>
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<PAGE> 34
Class B shareholders who originally acquired their shares as Initial Shares of
Kemper Portfolios, formerly known as Kemper Investment Portfolios, hold them
subject to the same CDSC schedule that applied when those shares were purchased,
as follows:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
YEAR OF ---------------------------------------------------------------------------------------
REDEMPTION SHARES PURCHASED ON OR AFTER
AFTER SHARES PURCHASED ON OR AFTER FEBRUARY 1, 1991 AND BEFORE SHARES PURCHASED BEFORE
PURCHASE MARCH 1, 1993 MARCH 1, 1993 FEBRUARY 1, 1991
----------------- ---------------------------- ---------------------------- -----------------------
<S> <C> <C> <C>
First............ 4% 3% 5%
Second........... 3% 3% 4%
Third............ 3% 2% 3%
Fourth........... 2% 2% 2%
Fifth............ 2% 1% 2%
Sixth............ 1% 1% 1%
</TABLE>
The following example will illustrate the operation of the contingent deferred
sales charge. Assume that an investor makes a single purchase of $10,000 of a
Fund's Class B shares and that 16 months later the value of the shares has grown
by $1,000 through reinvested dividends and by an additional $1,000 in
appreciation to a total of $12,000. If the investor were then to redeem the
entire $12,000 in share value, the contingent deferred sales charge would be
payable only with respect to $10,000 because neither the $1,000 of reinvested
dividends nor the $1,000 of share appreciation is subject to the charge. The
charge would be at the rate of 3% ($300) because it was in the second year after
the purchase was made.
The rate of the contingent deferred sales charge under the schedule above is
determined by the length of the period of ownership. Investments are tracked on
a monthly basis. The period of ownership for this purpose begins the first day
of the month in which the order for the investment is received. In the event no
specific order is requested, the redemption will be made first from Class B
shares representing reinvested dividends and then from the earliest purchase of
Class B shares. For example, an investment made in June, 1994 will be eligible
for the 3% charge if redeemed on or after June 1, 1995. KDI receives any
contingent deferred sales charge directly.
The contingent deferred sales charge will be waived: (a) in the event of the
total disability (as evidenced by a determination by the federal Social Security
Administration) of the shareholder (including a registered joint owner)
occurring after the purchase of the shares being redeemed, (b) in the event of
the death of the shareholder (including a registered joint owner), (c) for
redemptions made pursuant to a systematic withdrawal plan (see "Special
Features--Systematic Withdrawal Plan" below), (d) for redemptions made pursuant
to any IRA systematic withdrawal based on the shareholder's life expectancy
including, but not limited to, substantially equal periodic payments described
in Internal Revenue Code Section 72(t)(2)(A)(iv) prior to age 59 1/2 and (e) for
redemptions to satisfy required minimum distributions after age 70 1/2 from an
IRA account (with the maximum amount subject to this waiver being based only
upon the shareholder's Kemper IRA accounts). The contingent deferred sales
charge will also be waived in connection with the following redemptions of
shares held by employer sponsored employee benefit plans maintained on the
subaccount record keeping system made available by KFS: (a) redemptions to
satisfy participant loan advances (note that loan repayments constitute new
purchases for purposes of the contingent deferred sales charge and the
conversion privilege), (b) redemptions in connection with retirement
distributions (limited at any one time to 10% of the total value of plan assets
invested in a Fund), (c) redemptions in connection with distributions qualifying
under the hardship provisions of the Internal Revenue Code and (d) redemptions
representing returns of excess contributions to such plans. During the period
from the date of this prospectus until June 1, 1995, the contingent deferred
sales charge will be waived in connection with the redemption of Class B shares
of a Fund and other Kemper Mutual Funds by a retirement plan qualified under
Internal Revenue Code Section 401(k) subject to the following conditions: (a)
the proceeds of the redemption are reinvested in Class A shares of a Fund or
other Kemper Mutual Funds (which reinvestment will be at net asset value without
any sales charge), (b) all Class B shares of the Fund and other Kemper Mutual
Funds held by the plan are so redeemed and reinvested, and (c) the average
contingent deferred sales charge that would have been imposed on such a
redemption, but for this waiver, is 2.5% or less.
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<PAGE> 35
REINVESTMENT PRIVILEGE. A shareholder who has redeemed Class A shares of a Fund
or any other Kemper Mutual Fund listed under "Special Features--Class A
Shares--Combined Purchases" may reinvest up to the full amount redeemed at net
asset value at the time of the reinvestment in Class A shares of the Fund or of
the other listed Kemper Mutual Funds. A shareholder of a Fund or any other
Kemper Mutual Fund who redeems shares purchased under the Large Order NAV
Purchase Privilege (see "Purchase of Shares") or Class B shares and incurs a
contingent deferred sales charge may reinvest up to the full amount redeemed at
net asset value at the time of the reinvestment in Class A shares or Class B
shares, as the case may be, of a Fund or of other Kemper Mutual Funds. The
amount of any contingent deferred sales charge also will be reinvested. These
reinvested shares will retain their original cost and purchase date for purposes
of the contingent deferred sales charge. Also, a holder of Class B shares who
has redeemed shares may reinvest up to the full amount redeemed, less any
applicable contingent deferred sales charge that may have been imposed upon the
redemption of such shares, at net asset value in Class A shares of a Fund or of
the other Kemper Mutual Funds listed under "Special Features--Class A
Shares--Combined Purchases." Purchases through the reinvestment privilege are
subject to the minimum investment requirements applicable to the shares being
purchased and may only be made for Kemper Funds available for sale in the
shareholder's state of residence as listed under "Special Features--Exchange
Privilege." The reinvestment privilege can be used only once as to any specific
shares and reinvestment must be effected within six months of the redemption. If
a loss is realized on the redemption of Fund shares, the reinvestment may be
subject to the "wash sale" rules if made within 30 days of the redemption,
resulting in a postponement of the recognition of such loss for federal income
tax purposes. The reinvestment privilege may be terminated or modified at any
time.
SPECIAL FEATURES
CLASS A SHARES--COMBINED PURCHASES. A Fund's Class A shares may be purchased at
the rate applicable to the discount bracket attained by combining concurrent
investments in Class A shares of any of the following funds: Kemper Technology
Fund, Kemper Total Return Fund, Kemper Growth Fund, Kemper Small Capitalization
Equity Fund, Kemper Income and Capital Preservation Fund, Kemper Municipal Bond
Fund, Kemper Diversified Income Fund, Kemper High Yield Fund, Kemper U.S.
Government Securities Fund, Kemper International Fund, Kemper State Tax-Free
Income Series, Kemper Adjustable Rate U.S. Government Fund, Kemper Blue Chip
Fund, Kemper Global Income Fund, Kemper Target Equity Fund (series are subject
to a limited offering period), Kemper Intermediate Municipal Bond Fund, Kemper
Cash Reserves Fund (available only upon exchange or conversion from Class A
shares of another Kemper Mutual Fund), Kemper U.S. Mortgage Fund and Kemper
Short-Intermediate Government Fund ("Kemper Mutual Funds"). Except as noted
below, there is no combined purchase credit for direct purchases of shares of
Kemper Money Market Fund, Cash Equivalent Fund, Tax-Exempt California Money
Market Fund, Cash Account Trust, Tax-Exempt New York Money Market Fund or
Investors Cash Trust ("Money Market Funds"), which are not considered "Kemper
Mutual Funds" for purposes hereof. For purposes of the Combined Purchases
feature described above as well as for the Letter of Intent and Cumulative
Discount features described below, employer sponsored employee benefit plans
using the subaccount record keeping system made available through KFS may
include: (a) Money Market Funds as "Kemper Mutual Funds", (b) all classes of
shares of any Kemper Mutual Fund and (c) the value of any other plan
investments, such as guaranteed investment contracts and employer stock,
maintained on such subaccount record keeping system.
CLASS A SHARES--LETTER OF INTENT. The same reduced sales charges for Class A
shares, as shown in the applicable prospectus, also apply to the aggregate
amount of purchases of such Kemper Mutual Funds listed above made by any
purchaser within a 24-month period under a written Letter of Intent ("Letter")
provided by KDI. The Letter, which imposes no obligation to purchase or sell
additional Class A shares, provides for a price adjustment depending upon the
actual amount purchased within such period. The Letter provides that the first
purchase following execution of the Letter must be at least 5% of the amount of
the intended purchase, and that 5% of the amount of the intended purchase
normally will be held in escrow in the form of shares pending completion of the
intended purchase. If the total investments under the Letter are less than the
intended amount and thereby qualify only for a higher sales charge than actually
paid, the appropriate number of escrowed shares are redeemed and the
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<PAGE> 36
proceeds used toward satisfaction of the obligation to pay the increased sales
charge. The Letter for an employer sponsored employee benefit plan maintained on
the subaccount record keeping system available through KFS may have special
provisions regarding payment of any increased sales charge resulting from a
failure to complete the intended purchase under the Letter. A shareholder may
include the value (at the maximum offering price) of all shares of such Kemper
Mutual Funds held of record as of the initial purchase date under the Letter as
an "accumulation credit" toward the completion of the Letter, but no price
adjustment will be made on such shares. Only investments in Class A shares of a
Fund are included for this privilege.
CLASS A SHARES--CUMULATIVE DISCOUNT. Each Fund's Class A shares also may be
purchased at the rate applicable to the discount bracket attained by adding to
the cost of Fund shares being purchased the value of all Class A shares of the
above mentioned Kemper Mutual Funds (computed at the maximum offering price at
the time of the purchase for which the discount is applicable) already owned by
the investor.
CLASS A SHARES--AVAILABILITY OF QUANTITY DISCOUNTS. An investor or the
investor's dealer or other financial services firm must notify the Shareholder
Service Agent or KDI whenever a quantity discount or reduced sales charge is
applicable to a purchase. Upon such notification, the investor will receive the
lowest applicable sales charge. Quantity discounts described above may be
modified or terminated at any time.
EXCHANGE PRIVILEGE. Shareholders of Class A, Class B and Class C shares may
exchange their shares for shares of the corresponding class of other Kemper
Mutual Funds in accordance with the provisions below.
CLASS A SHARES. Class A shares of the Kemper Mutual Funds and shares of the
Money Market Funds listed under "Special Features--Class A Shares--Combined
Purchases" above may be exchanged for each other at their relative net asset
values. Shares of Money Market Funds that were acquired by purchase (not
including shares acquired by dividend reinvestment) are subject to the
applicable sales charge on exchange. Series of Kemper Target Equity Fund are
available on exchange only during the Offering Period for such series as
described in the applicable prospectus. Cash Equivalent Fund, Tax-Exempt
California Money Market Fund, Cash Account Trust, Tax-Exempt New York Money
Market Fund and Investors Cash Trust are available on exchange but only through
a financial services firm having a services agreement with KDI. Exchanges may
only be made for funds that are eligible for sale in the shareholder's state of
residence. Currently, Tax-Exempt California Money Market Fund is available for
sale only in California and Tax-Exempt New York Money Market Fund is available
for sale only in New York, Connecticut, New Jersey and Pennsylvania.
Class A shares of a Fund purchased under the Large Order NAV Purchase Privilege
may be exchanged for Class A shares of another Kemper Mutual Fund or a Money
Market Fund under the exchange privilege described above without paying any
contingent deferred sales charge at the time of exchange. If the Class A shares
received on exchange are redeemed thereafter, a contingent deferred sales charge
may be imposed in accordance with the foregoing requirements provided that the
shares redeemed will retain their original cost and purchase date for purposes
of the contingent deferred sales charge.
CLASS B SHARES. Class B shares of a Fund and Class B shares of any other Kemper
Mutual Fund listed under "Special Features--Class A Shares--Combined Purchases"
may be exchanged for each other at their relative net asset values. Class B
shares may be exchanged without any contingent deferred sales charge being
imposed at the time of exchange. For purposes of the contingent deferred sales
charge that may be imposed upon the redemption of the shares received on
exchange, amounts exchanged retain their original cost and purchase date.
CLASS C SHARES. Class C shares of a Fund and Class C shares of any other Kemper
Mutual Fund listed under "Special Features--Class A Shares--Combined Purchases"
may be exchanged for each other at their relative net asset values.
GENERAL. Shares purchased by check or through EXPRESS-Transfer or Bank Direct
Deposit may not be exchanged until they have been owned for at least 15 days. In
addition, shares of a Kemper Mutual Fund (except Kemper Cash Reserves Fund)
acquired by exchange from another Kemper Mutual Fund, or from a Money Market
Fund, may not be exchanged thereafter until they have been owned for 15 days.
The total value of shares being exchanged must at least equal the minimum
investment requirement of the fund into which they are being exchanged.
Exchanges are
31
<PAGE> 37
made based on relative dollar values of the shares involved in the exchange.
There is no service fee for an exchange; however, dealers or other firms may
charge for their services in effecting exchange transactions. Exchanges will be
effected by redemption of shares of the fund held and purchase of shares of the
other fund. For federal income tax purposes, any such exchange constitutes a
sale upon which a gain or loss may be realized, depending upon whether the value
of the shares being exchanged is more or less than the shareholder's adjusted
cost basis of such shares. Shareholders interested in exercising the exchange
privilege may obtain prospectuses of the other funds from dealers, other firms
or KDI. Exchanges may be accomplished by a written request to Kemper Mutual
Funds, Attention: Exchange Department, P.O. Box 419557, Kansas City, Missouri
64141-6557, or by telephone if the shareholder has given authorization. Once the
authorization is on file, the Shareholder Service Agent will honor requests by
telephone at 1-800-621-1048, subject to the limitations on liability under
"Redemption or Repurchase of Shares--General." Any share certificates must be
deposited prior to any exchange of such shares. During periods when it is
difficult to contact the Shareholder Service Agent by telephone, it may be
difficult to implement the telephone exchange privilege. The exchange privilege
is not a right and may be suspended, terminated or modified at any time. Except
as otherwise permitted by applicable regulations, 60 days' prior written notice
of any termination or material change will be provided.
SYSTEMATIC EXCHANGE PRIVILEGE. The owner of $1,000 or more of any class of the
shares of a Kemper Mutual Fund or Money Market Fund may authorize the automatic
exchange of a specified amount ($100 minimum) of such shares for shares of the
same class of another such Kemper Fund. If selected, exchanges will be made
automatically until the privilege is terminated by the shareholder or the Kemper
Fund. Exchanges are subject to the terms and conditions described above under
"Exchange Privilege," including the $1,000 minimum investment requirement for
the Kemper Fund acquired on exchange. This privilege may not be used for the
exchange of shares held in certificated form.
EXPRESS-TRANSFER. EXPRESS-Transfer permits the transfer of money via the
Automated Clearing House System (minimum $100 and maximum $2,500) from a
shareholder's bank, savings and loan, or credit union account to purchase shares
in the Fund. Shareholders can also redeem shares (minimum $500 and maximum
$2,500) from their Fund account and transfer the proceeds to their bank, savings
and loan, or credit union checking account. By enrolling in EXPRESS-Transfer,
the shareholder authorizes the Shareholder Service Agent to rely upon telephone
instructions from ANY PERSON to transfer the specified amounts between the
shareholder's Fund account and the predesignated bank, savings and loan or
credit union account, subject to the limitations on liability under "Redemption
or Repurchase of Shares--General." Once enrolled in EXPRESS-Transfer, a
shareholder can initiate a transaction by calling Kemper Shareholder Services
toll free at 1-800-621-1048 Monday through Friday, 8:00 a.m. to 3:00 p.m.
Chicago time. Shareholders may terminate this privilege by sending written
notice to Kemper Service Company, P.O. Box 419415, Kansas City, Missouri
64141-6415. Termination will become effective as soon as the Shareholder Service
Agent has had a reasonable time to act upon the request. EXPRESS-Transfer cannot
be used with passbook savings accounts or for tax-deferred plans such as
Individual Retirement Accounts ("IRAs").
BANK DIRECT DEPOSIT. A shareholder may purchase additional Fund shares through
an automatic investment program. With the Bank Direct Deposit Purchase Plan,
monthly investments are made automatically from the shareholder's account at a
bank, savings and loan or credit union into the shareholder's Fund account. By
enrolling in Bank Direct Deposit, the shareholder authorizes the Fund and its
agents to either draw checks or initiate Automated Clearing House debits against
the designated account at a bank or other financial institution. This privilege
may be selected by completing the appropriate section on the Account Application
or by contacting the Shareholder Service Agent for appropriate forms. A
shareholder may terminate his or her Plan by sending written notice to Kemper
Service Company, P.O. Box 419415, Kansas City, Missouri 64141-6415. Termination
by a shareholder will become effective within thirty days after the Shareholder
Service Agent has received the request. A Fund may immediately terminate a
shareholder's Plan in the event that any item is unpaid by the shareholder's
financial institution. A Fund may terminate or modify this privilege at any
time.
PAYROLL DIRECT DEPOSIT AND GOVERNMENT DIRECT DEPOSIT. A shareholder may invest
in a Fund through Payroll Direct Deposit or Government Direct Deposit. Under
these programs, all or a portion of a
32
<PAGE> 38
shareholder's net pay or government check is automatically invested in a Fund
account each payment period. A shareholder may terminate participation in these
programs by giving written notice to the shareholder's employer or government
agency, as appropriate. (A reasonable time to act is required.) A Fund is not
responsible for the efficiency of the employer or government agency making the
payment or any financial institutions transmitting payments.
SYSTEMATIC WITHDRAWAL PLAN. The owner of $5,000 or more of a class of a Fund's
shares at the offering price (net asset value plus, in the case of Class A
shares, the initial sales charge) may provide for the payment from the owner's
account of any requested dollar amount to be paid to the owner or a designated
payee monthly, quarterly, semiannually or annually. The $5,000 minimum account
size is not applicable to Individual Retirement Accounts. The minimum periodic
payment is $100. The maximum annual rate at which Class B shares may be redeemed
under a systematic withdrawal plan is 10% of the net asset value of the account.
Shares are redeemed so that the payee will receive payment approximately the
first of the month. Any income and capital gain dividends will be automatically
reinvested at net asset value. A sufficient number of full and fractional shares
will be redeemed to make the designated payment. Depending upon the size of the
payments requested and fluctuations in the net asset value of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust the account.
The purchase of Class A shares while participating in a systematic withdrawal
plan ordinarily will be disadvantageous to the investor because the investor
will be paying a sales charge on the purchase of shares at the same time that
the investor is redeeming shares upon which a sales charge may already have been
paid. Therefore, the Funds will not knowingly permit additional investments of
less than $2,000 if the investor is at the same time making systematic
withdrawals. KDI will waive the contingent deferred sales charge on redemption
of Class B shares made pursuant to a systematic withdrawal plan. The right is
reserved to amend the systematic withdrawal plan on 30 days' notice. The plan
may be terminated at any time by the investor or the Funds.
TAX-SHELTERED RETIREMENT PLANS. KFS provides retirement plan services and
documents and KDI can establish investor accounts in any of the following types
of retirement plans:
- - Individual Retirement Accounts ("IRAs") trusteed by IFTC. This includes
Simplified Employee Pension Plan ("SEP") IRA accounts and prototype documents.
- - 403(b)(7) Custodial Accounts also trusteed by IFTC. This type of plan is
available to employees of most non-profit organizations.
- - Prototype money purchase pension and profit-sharing plans may be adopted by
employers. The maximum annual contribution per participant is the lesser of
25% of compensation or $30,000.
Brochures describing the above plans as well as model defined benefit plans,
target benefit plans, 457 plans, 401(k) plans and materials for establishing
them are available from KDI upon request. The brochures for plans trusteed by
IFTC describe the current fees payable to IFTC for its services as trustee.
Investors should consult with their own tax advisers before establishing a
retirement plan.
PERFORMANCE
The Funds may advertise several types of performance information for a class of
shares, including "average annual total return" and "total return" and, for the
Global Fund, "yield." Performance information will be computed separately for
Class A, Class B and Class C shares. Each of these figures is based upon
historical results and is not necessarily representative of the future
performance of any class of the Funds. Any advertisement or information that
contains performance data of a Fund will include performance data for all
classes of the Fund offered by this prospectus.
The Global Fund's yield is a measure of the net investment income per share
earned over a specific one month or 30-day period expressed as a percentage of
the maximum offering price of the Fund's shares. Yield is an annualized
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<PAGE> 39
figure, which means that it is assumed that the Fund generates the same level of
net investment income over a one year period. Net investment income is assumed
to be compounded semiannually when it is annualized.
Average annual total return and total return figures measure both the net
investment income generated by, and the effect of any realized and unrealized
appreciation or depreciation of, the underlying investments in a Fund's
portfolio for the period in question, assuming the reinvestment of all
dividends. Thus, these figures reflect the change in the value of an investment
in the Fund during a specified period. Average annual total return will be
quoted for at least the one, five and ten year periods ending on a recent
calendar quarter (or if such periods have not yet elapsed, at the end of a
shorter period corresponding to the life of the Fund). Average annual total
return figures represent the average annual percentage change over the period in
question. Total return figures represent the aggregate percentage or dollar
value change over the period in question.
A Fund's performance may be compared to that of the Consumer Price Index or, for
the Global Fund, various unmanaged bond indexes such as the Salomon Brothers
High Grade Corporate Bond Index, the Lehman Brothers Government/Corporate Bond
Index and the Salomon Brothers World Government Bond Index, or for the
International Fund various unmanaged equity indexes such as the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index and the Europe
Australia Far East ("EAFE") Index and may also be compared to the performance of
other mutual funds or mutual fund indexes as reported by independent mutual fund
reporting services such as Lipper Analytical Services, Inc. ("Lipper"). Lipper
performance calculations are based upon changes in net asset value with all
dividends reinvested and do not include the effect of any sales charges. Also,
investors may want to compare the historical returns of various global
securities markets. Such returns would not necessarily be representative of the
future performance of such markets or of the performance of the Fund.
A Fund may quote information from publications such as Morningstar, Inc., The
Wall Street Journal, Money Magazine, Forbes, Barron's, Fortune, The Chicago
Tribune, USA Today, Institutional Investor and Registered Representative. Also,
investors may want to compare the historical returns of various investments,
performance indexes of those investments or economic indicators, including but
not limited to stocks, bonds, certificates of deposit, money market funds and
U.S. Treasury obligations. Bank product performance may be based upon, among
other things, the BANK RATE MONITOR National IndexTM or various certificate of
deposit indexes. Money market fund performance may be based upon, among other
things, the IBC/Donoghue's Money Fund Report(R) or Money Market Insight(R),
reporting services on money market funds. Performance of U.S. Treasury
obligations may be based upon, among other things, various U.S. Treasury bill
indexes. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured.
A Fund may depict the historical performance of the securities in which the Fund
may invest over periods reflecting a variety of market or economic conditions
either alone or in comparison with alternative investments, performance indexes
of those investments or economic indicators. The Fund may also describe its
portfolio holdings and depict its size or relative size compared to other mutual
funds, the number and make-up of its shareholder base and other descriptive
factors concerning the Fund.
The Global Fund may include in its sales literature and shareholder reports a
quotation of the current "distribution rate" for a class of the Fund.
Distribution rate is simply a measure of the level of dividends distributed for
a specified period. It differs from yield, which is a measure of the income
actually earned by the Fund's investments, and from total return, which is a
measure of the income actually earned by, plus the effect of any realized and
unrealized appreciation or depreciation of such investments during the period.
Distribution rate is, therefore, not intended to be a complete measure of
performance. Distribution rate may sometimes be greater than yield since, for
instance, it may include gains from the sale of options or other short-term and
possibly long-term gains (which may be non-recurring) and may not include the
effect of amortization of bond premiums. As reflected under "Investment
Objectives and Policies--Additional Investment Information," option writing can
limit the potential for capital appreciation.
The Global Fund's Class A shares are sold at net asset value plus a maximum
sales charge of 4.5% of the offering price. The International Fund's Class A
shares are sold at net asset value plus a maximum sales charge of 5.75% of
34
<PAGE> 40
the offering price. While the maximum sales charge is normally reflected in a
Fund's Class A performance figures, certain total return calculations may not
include such charge and those results would be reduced if it were included.
Class B shares and Class C shares are sold at net asset value. Redemptions of
Class B shares within the first six years after purchase may be subject to a
contingent deferred sales charge that ranges from 4% during the first year to 0%
after six years. Yield figures for Class B shares do not include the effect of
any contingent deferred sales charge. Average annual total return figures do,
and total return figures may, include the effect of the contingent deferred
sales charge for the Class B shares that may be imposed at the end of the period
in question. Performance figures for the Class B shares not including the effect
of the applicable contingent deferred sales charge would be reduced if it were
included.
A Fund's returns and net asset value will fluctuate and shares of a Fund are
redeemable by an investor at the then current net asset value, which may be more
or less than original cost. Redemption of Class B shares may be subject to a
contingent deferred sales charge as described above. Additional information
concerning each Fund's performance, and the performance of various global stock
and bond markets, appears in the Statement of Additional Information. Additional
information about each Fund's performance also appears in its Annual Report to
Shareholders, which is available without charge from the applicable Fund.
CAPITAL STRUCTURE
The Funds are open-end management investment companies, organized as separate
business trusts under the laws of Massachusetts. The Global Fund was organized
as a business trust under the laws of Massachusetts on August 3, 1988. The
International Fund was organized as a business trust under the laws of
Massachusetts on October 24, 1985 and, effective January 31, 1986, that Fund
pursuant to a reorganization succeeded to the assets and liabilities of Kemper
International Fund, Inc., a Maryland corporation organized in 1980.
Each Fund may issue an unlimited number of shares of beneficial interest in one
or more series or "Portfolios," all having no par value, which may be divided by
the Board of Trustees into classes of shares. Currently, each Fund offers four
classes of shares of a single Portfolio. These are Class A, Class B and Class C
shares, as well as Class I shares, which are available for purchase exclusively
by the following investors: (a) tax-exempt retirement plans of KFS and its
affiliates; and (b) the following investment advisory clients of KFS and its
investment advisory affiliates that invest at least $1 million in a Fund: (1)
unaffiliated benefit plans (other than individual retirement accounts and
self-directed retirement plans); (2) unaffiliated banks and insurance companies
purchasing for their own accounts; and (3) endowment funds of unaffiliated
non-profit organizations. The Board of Trustees may authorize the issuance of
additional classes and additional Portfolios if deemed desirable, each with its
own investment objective, policies and restrictions. Since the Funds may offer
multiple Portfolios, each is known as a "series company." Shares of a Fund have
equal noncumulative voting rights except that Class B and Class C shares have
separate and exclusive voting rights with respect to each Fund's Rule 12b-1
Plan. Shares of each class also have equal rights with respect to dividends,
assets and liquidation of such Fund subject to any preferences (such as
resulting from different Rule 12b-1 distribution fees), rights or privileges of
any classes of shares of a Fund. Shares are fully paid and nonassessable when
issued, are transferable without restriction and have no preemptive or
conversion rights. The Funds are not required to hold annual shareholder
meetings and do not intend to do so. However, they will hold special meetings as
required or deemed desirable for such purposes as electing trustees, changing
fundamental policies or approving an investment management agreement. Subject to
the Agreement and Declaration of Trust of each Fund, shareholders may remove
trustees. If shares of more than one Portfolio are outstanding, shareholders
will vote by Portfolio and not in the aggregate or by class except when voting
in the aggregate is required under the Investment Company Act of 1940, such as
for the election of trustees, or when voting by class is appropriate.
35
<PAGE> 41
INSTITUTIONAL ACCOUNT APPLICATION GUIDE
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
INSTRUCTIONS
Please make sure you are using the correct application. Use the Institutional
Account Application for Corporate, Trust or other Fiduciary accounts. Use the
Individual Account Application for Individual, Joint Owners and Transfer to
Minor accounts.
THIS APPLICATION CANNOT BE USED TO ESTABLISH A RETIREMENT ACCOUNT WITH INVESTORS
FIDUCIARY TRUST COMPANY AS TRUSTEE. This application also cannot be used for any
modification of an existing account. To obtain an application for Retirement
Accounts, or forms to modify your account, call 1-800-621-1048.
- - Please print information exactly as you wish it to appear on the account.
- - Please check the box that is applicable to the type of account you are
opening.
- - PLEASE BE SURE TO COMPLETE BOTH SECTIONS I AND II.
- - PLEASE BE SURE TO SIGN THIS APPLICATION.
- - Signature(s) of authorized person(s) are required.
READ THIS IMPORTANT INFORMATION
FUND FEATURES
Exchanges. If you elect this option:
- You are authorizing exchanges between Kemper Mutual Funds by ANY
PERSON by telephone.
- Shares held in certificated form may not be exchanged until they
have been received by the Fund's Shareholder Service Agent and
deposited to the account.
- If exchanging to a new account, the minimum requirement is $1,000.
- Subsequent exchanges may be made for $100 or more.
Systematic Exchanges. If you elect this option:
- You are authorizing monthly exchanges from your Fund account to
another Fund account with the same registration.
- Shares may not be held in certificated form.
- The minimum initial account balance for Fund shares being
exchanged is $1,000.
- The minimum monthly exchange is $100 per Fund exchanged into.
Wire Redemptions. If you elect this option:
- You are authorizing the Fund or its agents to honor telephone or
other instructions from ANY PERSON for the redemption of Fund
shares. Proceeds will be wire transferred to the bank account
referenced on the application.
- Shares held in certificated form may not be redeemed under this
privilege.
- The amount redeemed must be at least $1,000.
Telephone Redemptions. If you elect this option:
- You are authorizing the Fund or its agents to honor telephone or
other instructions from ANY PERSON for the redemption of Fund
shares. Redemptions may not exceed $50,000 and proceeds are to be
payable to the shareholder of record and mailed to the address of
record.
- Shares held in certificated form may not be redeemed under this
privilege.
CERTIFICATION
The account holders certify that they have the power and authority to establish
this account and select the privileges requested. Account holders can request
the following telephone privileges on this application: expedited wire transfer
redemptions, telephone exchange transactions and pre-authorized telephone
redemption transactions. Please note that the telephone exchange privilege is
automatic unless the account holder refuses it. Neither the Fund nor its agents
will be liable for any loss, expense or cost arising out of any telephone
request pursuant to these privileges, including any fraudulent or unauthorized
request, and THE ACCOUNT HOLDER WILL BEAR THE RISK OF LOSS, so long as the Fund
or its agent reasonably believes, based upon reasonable verification procedures,
that the telephonic instructions are genuine. The verification procedures
include recording instructions, requiring certain identifying information before
acting upon instructions and sending written confirmations. The account holders
certify that the current prospectus for the Fund (including any Kemper Fund
selected under the Systematic Exchange Privilege) has been received and read and
that the authorizations hereon shall continue until the Fund receives written
notice of a modification signed by all appropriate parties or a termination
signed by any party. This account is subject to the terms of the Fund's
prospectus, as amended from time to time, and the terms herein set forth, and is
subject to acceptance by the Fund and to the laws of Illinois. All terms shall
be binding upon the heirs, representatives, successors and assigns of the
account holders.
All persons signing as representatives warrant as individuals that each person
signing is an authorized representative of the account holder, that the account
and privileges selected have been duly authorized, that all signatures hereon
are genuine and that the persons indicated hereon are authorized to sign.
The account holders authorize the Fund to provide the trustees or custodian of
their tax-deferred retirement plan any information necessary to administer such
a plan.
QUESTIONS
Shareholders may call 1-800-621-1048 to speak with a Kemper Shareholder Services
Representative.
Financial Representatives may call 1-800-621-5027 to speak with a Kemper Sales
Support Representative.
<PAGE> 42
INSTITUTIONAL ACCOUNT APPLICATION--SECTION I OF II (LOGO)
KEMPER GLOBAL INCOME FUND/KEMPER INTERNATIONAL FUND
MAIL TO: KEMPER MUTUAL FUNDS, ATTENTION: NEW APPLICATIONS, P.O. BOX 419356,
KANSAS CITY, MO 64141-6356
- --------------------------------------------------------------------------------
1. YOUR ACCOUNT REGISTRATION.
<TABLE>
<S> <C> <C> <C>
NAME OF
TRUSTEE(S)/AUTHORIZED
SIGNER(S)
FIRST NAME M.I. LAST NAME
FIRST NAME M.I. LAST NAME
NAME OF
ORGANIZATION
</TABLE>
- --------------------------------------------------------------------------------
2. IS THIS A RETIREMENT PLAN*? / / Yes / / No. If Yes, designate type below. If
No, complete Item 3.
<TABLE>
<S> <C>
/ / Self Directed IRA / / Defined Benefit
/ / Profit Sharing Plan / / Target Benefit
/ / Money Purchase Pension Plan / / 401(k) Salary Deferral
/ / Other
</TABLE>
* If each participant is to have a separate account for the contributions, call
1-800-621-1048 for special forms. Series of Kemper National Tax-Free Income
Series and Kemper State Tax-Free Income Series are not appropriate for certain
qualified plans.
- --------------------------------------------------------------------------------
3. TYPE OF ORGANIZATION (COMPLETE IF ANSWER TO ITEM 2 ABOVE IS NO.).
<TABLE>
<S> <C> <C>
/ / Corporation / / Sole Proprietorship / / Other
/ / Partnership / / Trust
Trust Date (required)
</TABLE>
- --------------------------------------------------------------------------------
4. MAILING ADDRESS.
<TABLE>
<S> <C> <C>
Street Address
City State Zip
Tax ID No.
</TABLE>
- --------------------------------------------------------------------------------
5. AMOUNT INVESTED AND FUND/CLASS SELECTION.
Please Do Not Write In This Space
Make checks payable to Kemper Mutual Funds.
The minimum initial investment is $1,000 per Fund.*
FUND AMOUNT CLASS
Kemper Global Income Fund $
Kemper International Fund $
*See Letter of Intent Conditions if
Item 7 is selected.
- --------------------------------------------------------------------------------
6. RIGHTS OF ACCUMULATION -- CLASS A.
Cum. Discount Number (if known). We own shares in
other Kemper Mutual Funds which may entitle this purchase to a reduced sales
charge as described in the Fund prospectus.
Existing Fund Name(s) Account Number(s)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------------------------------------------------------------------------------
7. LETTER OF INTENT -- CLASS A (OPTIONAL). We agree to the Letter of Intent
Conditions on the reverse side of this application.
We intend to invest, within a 24 month period beginning on the date hereof
(initial purchase date) in shares of the Fund purchased hereunder and one or
more of the other funds listed in Item 6 above (the "Funds"), an aggregate
amount which, together with the value of shares of any of the Funds then owned
by us, will equal or exceed the amount indicated below:
/ /$50,000 / /$100,000 / /$250,000 / /$500,000 / /$1,000,000
- --------------------------------------------------------------------------------
8. YOUR BROKER/DEALER. Representative's Phone Number
<TABLE>
<S> <C> <C>
Dealer Number Branch Number Representative's Number
Firm Name Representative's Last Name
Branch Address
</TABLE>
<PAGE> 43
TEAR OUT COMPLETED APPLICATION
INSTITUTIONAL ACCOUNT APPLICATION--SECTION II OF II
- --------------------------------------------------------------------------------
9. DIVIDENDS.
Choose how you wish to receive dividends. IF NO BOXES ARE CHECKED, OPTION A WILL
BE ASSIGNED.
A. / /All income and capital gains dividends REINVESTED in the account.
B. All income and short-term capital gains dividends IN CASH and long-term
capital gains REINVESTED in the account. (COMPLETE CASH DIVIDENDS SECTION
BELOW.)
C. / /All income and capital gains dividends paid IN CASH. (COMPLETE CASH
DIVIDENDS SECTION BELOW.)
D.All dividends REINVESTED in another Kemper Fund account: (See prospectus
regarding limitations on this privilege.)
Fund Name Account Number
PLEASE SEND CASH DIVIDENDS TO (if no special payee, cash dividends will be sent
to the account registration address):
/ / Account registration address.
/ / Special Payee as follows:
Name of Payee Account No. (if applicable)
Street Address
City State Zip
- --------------------------------------------------------------------------------
10. EXCHANGES.
I authorize exchanges between Kemper Mutual Funds upon instruction from ANY
PERSON by telephone. / / Yes / / No
IF NEITHER BOX IS CHECKED, THE TELEPHONE EXCHANGE PRIVILEGE WILL BE PROVIDED.
- --------------------------------------------------------------------------------
11. SYSTEMATIC EXCHANGE PRIVILEGE (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF
THIS PRIVILEGE IS NOT WANTED.
I authorize the monthly exchange of shares FROM my account established by this
Application as follows. The account registration on the account being exchanged
INTO is/will be identical to that listed in Item 1 of this Application.
Fund (to exchange INTO): Account No. (if existing)
Choose one of the following options. Monthly exchange amount must be at least
$100.
/ / Exchange shares at net asset value in the amount of $ .
/ / Exchange % annual rate of the net asset value of my account.
/ / Exchange sufficient amounts to exchange my entire account within (choose
one): / / years or / / months.
If you want to establish the Systematic Exchange Privilege with options other
than those listed above, call the Shareholder Service Agent at 1-800-621-1048.
- --------------------------------------------------------------------------------
12. WIRE REDEMPTIONS (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF THIS
PRIVILEGE IS NOT WANTED.
The Fund or its agents are authorized to honor telephone or other instructions
from ANY PERSON for the redemption of Fund shares. Proceeds are to be wire
transferred to the bank account referenced below. ($1,000 minimum per
redemption.)
Name of Depositor
(as shown on bank records)
Name of Bank Bank Account No.
(a savings and loan or credit union may not be able to receive wire redemptions)
Address of Bank
City State Zip
- --------------------------------------------------------------------------------
13. TELEPHONE REDEMPTIONS (OPTIONAL). / / Yes / / No PLEASE CROSS OUT
THIS SECTION IF THIS PRIVILEGE IS NOT WANTED.
The Fund or its agents are authorized to honor telephone or other instructions
from ANY PERSON for the redemption of Fund shares. The amount of the redemption
shall not exceed $50,000 and the proceeds are to be payable to the shareholder
of record and mailed to the address of record.
- --------------------------------------------------------------------------------
14. CERTIFICATION AND SIGNATURE (SUBJECT TO CERTIFICATION SHOWN ON APPLICATION
GUIDE).
Under penalties of perjury, the account owner hereby certifies (1) that the Tax
I.D. Number above is correct and (2) that the account owner is not subject to
backup withholding because (a) the account owner has not been notified of being
subject to backup withholding as a result of a failure to report all interest or
dividends, or (b) the I.R.S. has provided notification that the account owner is
no longer subject to backup withholding. (Cross out (2) if it is not correct.)
<TABLE>
<S> <C>
X X
Authorized Signature Title Authorized Signature Title
X
Date Authorized Signature Title
Daytime Phone #
</TABLE>
SIGNATURE GUARANTEE: REQUIRED ONLY IF ITEM 12 (WIRE REDEMPTIONS) OR ITEM 13
(TELEPHONE REDEMPTIONS) IS SELECTED. A signature guarantee must be supplied by a
commercial bank, trust company, savings and loan association, federal savings
bank, member of a national securities exchange or other eligible financial
institution.
AFFIX SIGNATURE GUARANTEE STAMP
<TABLE>
<S> <C>
Signature Guaranteed by Authorized Signature
</TABLE>
<PAGE> 44
LETTER OF INTENT ("LOI") CONDITIONS -- CLASS A
(APPLICABLE IF ITEM 7 LETTER OF INTENT SELECTED)
The first investment hereunder must equal or exceed $1,000 or 5% of the
indicated amount, whichever is greater. The value of shares owned by us on the
initial purchase date is determined by the maximum offering price on that date.
Each investment will be made at the public offering price applicable to a single
transaction of the dollar amount indicated on the application, as described in
the applicable Fund Prospectus in effect at the time of such investment. We
understand that the levels at which reduced sales charges are available may vary
for different Funds. We agree that the sales charge schedules for the Funds are
subject to change.
We are making no commitment to purchase shares, but if our investments within 24
months from the initial purchase date do not aggregate the sum specified, we
will pay the increased amount of sales charge as prescribed below. In
determining the total amount of purchases, any shares purchased under this LOI
and then sold within the 24-month period will be deducted from our total
purchases. Exchanges between Funds will not be deducted.
Five percent (5%) of the dollar amount specified in this LOI will be held in
escrow by Kemper Distributors, Inc. (the principal underwriter) in the form of
shares of one or more of the Funds being purchased (computed to the nearest full
share at public offering price) registered in our name. All income and capital
gain dividends on the escrowed shares will be reinvested in additional shares or
paid in cash per our dividend instructions. If the shares held in escrow in
connection with this LOI are to be exchanged in accordance with the Exchange
Privilege described in the applicable Fund Prospectus, the smallest number of
full shares of the Kemper Mutual Fund to be issued on the exchange having the
same aggregate net asset value as the shares being exchanged shall be
substituted in the escrow account. If we complete the investment specified
within the 24 month period, the escrowed shares will be released.
If our total investments pursuant to this Letter are less than the amount
specified, we will remit to the principal underwriter the difference in the
sales charge actually paid and the sales charge which we would have paid if our
total investments hereunder had been made at a single time. If we do not pay
such difference in sales charge within 7 business days after written request by
the principal underwriter or our dealer, we irrevocably constitute and appoint
the principal underwriter Kemper Distributors, Inc., our attorney, with full
power of substitution, to surrender for redemption the necessary number of the
escrowed shares to realize such difference without further notice or demand. If
shares of more than one Fund are held in escrow, shares of only one Fund, or
more than one Fund, as determined in the sole discretion of the principal
underwriter may be redeemed for this purpose. In the event of a deficiency after
such surrender, we shall remain liable for such deficiency.
We agree that we or our dealer will refer to this LOI in placing any future
order for us for shares of the Fund(s) hereunder. If additional Funds are to be
added to the LOI, we or our dealer will notify the Shareholder Service Agent for
the Kemper Mutual Funds of that fact.
All purchases under this LOI must be by the same purchaser as described in the
applicable Fund Prospectus.
We agree that this LOI is subject to the terms of the applicable Fund Prospectus
that is currently in effect from time to time and that neither Kemper
Distributors, Inc. nor any Fund has any obligation to sell shares of any Fund
hereunder.
<PAGE> 45
INDIVIDUAL ACCOUNT APPLICATION GUIDE
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
INSTRUCTIONS
Please make sure you are using the correct application. Use the Individual
Account Application for Individual, Joint Owners and Transfer to Minor accounts.
Use the Institutional Account Application for Corporate, Trust or other
Fiduciary accounts. This application cannot be used for any modification of an
existing account. This application also cannot be used to establish an
Individual Retirement Account (IRA) with Investors Fiduciary Trust Company as
trustee. To obtain an IRA application, or forms to modify your account, call
1-800-621-1048.
- - Please print information exactly as you wish it to appear on the account.
- - Please check the box that is applicable to the type of account you are
opening.
- - Please insure that the social security number for a joint account is for the
FIRST named registrant and for a transfer to minor account is for the MINOR.
- - PLEASE BE SURE TO COMPLETE BOTH SECTIONS I AND II.
- - PLEASE BE SURE TO SIGN THIS APPLICATION. If the account is registered in the
name of:
- an individual, the individual must sign.
- joint owners, all must sign.
- a custodian for a minor, the custodian must sign.
READ THIS IMPORTANT INFORMATION
FUND FEATURES
Exchanges. If you elect this option:
- You are authorizing exchanges between Kemper Mutual Funds by ANY
PERSON by telephone.
- Shares held in certificated form may not be exchanged until they
have been received by the Fund's Shareholder Service Agent and
deposited to the account.
- If exchanging to a new account, the minimum requirement is $1,000.
- Subsequent exchanges may be made for $100 or more.
Systematic Exchanges. If you elect this option:
- You are authorizing monthly exchanges from your Fund account to
another Fund account with the same registration.
- Shares may not be held in certificated form.
- The minimum initial account balance for Fund shares being exchanged
is $1,000.
- The minimum monthly exchange is $100 per Fund exchanged into.
Systematic Withdrawal Plans. If you elect this option:
- Shares may not be held in certificated form.
- The Plan may not be selected in conjunction with a Letter of Intent.
- Your account value must be at least $5,000.
- All dividends will be reinvested.
Wire Redemptions. If you elect this option:
- You are authorizing the Fund or its agents to honor telephone or
other instructions from ANY PERSON for the redemption of Fund
shares. Proceeds will be wire transferred to the bank account
referenced on the application.
- Shares held in certificated form may not be redeemed under this
privilege.
- The amount redeemed must be at least $1,000.
CERTIFICATION
The account holders certify that they have the power and authority to establish
this account and select the privileges requested. Account holders can request
the following telephone privileges on this application: expedited wire transfer
redemption and telephone exchange transactions. Please note that the telephone
exchange privilege is automatic unless the account holder refuses it. Neither
the Fund nor its agents will be liable for any loss, expense or cost arising out
of any telephone request pursuant to these privileges, including any fraudulent
or unauthorized request, and THE ACCOUNT HOLDER WILL BEAR THE RISK OF LOSS, so
long as the Fund or its agent reasonably believes, based upon reasonable
verification procedures, that the telephonic instructions are genuine. The
verification procedures include recording instructions, requiring certain
identifying information before acting upon instructions, and sending written
confirmations. The account holders certify that the current prospectus for the
Fund (including any Kemper Fund selected under the Systematic Exchange
Privilege) has been received and read and that the authorizations hereon shall
continue until the Fund receives written notice of a modification signed by all
appropriate parties or a termination signed by any party. This account is
subject to the terms of the Fund's prospectus, as amended from time to time, and
the terms herein set forth, and is subject to acceptance by the Fund and to the
laws of Illinois. All terms shall be binding upon the heirs, representatives and
assigns of the account holders.
QUESTIONS
Shareholders may call 1-800-621-1048 to speak with a Kemper Shareholder Services
Representative.
Financial Representatives may call 1-800-621-5027 to speak with a Kemper Sales
Support Representative.
<PAGE> 46
INDIVIDUAL ACCOUNT APPLICATION--SECTION I OF II IJKLM(LOGO)
KEMPER GLOBAL INCOME FUND/KEMPER INTERNATIONAL FUND
MAIL TO: KEMPER MUTUAL FUNDS, ATTENTION: NEW APPLICATIONS, P.O. BOX 419356,
KANSAS CITY, MO 64141-6356
- --------------------------------------------------------------------------------
1. YOUR ACCOUNT REGISTRATION.
<TABLE>
<S> <C>
/ / INDIVIDUAL FIRST NAME M.I. LAST NAME
OR
/ / JOINT TENANT* FIRST NAME M.I. LAST NAME
FIRST NAME M.I. LAST NAME
* Joint accounts will be registered as joint tenants with rights of survivorship unless otherwise indicated.
- ---------------------------------------------------------------------------------------------------------------------------
/ / TRANSFER TO A Custodian's Name Minor's Name
Minor (only one permitted) (only one permitted)
</TABLE>
- --------------------------------------------------------------------------------
2. YOUR MAILING ADDRESS.
<TABLE>
<CAPTION>
<S> <C>
Street Address Apt. #
City State Zip
I am a citizen of / / U.S. / / Other (Please specify) Social Security No.
(for first registrant or minor)
</TABLE>
- --------------------------------------------------------------------------------
3. AMOUNT INVESTED AND FUND/CLASS SELECTION.
Please Do Not Write In This Space
Make checks payable to Kemper Mutual
Funds. The minimum initial investment
is $1,000 per Fund ($50 if Item 12
selected).*
FUND AMOUNT CLASS
Kemper Global Income Fund $
Kemper International Fund $
*See Letter of Intent if Item 6 is
selected.
- --------------------------------------------------------------------------------
4. DIVIDENDS.
Choose how you wish to receive dividends. IF NO BOXES ARE CHECKED, OPTION A WILL
BE ASSIGNED.
<TABLE>
<S> <C>
A. / / All income and capital gains dividends REINVESTED in my account.
B. / / All income and short-term capital gains dividends IN CASH and long-term capital gains REINVESTED in my account.
(COMPLETE CASH DIVIDENDS SECTION BELOW.)
C. / / All income and capital gains dividends paid to me IN CASH. (COMPLETE CASH DIVIDENDS SECTION BELOW.)
D. / / All dividends REINVESTED in another Kemper Fund account: (See prospectus regarding limitations on this privilege.)
</TABLE>
Fund Name Account Number
PLEASE SEND CASH DIVIDENDS TO (if no special payee, cash dividends will be sent
to the account registration address):
/ / Account registration address. / / Special Payee as follows:
<TABLE>
<S> <C>
Name of Payee Account No. (if applicable)
Street Address
City State Zip
</TABLE>
- --------------------------------------------------------------------------------
5. RIGHTS OF ACCUMULATION--CLASS A.
Cum. Discount Number (if known). I own shares in
other Kemper Mutual Funds which may entitle this purchase to a reduced sales
charge as described in the Fund prospectus.
Existing Fund Name(s) Account Number(s)
- --------------------------------------------------------------------------------
6. LETTER OF INTENT--CLASS A (OPTIONAL). I agree to the Letter of Intent
Conditions on the reverse side of this application.
I intend to invest, within a 24-month period beginning on the date hereof
(initial purchase date) in shares of the Fund purchased hereunder and one or
more of the other funds listed in Item 5 above (the "Funds"), an aggregate
amount which, together with the value of shares of any of the Funds then owned
by me, will equal or exceed the amount indicated below:
/ /$50,000 / /$100,000 / /$250,000 /
/$500,000 / /$1,000,000
- --------------------------------------------------------------------------------
7. YOUR BROKER/DEALER. Representative's Phone Number
<TABLE>
<CAPTION>
<S> <C> <C>
Dealer Number Branch Number Representative's Number
Firm Name Representative's Last Name
Branch Address
</TABLE>
<PAGE> 47
TEAR OUT COMPLETED APPLICATION
PLEASE ATTACH VOIDED CHECK HERE
INDIVIDUAL ACCOUNT APPLICATION--SECTION II OF II
- --------------------------------------------------------------------------------
8. EXCHANGES.
I authorize exchanges between Kemper Funds upon instruction from ANY PERSON by
telephone. / / Yes / /No
IF NEITHER BOX IS CHECKED, THE TELEPHONE EXCHANGE PRIVILEGE WILL BE PROVIDED.
- --------------------------------------------------------------------------------
9. SYSTEMATIC EXCHANGE PRIVILEGE (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF
THIS PRIVILEGE IS NOT WANTED.
I authorize the monthly exchange of shares FROM my account established by this
Application as follows. The account registration on the account being exchanged
INTO is/will be identical to that listed in Item 1 of this Application.
Fund (to exchange INTO): Account No.
Choose one of the following options. Monthly exchange amount must be at least
$100.
/ / Exchange shares at net asset value in the amount of $ .
/ / Exchange % annual rate of the net asset value of my account.
/ / Exchange sufficient amounts to exchange my entire account within (choose
one): / / years or / / months.
If you want to establish the Systematic Exchange Privilege with options other
than those listed above, call the Shareholder Service Agent at 1-800-621-1048.
- --------------------------------------------------------------------------------
10. SYSTEMATIC WITHDRAWAL PLAN (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF
THIS PRIVILEGE IS NOT WANTED.
Please establish a Systematic Withdrawal Plan to begin:
(Month, Year) for my account(s) established by this Application. The payment
($100 minimum) may be either a specified dollar amount or an annualized
percentage (10% maximum) of the net asset value of the account as determined by
a monthly valuation.
<TABLE>
<CAPTION>
Fund Withdrawal
Amount or
Annualized Percentage Payment Frequency Send Check to
<S> <C> <C>
/ / Monthly / / Quarterly / / Semi-Annually / / / Acc't registration /
$ / Annually / Special
/ / Monthly / / Quarterly / / Semi-Annually / / / Acc't registration /
$ / Annually / Special
</TABLE>
Please send the Systematic Withdrawal Plan check to (check above; IF NO SPECIAL
PAYEE, PAYMENT WILL BE SENT TO ACCOUNT REGISTRATION ADDRESS).
Special Payee Address:
Name Account No. (if applicable)
Address
City State Zip
- --------------------------------------------------------------------------------
11. WIRE REDEMPTIONS (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF THIS
PRIVILEGE IS NOT WANTED.
I authorize the Fund or its agents to honor telephone or other instructions from
ANY PERSON for the redemption of Fund shares. Proceeds are to be wire
transferred to the bank account referenced below. ($1,000 minimum per
redemption.)
Name of Depositor
(as shown on bank records)
Name of Bank Bank Account No.
(a savings and loan or credit union may not be able to receive wire redemptions)
Address of Bank
City State Zip
- --------------------------------------------------------------------------------
12. AUTOMATIC INVESTING (OPTIONAL). PLEASE CROSS OUT THIS SECTION IF THIS
PRIVILEGE IS NOT WANTED.
A. BANK DIRECT DEPOSIT
I authorize the Fund's Agent to draw checks or initiate Automated Clearing House
("ACH") debits against the bank account described on the attached voided check
beginning on the day of each month for my account(s) established by this
Application. WRITE "VOID" ACROSS THE FACE OF A CHECK FOR THE BANK ACCOUNT YOU
WISH TO USE, THEN ATTACH THE CHECK TO THIS FORM. A $50 minimum applies.
<TABLE>
<CAPTION>
If you do not have check writing privileges and therefore cannot attach
Fund Amount a voided check, please complete the following information:
<S> <C> <C> <C>
$ Name of Bank Branch (if applicable)
$ Address of Bank
City State Zip
Bank Account No.
</TABLE>
B. DIRECT DEPOSIT OF PAYROLL/GOVERNMENT CHECK
For information on direct deposit of payroll or government checks please call
the Shareholder Service Agent at 1-800-621-1048.
- --------------------------------------------------------------------------------
13. CERTIFICATION AND SIGNATURE (SUBJECT TO CERTIFICATION SHOWN ON APPLICATION
GUIDE).
Under penalties of perjury, the undersigned hereby certify (1) that the Social
Security Number above is correct and (2) that the account owner is not subject
to backup withholding because (a) the account owner has not been notified of
being subject to backup withholding as a result of a failure to report all
interest or dividends, or (b) the I.R.S. has provided notification that the
account owner is no longer subject to backup withholding. (Cross out (2) if it
is not correct.)
<TABLE>
<S> <C>
X X
Signature Co-Owner (if applicable)
X
Date Co-Owner (if applicable)
Daytime Phone #
</TABLE>
<PAGE> 48
LETTER OF INTENT ("LOI") CONDITIONS -- CLASS A
(APPLICABLE IF ITEM 6 LETTER OF INTENT SELECTED)
The first investment hereunder must equal or exceed $1,000 or 5% of the
indicated amount, whichever is greater. The value of shares owned by me on the
initial purchase date is determined by the maximum offering price on that date.
Each investment will be made at the public offering price applicable to a single
transaction of the dollar amount indicated on the application, as described in
the applicable Fund Prospectus in effect at the time of such investment. I
understand that the levels at which reduced sales charges are available may vary
for different Funds. I agree that the sales charge schedules for the Funds are
subject to change.
I am making no commitment to purchase shares, but if my investments within 24
months from the initial purchase date do not aggregate the sum specified, I will
pay the increased amount of sales charge as prescribed below. In determining the
total amount of purchases, any shares purchased under this LOI and then sold
within the 24 month period will be deducted from my total purchases. Exchanges
between Funds will not be deducted.
Five percent (5%) of the dollar amount specified in this LOI will be held in
escrow by Kemper Distributors, Inc. (the principal underwriter) in the form of
shares of one or more of the Funds being purchased (computed to the nearest full
share at public offering price) registered in my name. All income and capital
gain dividends on the escrowed shares will be reinvested in additional shares or
paid in cash per my dividend instructions. If the shares held in escrow in
connection with this LOI are to be exchanged in accordance with the Exchange
Privilege described in the applicable Fund Prospectus, the smallest number of
full shares of the Kemper Mutual Fund to be issued on the exchange having the
same aggregate net asset value as the shares being exchanged shall be
substituted in the escrow account. If I complete the investment specified within
the 24 month period, the escrowed shares will be released.
If my total investments pursuant to this Letter are less than the amount
specified, I will remit to the principal underwriter the difference in the sales
charge actually paid and the sales charge which I would have paid if my total
investments hereunder had been made at a single time. If I do not pay such
difference in sales charge within 7 business days after written request by the
principal underwriter or my dealer, I irrevocably constitute and appoint the
principal underwriter Kemper Distributors, Inc., my attorney, with full power of
substitution, to surrender for redemption the necessary number of the escrowed
shares to realize such difference without further notice or demand. If shares of
more than one Fund are held in escrow, shares of only one Fund, or more than one
Fund, as determined in the sole discretion of the principal underwriter may be
redeemed for this purpose. In the event of a deficiency after such surrender, I
shall remain liable for such deficiency.
I agree that I or my dealer will refer to this LOI in placing any future order
for me for shares of the Fund(s) hereunder. If additional Funds are to be added
to the LOI, I or my dealer will notify the Shareholder Service Agent for the
Kemper Mutual Funds of that fact.
All purchases under this LOI must be by the same purchaser as described in the
applicable Fund Prospectus.
I agree that this LOI is subject to the terms of the applicable Fund Prospectus
that is currently in effect from time to time and that neither Kemper
Distributors, Inc. nor any Fund has any obligation to sell shares of any Fund
hereunder.
<PAGE> 49
KEMPER
GLOBAL
INCOME
FUND
KEMPER
INTERNATIONAL
FUND
PROSPECTUS
AND APPLICATION
March 1, 1995
INVESTMENT MANAGER
Kemper Financial Services, Inc.
PRINCIPAL UNDERWRITER
Kemper Distributors, Inc.
120 South LaSalle Street
Chicago, Illinois 60603
1-800-621-1048
KIF-1 3/95 (LOGO)printed on recycled paper
(LOGO)
KEMPER
<PAGE> 50
KEMPER GLOBAL INCOME FUND
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN PART B
OF FORM N-1A AND STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
ITEM NUMBER LOCATION IN STATEMENT OF
OF FORM N-1A ADDITIONAL INFORMATION
---------------------------------------------
<S> <C> <C>
10. Cover Page.................................... Cover Page
11. Table of Contents............................. Table of Contents
12. General Information and History............... Inapplicable
13. Investment Objectives and Policies............ Investment Restrictions; Investment Policies
and Techniques
14. Management of the Fund........................ Investment Manager and Underwriter;
Officers and Trustees
15. Control Persons and Principal Holders of
Securities.................................... Officers and Trustees
16. Investment Advisory and Other Services........ Investment Manager and Underwriter
17. Brokerage Allocation and Other Practices...... Portfolio Transactions
18. Capital Stock and Other Securities............ Dividends and Taxes;
Shareholder Rights
19. Purchase, Redemption and Pricing of
Securities Being Offered...................... Purchase and Redemption of Shares
20. Tax Status.................................... Dividends and Taxes
21. Underwriters.................................. Investment Manager and Underwriter
22. Calculation of Performance Data............... Performance
23. Financial Statements.......................... Financial Statements
</TABLE>
<PAGE> 51
STATEMENT OF ADDITIONAL INFORMATION
MARCH 1, 1995
KEMPER GLOBAL INCOME FUND
KEMPER INTERNATIONAL FUND
120 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60603
1-800-621-1048
This Statement of Additional Information is not a prospectus. It is the combined
Statement of Additional Information for Kemper Global Income Fund and Kemper
International Fund (the "Funds"). It should be read in conjunction with the
combined prospectus of the Funds dated March 1, 1995. The prospectus may be
obtained without charge from the Funds.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
- --------------------------------------------------------------------------
<S> <C>
Investment Restrictions............................................ B-1
Investment Policies and Techniques................................. B-4
Dividends and Taxes................................................ B-10
Performance........................................................ B-11
Investment Manager and Underwriter................................. B-19
Portfolio Transactions............................................. B-23
Purchase and Redemption of Shares.................................. B-24
Officers and Trustees.............................................. B-26
Shareholder Rights................................................. B-27
Appendix--Ratings of Investments................................... B-29
</TABLE>
The financial statements appearing in each Fund's Annual Report to Shareholders
are incorporated herein by reference. The Report for the Fund for which this
Statement of Additional Information is requested accompanies this document.
KIF-1 3/95 (LOGO)printed on recycled paper
<PAGE> 52
INVESTMENT RESTRICTIONS
Each Fund has adopted certain fundamental investment restrictions which,
together with the investment objective and fundamental policies of such Fund,
cannot be changed without approval of a "majority" of its outstanding voting
shares. As defined in the Investment Company Act of 1940, this means the lesser
of (1) 67% of the Fund's shares present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy; or (2) more than 50% of
the Fund's outstanding shares.
THE GLOBAL FUND MAY NOT, AS A FUNDAMENTAL POLICY:
(1) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the U.S. Government, its agencies or instrumentalities) if, as a result,
more than 5% of the total value of the Fund's assets would be invested in
securities of that issuer except that, with respect to 50% of the Fund's total
assets, the Fund may invest up to 25% of its total assets in securities of any
one issuer.
(2) Purchase more than 10% of any class of voting securities of any issuer.
(3) Make loans to others provided that the Fund may purchase debt obligations or
repurchase agreements and it may lend its securities in accordance with its
investment objective and policies.
(4) Borrow money except as a temporary measure for extraordinary or emergency
purposes, and then only in an amount up to one-third of the value of its total
assets, in order to meet redemption requests without immediately selling any
portfolio securities. If, for any reason, the current value of the Fund's total
assets falls below an amount equal to three times the amount of its indebtedness
from money borrowed, the Fund will, within three days (not including Sundays and
holidays), reduce its indebtedness to the extent necessary. The Fund will not
borrow for leverage purposes and will not purchase securities or make
investments while borrowings are outstanding.
(5) Pledge, hypothecate, mortgage or otherwise encumber more than 15% of its
total assets and then only to secure borrowings permitted by restriction 4
above. (The collateral arrangements with respect to options, financial futures
and delayed delivery transactions and any margin payments in connection
therewith are not deemed to be pledges or other encumbrances.)
(6) Purchase securities on margin, except to obtain such short-term credits as
may be necessary for the clearance of transactions; however, the Fund may make
margin deposits in connection with options and financial futures transactions.
(7) Make short sales of securities or other assets or maintain a short position
for the account of the Fund unless at all times when a short position is open it
owns an equal amount of such securities or other assets or owns securities
which, without payment of any further consideration, are convertible into or
exchangeable for securities or other assets of the same issue as, and equal in
amount to, the securities or other assets sold short and unless not more than
10% of the Fund's total assets is held as collateral for such sales at any one
time.
(8) Write or sell put or call options, combinations thereof or similar options
on more than 25% of the Fund's net assets; nor may the Fund purchase put or call
options if more than 5% of the Fund's net assets would be invested in premiums
on put and call options, combinations thereof or similar options; however, the
Fund may buy or sell options on financial futures contracts.
(9) Purchase securities (other than securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities) if as a result of such purchase
25% or more of the Fund's total assets would be invested in any one industry.
(10) Invest in commodities or commodity futures contracts, although it may buy
or sell financial futures contracts and options on such contracts, and engage in
foreign currency transactions; or in real estate (including real estate limited
partnerships), although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate including
real estate investment trusts.
B-1
<PAGE> 53
(11) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities.
(12) Issue senior securities except as permitted under the Investment Company
Act of 1940.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The Global
Fund did not borrow money as permitted by investment restriction number 4 in the
latest fiscal year and it has no present intention of borrowing during the
current year. The Global Fund has adopted the following non-fundamental
restrictions, which may be changed by the Board of Trustees without shareholder
approval. The Global Fund may not:
(i) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more than
5% of the securities of such issuer.
(ii) Invest for the purpose of exercising control or management of another
issuer.
(iii) Invest in interests in oil or gas exploration or development programs,
although it may invest in the securities of issuers which invest in or sponsor
such programs.
(iv) Invest more than 15% of its net assets in illiquid securities.
(v) Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York or American Stock
Exchanges. Warrants acquired in units or attached to securities may be deemed to
be without value for such purposes.
(vi) Purchase securities of other open-end investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
(vii) Invest in oil, gas or other mineral leases.
(viii) Invest more than 5% of the Fund's total assets in securities of issuers
(other than obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities) which with their predecessors have a record of less than
three years continuous operation, and equity securities of issuers which are not
readily marketable.
(ix) Invest more than 5% of its total assets in restricted securities, excluding
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid pursuant to
procedures adopted by the Board of Trustees, provided that the total amount of
Fund assets invested in restricted securities will not exceed 15% of total
assets.
(x) Invest more than 10% of its total assets in securities of real estate
investment trusts.
THE INTERNATIONAL FUND MAY NOT, AS A FUNDAMENTAL POLICY:
(1) Purchase securities of any issuer (other than obligations of, or guaranteed
by, the United States or any foreign government or their agencies or
instrumentalities) if, as a result, more than 5% of the Fund's total assets
would be invested in securities of that issuer. With respect to 75% of its
assets, the Fund will limit its investments in the securities of any one foreign
government issuer to 5% of the Fund's total assets.
(2) Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities. All debt securities and all preferred stocks are each
considered as one class.
B-2
<PAGE> 54
(3) Lend money or securities, provided that the making of time or demand
deposits with banks and the purchase of debt securities such as bonds,
debentures, commercial paper, repurchase agreements and short-term obligations
in accordance with its objective and policies are not prohibited.
(4) Borrow money except for temporary or emergency purposes (but not for the
purpose of purchase of investments) and then only in an amount not to exceed 5%
of the Fund's net assets; or pledge the Fund's securities or receivables or
transfer or assign or otherwise encumber them in an amount exceeding the amount
of the borrowing secured thereby.
(5) Make short sales of securities, or purchase any securities on margin except
to obtain such short-term credits as may be necessary for the clearance of
transactions; however, the Fund may make margin deposits in connection with
financial futures and options transactions.
(6) Write or sell put or call options, combinations thereof or similar options
on more than 25% of the Fund's net assets; nor may it purchase put or call
options if more than 5% of the Fund's net assets would be invested in premiums
on put and call options, combinations thereof or similar options; however, the
Fund may buy or sell options on financial futures contracts.
(7) Concentrate more than 25% of the value of its assets in any one industry.
Water, communications, electric and gas utilities shall each be considered a
separate industry. This limitation shall not apply to obligations issued by the
United States or any foreign government or their agencies or instrumentalities.
(8) Invest in commodities or commodity futures contracts, although it may buy or
sell financial futures contracts and options on such contracts and may enter
into foreign currency transactions; or in real estate, although it may invest in
securities which are secured by real estate and securities of issuers which
invest or deal in real estate.
(9) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter, under the federal securities laws, in connection
with the disposition of portfolio securities. The Fund may buy and sell
securities outside the United States which are not registered with the
Securities and Exchange Commission or marketable in the United States.
(10) Issue senior securities except as permitted under the Investment Company
Act of 1940.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation. The
International Fund did not borrow money as permitted by investment restriction
number 4 in the latest fiscal year and it has no present intention of borrowing
during the current year. The International Fund has adopted the following
non-fundamental restrictions, which may be changed by the Board of Trustees
without shareholder approval. The International Fund may not:
(i) Invest more than 5% of the Fund's total assets in securities of issuers
which with their predecessors have a record of less than three years continuous
operation, and equity securities of issuers which are not readily marketable.
(ii) Purchase or retain the securities of any issuer if any of the officers,
trustees or directors of the Fund or its investment adviser owns beneficially
more than 1/2 of 1% of the securities of such issuer and together own more than
5% of the securities of such issuer.
(iii) Invest for the purpose of exercising control or management of another
issuer.
(iv) Invest in interests in oil, gas or other mineral exploration or development
programs, although it may invest in the securities of issuers which invest in or
sponsor such programs.
(v) Purchase securities of other investment companies, except in connection with
a merger, consolidation, acquisition or reorganization, or by purchase in the
open market of securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than customary broker's
commission, is involved and
B-3
<PAGE> 55
only if immediately thereafter not more than (i) 3% of the total outstanding
voting stock of such company is owned by the Fund, (ii) 5% of the Fund's total
assets would be invested in any one such company, and (iii) 10% of the Fund's
total assets would be invested in such securities.
(vi) Invest more than 15% of its net assets in illiquid securities.
(vii) Invest in warrants if more than 5% of the Fund's net assets would be
invested in warrants. Included within that amount, but not to exceed 2% of the
Fund's net assets, may be warrants not listed on the New York or American Stock
Exchanges. Warrants acquired in units or attached to securities may be deemed to
be without value for such purposes.
(viii) Invest in oil, gas, and other mineral leases.
(ix) Purchase or sell real property (including limited partnership interests but
excluding readily marketable interests in real estate investment trusts and
readily marketable securities of companies which invest in real estate).
(x) Invest more than 5% of its total assets in restricted securities, excluding
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid pursuant to
procedures adopted by the Board of Trustees, provided that the total amount of
Fund assets invested in restricted securities will not exceed 15% of total
assets.
(xi) Invest more than 10% of its total assets in securities of real estate
investment trusts.
INVESTMENT POLICIES AND TECHNIQUES
GENERAL. Each Fund may engage in futures and options transactions in accordance
with its investment objective and policies. The Funds intends to engage in such
transactions if it appears to the investment manager to be advantageous to do
so, in order to pursue its investment objective, to hedge against the effects of
fluctuating interest rates and to stabilize the value of its assets and not for
speculation. The use of futures and options, and possible benefits and attendant
risks, are discussed below, along with information concerning certain other
investment policies and techniques.
FINANCIAL FUTURES CONTRACTS. Each Fund may enter into contracts for the future
delivery of a financial instrument, such as a security, or an amount of foreign
currency, or the cash value of a securities index or other appropriate index, as
available, such as a foreign currency index. This investment technique is
designed primarily to hedge (i.e., protect) against anticipated future changes
in market conditions or foreign exchange rates which otherwise might adversely
affect the value of securities or other assets which the Fund holds or intends
to purchase. A "sale" of a futures contract means the undertaking of a
contractual obligation to deliver the underlying securities or the cash value of
an index or foreign currency called for by the contract at a specified price
during a specified delivery period. A "purchase" of a futures contract means the
undertaking of a contractual obligation to acquire the underlying securities or
cash value of an index or foreign currency at a specified price during a
specified delivery period. At the time of delivery in the case of fixed income
securities pursuant to the contract, adjustments are made to recognize
differences in value arising from the delivery of securities with a different
interest rate than that specified in the contract. In some cases, securities
called for by a futures contract may not have been issued at the time the
contract was written.
Although some financial futures contracts by their terms call for the actual
delivery or acquisition of securities or other assets, in most cases a party
will close out the contractual commitment before delivery without having to make
or take delivery of the underlying assets by purchasing (or selling, as the case
may be) on a commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, if effected through a member of
an exchange, cancels the obligation to make or take delivery of the underlying
securities or other assets. All transactions in the futures market are made,
offset or fulfilled through a clearing house associated with the exchange on
which the contracts are traded. A Fund will incur brokerage fees when it
purchases or sells contracts, and will be required to maintain margin deposits.
At the time a Fund enters into a futures contract, it is required to deposit
with
B-4
<PAGE> 56
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 costs incurred
in connection with futures transactions could reduce a Fund's return. Futures
contracts entail risks. If the investment manager's judgment about the general
direction of markets or exchange rates is wrong, the overall performance may be
poorer than if no such contracts had been entered into.
There may be an imperfect correlation between movements in prices of futures
contracts and portfolio assets being hedged. In addition, the market prices of
futures contracts may be affected by certain factors. If participants in the
futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the assets and futures markets could result. Price
distortions also could result if investors in futures contracts decide to make
or take delivery of underlying securities or other assets rather than engage in
closing transactions because of the resultant reduction in the liquidity of the
futures market. In addition, because, from the point of view of speculators,
margin requirements in the futures market are less onerous than margin
requirements in the cash market, increased participation by speculators in the
futures market could cause temporary price distortions. Due to the possibility
of price distortions in the futures market and because of the imperfect
correlation between movements in the prices of securities or other assets and
movements in the prices of futures contracts, a correct forecast of market
trends by the investment manager still may not result in a successful hedging
transaction. If any of these events should occur, the Fund could lose money on
the financial futures contracts and also on the value of its portfolio assets.
OPTIONS ON FINANCIAL FUTURES CONTRACTS. Each Fund may purchase and write call
and put options on financial futures contracts. An option on a futures contract
gives the purchaser the right, in return for the premium paid, to assume a
position in a futures contract at a specified exercise price at any time during
the period of the option. Upon exercise, the writer of the option delivers the
futures contract to the holder at the exercise price. A Fund would be required
to deposit with its custodian initial margin and maintenance margin with respect
to put and call options on futures contracts written by it. Each Fund will
establish segregated accounts or will provide cover with respect to written
options on financial futures contracts in a manner similar to that described
under "Options on Securities." Options on futures contracts involve risks
similar to those risks relating to transactions in financial futures contracts
described above. Also, an option purchased by a Fund may expire worthless, in
which case the Fund would lose the premium paid therefor.
OPTIONS ON SECURITIES. Each Fund may write (sell) "covered" call options on
securities as long as it owns the underlying securities subject to the option or
an option to purchase the same underlying securities, having an exercise price
equal to or less than the exercise price of the "covered" option, or will
establish and maintain for the term of the option a segregated account
consisting of cash, U.S. Government securities or other liquid high-grade debt
obligations ("eligible securities") having a value at least equal to the
fluctuating market value of the optioned securities. A Fund may write "covered"
put options provided that, as long as the Fund is obligated as a writer of a put
option, the Fund will own an option to sell the underlying securities subject to
the option, having an exercise price equal to or greater than the exercise price
of the "covered" option, or it will deposit and maintain in a segregated account
eligible securities having a value equal to or greater than the exercise price
of the option. A call option gives the purchaser the right to buy, and the
writer the obligation to sell, the underlying security at the exercise price
during the option period. A put option gives the purchaser the right to sell,
and the writer has the obligation to buy, the underlying security at the
exercise price during the option period. The premium received for writing an
option will reflect, among other things, the current market price of the
underlying security, the relationship of the exercise price to such market
price, the price volatility of the underlying security, the option period,
supply and demand and interest rates. The exercise price of an option may be
below, equal to or above the current market value of the underlying security at
the time the option is written. The Funds may write or purchase spread options,
which are options for which the exercise price may be a fixed dollar spread or
yield spread between the security underlying the option and another security it
does not own, but that is used as a bench mark. The buyer of a put who also owns
the related security is protected by ownership of a put option against any
decline in that
B-5
<PAGE> 57
security's price below the exercise price less the amount paid for the option.
The ability to purchase put options allows a Fund to protect capital gains in an
appreciated security it owns, without being required to actually sell that
security. At times a Fund would like to establish a position in a security upon
which call options are available. By purchasing a call option, a Fund is able to
fix the cost of acquiring the security, this being the cost of the call plus the
exercise price of the option. This procedure also provides some protection from
an unexpected downturn in the market because a Fund is only at risk for the
amount of the premium paid for the call option which it can, if it chooses,
permit to expire.
During the option period the covered call writer gives up the potential for
capital appreciation above the exercise price should the underlying asset rise
in value, and the secured put writer retains the risk of loss should the
underlying asset decline in value. For the covered call writer, substantial
appreciation in the value of the underlying asset would result in the asset
being "called away." For the secured put writer, substantial depreciation in the
value of the underlying asset would result in the asset being "put to" the
writer. If a covered call option expires unexercised, the writer realizes a gain
and the buyer a loss in the amount of the premium. If the covered call option
writer has to sell the underlying asset because of the exercise of the call
option, it realizes a gain or loss from the sale of the underlying asset, with
the proceeds being increased by the amount of the premium.
If a secured put option expires unexercised, the writer realizes a gain and the
buyer a loss in the amount of the premium. If the secured put writer has to buy
the underlying asset because of the exercise of the put option, the secured put
writer incurs an unrealized loss to the extent that the current market value of
the underlying asset is less than the exercise price of the put option minus the
premium received.
OVER-THE-COUNTER OPTIONS. As indicated in the prospectus (see "Investment
Objectives and Policies"), each Fund may deal in over-the-counter traded options
("OTC options"). OTC options differ from exchange traded options in several
respects. They are transacted directly with dealers and not with a clearing
corporation, and there is a risk of nonperformance by the dealer as a result of
the insolvency of such dealer or otherwise, in which event a Fund may experience
material losses. However, in writing options the premium is paid in advance by
the dealer. OTC options are available for a greater variety of securities, and a
wider range of expiration dates and exercise prices, than are exchange traded
options. Since there is no exchange, pricing is normally done by reference to
information from market makers, which information is carefully monitored by the
investment manager and verified in appropriate cases.
A writer or purchaser of a put or call option can terminate it voluntarily only
by entering into a closing transaction. In the case of OTC options, there can be
no assurance that a continuous liquid secondary market will exist for any
particular option at any specific time. Consequently, a Fund may be able to
realize the value of an OTC option it has purchased only by exercising it or
entering into a closing sale transaction with the dealer that issued it.
Similarly, when a Fund writes an OTC option, it generally can close out that
option prior to its expiration only by entering into a closing purchase
transaction with the dealer to which the Fund originally wrote it. If a covered
call option writer cannot effect a closing transaction, it cannot sell the
underlying asset until the option expires or the option is exercised. Therefore,
a covered call option writer of an OTC option may not be able to sell an
underlying asset even though it might otherwise be advantageous to do so.
Likewise, a secured put writer of an OTC option may be unable to sell the assets
pledged to secure the put for other investment purposes while it is obligated as
a put writer. Similarly, a purchaser of such put or call option might also find
it difficult to terminate its position on a timely basis in the absence of a
secondary market.
The Funds understand the position of the staff of the Securities and Exchange
Commission ("SEC") to be that purchased OTC options and the assets used as
"cover" for written OTC options are illiquid securities. The investment manager
disagrees with this position and has found the dealers with which it engages in
OTC options transactions generally agreeable to and capable of entering into
closing transactions. The Funds have adopted procedures for engaging in OTC
options for the purpose of reducing any potential adverse effect of such
transactions upon the liquidity of the Funds' portfolios. A brief description of
such procedures is set forth below.
B-6
<PAGE> 58
A Fund will only engage in OTC options transactions with dealers approved by the
investment manager pursuant to procedures adopted by the Fund's Board of
Trustees. The investment manager believes that the approved dealers should be
able to enter into closing transactions if necessary and, therefore, present
minimal credit risks to a Fund. The investment manager will monitor the
creditworthiness of the approved dealers on an ongoing basis. A Fund currently
will not engage in OTC options transactions if the amount invested by the Fund
in OTC options, plus a "liquidity charge" related to OTC options written by the
Fund, plus the amount invested by the Fund in illiquid securities, would exceed
15% of the Fund's net assets. The "liquidity charge" referred to above is
computed as described below.
The Funds anticipate entering into agreements with dealers to which a Fund sells
OTC options. Under these agreements a Fund would have the absolute right to
repurchase the OTC options from the dealer at any time at a price no greater
than a price established under the agreements (the "Repurchase Price"). The
"liquidity charge" referred to above for a specific OTC option transaction will
be the Repurchase Price related to the OTC option less the intrinsic value of
the OTC option. The intrinsic value of an OTC call option for such purposes will
be the amount by which the current market value of the underlying security
exceeds the exercise price. In the case of an OTC put option, intrinsic value
will be the amount by which the exercise price exceeds the current market value
of the underlying security. If there is no such agreement requiring a dealer to
allow the Fund to repurchase a specific OTC option written by the Fund, the
"liquidity charge" will be the current market value of the assets serving as
"cover" for such OTC option.
OPTIONS ON SECURITIES INDICES. Each Fund also may purchase and write call and
put options on securities indices in an attempt to hedge against market
conditions affecting the values of securities that the Fund owns or intends to
purchase, and not for speculation. Through the writing or purchase of index
options, a Fund can achieve many of the same objectives as through the use of
options on individual securities. 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. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option. The
writer of the option is obligated, in return for the premium received, to make
delivery of this amount. Unlike security options, all settlements are in cash
and gain or loss depends upon price movements in the market generally (or in a
particular industry or segment of the market), rather than upon price movements
in individual securities. Price movements in securities that the Fund owns or
intends to purchase will probably not correlate perfectly with movements in the
level of an index since the prices of such securities may be affected by
somewhat different factors and, therefore, the Fund bears the risk that a loss
on an index option would not be completely offset by movements in the price of
such securities.
A Fund will cover call options written on a securities index by owning
securities whose price changes, in the opinion of the Fund's investment manager,
are expected to be similar to those of the index, or in such other manner as may
be in accordance with applicable laws, regulations and exchange rules. Price
changes of the securities owned will probably not be perfectly correlated with
the index. The Fund will secure put options written on a securities index by
segregating liquid high-grade securities equal to the exercise price, or in such
other manner as may be in accordance with applicable laws, regulations and
exchange rules. When a Fund writes an option on a securities index, it will
segregate and mark-to-market eligible securities equal in value to at least 100%
of the exercise price in the case of a put, or the contract value in the case of
a call. In addition, if the Fund writes a call option on a securities index at a
time when the contract value exceeds the exercise price, the Fund will segregate
and mark-to-market, until the option expires or is closed out, cash or cash
equivalents equal in value to such excess.
Each Fund may also purchase and write (sell) options on other appropriate
indices, as available, such as foreign currency indices. Options on futures
contracts and index options involve risks similar to those risks relating to
transactions in financial futures contracts described above. Also, an option
purchased by a Fund may expire worthless, in which case the Fund would lose the
premium paid therefor.
B-7
<PAGE> 59
FOREIGN CURRENCY OPTIONS. A foreign currency option provides the option buyer
with the right to buy or sell a stated amount of foreign currency at the
exercise price at a specified date or during the option period. A call option
gives its owner the right, but not the obligation, to buy the currency, while a
put option gives its owner the right, but not the obligation, to sell the
currency. The option seller (writer) is obligated to fulfill the terms of the
option sold if it is exercised. However, either seller or buyer may close its
position during the option period in the secondary market for such options any
time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a put
rises in value if the underlying currency depreciates. While purchasing a
foreign currency option can protect the Fund against an adverse movement in the
value of a foreign currency, it does not limit the gain which might result from
a favorable movement in the value of such currency. For example, if a Fund were
holding securities denominated in an appreciating foreign currency and had
purchased a foreign currency put to hedge against a decline in the value of the
currency, it would not have to exercise its put. Similarly, if the Fund has
entered into a contract to purchase a security denominated in a foreign currency
and had purchased a foreign currency call to hedge against a rise in value of
the currency but instead the currency had depreciated in value between the date
of purchase and the settlement date, the Fund would not have to exercise its
call but could acquire in the spot market the amount of foreign currency needed
for settlement.
FOREIGN CURRENCY FUTURES TRANSACTIONS. As part of its financial futures
transactions (see "Financial Futures Contracts" and "Options on Financial
Futures Contracts" above), each Fund may use foreign currency futures contracts
and options on such futures contracts. Through the purchase or sale of such
contracts, a Fund may be able to achieve many of the same objectives as through
forward foreign currency exchange contracts more effectively and possibly at a
lower cost.
Unlike forward foreign currency exchange contracts, foreign currency futures
contracts and options on foreign currency futures contracts are standardized as
to amount and delivery period and are traded on boards of trade and commodities
exchanges. It is anticipated that such contracts may provide greater liquidity
and lower cost than forward foreign currency exchange contracts.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days ("term") from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders (usually large
commercial banks) and their customers. The investment manager believes that it
is important to have the flexibility to enter into such forward contracts when
it determines that to do so is in the best interests of a Fund. A Fund will not
speculate in foreign currency exchange.
If a Fund retains the portfolio security and engages in an offsetting
transaction with respect to a forward contract, the Fund will incur a gain or a
loss (as described below) to the extent that there has been movement in forward
contract prices. If the Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign currency.
Should forward prices decline during the period between the Fund's entering into
a forward contract for the sale of foreign currency and the date it enters into
an offsetting contract for the purchase of the foreign currency, the Fund would
realize a gain to the extent the price of the currency it has agreed to sell
exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Fund would suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. Although such contracts tend to minimize the risk of loss due to
a decline in the value of the hedged currency, they also tend to limit any
potential gain which might result should the value of such currency increase.
The Fund will have to convert its holdings of foreign currencies into U.S.
Dollars from time to time. Although foreign exchange dealers do not charge a fee
for conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
The returns available from foreign currency denominated debt instruments can be
adversely affected by changes in exchange rates. The investment manager believes
that the use of foreign currency hedging techniques, including "cross-hedges,"
can help protect against declines in the U.S. Dollar value of income available
for distribution to
B-8
<PAGE> 60
shareholders, and against declines in the net asset value of the Fund's shares
resulting from adverse changes in currency exchange rates. For example, the
return available from securities denominated in a particular foreign currency
would diminish if the value of the U.S. Dollar increased against that currency.
Such a decline could be partially or completely offset by the increased value of
a cross-hedge involving a forward foreign currency exchange contract to sell a
different foreign currency, if that contract were available on terms more
advantageous to the Fund than a contract to sell the currency in which the
position being hedged is denominated. The Funds' investment manager believes
that cross-hedges can therefore provide significant protection of net asset
value in the event of a general rise in the U.S. Dollar against foreign
currencies. For example, the Global Fund may invest in high yielding securities
denominated in a Western European currency, such as the French Franc, and seek
to hedge against the effect of an increase in the value of the U.S. Dollar
against that currency by entering into a forward exchange contract to sell the
lower yielding German Mark, which has historically had price movements that tend
to correlate closely with those of the French Franc. However, a cross-hedge
cannot provide assured protection against exchange rate risks and, if the Fund's
investment manager misjudges future exchange rate relationships, the Fund could
be in a less advantageous position than if such a hedge had not been
established.
A Fund will not enter into forward contracts or maintain a net exposure in such
contracts when the Fund would be obligated to deliver an amount of foreign
currency in excess of the value of the Fund's portfolio securities or other
assets (a) denominated in that currency or (b), in the case of a "cross-hedge"
(see "Investment Objectives and Policies" in the prospectus), denominated in a
currency or currencies that the investment manager believes will tend to
correlate closely with that currency with regard to price movements. The
investment manager will normally seek to select currencies for sale under a
forward contract for a "cross-hedge" that would reflect a price movement
correlation of .8 or higher with respect to the currency being hedged (1
reflects a perfect correlation, 0 reflects a random relationship and -1 reflects
a diametrically opposite correlation). There is, of course, no assurance that
any specific correlation can be maintained for any specific transaction. See
"Foreign Currency Transactions" under "Investment Objectives and
Policies--Additional Investment Information" in the prospectus. There is no
limitation as to the percentage of the Global Fund's assets that may be
committed to forward contracts for the purchase of a foreign currency; the
International Fund does not intend to enter into such forward contracts if it
would have more than 15% of the value of its total assets committed to such
contracts. A Fund segregates cash or liquid high-grade securities in an amount
not less than the value of the Fund's total assets committed to forward foreign
currency exchange contracts entered into for the purchase of a foreign currency.
If the value of the securities segregated declines, additional cash or
securities is added so that the segregated amount is not less than the amount of
the Fund's commitments with respect to such contracts. A Fund generally does not
enter into a forward contract with a term longer than one year.
DELAYED DELIVERY TRANSACTIONS. The Global Fund may purchase or sell portfolio
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions involve a commitment by the Fund to purchase or sell
securities with payment and delivery to take place in the future in order to
secure what is considered to be an advantageous price or yield to the Fund at
the time of entering into the transaction. When the Fund enters into a delayed
delivery purchase, it becomes obligated to purchase securities and it has all
the rights and risks attendant to ownership of a security, although delivery and
payment occur at a later date. The value of fixed income securities to be
delivered in the future will fluctuate as interest rates vary. At the time the
Fund makes the commitment to purchase a security on a when-issued or delayed
delivery basis, it will record the transaction and reflect the liability for the
purchase and the value of the security in determining its net asset value.
Likewise, at the time the Fund makes the commitment to sell a security on a
delayed delivery basis, it will record the transaction and include the proceeds
to be received in determining its net asset value; accordingly, any fluctuations
in the value of the security sold pursuant to a delayed delivery commitment are
ignored in calculating net asset value so long as the commitment remains in
effect. The Fund generally has the ability to close out a purchase obligation on
or before the settlement date, rather than take delivery of the security.
To the extent the Global Fund engages in when-issued or delayed delivery
purchases, it will do so for the purpose of acquiring portfolio securities
consistent with the Fund's investment objective and policies and not for
investment leverage or to speculate in interest rate changes. The Fund will only
make commitments to purchase securities on a
B-9
<PAGE> 61
when-issued or delayed delivery basis with the intention of actually acquiring
the securities, but the Fund reserves the right to sell these securities before
the settlement date if deemed advisable.
REGULATORY RESTRICTIONS. To the extent required to comply with SEC Release No.
IC-10666, when purchasing a futures contract, writing a put option or entering
into a delayed delivery purchase or a forward foreign currency exchange
purchase, a Fund will maintain in a segregated account cash, U.S. Government
securities or liquid high-grade debt obligations equal to the value of such
contracts. A Fund will use cover in connection with selling a futures contract.
A Fund will not engage in transactions in financial futures contracts or options
thereon for speculation, but only to attempt to hedge against changes in market
conditions affecting the values of securities or other assets which the Fund
holds or intends to purchase.
REPURCHASE AGREEMENTS. A Fund may invest in repurchase agreements, which are
instruments under which the Fund acquires ownership of a security from a
broker-dealer or bank that agrees to repurchase the security at a mutually
agreed upon time and price (which price is higher than the purchase price),
thereby determining the yield during the Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement, the Fund
might incur expenses in enforcing its rights, and could experience losses,
including a decline in the value of the underlying securities and loss of
income. The securities underlying a repurchase agreement will be marked-to-
market every business day so that the value of such securities is at least equal
to the investment value of the repurchase agreement, including any accrued
interest thereon. Each Fund currently does not intend to invest more than 5% of
its net assets in repurchase agreements during the current year.
SHORT SALES AGAINST-THE-BOX. The Global Fund may make short sales
against-the-box for the purpose of deferring realization of gain or loss for
federal income tax purposes. A short sale "against-the-box" is a short sale in
which the Fund owns at least an equal amount of the securities or other assets
sold short or securities convertible into or exchangeable for, without payment
of any further consideration, securities or other assets of the same issue as,
and at least equal in amount to, the securities or other assets sold short. The
Fund may engage in such short sales only to the extent that not more than 10% of
the Fund's total assets (determined at the time of the short sale) is held as
collateral for such sales. The Fund currently does not intend, however, to
engage in such short sales to the extent that more than 5% of its net assets
will be held as collateral therefor during the current year.
DIVIDENDS AND TAXES
DIVIDENDS. The Global Fund normally distributes monthly dividends of net
investment income, the International Fund normally distributes annual dividends
of net investment income and each Fund distributes any net realized short-term
and long-term capital gains at least annually.
The level of income dividends per share (as a percentage of net asset value)
will be lower for Class B and Class C shares than for Class A shares primarily
as a result of the distribution services fee applicable to Class B and Class C
shares. Distributions of capital gains, if any, will be paid in the same amount
for each class.
A Fund may at any time vary the foregoing dividend practice and, therefore,
reserves the right from time to time either to distribute or to retain for
reinvestment such of its net investment income and its net short-term and long-
term capital gains as the Board of Trustees of the Fund determines appropriate
under then current circumstances. In particular, and without limiting the
foregoing, a Fund may make additional distributions of net investment income or
capital gain net income in order to satisfy the minimum distribution
requirements contained in the Internal Revenue Code (the "Code"). Dividends will
be reinvested in shares of the Fund paying such dividends unless shareholders
indicate in writing that they wish to receive them in cash or in shares of other
Kemper Funds as provided in the prospectus.
TAXES. Each Fund intends to continue to qualify as a regulated investment
company under Subchapter M of the Code and, if so qualified, will not be liable
for federal income taxes to the extent its earnings are distributed. One of
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<PAGE> 62
the Subchapter M requirements to be satisfied is that less than 30% of a Fund's
gross income during the fiscal year must be derived from gains (not reduced by
losses) from the sale or other disposition of securities and certain other
investments held for less than three months. A Fund may be limited in its
options, futures and foreign currency transactions in order to prevent
recognition of such gains.
A Fund's options, futures and foreign currency transactions are subject to
special tax provisions that may accelerate or defer recognition of certain gains
or losses, change the character of certain gains or losses, or alter the holding
periods of certain of the Fund's securities.
A 4% excise tax is imposed on the excess of the required distribution for a
calendar year over the distributed amount for such calendar year. The required
distribution is the sum of 98% of a Fund's net investment income for the
calendar year plus 98% of its capital gain net income for the one-year period
ending October 31, plus any undistributed net investment income from the prior
calendar year, plus any undistributed capital gain net income from the one year
period ended October 31 in the prior calendar year, minus any overdistribution
in the prior calendar year. For purposes of calculating the required
distribution, foreign currency gains or losses occurring after October 31 are
taken into account in the following calendar year. The Funds intend to declare
or distribute dividends during the appropriate periods of an amount sufficient
to prevent imposition of the 4% excise tax.
It is anticipated that only a small portion, if any, of the ordinary income
dividends from the Funds will be eligible for the dividends received deduction
available to corporate shareholders. The aggregate amount eligible for the
dividends received deduction may not exceed the aggregate qualifying dividends
received by a Fund for the fiscal year.
A shareholder who redeems shares of a Fund will recognize capital gain or loss
for federal income tax purposes measured by the difference between the value of
the shares redeemed and the adjusted cost basis of the shares. Any loss
recognized on the redemption of Fund shares held six months or less will be
treated as long-term capital loss to the extent that the shareholder has
received any long-term capital gain dividends on such shares. A shareholder who
has redeemed shares of a Fund or any other Kemper Mutual Fund listed in the
prospectus under "Special Features--Class A Shares--Combined Purchases" may
reinvest the amount redeemed at net asset value at the time of the reinvestment
in shares of the Fund or in shares of the other Kemper Mutual Funds within six
months of the redemption as described in the prospectus under "Redemption or
Repurchase of Shares--Reinvestment Privilege." If a shareholder realizes a loss
on the redemption or exchange of a Fund's shares and reinvests in shares of the
same Fund within 30 days before or after the redemption or exchange, the
transactions may be subject to the wash sale rules resulting in a postponement
of the recognition of such loss for federal income tax purposes. An exchange of
a Fund's shares for shares of another fund is treated as a redemption and
reinvestment for federal income tax purposes upon which gain or loss may be
recognized.
Investment income derived from foreign securities may be subject to foreign
income taxes withheld at the source. Because the amount of a Fund's investments
in various countries will change from time to time, it is not possible to
determine the effective rate of such taxes in advance.
Shareholders who are non-resident aliens are subject to U.S. withholding tax on
ordinary income dividends (whether received in cash or shares) at a rate of 30%
or such lower rate as prescribed by any applicable tax treaty.
PERFORMANCE
As described in the prospectus, each Fund's historical performance or return for
a class of shares may be shown in the form of "average annual total return" and
"total return" figures, and for the Global Fund may be shown in the form of
"yield" figures. These various measures of performance are described below.
Performance information will be computed separately for each class.
Yield is a measure of the net investment income per share earned over a specific
one month or 30-day period expressed as a percentage of the maximum offering
price of the Global Fund's shares (which is net asset value for
B-11
<PAGE> 63
Class B and Class C shares) at the end of the period. Average annual total
return and total return measure both the net investment income generated by, and
the effect of any realized or unrealized appreciation or depreciation of, the
underlying investments in the Fund's portfolio.
The Global Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Securities and Exchange Commission. The Fund's Class
A shares' yield based upon the one-month period ended December 31, 1993 was
4.18%. Class B shares and Class C shares were not available prior to May 31,
1994. The Fund's yield is computed by dividing the net investment income per
share earned during the specified one month or 30-day period by the maximum
offering price per share (which is net asset value for Class B and Class C
shares) on the last day of the period, according to the following formula:
<TABLE>
<S> <C>
a - b
YIELD = 2[( ------- +1)(6) - 1
cd
</TABLE>
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period
(which is net asset value for Class B and Class C shares).
In computing the foregoing yield, the Global Fund follows certain standardized
accounting practices specified by Securities and Exchange Commission rules.
These practices are not necessarily consistent with those that the Fund uses to
prepare its annual and interim financial statements in conformity with generally
accepted accounting principles.
Each Fund's average annual total return quotation is computed in accordance with
a standardized method prescribed by rules of the Securities and Exchange
Commission. The average annual total return for a Fund for a specific period is
found by first taking a hypothetical $1,000 investment ("initial investment") in
the Fund's shares on the first day of the period, adjusting to deduct the
maximum sales charge (in the case of Class A shares), and computing the
"redeemable value" of that investment at the end of the period. The redeemable
value in the case of Class B shares may or may not include the effect of the
applicable contingent deferred sales charge that may be imposed at the end of
the period. The redeemable value is then divided by the initial investment, and
this quotient is taken to the Nth root (N representing the number of years in
the period) and 1 is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all income and capital gains dividends
paid by the Fund have been reinvested at net asset value on the reinvestment
dates during the period. Average annual total return figures for Class A shares
for various periods are set forth in the tables below.
Calculation of a Fund's total return is not subject to a standardized formula,
except when calculated for the Fund's "Financial Highlights" table in the Fund's
financial statements. Total return performance for a specific period is
calculated by first taking an investment (assumed below to be $10,000) ("initial
investment") in the Fund's shares on the first day of the period, either
adjusting or not adjusting to deduct the maximum sales charge (in the case of
Class A shares), and computing the "ending value" of that investment at the end
of the period. The total return percentage is then determined by subtracting the
initial investment from the ending value and dividing the remainder by the
initial investment and expressing the result as a percentage. The ending value
in the case of Class B shares may or may not include the effect of the
applicable contingent deferred sales charge that may be imposed at the end of
the period. The calculation assumes that all income and capital gains dividends
paid by the Fund have been reinvested at net asset value on the reinvestment
dates during the period. Total return may also be shown as the increased dollar
value of the hypothetical investment over the period. Total return calculations
that do not include the effect of the sales charge for Class A shares or the
contingent deferred sales charge for Class B shares
B-12
<PAGE> 64
would be reduced if such charge were included. Total return figures for Class A
shares for various periods are set forth in the tables below.
A Fund's performance figures are based upon historical results and are not
necessarily representative of future performance. The Global Fund's Class A
shares are sold at net asset value plus a maximum sales charge of 4.5% of the
offering price and the International Fund's Class A shares are sold at net asset
value plus a maximum sales charge of 5.75% of the offering price. Class B and
Class C shares are sold at net asset value. Redemption of Class B shares may be
subject to a contingent deferred sales charge that is 4% in the first year
following the purchase, declines by a specified percentage each year thereafter
and becomes zero after six years. Returns and net asset value will fluctuate.
Factors affecting each Fund's performance include general market conditions,
operating expenses and investment management. Any additional fees charged by a
dealer or other financial services firm would reduce returns described in this
section. Shares of each Fund are redeemable at the then current net asset value,
which may be more or less than original cost.
The figures below show performance information for various periods. Comparative
information with respect to certain indices is also included. There are
differences and similarities between the investments which a Fund may purchase
and the investments measured by the indices which are described herein. The
Consumer Price Index is generally considered to be a measure of inflation. The
Salomon Brothers World Government Bond Index generally represents the
performance of government debt securities of various markets throughout the
world, including the United States. The Salomon Brothers High Grade Corporate
Bond Index generally represents the performance of high grade long-term
corporate bonds during various market conditions. The Lehman Brothers
Government/ Corporate Bond Index generally represents the performance of
intermediate and long-term government and investment grade corporate debt
securities during various market conditions. The Dow Jones Industrial Average
and the Standard & Poor's 500 Stock Index are indices of common stocks which are
considered to be generally representative of the U.S. stock market. The Europe
Australia Far East ("EAFE") Index is an index that is considered to be generally
representative of major non-U.S. stock markets. The Lipper International Fund
Index is a weighted performance average of other mutual funds that invest
primarily in securities of foreign issuers. The foregoing indices are unmanaged.
The net asset value and returns of the Funds will fluctuate. No adjustment has
been made for taxes payable on dividends. The periods indicated were ones of
fluctuating securities prices and interest rates.
B-13
<PAGE> 65
GLOBAL FUND--DECEMBER 31, 1994
<TABLE>
<CAPTION>
COMPARED TO
----------------------------------------
Salomon
Salomon Bros.
Capital Bros. High Lehman
TOTAL Initial Gain Income Ending Percentage Ending Percentage Consumer World Grade Brothers
RETURN $10,000 Dividends Dividends Value Increase Value Increase Price Govt. Corp. Govt./Corp.
TABLE Investment Reinvested Reinvested (adjusted) (adjusted) (unadjusted) (unadjusted) Index Index(4) Index(5) Index(6)
(1) (2) (1) (1) (1) (1) (3)
- ------ ------ ---- ------ -------- ------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
SHARES
Life of
Fund(+) $9,076 $ 28 $5,437 $ 14,541 45.4 % $ 15,219 52.2 % 19.8% 63.4% 54.7% 50.2%
Five
Years 8,806 26 5,033 13,865 38.7 14,523 45.2 24.2 58.7 49.4 44.9
Three
Years 8,074 19 2,078 10,171 1.7 10,654 6.5 8.6 22.3 16.7 15.3
One Year 8,788 0 620 9,408 (5.9) 9,853 (1.5) 2.7 2.4 (5.7) (3.5)
CLASS B
SHARES
Life of
Fund(++) $9,839 $ 0 $ 350 $ 9,795 (2.0)% $ 10,189 1.9 % 1.5% 3.1% 0.5% 0.6%
CLASS C
SHARES
Life of
Fund(++) $9,839 $ 0 $ 352 -- -- $ 10,191 1.9 % 1.5% 3.1% 0.5% 0.6%
</TABLE>
<TABLE>
<CAPTION>
Salomon
Salomon Bros.
Fund Fund Fund Bros. High Lehman
AVERAGE ANNUAL Class Class Class Consumer World Grade Brothers
TOTAL RETURN A B C Price Govt. Corp. Govt./Corp.
TABLE Shares Shares Shares Index(3) Index(4) Index(5) Index(6)
- ------------------- ------ ------ ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) 7.4 % -- -- 3.5% 9.8% 8.7 % 8.1 %
Life of Fund(++) -- (3.5)% 3.3% 2.6 5.4 0.8 1.1
Five Years 6.8 3.7 9.7 8.4 7.7
Three Years 0.6 -- -- 2.8 7.0 5.3 4.9
One Year (5.9) -- -- 2.7 2.4 (5.7) (3.5)
</TABLE>
- ---------------
(+) Since October 1, 1989 for Class A shares.
(++) Since May 31, 1994 for Class B and Class C shares.
B-14
<PAGE> 66
INTERNATIONAL FUND--OCTOBER 31, 1994
<TABLE>
<CAPTION>
Initial Income Ending Percentage
TOTAL $10,000 Capital Gain Dividends Value Increase
RETURN Investment Dividends Reinvested (adjusted) (adjusted)
TABLE (1) Reinvested (2) (1) (1)
- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Life of Fund(+) $ 16,864 $ 21,837 $ 11,457 $ 50,158 401.6%
Ten Years 16,464 16,692 8,058 41,214 312.1
Five Years 10,550 2,045 1,436 14,031 40.3
Three Years 11,980 511 302 12,793 27.9
One Year 9,937 247 29 10,213 2.1
Year to Date 9,704 0 0 9,704 )(3.0
CLASS B SHARES
Life of Fund(++) $ 10,482 $ 0 $ 0 $ 10,082 % 0.8
CLASS C SHARES
Life of Fund(++) $ 10,482 $ 0 $ 0 -- --
<CAPTION>
COMPARED TO
--------------------------------------------------------
Ending Percentage
TOTAL Value Increase Dow Jones Standard Consumer
RETURN (unadjusted) (unadjusted) Industrial & Poor's Price
TABLE (1) (1) Average(7) 500(8) Index(3)
- ----------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <<C> <C>
CLASS A SHARES
Life of Fund(+) $ 53,222 432.2% 581.2% 492.9% % 66.5
Ten Years 43,738 337.4 362.3 296.7 42.0
Five Years 14,892 48.9 72.7 62.1 19.0
Three Years 13,562 35.7 38.0 31.3 8.8
One Year 10,832 8.3 9.4 3.9 2.6
Year to Date 10,296 3.0 6.3 3.5 2.5
CLASS B SHARES
Life of Fund(++) $ 10,482 % 4.8 % 5.5 % 5.1 % 1.4
CLASS C SHARES
Life of Fund(++) $ 10,482 % 4.8 % 5.5 % 5.1 % 1.4
<CAPTION>
Lipper
TOTAL Inter-
RETURN EAFE national
TABLE Index(9) Fund(10)
- ----------------- ---------------- ----------------
CLASS A SHARES
Life of Fund(+) 432.1% % *
Ten Years 359.9 *
Five Years 12.6 53.3
Three Years 24.9 41.9
One Year 8.5 11.5
Year to Date 11.2 5.5
CLASS B SHARES
Life of Fund(++) % 4.3 % 4.1
CLASS C SHARES
Life of Fund(++) % 4.3 % 4.1
</TABLE>
<TABLE>
<CAPTION>
Fund Fund Fund Dow Standard
AVERAGE ANNUAL Class Class Class Jones & Consumer Lipper
TOTAL RETURN A B C Industrial Poor's Price EAFE International
TABLE Shares Shares Shares Average(7) 500(8) Index(3) Index(9) Fund(10)
- ---------------- ---- ---- ---- ---- ---- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of Fund(+) 12.7% -- -- 15.4% 14.2% 3.9% 13.3% *%
Life of Fund(++) -- 2.0% 12.0% 13.6 12.5 3.3 10.5 10.1
Ten Years 15.2 16.6 14.8 3.6 16.5 *
Five Years 7.0 11.6 10.1 3.6 2.4 8.9
Three Years 8.6 11.3 9.5 2.9 7.7 12.4
One Year 2.1 9.4 3.9 2.6 8.5 11.5
</TABLE>
- ---------------
* Data not available
(+) Since May 21, 1981 for Class A shares.
(++) Since May 31, 1994 for Class B and Class C shares.
FOOTNOTES FOR ALL FUNDS
(1) The Initial Investment and adjusted amounts for Class A shares were
adjusted for the maximum initial sales charge at the beginning of the
period, which is 5.75% for the International Fund and 4.5% for the Global
Fund. The Initial Investment for Class B and Class C shares was not
adjusted. Amounts were adjusted for Class B shares for the contingent
deferred sales charge that may be imposed at the end of the period based
upon the schedule for shares sold currently, see "Redemption or Repurchase
of Shares" in the prospectus. No adjustments were made to Class C shares
since they do not have an initial or contingent deferred sales charge.
(2) Includes short-term capital gain dividends, if any.
(3) The Consumer Price Index is a statistical measure of change, over time, in
the prices of goods and services in major expenditure groups for all urban
consumers. Source is Towers Data Systems.
(4) The Salomon Brothers World Government Bond Index is on a U.S. Dollar total
return basis with all dividends reinvested and is comprised of government
bonds from ten countries (United States, Japan, United Kingdom, Germany,
France, Canada, the Netherlands, Australia, Switzerland and Denmark). This
index is unmanaged. The minimum maturity is 1 year. Source is Lipper
Analytical Services, Inc.
(5) The Salomon Brothers High Grade Corporate Bond Index is on a total return
basis with all dividends reinvested and is comprised of high grade
long-term industrial and utility bonds rated in the top two rating
categories. This index is unmanaged. Source is Lipper Analytical Services,
Inc.
(6) The Lehman Brothers Government/Corporate Bond Index is on a total return
basis and is comprised of all publicly issued, non- convertible, domestic
debt of the U.S. Government or any agency thereof, quasi-Federal
corporation, or corporate debt guaranteed by the U.S. Government and all
publicly issued, fixed-rate, non-convertible, domestic debt of the three
major corporate classifications: industrial, utility, and financial. Only
notes and bonds with a minimum outstanding principal amount of $1,000,000
and a minimum of one year to maturity are included. Bonds included must
have a rating of at least Baa by Moody's Investors Service, Inc., BBB by
Standard & Poor's Corporation or in the case of bank bonds not rated by
either Moody's or S&P, BBB by Fitch Investors Service. This index is
unmanaged. Source is Lipper Analytical Services, Inc.
B-15
<PAGE> 67
(7) The Dow Jones Industrial Average is an unmanaged weighted average of thirty
blue chip industrial corporations listed on the New York Stock Exchange.
Assumes reinvestment of dividends. Source is Towers Data Systems.
(8) The Standard & Poor's 500 Stock Index is an unmanaged unweighted average of
500 stocks, over 95% of which are listed on the New York Stock Exchange.
Assumes reinvestment of dividends. Source is Towers Data Systems.
(9) The EAFE Index (Morgan Stanley Capital International Europe, Australia, Far
East Index) is a generally accepted benchmark for performance of major
overseas markets. This index is unmanaged and is U.S. dollar adjusted.
Assumes reinvestment of dividends. Source is Towers Data Systems.
(10) The Lipper International Fund Index is a net asset value weighted index of
the performance of certain mutual funds tracked by Lipper Analytical
Services, Inc. The index is comprised of mutual funds that invest assets in
the securities whose primary trading markets are outside of the United
States. Performance is based on changes in net asset value with all
dividends reinvested and with no adjustment for sales charge. Source is
Lipper Analytical Services, Inc.
The following tables illustrate an assumed $10,000 investment in Class A shares
of each Fund, which includes the maximum sales charge of 4.5% for the Global
Fund and 5.75% for the International Fund, with income and capital gain
dividends reinvested in additional shares. The table for each Fund covers the
period from its commencement of operations through December 31, 1994.
- --------------------------------------------------------------------------------
GLOBAL FUND (10/1/89)
<TABLE>
<CAPTION>
CUMULATIVE VALUE OF SHARES
DIVIDENDS ACQUIRED
ANNUAL
ANNUAL CAPITAL REINVESTED
YEAR INCOME GAIN INITIAL REINVESTED CAPITAL
ENDED DIVIDENDS DIVIDENDS INVEST- INCOME GAIN TOTAL
12/31 REINVESTED* REINVESTED MENT DIVIDENDS* DIVIDENDS VALUE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1989 $ 170 $ 0 $ 9,840 $ 172 $ 0 $ 10,012
1990 1,541 0 10,563 1,718 0 12,281
1991 1,119 0 10,732 2,916 0 13,648
1992 1,093 29 9,671 3,688 29 13,388
1993 1,097 0 9,862 4,866 30 14,758
1994 983 0 9,076 5,437 28 14,541
</TABLE>
* Includes short-term capital gain dividends.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INTERNATIONAL FUND (5/21/81)
<TABLE>
<CAPTION>
CUMULATIVE VALUE OF SHARES
DIVIDENDS ACQUIRED
<S> <C> <C> <C> <C> <C> <C>
ANNUAL
ANNUAL CAPITAL REINVESTED
YEAR INCOME GAIN REINVESTED CAPITAL
ENDED DIVIDENDS DIVIDENDS INITIAL INCOME GAIN TOTAL
12/31 REINVESTED* REINVESTED INVESTMENT DIVIDENDS* DIVIDENDS VALUE
<CAPTION>
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1981 $ 205 $ 0 $ 9,167 $ 223 $ 0 $ 9,390
1982 273 0 9,113 538 0 9,651
1983 161 162 11,348 845 164 12,357
1984 231 728 9,445 925 854 11,234
1985 181 743 13,773 1,585 2,157 17,515
1986 1,766 4,604 14,621 3,523 7,104 25,248
1987 923 3,978 12,561 3,909 10,407 26,877
1988 814 456 14,121 5,229 12,163 31,513
1989 1,965 813 15,364 7,866 14,135 37,365
1990 1,216 3,206 12,409 7,559 14,596 34,564
1991 0 591 13,318 8,113 16,287 37,718
1992 772 0 12,409 8,328 15,175 35,912
1993 132 1,140 16,378 11,128 21,209 48,715
1994 1,397 1,577 14,713 11,408 20,646 46,767
</TABLE>
* Includes short-term capital gain dividends.
- --------------------------------------------------------------------------------
B-16
<PAGE> 68
Investors may want to compare a Fund's performance to that of certificates of
deposit issued by banks and other depository institutions. Certificates of
deposit may offer fixed or variable interest rates and principal is guaranteed
and may be insured. Withdrawal of the deposit prior to maturity will normally be
subject to a penalty. Rates offered by banks and other depository institutions
are subject to change at any time specified by the issuing institution. The
shares of the Fund are not insured and net asset value as well as yield will
fluctuate. Shares of a Fund are redeemable at net asset value which may be more
or less than original cost. Redemption of Class B shares may be subject to a
contingent deferred sales charge. The bonds in the Global Fund's portfolio are
generally of longer term than most certificates of deposit and may reflect
longer term market interest rate fluctuations.
Investors may also want to compare a Fund's performance to that of U.S. Treasury
bills, notes or bonds. Rates of Treasury obligations are fixed at the time of
issuance and payment of principal and interest is backed by the full faith and
credit of the U.S. Treasury. The market value of such instruments will generally
fluctuate inversely with interest rates prior to maturity and will equal par
value at maturity. Shares of a Fund are redeemable at net asset value, which may
be more or less than original cost. The Funds' returns will also fluctuate.
In order to appreciate more fully the opportunities for income throughout the
world and the potential advantages of investing in the Global Fund, investors
may want to compare the historical performance of various bond markets around
the world. Such performance, of course, would not necessarily be representative
of future actual or relative performance of such markets, or of the past or
future performance of the Fund.
The table below reflects the relative returns of certain unmanaged domestic bond
indexes and a foreign bond index over the periods indicated.
BOND INDEX TOTAL RETURNS
(PERIODS ENDED 12/31/94)
<TABLE>
<CAPTION>
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
----- ----- ------ ------
<S> <C> <C> <C> <C>
Salomon Non-U.S. Bond Index(1)............................. 5.99% 27.84% 71.28% 305.82%
Salomon Long-Term High Yield Bond Index(2)................. (3.79) 37.54 80.13 208.09
Salomon High Grade Corp. Bond Index(3)..................... (5.74) 16.72 49.43 198.97
Merrill Lynch Govt./Corp. Bond Index(4).................... (3.27) 15.68 45.45 157.17
Lehman Brothers Govt./Corp. Bond Index(5).................. (3.51) 15.26 44.93 155.53
</TABLE>
- ---------------
(1) The Salomon Brothers Non-U.S. Bond Index is on a U.S. dollar total return
basis with all dividends reinvested and is comprised of non-U.S. government
and corporate bonds with more than five years to maturity. This index is
unmanaged. Source is Lipper Analytical Services, Inc.
(2) The Salomon Brothers Long-Term High Yield Bond Index is on a total return
basis with all dividends reinvested and is comprised of high yield bonds
with a par value of $50 million or higher and a maturity of 10 years or
longer rated BB+ or lower by Standard & Poor's Corporation or Ba1 or lower
by Moody's Investors Service, Inc. This index is unmanaged. Source is
Salomon Brothers Inc.
(3) The Salomon Brothers High Grade Corporate Bond Index is on a total return
basis with all dividends reinvested and is comprised of high grade long-term
industrial and utility bonds rated in the top two rating categories. This
index is unmanaged. Source is Lipper Analytical Services, Inc.
(4) The Merrill Lynch Government/Corporate Bond Index is based upon the total
return with all dividends reinvested of 4,000 corporate and 300 government
bond issues with an intermediate average maturity and an average quality
rating of Aa (Moody's Investors Service, Inc.) or AA (Standard & Poor's
Corporation). This index is unmanaged. Source is Lipper Analytical Services,
Inc.
(5) The Lehman Brothers Government/Corporate Bond Index is on a total return
basis and is comprised of all publicly issued, nonconvertible, domestic debt
of the U.S. Government or any agency thereof, quasi-federal corporation, or
corporate debt guaranteed by the U.S. Government and all publicly issued,
fixed-rate, non-convertible, domestic debt of the three major corporate
classifications: industrial, utility, and financial. Only notes and bonds
with a minimum outstanding principal amount of $1,000,000 and a minimum of
one year to maturity are included. Bonds included must have a rating of at
least Baa by Moody's Investors Services, Inc., BBB by Standard & Poor's
Corporation or in the case of bank bonds not rated by either Moody's or S&P,
BBB by Fitch Investors Services. This index is unmanaged. Source is Lipper
Analytical Services, Inc.
B-17
<PAGE> 69
The following table depicts the best performing world government bond market for
each year during the period 1983-1994. The performance of these markets is
compared in each case to the performance of long-term U.S. Government bonds for
the same period. As shown in this table, the U.S. market, as represented by U.S.
Government bonds, was the best performing market in only one of the past ten
years. Performance is on a U.S. Dollar total return basis with all dividends
reinvested.
BEST WORLD BOND MARKETS VS. U.S. BOND MARKET
1983-1994
<TABLE>
<CAPTION>
Top Foreign Government Long-Term U.S.
Year Returns Govt. Returns
-------------------------- ----------------
<S> <C> <C>
1983................................. Japan 12.56% 4.09%
1984................................. Canada 8.82 14.27
1985................................. France 52.78 28.49
1986................................. Japan 43.55 21.01
1987................................. United Kingdom 47.57 (1.37)
1988................................. Australia 30.34 8.14
1989................................. Canada 17.97 17.40
1990................................. United Kingdom 29.16 7.47
1991................................. Australia 26.70 17.97
1992................................. Japan 11.96 7.78
1993................................. Japan 27.58 10.69
1994................................. Belgium 12.22 (3.36)
</TABLE>
- ---------------
Source: Salomon Brothers International Bond Market Performance Indexes.
The following table depicts the available yields from various global markets as
of January 10, 1995 and shows the wide range of yields among various markets.
Yield is a measure of the income generated by an investment and is not a
complete measure of performance. Yield does not include the effect of
appreciation or depreciation of the underlying investment due to changes in
interest rates or currency valuations or other market conditions, which may vary
from one global market to another. Thus, it is possible for a lower yielding
investment to outperform a higher yielding investment on a total return basis.
AVAILABLE YIELDS: INTERNATIONAL BONDS
<TABLE>
<CAPTION>
Long-Term Gov'ts. Long-Term Corp.
----------------- ----------------
<S> <C> <C>
Australia.................................... 10.42% 11.04%
Belgium...................................... 8.32 7.46
Canada....................................... 9.33 10.06
France....................................... 8.16 8.58
Germany...................................... 7.48 7.67
Holland...................................... 7.60 7.42
Italy........................................ 12.26 9.82
Japan........................................ 4.65 4.66
Spain........................................ 13.41 12.77
Sweden....................................... 10.90 11.36
Switzerland.................................. 5.21 5.38
Britain...................................... 8.71 9.15
United States................................ 7.83 8.54
</TABLE>
- ---------------
Source: The Economist. The Economist obtains its yield information from the
following sources: Banco Bilbao Vizcaya, Chase Manhattan, Belgium Bankers
Association, Royal Bank of Canada, Westpac Banking Corp., Credit Lyonnais, Bank
Nederland, Svenska Handelsbanken, CFSB, and the WEFA Group.
In 1994, the U.S. stock market ranked 19 in U.S. Dollar total return out of 27
markets. The source for non-U.S. stock markets is Morgan Stanley Capital
International, which ranks the major non-U.S. stock markets. The U.S.
B-18
<PAGE> 70
stock market is measured by the Standard & Poor's 500 Stock Index ("S&P 500"),
which is an unmanaged, unweighted average of 500 stocks, over 95% of which are
listed on the New York Stock Exchange. Morgan Stanley Capital International and
S&P 500 performance are on a total return basis after adjustment for
reinvestment of distributions. Morgan Stanley Capital International performance
data is U.S. Dollar adjusted and thus reflects both the change in local currency
terms plus the change in the value of the local currency against the U.S.
Dollar. This information is provided to compare the past performance of the U.S.
stock market with non-U.S. stock markets. It is not necessarily indicative of
the future performance of these markets or of the performance of the
International Fund as compared to any of these markets. The past performance of
the Fund as compared to various market indexes is provided above.
The following table compares the performance of the Class A shares of each Fund
over various periods with that of other mutual funds within the category
described below according to data reported by Lipper Analytical Services, Inc.
("Lipper"), New York, New York, which is a mutual fund reporting service. Lipper
performance figures are based on changes in net asset value, with all income and
capital gain dividends reinvested. Such calculations do not include the effect
of any sales charges. Future performance cannot be guaranteed. Lipper publishes
performance analyses on a regular basis.
GLOBAL FUND
<TABLE>
<CAPTION>
Lipper Mutual Fund
Performance Analysis
--------------------
General World Income
Funds
<S> <C>
Five Years (Period ended 12/31/94)......................................... 11 of 27
Three Years (Period ended 12/31/94)........................................ 38 of 45
One Year (Period ended 12/31/94)........................................... 19 of 107
</TABLE>
The Lipper General World Income Fund category includes funds which by prospectus
or portfolio practice invest primarily in U.S. Dollar and non-U.S. Dollar debt
instruments and, secondarily, in common and preferred stocks. This category
includes funds with a variety of objectives, policies and market and credit
risks that should be considered in reviewing these rankings.
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Lipper Mutual Fund
Performance Analysis
--------------------
International Funds
--------------------
<S> <C>
Ten Years (Period ended 12/31/94).......................................... 10 of 19
Five Years (Period ended 12/31/94)......................................... 31 of 50
One Year (Period ended 12/31/94)........................................... 118 of 157
</TABLE>
The Lipper International Funds category includes funds which invest their assets
in securities whose primary trading markets are outside of the United States.
INVESTMENT MANAGER AND UNDERWRITER
INVESTMENT MANAGER. Kemper Financial Services, Inc. ("KFS"), 120 South LaSalle
Street, Chicago, Illinois 60603, is each Fund's investment manager. Pursuant to
the investment management agreements, KFS acts as each Fund's investment
adviser, manages its investments, administers its business affairs, furnishes
office facilities and equipment, provides clerical, bookkeeping and
administrative services and permits any of its officers or employees to serve
without compensation as trustees or officers of the Fund if elected to such
positions. The investment management agreements provide that the Fund shall pay
the charges and expenses of its operations, including the
B-19
<PAGE> 71
fees and expenses of the trustees (except those who are officers or employees of
KFS), independent auditors, counsel, custodian and transfer agent and the cost
of share certificates, reports and notices to shareholders, brokerage
commissions or transaction costs, costs of calculating net asset value, taxes
and membership dues. Each Fund bears the expenses of registration of its shares
with the Securities and Exchange Commission, while KDI, as principal
underwriter, pays the cost of qualifying and maintaining the qualification of
each Fund's shares for sale under the securities laws of the various states. KFS
has agreed to reimburse each Fund to the extent required by applicable state
expense limitations should all operating expenses of each Fund, including the
investment management fees of KFS but excluding taxes, interest, distribution
fees, extraordinary expenses, brokerage commissions or transaction costs and any
other properly excludable expenses, exceed the applicable state expense
limitations. The Funds believe that the most restrictive state expense
limitation currently in effect would require that such operating expenses not
exceed 2.5% of the first $30 million of average daily net assets, 2% of the next
$70 million and 1.5% of average daily net assets over $100 million. Under such
state expense limitation, custodian costs attributable to foreign securities
that are in excess of similar domestic custodian costs are excluded from
operating expenses. A Fund may elect to seek an exemption from any otherwise
applicable state expense limitation and, if any such exemption were obtained,
the Fund would be subject to such limitations as may be required by such
exemption.
The investment management agreements provide that KFS shall not be liable for
any error of judgment or of law, or for any loss suffered by a Fund in
connection with the matters to which the agreements relate, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
KFS in the performance of its obligations and duties, or by reason of its
reckless disregard of its obligations and duties under each agreement.
Each Fund's investment management agreement continues in effect from year to
year so long as its continuation is approved at least annually by (a) a majority
of the trustees who are not parties to such agreement or interested persons of
any such party except in their capacity as trustees of the Fund and (b) by the
shareholders or the Board of Trustees of the Fund. Each Fund's investment
management agreement may be terminated at any time upon 60 days' notice by
either party, or by a majority vote of the outstanding shares of the Fund, and
will terminate automatically upon assignment. If additional Funds become subject
to an investment management agreement, the provisions concerning continuation,
amendment and termination shall be on a Fund by Fund basis. Additional Funds may
be subject to a different agreement.
Before May 31, 1994, each Fund paid KFS an investment management fee, payable
monthly, at the annual rate of .75 of 1% of its average daily net assets. The
current investment management fee rates paid by the Funds are in the prospectus,
see "Investment Manager and Underwriter." The investment management fees paid by
each Fund for its last three fiscal years are shown in the table below.
<TABLE>
<CAPTION>
FUND FISCAL 1994 FISCAL 1993 FISCAL 1992
- -------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Global........................................................ $ 864,000 * 520,000
International................................................. $ 2,666,000 1,498,000 1,311,000
</TABLE>
- ---------------
* $331,000 for the six months ended December 31, 1993 and $572,000 for the
fiscal year ended June 30, 1993.
PRINCIPAL UNDERWRITER. Pursuant to separate underwriting and distribution
services agreements ("distribution agreements"), Kemper Distributors, Inc., an
affiliate of KFS, is the principal underwriter and distributor for the shares of
each Fund and acts as agent of the Fund in the continuous offering of its
shares. KDI bears all of its expenses of providing services pursuant to the
distribution agreement, including the payment of any commissions. Each Fund pays
the cost for the prospectus and shareholder reports to be set in type and
printed for existing shareholders, and KDI pays for the printing and
distribution of copies thereof used in connection with the offering of shares to
prospective investors. KDI also pays for supplementary sales literature and
advertising costs. Before February 1, 1995, KFS was the Fund's principal
underwriter and distributor.
Each distribution agreement continues in effect from year to year so long as
such continuance is approved for each class at least annually by a vote of the
Board of Trustees of the Fund, including the Trustees who are not interested
B-20
<PAGE> 72
persons of the Fund and who have no direct or indirect financial interest in the
agreement. Each agreement automatically terminates in the event of its
assignment and may be terminated for a class at any time without penalty by a
Fund or by KDI upon 60 days' notice. Termination by a Fund with respect to a
class may be by vote of a majority of the Board of Trustees, or a majority of
the Trustees who are not interested persons of the Fund and who have no direct
or indirect financial interest in the agreement, or a "majority of the
outstanding voting securities" of the class of the Fund, as defined under the
Investment Company Act of 1940. The agreement may not be amended for a class to
increase the fee to be paid by a Fund with respect to such class without
approval by a majority of the outstanding voting securities of such class of the
Fund and all material amendments must in any event be approved by the Board of
Trustees in the manner described above with respect to the continuation of the
agreement. The provisions concerning the continuation, amendment and termination
of the distribution agreement are on a Fund by Fund basis and for each Fund on a
class by class basis.
CLASS A SHARES. The following information concerns the underwriting commissions
paid in connection with the distribution of each Fund's Class A shares for the
fiscal years noted.
<TABLE>
<CAPTION>
COMMISSIONS
COMMISSIONS PAID TO KEMPER
COMMISSIONS RETAINED UNDERWRITER AFFILIATED
FUND FISCAL YEAR BY UNDERWRITER PAID TO ALL FIRMS FIRMS
- ---------------------------------------- ----------- -------------------- ----------------- --------------
<S> <C> <C> <C> <C>
Global.................................. 1994 $ 15,000 111,000 37,000
1993A $ 16,000 26,000 51,000
1993B $ 53,000 406,000 112,000
1992 $ 86,000 585,000 173,000
International........................... 1994 $213,000 1,551,000 386,000
1993 $110,000 890,000 223,000
1992 $ 95,000 715,000 220,000
</TABLE>
- ---------------
1993A--Six months ended December 31, 1993
1993B--Fiscal year ended June 30, 1993
CLASS B SHARES AND CLASS C SHARES. Since the distribution agreement provides for
fees charged to Class B and Class C shares that are used by KDI to pay for
distribution services (see the prospectus under "Investment Manager and
Underwriter"), the agreement (the "Plan") is approved and renewed separately for
the Class B and Class C shares in accordance with Rule 12b-1 under the
Investment Company Act of 1940, which regulates the manner in which an
investment company may, directly or indirectly, bear expenses of distributing
its shares. Expenses of the Funds and of KFS, the principal underwriter until
February 1, 1995, in connection with the Rule 12b-1 Plans for the Class B and
Class C shares are set forth below. A portion of the marketing, sales and
operating expenses shown below could be considered overhead expense.
<TABLE>
<CAPTION>
DISTRIBUTION CONTINGENT TOTAL
FEES PAID DEFERRED COMMISSIONS COMMISSIONS
FISCAL BY FUND TO SALES CHARGES PAID BY UNDERWRITER PAID BY UNDERWRITER
FUND CLASS B SHARES YEAR* UNDERWRITER TO UNDERWRITER TO FIRMS TO AFFILIATED FIRMS
- ------------------------------- ------ ----------- -------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Global......................... 1994 $ 146,000 107,000 40,000 13,000
International.................. 1994 $ 48,000 8,000 202,000 59,000
<CAPTION>
OTHER DISTRIBUTION EXPENSES PAID BY UNDERWRITER
-----------------------------------------------------------
ADVERTISING MARKETING MISC.
AND PROSPECTUS AND SALES OPERATING INTEREST
FUND CLASS B SHARES LITERATURE PRINTING EXPENSES EXPENSES EXPENSES
- ------------------------------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Global......................... 13,000 18,000 17,000 21,000 11,000
International.................. 17,000 5,000 76,000 11,000 11,000
</TABLE>
- ---------------
* Class B shares were first offered on May 31, 1994.
<TABLE>
<CAPTION>
TOTAL DISTRIBUTION
DISTRIBUTION DISTRIBUTION FEES PAID
FEES PAID FEES PAID BY UNDERWRITER
FISCAL BY FUND BY UNDERWRITER TO AFFILIATED
FUND CLASS C SHARES YEAR** TO UNDERWRITER TO FIRMS FIRMS
- --------------------------------- ------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
Global........................... 1994 $ 0 0 0
International.................... 1994 $1,000 1,000 0
<CAPTION>
OTHER DISTRIBUTION EXPENSES PAID BY UNDERWRITER
--------------------------------------------------------------------
ADVERTISING MARKETING MISC.
AND PROSPECTUS AND SALES OPERATING INTEREST
FUND CLASS C SHARES LITERATURE PRINTING EXPENSES EXPENSES EXPENSES
- --------------------------------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Global........................... 1,000 3,000 2,000 2,000 0
International.................... 3,000 1,000 11,000 2,000 0
</TABLE>
- ---------------
** Class C shares were first offered on May 31, 1994.
B-21
<PAGE> 73
ADMINISTRATIVE SERVICES. Administrative services are provided to each Fund under
an administrative services agreement ("administrative agreement") with KDI. KDI
bears all its expenses of providing services pursuant to the administrative
agreement between KDI and each Fund, including the payment of service fees.
Until October 1, 1993, for the services under the administrative agreement, the
Global Fund paid KFS (as the predecessor to KDI) an administrative services fee,
payable monthly, at the annual rate of up to .15 of 1% of average daily net
assets of the Class A shares, and the International Fund at the annual rate of
up to .25 of 1% of average daily net assets of the Class A shares. Effective
October 1, 1993, for the services under the administrative agreement, each Fund
pays KDI an administrative services fee, payable monthly, at the annual rate of
up to .25 of 1% of average daily net assets of each class of the Fund. Before
February 1, 1995, KFS was the administrator.
KDI enters into related arrangements with various financial services firms, such
as broker-dealers or banks ("firms"), that provide services and facilities for
their customers or clients who are shareholders of a Fund. The firms provide
such office space and equipment, telephone facilities and personnel as is
necessary or beneficial for providing information and services to their clients.
Such services and assistance may include, but are not limited to, establishing
and maintaining shareholder accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Funds,
assistance to clients in changing dividend and investment options, account
designations and addresses and such other services as may be agreed upon from
time to time and permitted by applicable statute, rule or regulation. With
respect to Class A shares, KDI pays each firm a service fee, payable quarterly,
at an annual rate of (a) up to .15 of 1% of the net assets in Fund accounts that
it maintains and services (.25 of 1% of the International Fund) attributable to
Class A shares acquired prior to October 1, 1993, and (b) up to .25 of 1% of the
net assets in Fund accounts that it maintains and services attributable to Class
A shares acquired on or after October 1, 1993, in each case commencing with the
month after investment. With respect to Class B shares and Class C shares, KDI
pays each firm a service fee, payable quarterly, at an annual rate of up to .25
of 1% of the net assets in Fund accounts that it maintains and services
attributable to Class B shares and Class C shares, respectively, commencing with
the month after investment (month of investment for Class C shares); provided,
however, KDI may for Class B shares advance the first year service fee as
described in the prospectus under "Investment Manager and Underwriter." Firms to
which service fees may be paid include broker-dealers affiliated with KDI.
The following information concerns the administrative services fee paid by each
Fund.
<TABLE>
<CAPTION>
ADMINISTRATIVE SERVICE FEES
PAID BY FUND SERVICE FEES SERVICE FEES
------------------------------ PAID BY ADMINISTRATOR PAID BY ADMINISTRATOR
FUND FISCAL PERIOD CLASS A CLASS B CLASS C TO FIRMS TO AFFILIATED FIRMS
- ------------------------ ------------- -------- ------- ------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Global.................. 1994* $154,000 45,000 -- 224,000 58,000
1993A $ 62,000 -- -- 62,000 21,000
1993B $106,000 -- -- 106,000 37,000
1992 $ 94,000 -- -- 94,000 33,000
International........... 1994* $723,000 16,000 755,000 162,000
1993 $404,000 -- -- 404,000 100,000
1992 $362,000 -- -- 362,000 90,000
</TABLE>
- ---------------
1993A--Six months ended December 31, 1993
1993B--Fiscal year ended June 30, 1993
* Class B and Class C shares were first offered on May 31, 1994.
KDI also may provide some of the above services and may retain any portion of
the fee under the administrative agreement not paid to firms to compensate
itself for administrative functions performed for a Fund. Currently, the
administrative services fee payable to KDI is based only upon Fund assets in
accounts for which there is a firm listed on the Fund's records and it is
intended that KDI will pay all the administrative services fees that it receives
from the Fund to firms in the form of service fees. The effective administrative
services fee rate to be charged against all
B-22
<PAGE> 74
assets of each Fund while this procedure is in effect will depend upon the
proportion of Fund assets that is in accounts for which there is a firm of
record as well as, with respect to the Global Fund's Class A shares, the date
when shares representing such assets were purchased. The Board of Trustees of a
Fund, in its discretion, may approve basing the fee to KDI on all Fund assets in
the future.
Certain trustees or officers of each Fund are also directors or officers of KFS,
KDI or of Kemper Investment Management Company Limited, a wholly owned
subsidiary of KFS, as indicated under "Officers and Trustees."
CUSTODIAN AND SHAREHOLDER SERVICE AGENT. The Chase Manhattan Bank, N.A., Chase
MetroTech Center, Brooklyn, New York 11245, as custodian, has custody of all
securities and cash of each Fund held outside the United States. Investors
Fiduciary Trust Company ("IFTC"), 127 West 10th Street, Kansas City, Missouri
64105, as custodian, and United Missouri Bank, n.a., Tenth and Grand Streets,
Kansas City, Missouri 64106 and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, as sub-custodians, have custody of
all securities and cash of each Fund maintained in the United States. They
attend to the collection of principal and income, and payment for and collection
of proceeds of securities bought and sold by each Fund. IFTC is also each Fund's
transfer agent and dividend-paying agent. Pursuant to a services agreement with
IFTC, Kemper Service Company ("KSvC"), an affiliate of KFS, serves as
"Shareholder Service Agent." IFTC receives as transfer agent, and pays to KSvC,
annual account fees of $6 per account plus account set up, transaction,
maintenance and disaster recovery charges, annual fees associated with the
contingent deferred sales charge (Class B only) and out-of-pocket expense
reimbursement. IFTC's fee is reduced by certain earnings credits in favor of
each Fund. For the fiscal year ended December 31, 1994, the Global Fund incurred
custodian and transfer agent fees of $263,000 (excluding related expenses), to
IFTC and IFTC remitted shareholder service fees in the amount of $261,000 to
KSvC as Shareholder Service Agent. For the fiscal year ended October 31, 1994,
the International Fund incurred custodian and transfer agent fees of $1,135,000
(excluding related expenses) to IFTC and IFTC remitted shareholder service fees
in the amount of $1,146,000 to KSvC as Shareholder Service Agent. Prior to
February 1, 1995, IFTC was 50% owned by KFS.
INDEPENDENT AUDITORS AND REPORTS TO SHAREHOLDERS. The Funds' independent
auditors, Ernst & Young LLP, 233 South Wacker Drive, Chicago, Illinois 60606,
audit and report on the Funds' annual financial statements, review certain
regulatory reports and the Funds' federal income tax return, and perform other
professional accounting, auditing, tax and advisory services when engaged to do
so by the Funds. Shareholders will receive annual audited financial statements
and semi-annual unaudited financial statements.
PORTFOLIO TRANSACTIONS
KFS is the investment manager for the Kemper Funds and KFS and its affiliates
also furnish investment management services to other clients including Kemper
Corporation and the Kemper insurance companies. KFS is the sole shareholder of
Kemper Asset Management Company and Kemper Investment Management Company
Limited. These three entities share some common research and trading facilities.
At times investment decisions may be made to purchase or sell the same
investment securities for a Fund and for one or more of the other clients
managed by KFS. When two or more of such clients are simultaneously engaged in
the purchase or sale of the same security, the transactions are allocated as to
amount and price in a manner considered equitable to each and so that each
receives, to the extent practicable, the average price of such transactions.
National securities exchanges have established limitations governing the maximum
number of options in each class which may be written by a single investor or
group of investors acting in concert. An exchange may order the liquidation of
positions found to be in violation of these limits, and it may impose certain
other sanctions. These position limits may restrict the number of options the
Fund will be able to write on a particular security.
The above mentioned factors may have a detrimental effect on the quantities or
prices of securities and options and futures contracts available to the Fund. On
the other hand, the ability of a Fund to participate in volume transactions may
produce better executions for a Fund in some cases. The Board of Trustees of
each Fund believes
B-23
<PAGE> 75
that the benefits of KFS's organization outweigh any limitations that may arise
from simultaneous transactions or position limitations.
KFS, in effecting purchases and sales of portfolio securities for the account of
a Fund, will implement the Fund's policy of seeking best execution of orders,
which includes best net prices, except to the extent that KFS may be permitted
to pay higher brokerage commissions for research services as described below.
Consistent with this policy, orders for portfolio transactions are placed with
broker-dealer firms giving consideration to the quality, quantity and nature of
each firm's professional services, which include execution, clearance
procedures, wire service quotations and statistical and other research
information provided to a Fund and KFS. Any research benefits derived are
available for all clients, including clients of affiliated companies. Since it
is only supplementary to KFS's own research efforts and must be analyzed and
reviewed by KFS' staff, the receipt of research information is not expected to
materially reduce expenses. In selecting among firms believed to meet the
criteria for handling a particular transaction, KFS may give consideration to
those firms that have sold or are selling shares of the Funds and of other funds
managed by KFS, as well as to those firms that provide market, statistical and
other research information to a Fund and KFS, although KFS is not authorized to
pay higher commissions or, in the case of principal trades, higher prices to
firms that provide such services, except as provided below.
KFS may in certain instances be permitted to pay higher brokerage commissions
(not including principal trades) solely for receipt of market, statistical and
other research services. Subject to Section 28(e) of the Securities Exchange Act
of 1934 and procedures that may be adopted by the Board of Trustees of each
Fund, a Fund could pay a firm that provides research services to KFS a
commission for effecting a securities transaction for the Fund in excess of the
amount other firms would have charged for the transaction if KFS determines in
good faith that the greater commission is reasonable in relation to the value of
the research services provided by the executing firm viewed in terms either of a
particular transaction or KFS's overall responsibilities to the Fund or other
clients. Not all of such research services may be useful or of value in advising
a particular Fund. Research benefits will be available for all clients of KFS
and its subsidiaries. The investment management fee paid by a Fund to KFS is not
reduced because KFS receives these research services.
The table below shows total brokerage commissions paid by each Fund for the last
three fiscal periods and for the most recent fiscal year, the percentage thereof
that was allocated to firms based upon research information provided or sales of
Kemper Mutual Fund Shares.
<TABLE>
<CAPTION>
ALLOCATED TO FIRMS
BASED ON
RESEARCH/SALES OF
KEMPER FUND SHARES
FUND FISCAL 1994 IN FISCAL 1994 FISCAL 1993 FISCAL 1992
- ------------------------------------------- ----------- ------------------ ----------- -----------
<S> <C> <C> <C> <C>
Global..................................... $ 0 0% $ 0* $ 0
International.............................. $ 2,655,000 98% $ 2,601,000 $ 1,795,000
</TABLE>
- ---------------
* Includes both the fiscal year ended June 30, 1993 and the six months ended
December 31, 1993.
PURCHASE AND REDEMPTION OF SHARES
As described in the prospectus, Fund shares are sold at their public offering
price, which is the net asset value next determined after an order is received
in proper form plus, with respect to Class A shares, an initial sales charge.
The minimum initial investment is $1,000 and the minimum subsequent investment
is $100 but such minimum amounts may be changed at any time. See the prospectus
for certain exceptions to these minimums. An order for the purchase of shares
that is accompanied by a check drawn on a foreign bank (other than a check drawn
on a Canadian bank in U.S. Dollars) will not be considered in proper form and
will not be processed unless and until the Fund determines that it has received
payment of the proceeds of the check. The time required for such a determination
will vary and cannot be determined in advance.
B-24
<PAGE> 76
Upon receipt by the Shareholder Service Agent of a request for redemption,
shares of a Fund will be redeemed by the Fund at the applicable net asset value
per share of such Fund as described in the Funds' prospectus. The redemption
within one year of Class A shares purchased at net asset value under the Large
Order NAV Purchase Privilege described in the prospectus may be subject to a 1%
contingent deferred sales charge (see "Purchase of Shares" in the prospectus).
Redemption of Class B shares may be subject to a contingent deferred sales
charge. When a Fund is asked to redeem shares for which it may not yet have
received good payment, it may delay the mailing of a redemption check until it
has determined that collected funds have been received for the purchase of such
shares, which will be up to 15 days.
Scheduled variations in or the elimination of the initial sales charge for
purchases of Class A shares or the contingent deferred sales charge for
redemptions of Class B shares by certain classes of persons or through certain
types of transactions as described in the prospectus is provided because of
expected economies in sales and sales-related efforts.
A Fund may suspend the right of redemption or delay payment more than seven days
(a) during any period when the New York Stock Exchange ("Exchange") is closed
other than customary weekend and holiday closings or during any period in which
trading on the Exchange is restricted, (b) during any period when an emergency
exists as a result of which (i) disposal of a Fund's investments is not
reasonably practicable, or (ii) it is not reasonably practicable for the Fund to
determine the value of its net assets, or (c) for such other periods as the
Securities and Exchange Commission may by order permit for the protection of a
Fund's shareholders.
Although it is the Global Fund's present policy to redeem in cash, if the Board
of Trustees determines that a material adverse effect would be experienced by
the remaining shareholders if payment were made wholly in cash, the Fund will
satisfy the redemption request in whole or in part by a distribution of
portfolio securities in lieu of cash, in conformity with the applicable rules of
the Securities and Exchange Commission, taking such securities at the same value
used to determine net asset value, and selecting the securities in such manner
as the Board of Trustees may deem fair and equitable. If such a distribution
occurred, shareholders receiving securities and selling them could receive less
than the redemption value of such securities and in addition would incur certain
transaction costs. Such a redemption would not be so liquid as a redemption
entirely in cash. The Global Fund has elected to be governed by Rule 18f-1 under
the Investment Company Act of 1940 pursuant to which the Fund is obligated to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
assets of the Fund during any 90-day period for any one shareholder of record.
The conversion of Class B shares to Class A shares may be subject to the
continuing availability of an opinion of counsel, ruling by the Internal Revenue
Service or other assurance acceptable to each Fund to the effect that (a) the
assessment of the distribution services fee with respect to Class B shares and
not Class A shares does not result in the Fund's dividends constituting
"preferential dividends" under the Internal Revenue Code, and (b) that the
conversion of Class B shares to Class A shares does not constitute a taxable
event under the Internal Revenue Code. The conversion of Class B shares to Class
A shares may be suspended if such assurance is not available. In that event, no
further conversions of Class B shares would occur, and shares might continue to
be subject to the distribution services fee for an indefinite period that may
extend beyond the proposed conversion date as described in the prospectus.
B-25
<PAGE> 77
OFFICERS AND TRUSTEES
The officers and trustees of each Fund, their principal occupations and their
affiliations, if any, with Kemper Financial Services, Inc., the investment
manager, and Kemper Distributors, Inc., principal underwriter, are as follows
(The number following each person's title is the number of investment companies
managed by KFS for which he or she holds similar positions):
DAVID W. BELIN, Trustee (21), 2000 Financial Center, 7th and Walnut, Des Moines,
Iowa; Member, Belin Harris Lamson McCormick, P.C. (attorneys).
LEWIS A. BURNHAM, Trustee (21), 16410 Avila Boulevard, Tampa, Florida; Director,
Management Consulting Services, McNulty and Company; formerly, Executive Vice
President, Anchor Glass Container Corporation.
DONALD L. DUNAWAY, Trustee (21), One Park Place, Milwaukee, Wisconsin; Retired;
formerly, Executive Vice President, A. O. Smith Corporation (diversified
manufacturer).
ROBERT B. HOFFMAN, Trustee (21), 800 North Lindbergh Boulevard, St. Louis,
Missouri; Senior Vice President and Chief Financial Officer, Monsanto Company
(chemical products); prior thereto, Vice President, FMC Corporation
(manufacturer of machinery and chemicals); prior thereto, Director, Executive
Vice President and Chief Financial Officer, Staley Continental, Inc. (food
products).
DONALD R. JONES, Trustee (21), 1303 East Algonquin Road, Schaumburg, Illinois;
Retired; Director, Motorola, Inc. (manufacturer of electronic equipment and
components); formerly, Executive Vice President and Chief Financial Officer,
Motorola, Inc.
WILLIAM P. SOMMERS, Trustee (21), 333 Ravenswood Avenue, Menlo Park, California;
President and Chief Executive Officer, SRI International (research and
development); prior thereto, Executive Vice President, Iameter (medical
information and educational service provider); prior thereto, Senior Vice
President and Director, Booz, Allen & Hamilton, Inc. (management consulting
firm) (retired); Director, Rohr, Inc., Therapeutic Discovery Corp. and Litton
Industries.
STEPHEN B. TIMBERS, Vice President and Trustee* (31), Kemper Center, Long Grove,
Illinois; President, Chief Operating Officer and Director, Kemper Corporation;
Chairman, Chief Executive Officer and Director, Kemper Financial Services, Inc.,
Director, Kemper Financial Companies, Inc. and Kemper Securities, Inc.
JOHN E. PETERS, Vice President* (31), 120 South LaSalle Street, Chicago,
Illinois; Senior Executive Vice President, Kemper Financial Services, Inc.;
President and Director, Kemper Distributors, Inc.
CHARLES F. CUSTER, Vice President and Assistant Secretary* (31), 222 North
LaSalle Street, Chicago, Illinois; Partner, Vedder, Price, Kaufman & Kammholz
(attorneys), Legal Counsel to the Fund.
JEROME L. DUFFY, Treasurer* (31), 120 South LaSalle Street, Chicago, Illinois;
Senior Vice President, Kemper Financial Services, Inc.
PHILIP J. COLLORA, Vice President and Secretary* (31), 120 South LaSalle Street,
Chicago, Illinois; Attorney, Senior Vice President and Assistant Secretary,
Kemper Financial Services, Inc.
ELIZABETH C. WERTH, Assistant Secretary* (23), 120 South LaSalle Street,
Chicago, Illinois; Vice President and Director of State Registrations, Kemper
Financial Services, Inc.
GLOBAL FUND:
J. PATRICK BEIMFORD, JR., Vice President* (24), 120 South LaSalle Street,
Chicago, Illinois; Executive Vice President/Director of Fixed Income
Investments, Kemper Financial Services, Inc.
GORDON K. JOHNS, Vice President* (3), River Plate House, 1 Fleet Place, London
EC4M 7RQ, Director and Managing Director, Kemper Investment Management Company
Limited; Executive Vice President, Kemper
B-26
<PAGE> 78
Financial Services, Inc.; formerly, Director and Head of Fixed Investment
Management, Lazard Investors, Ltd., a London based investment manager.
INTERNATIONAL FUND:
DENNIS H. FERRO, Vice President* (4), 120 South LaSalle Street, Chicago,
Illinois; Executive Vice President, Kemper Financial Services, Inc.; formerly,
President and Chief Investment Officer, Cigna International Investment Advisors,
Ltd.
* Interested persons as defined in the Investment Company Act of 1940.
The trustees and officers who are "interested persons" as designated above
receive no compensation from the Funds, except that Mr. Custer's law firm
receives fees from the Funds as counsel to the Funds. The table below shows
amounts paid or accrued to those trustees who are not designated "interested
persons" during each Fund's 1994 fiscal year except that the information in the
last column is for calendar year 1994.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION FROM PENSION OR
FUNDS RETIREMENT BENEFITS TOTAL COMPENSATION
------------------------------ ACCRUED AS PART KEMPER FUNDS
NAME OF TRUSTEE GLOBAL INTERNATIONAL OF FUND EXPENSES PAID TO TRUSTEES**
- ----------------------------------- ------ ------------- ------------------- -------------------
<S> <C> <C> <C> <C>
David W. Belin*.................... $1,800 2,500 0 112,200
Lewis A. Burnham................... $1,600 1,900 0 90,100
Donald L. Dunaway*................. $2,000 2,500 0 115,400
Robert B. Hoffman.................. $1,500 1,900 0 87,400
Donald R. Jones.................... $1,600 2,000 0 94,300
William P. Sommers................. $1,500 1,800 0 84,100
</TABLE>
- ---------------
* Includes current fees deferred and interest pursuant to deferred compensation
agreements with the Funds. Deferred amounts accrue interest monthly at a rate
equal to the yield of Kemper Money Market Fund -- Money Market Portfolio.
** Includes compensation for service on the boards of twenty-three Kemper funds
(including two funds no longer in existence). Also includes amounts for new
funds estimated as if they had existed at the beginning of the year.
As of February 28, 1995, the trustees and officers as a group owned less than 1%
of the then outstanding shares of each Fund and no person owned of record more
than 5% of the outstanding shares of a Fund, except that Kemper Clearing Corp.,
111 E. Kilbourn Avenue, Milwaukee, Wisconsin owned of record 5.8% of KGIF.
SHAREHOLDER RIGHTS
The Funds generally are not required to hold meetings of their shareholders.
Under the Agreement and Declaration of Trust of each Fund ("Declaration of
Trust"), however, shareholder meetings will be held in connection with the
following matters: (a) the election or removal of trustees if a meeting is
called for such purpose; (b) the adoption of any contract for which approval by
shareholders is required by the Investment Company Act of 1940 ("1940 Act"); (c)
any termination of the Fund or a class to the extent and as provided in the
Declaration of Trust; (d) any amendment of the Declaration of Trust (other than
amendments changing the name of the Fund, supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or inconsistent
provision thereof); and (e) such additional matters as may be required by law,
the Declaration of Trust, the By-laws of the Fund, or any registration of the
Fund with the Securities and Exchange Commission or any state, or as the
trustees may consider necessary or desirable. The shareholders also would vote
upon changes in fundamental investment objectives, policies or restrictions.
Each trustee serves until the next meeting of shareholders, if any, called for
the purpose of electing trustees and until the election and qualification of a
successor or until such trustee sooner dies, resigns, retires or is removed by a
majority vote of the shares entitled to vote (as described below) or a majority
of the trustees. In accordance with the 1940 Act (a) each Fund will hold a
shareholder meeting for the election of trustees at such time as less than a
B-27
<PAGE> 79
majority of the trustees have been elected by shareholders, and (b) if, as a
result of a vacancy in the Board of Trustees, less than two-thirds of the
trustees have been elected by the shareholders, that vacancy will be filled only
by a vote of the shareholders.
Trustees may be removed from office by a vote of the holders of a majority of
the outstanding shares at a meeting called for that purpose, which meeting shall
be held upon the written request of the holders of not less than 10% of the
outstanding shares. Upon the written request of ten or more shareholders who
have been such for at least six months and who hold shares constituting at least
1% of the outstanding shares of a Fund stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, each
Fund has undertaken to disseminate appropriate materials at the expense of the
requesting shareholders.
Each Fund's Declaration of Trust provides that the presence at a shareholder
meeting in person or by proxy of at least 30% of the shares entitled to vote on
a matter shall constitute a quorum. Thus, a meeting of shareholders of a Fund
could take place even if less than a majority of the shareholders were
represented on its scheduled date. Shareholders would in such a case be
permitted to take action which does not require a larger vote than a majority of
a quorum, such as the election of trustees and ratification of the selection of
independent auditors. Some matters requiring a larger vote under the Declaration
of Trust, such as termination or reorganization of a Fund and certain amendments
of the Declaration of Trust, would not be affected by this provision; nor would
matters which under the 1940 Act require the vote of a "majority of the
outstanding voting securities" as defined in the 1940 Act.
Each Fund's Declaration of Trust specifically authorizes the Board of Trustees
to terminate the Fund or any Portfolio or class by notice to the shareholders
without shareholder approval.
Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for obligations of a
Fund. The Declaration of Trust, however, disclaims shareholder liability for
acts or obligations of each Fund and requires that notice of such disclaimer be
given in each agreement, obligation, or instrument entered into or executed by a
Fund or the Fund's trustees. Moreover, the Declaration of Trust provides for
indemnification out of Fund property for all losses and expenses of any
shareholder held personally liable for the obligations of a Fund and each Fund
will be covered by insurance which the trustees consider adequate to cover
foreseeable tort claims. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered by KFS remote and not
material, since it is limited to circumstances in which a disclaimer is
inoperative and such Fund itself is unable to meet its obligations.
B-28
<PAGE> 80
APPENDIX--RATINGS OF INVESTMENTS
STANDARD & POOR'S CORPORATION BOND RATINGS
AAA. Debt rated AAA had the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA. Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB. Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC AND C. Debt rated BB, B, CCC, CC and C is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CI. The rating CI is reserved for income bonds on which no interest is being
paid.
D. Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
MOODY'S INVESTORS SERVICE, INC., BOND RATINGS
AAA. Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
AA. Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
A. Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA. Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA. Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B. Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
B-29
<PAGE> 81
CAA. Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA. Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C. Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
IBCA LIMITED BOND RATINGS
AAA. Obligations for which there is the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly.
AA. Obligations for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions may increase investment
risk albeit not very significantly.
A. Obligations for which there is a low expectation of investment risk. Capacity
for timely repayment of principal and interest is strong, although adverse
changes in business, economic or financial conditions may lead to increased
investment risk.
BBB. Obligations for which there is currently a low expectation of investment
risk. Capacity for timely repayment of principal and interest is adequate,
although adverse changes in business, economic or financial conditions are more
likely to lead to increased investment risk than for obligations in higher
categories.
B-30
<PAGE> 82
KEMPER GLOBAL INCOME FUND
ANNUAL REPORT TO SHAREHOLDERS
FOR YEAR ENDED 12/31/94
PORTFOLIO OF INVESTMENTS BY CURRENCY December 31, 1994
(in thousands)
<TABLE>
<CAPTION>
Principal
Amount
(in Local Value
Currency) (in U.S. Dollars)
---------- -----------------
<S> <C> <C>
AUSTRALIAN DOLLAR--9.8%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
Commonwealth of Australia
7.00%, 2000 11,000 $ 7,483
12.00%, 2001 1,000 849
- -----------------------------------------------------------------
Queenlands Treasury
8.00%, 2001 6,000 4,147
6.50%, 2005 7,250 4,254
- -----------------------------------------------------------------
16,733
DANISH KRONER--6.7%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
Kingdom of Denmark
9.00%, 1998 19,000 3,144
9.00%, 2000 20,000 3,287
8.00%, 2003 33,000 5,065
- -----------------------------------------------------------------
11,496
FINNISH MARKKA--6.9%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
Republic of Finland
11.00%, 1997 11,000 2,435
11.00%, 1999 20,000 4,436
9.50%, 2004 24,000 4,893
- -----------------------------------------------------------------
11,764
FRENCH FRANC--4.8%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATION
- -----------------------------------------------------------------
French Treasury,
8.50%, 2008 17,000 3,224
- -----------------------------------------------------------------
CORPORATE OBLIGATION
- -----------------------------------------------------------------
French Telecom,
7.875%, 2003 27,000 4,933
- -----------------------------------------------------------------
IRISH PUNT--9.8%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
Government of Ireland
6.25%, 1999 4,000 5,609
6.25%, 2004 8,700 11,131
- -----------------------------------------------------------------
16,740
JAPANESE YEN--10.2%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATION
- -----------------------------------------------------------------
Republic of Austria,
5.00%, 2001 480,000 4,950
- -----------------------------------------------------------------
<CAPTION>
Principal
Amount
(in Local Value
Currency) (in U.S. Dollars)
---------- -----------------
<S> <C> <C>
CORPORATE OBLIGATIONS
- -----------------------------------------------------------------
European Investment Bank,
4.625%, 2003 800,000 $ 8,012
- -----------------------------------------------------------------
Export-Import Bank of Japan,
4.375%, 2003 450,000 4,413
- -----------------------------------------------------------------
17,375
NETHERLAND GUILDER--19.5%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
Dutch State Loan
8.25%, 2002 20,000 11,883
7.00%, 2003 20,000 11,030
8.25%, 2007 17,500 10,387
- -----------------------------------------------------------------
33,300
NEW ZEALAND DOLLAR--3.8%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
Government of New Zealand
8.00%, 1998 2,000 1,240
6.50%, 2000 5,500 3,199
10.00%, 2002 3,100 2,131
- -----------------------------------------------------------------
6,570
PORTUGESE ESCUDO--4.7%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
Government of Portugal
8.375%, 1999 290,000 1,640
11.875%, 2000 1,000,000 6,344
- -----------------------------------------------------------------
7,984
U.S. DOLLAR--20.4%
- -----------------------------------------------------------------
GOVERNMENT OBLIGATIONS
- -----------------------------------------------------------------
U.S. Treasury Notes
6.375%, 2000 3,500 3,292
6.25%, 2003 4,000 3,622
7.25%, 2004 10,500 10,096
9.375%, 2006 16,000 17,779
- -----------------------------------------------------------------
34,789
TOTAL INVESTMENTS--96.6%
(Cost: $165,446) 164,908
- -----------------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--3.4% 5,792
- -----------------------------------------------------------------
NET ASSETS--100% $170,700
- -----------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS BY CURRENCY
The Fund is a non-diversified investment company and may invest a relatively
high percentage of its assets in the obligations of a limited number of issuers.
At December 31, 1994, the Fund had 86.4% of its net assets in government
obligations, 10.2% in corporate obligations and 3.4% in other assets.
Based on the cost of investments of $165,446,000 for federal income tax purposes
at December 31, 1994, the aggregate gross unrealized appreciation was $908,000,
the aggregate gross unrealized depreciation was $1,446,000 and the net
unrealized depreciation was $538,000.
See accompanying Notes to Financial Statements.
5
<PAGE> 83
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER GLOBAL INCOME FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments by currency, of Kemper Global Income Fund as of
December 31, 1994, the related statement of operations for the year ended
December 31, 1994, the statement of changes in net assets for the year ended
December 31, 1994, the six months ended December 31, 1993 and the year ended
June 30, 1993, and financial highlights for each of the fiscal periods since
1990. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights 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 and financial
highlights 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 custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, 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 and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
Global Income Fund at December 31, 1994, the results of its operations, the
changes in its net assets and financial highlights for the periods referred to
above, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
February 3, 1995
6
<PAGE> 84
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
(in thousands)
<TABLE>
<S> <C>
ASSETS
- -------------------------------------------------------
Investments, at value
(Cost: $165,446) $164,908
- -------------------------------------------------------
Cash 670
- -------------------------------------------------------
Receivable for:
Investments sold 8,637
- -------------------------------------------------------
Interest 6,300
- -------------------------------------------------------
Fund shares sold 31
- -------------------------------------------------------
Total assets 180,546
- -------------------------------------------------------
LIABILITIES AND NET ASSETS
- -------------------------------------------------------
Payable for:
Investments purchased 8,600
- -------------------------------------------------------
Fund shares redeemed 1,061
- -------------------------------------------------------
Management fee 108
- -------------------------------------------------------
Administrative services fee 27
- -------------------------------------------------------
Distribution services fee 33
- -------------------------------------------------------
Other 17
- -------------------------------------------------------
Total liabilities 9,846
- -------------------------------------------------------
Net assets 170,700
- -------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------
Excess of amounts received from
issuance of shares over amounts paid
on redemptions of shares on account
of capital $231,307
- -------------------------------------------------------
Accumulated net realized loss on investments
and foreign currency transactions (60,696)
- -------------------------------------------------------
Unrealized depreciation of investments and
foreign currency transactions (554)
- -------------------------------------------------------
Undistributed net investment income 643
- -------------------------------------------------------
Net assets applicable to shares
outstanding $170,700
- -------------------------------------------------------
THE PRICING OF SHARES
- -------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per
share
($119,100,846/13,930,543 shares
outstanding) $8.55
- -------------------------------------------------------
Maximum offering price per share
(net asset value, plus 4.71% of net
asset value or 4.50% of offering price) $8.95
- -------------------------------------------------------
CLASS B SHARES
Net asset value, offering price and
redemption
price (subject to contingent deferred
sales
charge) per share
($51,575,721/6,024,073 shares outstanding) $8.56
- -------------------------------------------------------
CLASS C SHARES
Net asset value, offering price and
redemption price per share
($23,056/2,693 shares outstanding) $8.56
- -------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
Year ended December 31, 1994
(in thousands)
<TABLE>
<S> <C>
INTEREST INCOME $ 9,430
- -------------------------------------------------------
EXPENSES
- -------------------------------------------------------
Management fee 864
- -------------------------------------------------------
Administrative services fee 199
- -------------------------------------------------------
Distribution services fee 146
- -------------------------------------------------------
Custodian and transfer agent
fees and related expenses 396
- -------------------------------------------------------
Professional fees 121
- -------------------------------------------------------
Reports to shareholders 184
- -------------------------------------------------------
Trustees' fees and other 17
- -------------------------------------------------------
Total expenses 1,927
- -------------------------------------------------------
Net investment income 7,503
- -------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS
- -------------------------------------------------------
Net realized loss on investments
and foreign currency transactions (6,845)
- -------------------------------------------------------
Net change in balance of unrealized
depreciation of investments and foreign
currency transactions (757)
- -------------------------------------------------------
Net loss on investments (7,602)
- -------------------------------------------------------
Net decrease in net assets resulting
from operations $ (99)
- -------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
7
<PAGE> 85
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
Year
ended
December 31, Six months Year
1994 ended ended
------------ December 31, June 30,
OPERATIONS 1993 1993
------------ --------
<S> <C> <C> <C>
- ---------------------------
Net investment income $ 7,503 2,539 5,996
- ---------------------------
Net realized (loss) gain
on investments and
foreign currency
transactions (6,845) 455 (3,395)
- ---------------------------
Net change in unrealized
(depreciation)
appreciation (757) 832 2,060
- ---------------------------
Net (decrease) increase in
net assets resulting from
operations (99) 3,826 4,661
- ---------------------------
Net equalization credits 42 123 66
- ---------------------------
DIVIDENDS TO SHAREHOLDERS
- ---------------------------
Distribution from net
investment income (4,876) -- (5,998)
- ---------------------------
Distribution from net
realized gain on
investments -- (455) (464)
- ---------------------------
Distribution in excess of
net realized gain on
investments -- (569) --
- ---------------------------
Tax return of capital
distribution (2,738) (2,331) --
- ---------------------------
Total dividends to
shareholders (7,614) (3,355) (6,462)
- ---------------------------
Net increase from capital
share transactions 95,350 4,359 8,013
- ---------------------------
Total increase in net
assets 87,679 4,953 6,278
- ---------------------------
NET ASSETS
- ---------------------------
Beginning of period 83,021 78,068 71,790
- ---------------------------
End of period (including
undistributed net
investment income of
$643, $601 and $501
respectively) $170,700 83,021 78,068
- ---------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE FUND
Effective May 31, 1994, the Fund began offering three classes of shares. Class A
shares are sold to investors subject to an initial sales charge. Class B shares
are sold without an initial sales charge but are subject to higher ongoing
expenses than Class A shares and a contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically convert to Class A shares six
years after issuance. Class C shares are sold without an initial or a contingent
deferred sales charge but are subject to higher ongoing expenses than Class A
shares and do not convert into another class. The Fund may offer, to a limited
group of investors, Class I shares (none sold through December 31, 1994) which
are not subject to initial or contingent deferred sales charges and have lower
ongoing expenses than other classes. Each share represents an identical interest
in the investments of the Fund and has the same rights.
On August 26, 1994, the Fund acquired the assets of Kemper Investment
Portfolios -- Short Term Global Income Portfolio ("KIP-STGP") and Kemper Short
Term Global Income Fund ("KSGIF") in a tax-free exchange. KIP-STGP and KSGIF net
assets on that date of $59 million and $58 million, respectively, were exchanged
for 13.5 million shares of the Fund (including Class A shares and Class B
shares), and the aggregate net assets of the Fund after the acquisition were
$192 million.
In 1993, the Fund changed its fiscal year end for financial reporting purposes
and federal income tax purposes from June 30 to December 31.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at value. 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. Portfolio securities
that are traded on a domestic securities exchange are valued at the last sale
price on the exchange where primarily traded 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 are valued at the last current bid quotation if market
quotations are available. Exchange traded options are valued at the last sale
price unless there is no sale price, in which event prices provided by market
makers are used. Over-the-counter traded options are valued based upon prices
provided by market makers. Financial futures and options thereon are valued at
the settlement price established each day by the board of trade or exchange on
which they are traded. Forward foreign currency contracts and foreign currencies
are valued at the forward and current exchange rates, respectively, prevailing
on the day of valuation. Other securities and assets are valued at fair value as
determined in good faith by the Board of Trustees.
8
<PAGE> 86
CURRENCY TRANSLATION
The books and records of the Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency values are converted into
U.S. dollar values at the mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by a recognized dealer. If such
quotations are not readily available, the rate of exchange is determined in good
faith by the Board of Trustees. Income and expenses and purchases and sales of
investments are translated into U.S. dollars at the rate of exchange prevailing
on the respective dates of such transactions. The Fund includes that portion of
the results of operations resulting from changes in foreign exchange rates with
net realized and unrealized gain or loss from investments and foreign currency
transactions, as appropriate.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for on the trade date (date the order to
buy or sell is executed). Interest income is recorded on the accrual basis; it
includes premium and discount amortization on money market instruments and
discount amortization on long-term fixed income securities. Realized gains and
losses from investment transactions are reported on an identified cost basis.
Realized and unrealized gains and losses on financial futures, options and
forward foreign currency contracts are included in net realized and unrealized
(gain) loss on investments, as appropriate.
FUND SHARE VALUATION
Fund shares are sold and redeemed on a continuous basis at net asset value (plus
an initial sales charge on most sales of Class A shares). Proceeds payable on
redemption of Class B shares will be reduced by the amount of any applicable
contingent deferred sales charge. On each day the New York Stock Exchange is
open for trading, the net asset value per share is determined as of the earlier
of 3:00 p.m. Chicago time or the close of the Exchange. The net asset value per
share is determined separately for each share class by dividing the attributable
net assets by the number of outstanding shares of each class. Because of the
need to obtain prices as of the close of trading on various exchanges throughout
the world, the calculation of net asset value does not take place
contemporaneously with the determination of the prices of the Fund's foreign
securities.
FEDERAL INCOME TAXES AND DIVIDENDS TO SHAREHOLDERS
The Fund has complied with the special provisions
of the Internal Revenue Code available to investment companies and therefore no
federal income tax provision is required. The accumulated net realized loss on
sales of investments for federal income tax purposes at December 31, 1994,
amounting to approximately $60,696,000, is available to offset future taxable
gains. Of this amount approximately $56,000,000 was obtained in the acquisition
of KIP-STGP and KSGIF. Under Internal Revenue Code provisions the amount of
acquired loss carryover available each year is limited to approximately
$7,000,000. If not applied, the loss carryover expires during the period 1997
through 2002.
Dividends are declared separately for each class. Differences in per share
dividend rates are generally due to differences in separate class expenses.
Dividends payable to its shareholders are recorded by the Fund on the
ex-dividend date.
On January 18, 1995, the following per share dividends were declared, payable
January 31, 1995 to shareholders of record on January 19, 1995.
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
- ----------------------------------------------------------------
Income $.0500 .0435 .0437
- ----------------------------------------------------------------
</TABLE>
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments for certain transactions such as foreign
currency transactions.
EQUALIZATION ACCOUNTING
A portion of proceeds from sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment income so that income per
share available for distribution is not affected by sales or redemptions of
shares.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The Fund has a management agreement with Kemper Financial Services, Inc. (KFS).
For the period ended May 31, 1994, the Fund paid an effective investment
management fee of .75% of average daily net assets. Effective May 31, 1994, the
Fund pays a fee at an annual rate of .75% of the first $250 million of average
daily net assets declining gradually to .62% of average daily net assets in
excess of $12.5 billion. The Fund incurred a management fee of $864,000 for the
year ended December 31, 1994.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
The Fund has an underwriting and distribution services agreement with KFS. As
principal underwriter for the Fund, KFS retained commissions of $15,000 for the
year ended December 31, 1994 for sales of Class A shares after allowing $111,000
as commissions to firms; of which $37,000 was paid to firms affiliated with KFS.
For services under the distribution services agreement, the Fund pays KFS a fee
of .75% of average daily net assets of the Class B shares and Class C shares.
Pursuant to the agreement, KFS enters into related selling group agreements with
various firms that provide distribution services to investors. KFS compensates
these firms at various rates for sales of Class B and Class C shares. During the
year ended December 31, 1994, the Fund incurred a distribution services fee for
Class B and Class C shares of $146,000, and KFS paid $40,000 for commissions and
distribution fees to firms, including $13,000 to firms affiliated with KFS. In
addition, KFS received $107,000 of contingent deferred sales charges.
ADMINISTRATIVE SERVICES AGREEMENT
The Fund has an administrative services agreement with KFS. For providing
information and administrative services to shareholders, the Fund pays KFS a fee
at the annual rate of up to .25% of average daily net assets.
9
<PAGE> 87
KFS in turn has various arrangements with financial services firms that provide
these services and pays these firms based on assets of Fund accounts the firms
service. For the year ended December 31, 1994, the Fund incurred an
administrative services fee of $199,000, and KFS paid $224,000 to firms,
including $58,000 that was paid to firms affiliated with KFS.
Effective February 1, 1995, KFS transferred all of its duties and
responsibilities as principal underwriter and administrator to Kemper
Distributor's, Inc., a wholly-owned subsidiary of KFS.
CUSTODIAN AND TRANSFER AGENT AGREEMENT
The Fund has a custodian agreement and a transfer agent agreement with Investors
Fiduciary Trust Company (IFTC), which was 50% owned by KFS until January 31,
1995, when KFS completed the sale of IFTC to a third party. Under these
agreements, the Fund incurred custodian and transfer agent fees of $263,000
(excluding related expenses) for the year ended December 31, 1994. Pursuant to a
services agreement with IFTC, Kemper Service Company (KSvC), an affiliate of
KFS, is the shareholder service agent of the Fund. For the year ended December
31, 1994, IFTC remitted shareholder service fees of $261,000 to KSvC.
OFFICERS AND TRUSTEES
Certain officers or trustees of the Fund are also officers or directors of KFS.
During the year ended December 31, 1994, the Fund made no direct payments to its
officers and incurred trustees' fees of $12,000 to independent trustees.
4. INVESTMENT TRANSACTIONS
For the year ended December 31, 1994, investment transactions (excluding money
market instruments) are as follows (in thousands):
<TABLE>
<S> <C>
Purchases $509,577
- -------------------------------------------------------------
Proceeds from sales 421,789
- -------------------------------------------------------------
</TABLE>
5. CAPITAL SHARE TRANSACTIONS
The following tables summarize the activity in capital shares of the Fund (in
thousands):
<TABLE>
<CAPTION>
Year Six month Year
ended period ended ended
December 31, December 31, June 30,
1994 1993 1993
----------------- ----------------- -----------------
Shares Amount Shares Amount Shares Amount
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold:
Class A 3,146 $ 28,131 4,685 $ 43,541 4,064 $ 37,306
- ------------------------------------------------------------------------------
Class B 589 5,090 -- -- -- --
- ------------------------------------------------------------------------------
Class C 12 104 -- -- -- --
- ------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends:
Class A 532 4,663 271 2,513 571 4,887
- ------------------------------------------------------------------------------
Class B 82 709 -- -- -- --
- ------------------------------------------------------------------------------
Shares redeemed:
Class A (5,754) (50,420) (4,500) (41,695) (3,764) (34,180)
- ------------------------------------------------------------------------------
Class B (1,104) (9,675) -- -- -- --
- ------------------------------------------------------------------------------
Class C (9) (81) -- -- -- --
- ------------------------------------------------------------------------------
Conversion of
shares:
Class A 15 132 -- -- -- --
- ------------------------------------------------------------------------------
Class B (15) (132) -- -- -- --
- ------------------------------------------------------------------------------
Shares issued in
acquisition:
Class A 7,058 60,897 -- -- -- --
- ------------------------------------------------------------------------------
Class B 6,472 55,932 -- -- -- --
- ------------------------------------------------------------------------------
Net increase from
capital share
transactions $ 95,350 $ 4,359 $ 8,013
- ------------------------------------------------------------------------------
</TABLE>
6. FORWARD FOREIGN CURRENCY CONTRACTS
In order to protect itself against a decline in the value of particular foreign
currencies against the U.S. Dollar, the Fund has entered into forward contracts
to deliver foreign currency in exchange for U.S. Dollars as described below. The
Fund bears the market risk that arises from changes in foreign exchange rates,
and accordingly, the unrealized gain (loss) on these contracts is reflected in
the accompanying financial statements. The Fund also bears the credit risk if
the counterparty fails to perform under the contract. At December 31, 1994, the
Fund had outstanding forward foreign currency contracts as follows:
<TABLE>
<CAPTION>
Contract Unrealized
Foreign Currency amount in Gain/(Loss)
to be delivered U.S. Dollars Settlement 12/31/94
(in thousands) (in thousands) Date (in thousands)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
46,000 French Franc $8,486 March 1995 $ (138)
- ------------------------------------------------------------------------------
850,000 Japanese Yen 8,687 February 1995 122
- ------------------------------------------------------------------------------
Net unrealized loss (16)
- ------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 88
7. LITIGATION
In August of 1993, three shareholders of KIP-STGP and KSGIF filed an action in
the U.S. District Court for the Northern District of Illinois against KIP-STGP,
KSGIF, KFS, Kemper Financial Companies, Inc., Kemper Investment Management
Company, Limited, Kemper Corporation and the portfolio manager. The suit is a
class action brought on behalf of all persons who purchased shares of KIP-STGP
and KSGIF between October 29, 1990 and December 31, 1992. The complaint alleges
that sales literature and the registration statements of KIP-STGP and KSGIF were
misleading in violation of the Securities Act of 1933, the Securities Exchange
Act of 1934 and common law. The defendants believe the suit is without merit. As
mentioned above, on August 26, 1994, the Fund acquired the assets, and assumed
the liabilities, of KIP-STGP and KSGIF pursuant to an agreement and plan of
reorganization.
11
<PAGE> 89
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Six months Year October 1,
ended ended ended 1989 to
December 31, December 31, June 30, June 30,
------------ ------------ ----------------------------- ----------
CLASS A SHARES 1994 1993 1993 1992 1991 1990
- -------------------------------------------------- ------------ ------------ ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $9.29 9.21 9.44 9.26 9.98 9.00
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .60 .27 .72 .76 .94 .60
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments and foreign currency transactions (.74) .16 (.17) .22 -- .70
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (.14) .43 .55 .98 .94 1.30
- --------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .38 -- .72 .73 1.22 .32
- --------------------------------------------------------------------------------------------------------------------------------
Distribution from net realized gain on
investments -- .05 .06 .07 .44 --
- --------------------------------------------------------------------------------------------------------------------------------
Distribution in excess of net realized gain on
investments -- .06 -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution .22 .24 -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends .60 .35 .78 .80 1.66 .32
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.55 9.29 9.21 9.44 9.26 9.98
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): (1.47) 4.73 6.16 10.77 9.30 14.74
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 1.53 1.29 1.52 1.53 1.60 1.64
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income 6.67 5.75 7.87 8.32 9.17 9.23
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B AND CLASS C SHARES
May 31, 1994 to December 31, 1994 Class B Class C
------- -------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $8.70 $8.70
- -------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .30 .30
- -------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments and foreign currency transactions (.14 ) (.14)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .16 .16
- -------------------------------------------------------------------------------------------------------------------------------
Less dividends:
Distribution from net investment income .19 .19
- -------------------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution .11 .11
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends .30 .30
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.56 $8.56
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%): 1.89 1.91
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (%):
Expenses 2.27 2.23
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 5.89 5.93
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Year Six months Year October 1,
ended ended ended 1989 to
December 31, December 31, June 30, June 30,
------------ ------------ --------------------------- ----------
SUPPLEMENTAL FUND DATA 1994 1993 1993 1992 1991 1990
- ---------------------------------------------------- ------------ ------------ ------ ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net assets at end of period (in thousands) $170,700 83,021 78,068 71,790 58,631 28,391
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 378 484 372 292 346 444
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Ratios have been determined on an annualized basis. Total return is not
annualized and does not reflect the effect of any sales charges.
12
<PAGE> 90
KEMPER GLOBAL INCOME FUND
PART C.
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
(i) Financial Statements included in Part A of the Registration Statement:
Financial Highlights.
(ii) Financial Statements included in Part B of the Registration Statement:
Statement of assets and liabilities--December 31, 1994.
Statement of operations for the year ended December 31, 1994.
Statement of changes in net assets for the year ended December 31, 1994,
the six months ended December 31, 1993 and the year ended June 30, 1993.
Portfolio of investments by currency--December 31, 1994.
Notes to financial statements.
Schedules II, III, IV and V are omitted as the required information is not
present.
Schedule I has been omitted as the required information is presented in the
portfolio of investments by currency at December 31, 1994.
(b) Exhibits
<TABLE>
<S> <C>
99.B1. Amended and Restated Agreement and Declaration of Trust.
99.B2. By-Laws.(1)
99.B3. Inapplicable.
99.B4. (a) Text of Share Certificate.
(b) Written Instrument Establishing and Designating Separate Classes of
Shares.
99.B5. Investment Management Agreement.
99.B6. (a) Underwriting and Distribution Services Agreement.
(b) Assignment and Assumption Agreement.
(c) Form of Selling Group Agreement.
99.B7. Inapplicable.
99.B8. (a) Custody Agreement (Form 1).
(b) Custody Agreement (Form 2).
99.B9. (a) Agency Agreement.
(b) Supplement to Agency Agreement.
(c) Administrative Services Agreement.
(d) Amended Appendix I for Administrative Services Agreement.
(e) Amendment to Administrative Services Agreement.
(f) Assignment and Assumption Agreement.
99.B10. Inapplicable.
99.B11. Consent of Independent Auditors.
99.B12. Inapplicable.
99.B13. Inapplicable.
99.B14. (a) Kemper Retirement Plan Prototype.(3)
(b) Model Individual Retirement Account.(3)
99.B15. See 6(a) above (Class B and Class C shares).
99.B16. Performance Calculations.(2)
99.B24. Powers of Attorney.
27.All Classes Financial Data Schedule.
27.Class A Financial Data Schedule.
27.Class B Financial Data Schedule.
27.Class C Financial Data Schedule.
99.485(b)Letter Representation of Counsel (Rule 485(b)).
</TABLE>
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(1) Incorporated herein by reference to the Registration Statement of Registrant
on Form N-1A filed on or about June 16, 1989.
(2) Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Registration Statement of Registrant on Form N-1A filed on or about February
14, 1990.
(3) Incorporated herein by reference to Post-Effective Amendment No. 4 to the
Registration Statement of Registrant on Form N-1A filed on or about October
28, 1992.
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ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of January 31, 1995 there were 11,581 Class A, 6,205 Class B and 21
Class C holders of record of the sole series of shares of Registrant.
ITEM 27. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto, which is incorporated herein by reference) provides in effect
that the Registrant will indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and 17(i) of the
Investment Company Act of 1940 and its own terms, said Article of the Agreement
and Declaration of Trust does not protect any person against any liability to
the Registrant or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28.(A) BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information pertaining to business and other connections of the
Registrant's investment adviser is hereby incorporated by reference to the
section of the Prospectus captioned "Investment Manager and Underwriter," and to
the section of the Statement of Additional Information captioned "Investment
Manager and Underwriter."
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Kemper Financial Services, Inc., investment adviser of the Registrant, is
investment adviser of the following:
Kemper Mutual Funds:
Kemper Technology Fund
Kemper Total Return Fund
Kemper Growth Fund
Kemper Small Capitalization Equity Fund
Kemper Income and Capital Preservation Fund
Kemper Money Market Fund
Kemper National Tax-Free Income Series
Kemper Diversified Income Fund
Kemper High Yield Fund
Cash Equivalent Fund
Kemper U.S. Government Securities Fund
Kemper International Fund
Kemper Portfolios
Kemper State Tax-Free Income Series
Tax-Exempt California Money Market Fund
Kemper Adjustable Rate U.S. Government Fund
Kemper Blue Chip Fund
Kemper Global Income Fund
Kemper Target Equity Fund
Cash Account Trust
Investors Cash Trust
Tax-Exempt New York Money Market Fund
Kemper Closed-End Funds:
Kemper High Income Trust
Kemper Intermediate Government Trust
Kemper Municipal Income Trust
Kemper Multi-Market Income Trust
Kemper Strategic Municipal Income Trust
The Growth Fund of Spain, Inc.
Kemper Strategic Income Fund
Kemper Financial Services, Inc. also furnishes investment advice to and
manages investment portfolios for other clients including Kemper Investors Fund,
Sterling Funds and Kemper International Bond Fund.
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Item 28(b) Business and Other Connections of Officers
and Directors of Kemper Financial Services Inc.,
the Investment Advisor
BORIS, JAMES R.
Director, Kemper Financial Services, Inc.
Director, INVEST Financial Corporation Holding Company
Director, INVEST Financial Corporation
Executive Vice President, Kemper Corporation
Director, Executive Vice President, Kemper Financial Companies,
Inc.
Director, Kemper Investors Life Insurance Company
Director, Kemper Sales Company
Director, Chairman and CEO, Kemper Securities, Inc.
MATHIS, DAVID B.
Director, Kemper Financial Services, Inc.
Director, Centre Reinsurance (Bermuda) Limited
Director, Centre Reinsurance Company Limited
Chairman of the Board, Centre Reinsurance Holdings Limited
Director, Federal Kemper Insurance Company
Director, Federal Kemper Life Assurance Company
Finance Committee, Fidelity Life Association
Chairman and Chief Executive Officer, Kemper Corporation
Director, Kemper Europe Reassurances, S.A. (KERSA)
Director, Kemper Financial Companies, Inc.
Director, Kemper International Insurance Company (PTE.) Limited
Director, Kemper Investors Life Insurance Company
Director, Kemper Securities Group Holdings, Inc.
Director, Kemper Securities, Inc.
Director, KERSA Holding Company Luxembourg
Director, Mound Agency of West Virginia, Inc.
Director, Mound Agency, Inc.
Director, Seven Continents Insurance Company, LTD.
TIMBERS, STEPHEN B.
Director, Chairman and Chief Executive Officer, Kemper
Financial Services, Inc.
Director, Vice President, Kemper Asset Holdings, Inc.
Director, Federal Kemper Insurance Company
Director, Federal Kemper Life Assurance Company
Director, Vice President, FKLA Loire Court, Inc.
Director, FKLA Realty Corporation
Director, President, Galaxy Offshore, Inc.
Director, Vice President, FLA First Nationwide, Inc.
Director, Vice President, FLA Plate Building, Inc.
Director, FLA Realty Corp.
Trustee and Vice President, Kemper Closed-End Funds
Director, President and Chief Operating Officer, Kemper
Corporation
Director, Kemper Financial Companies, Inc.
Director, President, Kemper International Management, Inc.
Trustee and Vice President, Kemper Investors Fund
Director, Kemper Investors Life Insurance Company
Trustee and Vice President, Kemper Mutual Funds
Director, Vice President, Kemper Portfolio Corp.
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Director, Vice President, Kemper Real Estate, Inc.
Director, Kemper Securities, Inc.
Director, Kemper Securities Holdings, Inc.
Director, Vice President, Kemper/Cymrot Management, Inc.
Director, Vice President, Kemper/Cymrot, Inc.
Director, Vice President, KFC Portfolio Corp.
Director, Vice President, KI Aaron Rents, Inc.
Director, Vice President, KI Arnold Industrial, Inc.
Director, Vice President, KI Canyon Park, Inc.
Director, Vice President, KI Dublin Boulevard, Inc.
Director, Vice President, KI LaFiesta Square, Inc.
Director, Vice President, KI Monterey Research, Inc.
Director, Vice President, KI Olive Street, Inc.
Director, Vice President, KI Thornton Boulevard, Inc.
Director, Vice President, KILICO Realty Corporation
Director, Vice President, KR 77 Fitness Center, Inc.
Director, Vice President, KR Avondale Redmond, Inc.
Director, Vice President, KR Black Mountain, Inc.
Director, Vice President, KR Brannan Resources, Inc.
Director, Vice President, KR Clay Capital, Inc.
Director, Vice President, KR Cranbury, Inc.
Director, Vice President, KR Delta Wetlands, Inc.
Director, Vice President, KR Gainesville, Inc.
Director, Vice President, KR Hotels, Inc.
Director, Vice President, KR Lafayette Apartments, Inc.
Director, Vice President, KR Lafayette BART, Inc.
Director, Vice President, KR Palm Plaza, Inc.
Director, Vice President, KR Red Hill Associates, Inc.
Director, Vice President, KR Seagate/Gateway North, Inc.
Director, Vice President, KR Venture Way, Inc.
Director, Vice President, KR Walnut Creek, Inc.
Trustee, Vice President, Sterling Funds
Director, The LTV Corporation
Director, Gillett Holdings, Inc.
Director, Investment Analysts Society of Chicago
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NEAL, JOHN E.
President and Chief Operating Officer, Kemper Financial Services, Inc.
Director, Ardenwood Financial Corporation
Director, Avondale Redmond Inc.
Director, Bedford Holding Company
Director, Black Mountain, Inc.
Director, Brannan Resources, Inc.
Director, Butterfield Financial Corporation
Director, Camelot Financial Corporation
Director, Clay Capital, Inc.
Director, Concord Aviation, Inc.
Director, Coast Broadcasting Company
Director, Crow Canyon, Inc.
Director, Hawaii Kai Development Company
Director, Kacor Gateway, Inc.
Director, Kailua Associates, Inc.
Director, Kacor Trust Deed Company
Director, Community Investment Corporation
Director, Continental Community Development Corporation
Director, President, FKLA Loire Court, Inc.
Director, President, FKLA Realty Corporation
Director, President, FLA First Nationwide, Inc.
Director, President, FLA Plate Building, Inc.
Director, President, FLA Realty Corporation
Director, Kemper/Lumbermens Properties, Inc.
Director, Senior Vice President, Kemper Real Estate Management Company
Director, KRDC, Inc.
Director, Lafayette Apartments
Director, Lafayette Hills, Inc.
Director, Margarita Village Retirement Community
Director, Mesa Homes
Director, Mesa Homes Brokerage Company
Director, Mount Doloroes Corporation
Director, Montgomery Gallery, Inc.
Director, Monterey Research Park, Inc.
Director, One Business Centre
Director, Pacific Homes, Inc.
Director, Palomar Triad, Inc.
Director, Pine/Battery Properties, Inc.
Director, Rancho and Industrial Property Brokerage, Inc.
Director, Rancho California, Inc.
Director, Rancho Regional Shopping Center, Inc.
Director, Red Hill Associates, Inc.
Director, Seagate Associates, Inc.
Director, Seattle Gateway, Inc.
Director, Sutter Street, Inc.
Director, Technology Way, Inc.
Director, Time DC, Inc.
Director, Tourelle, Inc.
Director, Two Corporate Center
Director, Venture Way, Inc.
Director, President, Kemper Portfolio Corporation
Director, President, KFC Portfolio Corporation
Director, President, KILICO Realty Corporation
Director, President, KI Arnold Industrial, Inc.
Director, President, KI Canyon Park, Inc.
Director, President, KI Dublin Boulevard, Inc.
Director, President, KI La Fiesta Square, Inc.
Director, President, KI Lafayette BART, Inc.
Director, President, KI Monterey Research, Inc.
Director, President, KI Olive Street, Inc.
Director, President, KI Thornton Boulevard, Inc.
Director, President, KI Sutter Street, Inc.
Director, President, KR 77 Fitness Center, Inc.
Director, President, KR Avondale Redmond, Inc.
Director, President, KR Black Mountain, Inc.
Director, President, KR Brannan Resources, Inc.
Director, President, KR Clay Capital, Inc.
Director, President, KR Cranbury, Inc.
Director, President, KR Delta Wetlands, Inc.
Director, President, KR Gainesville, Inc.
Director, President, KR Hotels, Inc.
Director, President, KR Lafayette Apartments, Inc.
Director, President, KR Palm Plaza, Inc.
Director, President, KR Red Hill Associates, Inc.
Director, President, KR Seagate/Gateway North, Inc.
Director, President, KR Venture Way, Inc.
Director, President, KR Walnut Creek, Inc.
Director, K-P Greenway, Inc.
Director, K-P Enterprise Centers, Inc.
Director, K-P Plaza Dallas, Inc.
Director, Kemper/Prime Acquisition Fund, Inc.
Director, KRDC, Inc.
Director, President, SMS Realty Corp.
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PETERS, JOHN E.
Director, Senior Executive Vice President, Kemper Financial
Services, Inc.
Director, President, Kemper Distributors, Inc.
Vice President, Kemper Asset Management Company
Vice President, Kemper Closed-End Funds
Vice President, Kemper Investors Fund
Vice President, Kemper Mutual Funds
Director, Kemper Service Company
Vice President, Sterling Funds
FITZPATRICK, JOHN H.
Chief Financial Officer, Kemper Financial Services, Inc.
Director, Ardenwood Financial Corporation
Director, Camelot Financial Corporation
Director, Crow Canyon, Inc.
Director, Hawaii Kai Development Company
Director, Kacor Gateway, Inc.
Director, Kacor Trust Deed Company
Director, Vice President, FKLA Loire Court, Inc.
Director, Vice President, FLA First Nationwide, Inc.
Director, Vice President, FLA Plate Building, Inc.
Director, Executive Vice President and Chief Financial Officer,
Kemper Corporation
Director, Executive Vice President and Chief Financial Officer,
Kemper Financial Companies, Inc.
Senior Vice President, Kemper Investors Life Insurance Company
Director, Senior Vice President, Kemper Real Estate Management
Company
Director, Vice President, Kemper/Cymrot Management, Inc.
Director, Vice President, Kemper/Cymrot, Inc.
Director, Vice President Kemper/Lumbermens Properties, Inc.
Director, Senior Vice President, Kemper Real Estate Management Company
Director, KRDC, Inc.
Director, Margarita Retirement Community, Inc.
Director, Mesa Homes
Director, Mesa Homes Brokerage Company
Director, Montgomery Gallery, Inc.
Director, One Corporate Centre, Inc.
Director, Pacific Homes, Inc.
Director, Palomar Triad, Inc.
Director, Pine/Battery Properties, Inc.
Director, Rancho and Industrial Property Brokerage, Inc.
Director, Rancho California, Inc.
Director, Rancho Regional Shopping Center, Inc.
Director, Seattle Gateway, Inc.
Director, Sutter Street, Inc.
Director, Time DC, Inc.
Director, Two Corporate Center
Director, Vice President, KFC Portfolio Corp.
Director, Vice President, KI Aaron Rents, Inc.
Director, Vice President, KI Arnold Industrial, Inc.
Director, Vice President, KI Canyon Park, Inc.
Director, Vice President, KI Dublin Boulevard, Inc.
Director, Vice President, KI Lafayette BART, Inc.
Director, Vice President, KI LaFiesta Square, Inc.
Director, Vice President, KI Monterey Research, Inc.
Director, Vice President, KI Olive Street, Inc.
Director, Vice President, KI Thornton Boulevard, Inc.
Director, Vice President, KILICO Realty Corporation
Director, Vice President, KR 77 Fitness Center, Inc.
Director, Vice President, KR Avondale Redmond, Inc.
Director, Vice President, KR Black Mountain, Inc.
Director, Vice President, KR Brannan Resources, Inc.
Director, Vice President, KR Clay Capital, Inc.
Director, Vice President, KR Cranbury, Inc.
Director, Vice President, KR Delta Wetlands, Inc.
Director, Vice President, KR Gainesville, Inc.
Director, Vice President, KR Hotels, Inc.
Director, Vice President, KR Lafayette Apartments, Inc.
Director, Vice President, KR Palm Plaza, Inc.
Director, Vice President, KR Red Hill Associates, Inc.
Director, Vice President, KR Seagate/Gateway North, Inc.
Director, Vice President, KR Venture Way, Inc.
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Director, Vice President, KR Walnut Creek, Inc.
BEIMFORD, JR., JOSEPH P.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Galaxy Offshore, Inc.
Vice President, Investors Cash Trust
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Diversified Income Fund
Vice President, Kemper Global Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper International Bond Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Money Market Fund
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Municipal Bond Fund
Vice President, Kemper Municipal Income Trust
Vice President, Kemper Portfolios
Vice President, Kemper Short-Term Global Income Fund
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Income Fund
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Kemper U.S. Government Securities Fund
Vice President, Sterling Funds
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
CHAPMAN II, WILLIAM E.
Executive Vice President, Kemper Financial Services, Inc.
COTNER, C. BETH
Executive Vice President, Kemper Financial Services, Inc.
Trustee, Kemper Financial Services, Inc., Profit Sharing Plan
Vice President, Kemper Growth Fund
Vice President, Kemper Investors Fund
COXON, JAMES H.
Executive Vice President, Kemper Financial Services, Inc.
Director, Vice President, Galaxy Offshore, Inc.
Executive Vice President, Kemper Asset Management Company
Vice President, Kemper Investors Fund
Vice President, Kemper Target Equity Fund
Vice President, Sterling Funds
FERRO, DENNIS H.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Kemper International Fund
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Director, Kemper Investment Management Company Limited
Vice President, Kemper Investors Fund
Vice President, Kemper Target Equity Fund
Vice President, The Growth Fund of Spain, Inc.
JOHNS, GORDON K.
Executive Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Global Income Fund
Vice President, Kemper International Bond Fund
Vice President, Kemper International Management, Inc.
Managing Director and Joint Secretary, Kemper Investment
Management Company Limited
Vice President, Kemper Portfolios
Director, Thames Heritage Parade Limited
LANGBAUM, GARY A.
Executive Vice President, Kemper Financial Services, Inc.
COLLECCHIA, FRANK E.
Senior Vice President, Kemper Financial Services, Inc.
Senior Investment Officer, Federal Kemper Life Assurance
Company
Senior Investment Officer, Fidelity Life Association
Vice President, FKLA Loire Court, Inc.
Vice President, FLA First Nationwide, Inc.
Vice President, FLA Plate Building, Inc.
Vice President, Galaxy Offshore, Inc.
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Investors Fund
Senior Investment Officer, Kemper Investors Life Insurance
Company
Vice President, Kemper Multi-Market Income Trust
Vice President, KI Aaron Rents, Inc.
Vice President, KI Arnold Industrial, Inc.
Vice President, KI Canyon Park, Inc.
Vice President, KI Dublin Boulevard, Inc.
Vice President, KI Lafayette BART, Inc.
Vice President, KI LaFiesta Square, Inc.
Vice President, KI Monterey Research, Inc.
Vice President, KI Olive Street, Inc.
Vice President, KI Thornton Boulevard, Inc.
Vice President, KR 300 North LaSalle Street, Inc.
Vice President, KR 77 Fitness Center, Inc.
Vice President, KR Avondale Redmond, Inc.
Vice President, KR Black Mountain, Inc.
Vice President, KR Brannan Resources, Inc.
Vice President, KR Clay Capital, Inc.
Vice President, KR Cranbury, Inc.
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Vice President, KR Delta Wetlands, Inc.
Vice President, KR Gainesville, Inc.
Vice President, KR Gulf Coast Factory Shops, Inc.
Vice President, KR Halawa Associates, Inc.
Vice President, KR Hotels, Inc.
Vice President, KR Huntley I, Inc.
Vice President, KR Huntley II, Inc.
Vice President, KR Lafayette Apartments, Inc.
Vice President, KR Palm Plaza, Inc.
Vice President, KR Red Hill Associates, Inc.
Vice President, KR Seagate/Gateway North, Inc.
Vice President, KR Venture Way, Inc.
Vice President, KR Walnut Creek, Inc.
DUDASIK, PATRICK H.
Senior Vice President, Kemper Financial Services, Inc.
Director, Treasurer and Chief Financial Officer, Kemper Advisors, Inc.
Vice President and Treasurer, Kemper Asset Management Company
Treasurer and Chief Financial Officer, Kemper Distributors, Inc.
Treasurer and Chief Financial Officer, Kemper Sales Company
Treasurer and Chief Financial Officer, Kemper Service Company
Treasurer and Chief Financial Officer, Supervised Service
Company, Inc.
DUFFY, JEROME L.
Senior Vice President, Kemper Financial Services, Inc.
Treasurer, Kemper Closed-End Funds
Treasurer, Kemper Investors Fund
Treasurer, Kemper Mutual Funds
Treasurer, Kemper Target Equity Fund
Treasurer, Sterling Funds
GLASSMAN, HARVEY
Senior Vice President, Kemper Financial Services, Inc.
GOERS, RICHARD A.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Technology Fund
GUENTHER, HAROLD E.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Galaxy Offshore, Inc.
INNES, BRUCE D.
Vice President, Kemper Financial Services, Inc.
Co-President, International Association of Corporate and
Professional Recruiters
KLEIN, GEORGE
Senior Vice President, Kemper Financial Services, Inc.
Director, Senior Vice President, Kemper Asset Management
Company
KORTH, FRANK D.
Senior Vice President, Kemper Financial Services, Inc.
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Vice President, Kemper Target Equity Fund
Vice President, Kemper Technology Fund
McNAMARA, MICHAEL A.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Portfolios
NATHANSON, IRA
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Corporation
NEEL, JAMES R.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Blue Chip Fund
Vice President, Sterling Funds
RACHWALSKI, JR. FRANK J.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
Vice President, Investors Cash Trust
Vice President, Kemper Investors Fund
Vice President, Kemper Money Market Fund
Vice President, Kemper Portfolios
Vice President, Sterling Funds
Vice President, Tax-Exempt California Money Market Fund
Vice President, Tax-Exempt New York Money Market Fund
SCHUMACHER, ROBERT H.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Adjustable Rate U.S. Government Fund
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Investors Fund
Vice President, Kemper Portfolios
Vice President, Kemper Strategic Income Fund
Vice President, Kemper U.S. Government Securities Fund
Vice President, Sterling Funds
URBASZEWSKI, KENNETH T.
Senior Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Intermediate Government Trust
Vice President, Kemper Multi-Market Income Trust
Vice President, Kemper Strategic Income Fund
DIERENFELDT, DAVID F.
Senior Vice President, Associate General Counsel,
Assistant Secretary and Compliance Officer, Kemper Financial
Services, Inc.
Director, Chief Legal Officer and Chief Compliance Officer, Kemper Advisors,
Inc.
Vice President and Secretary, Kemper Distributors, Inc.
Assistant Secretary, Galaxy Offshore, Inc.
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Director, Secretary, INVEST Financial Corporation
Secretary, INVEST Financial Corporation Holding Company
Assistant Secretary, Investors Brokerage Services
Insurance Agency, Inc.
Assistant Secretary, Investors Brokerage Services, Inc.
Assistant Secretary, Kemper Asset Management Company
Assistant Secretary, Kemper International Management, Inc.
Assistant Secretary, Kemper Investment Management Company
Limited
Vice President and Assistant Secretary, Kemper Investors Fund
Assistant Secretary, Kemper Sales Company
Assistant Secretary, Kemper Service Company
Assistant Secretary, Supervised Service Company, Inc.
COLLORA, PHILIP J.
Senior Vice President and Assistant Secretary, Kemper Financial
Services, Inc.
Vice President and Assistant Secretary, Kemper Closed-End Funds
Assistant Secretary, Kemper International Management, Inc.
Vice President and Assistant Secretary, Kemper Investors Fund
Vice President and Assistant Secretary, Kemper Mutual Funds
Vice President and Assistant Secretary, Sterling Funds
BUKOWSKI, DANIEL J.
First Vice President, Kemper Financial Services, Inc.
BUTLER, DAVID H.
First Vice President, Kemper Financial Services, Inc.
CESSINE, ROBERT S.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Income and Capital Preservation Fund
CHIEN, CHRISTINE
First Vice President, Kemper Financial Services, Inc.
FISHER, REMY M.
First Vice President, Kemper Financial Services, Inc.
HALE, DAVID D.
First Vice President, Kemper Financial Services, Inc.
HARRINGTON, MICHAEL E.
First Vice President, Kemper Financial Services, Inc.
JACOBS, PETER M.
First Vice President, Kemper Financial Services, Inc.
LAUER, BRUCE H.
First Vice President, Kemper Financial Services, Inc.
McCRINDLE-PETRARCA, SUSAN
First Vice President, Kemper Financial Services, Inc.
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MIER, CHRISTOPHER J.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Municipal Bond Fund
Vice President, Kemper Municipal Income Trust
Vice President, Kemper State Tax-Free Income Series
Vice President, Kemper Strategic Municipal Income Trust
Vice President, Sterling Funds
PANOZZO, ROBERTA L.
First Vice President, Kemper Financial Services, Inc.
RESIS, JR., HARRY E.
First Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Diversified Income Fund
Vice President, Kemper High Income Trust
Vice President, Kemper High Yield Fund
Vice President, Kemper Income and Capital Preservation Fund
Vice President, Kemper Investors Fund
Vice President, Kemper Portfolios
SILVIA, JOHN E.
First Vice President, Kemper Financial Services, Inc.
VINCENT, CHRISTOPHER T.
First Vice President, Kemper Financial Services, Inc.
First Vice President, Kemper Asset Management Company
BURROW, DALE R.
Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Strategic Municipal Income Trust
COHEN, JERRI I.
Vice President, Kemper Financial Services, Inc.
DeMAIO, CHRIS C.
Vice President, Kemper Financial Services, Inc.
Vice President and Chief Accounting Officer, Kemper Service
Company
Vice President and Chief Accounting Officer, Supervised Service
Company, Inc.
DEXTER, STEPHEN P.
Vice President, Kemper Financial Services, Inc.
DOYLE, DANIEL J.
Vice President, Kemper Financial Services, Inc.
FENGER, JAMES
Vice President, Kemper Financial Services, Inc.
GERACI, AUGUST L.
Vice President, Kemper Financial Services, Inc.
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HORTON, ROBERT J.
Vice President, Kemper Financial Services, Inc.
KIEL, CAROL L.
Vice President, Kemper Financial Services, Inc.
KNAPP, WILLIAM M.
Vice President, Kemper Financial Services, Inc.
KOCH, DEBORAH L.
Vice President, Kemper Financial Services, Inc.
KRANZ, KATHY J.
Vice President, Kemper Financial Services, Inc.
KRUEGER, PAMELA D.
Vice President, Kemper Financial Services, Inc.
LeFEBVRE, THOMAS J.
Vice President, Kemper Financial Services, Inc.
CARNEY, ANN T.
Vice President, Kemper Financial Services, Inc.
McGOVERN, KAREN B.
Vice President, Kemper Financial Services, Inc.
MINER, EDWARD
Vice President, Kemper Financial Services, Inc.
MITCHELL, KATHERINE H.
Vice President, Kemper Financial Services, Inc.
PAYNE, ROBERT D.
Vice President, Kemper Financial Services, Inc.
PHILLIS, DAVID A.
Vice President, Kemper Financial Services, Inc.
PONTECORE, SUSAN E.
Vice President, Kemper Financial Services, Inc.
RADIS, STEVE A.
Vice President, Kemper Financial Services, Inc.
STUEBE, JOHN W.
Vice President, Kemper Financial Services, Inc.
Vice President, Cash Account Trust
Vice President, Cash Equivalent Fund
THOUIN-LEERKAMP, EDITH A.
Vice President, Kemper Financial Services, Inc.
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TRUTTER, JONATHAN W.
Vice President, Kemper Financial Services, Inc.
WERTH, ELIZABETH W.
Vice President, Kemper Financial Services, Inc.
Assistant Secretary, Kemper Mutual Funds
Assistant Secretary, Sterling Funds
WILLSON, STEPHEN R.
Vice President, Kemper Financial Services, Inc.
Vice President, Kemper Strategic Municipal Income Trust
WITTNEBEL, MARK E.
Vice President, Kemper Financial Services, Inc.
KOVACS, WILLIAM P.
Vice President and Assistant Secretary, Kemper Financial
Services, Inc.
Director, Secretary, Kemper Advisors, Inc.
RATEKIN, DIANE E.
Assistant General Counsel and Assistant Secretary, Kemper
Financial Services, Inc.
Assistant Secretary, Kemper Distributors, Inc.
C-15
<PAGE> 105
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Kemper Distributors, Inc. acts as principal underwriter and distributor
of the Registrant's shares, the Kemper Mutual Funds, Kemper Investors Fund, the
Sterling Funds and Kemper International Bond Fund.
(b) Information on the officers and directors of Kemper Distributors, Inc.
is set forth below. The principal business address is 120 South LaSalle Street,
Chicago, Illinois 60603.
<TABLE>
<CAPTION>
POSITIONS AND
OFFICES WITH
NAME POSITIONS AND OFFICES WITH UNDERWRITER REGISTRANT
- --------------------- ------------------------------------------------------------ ----------------
<S> <C> <C>
John E. Peters Principal, Director and President Vice President
James L. Greenawalt Director, Executive Vice President None
Patrick H. Dudasik Financial Principal, Treasurer and Chief Financial Officer None
Linda A. Bercher Senior Vice President None
Daniel T. O'Lear Senior Vice President None
David F. Dierenfeldt Vice President, Secretary None
Thomas V. Bruns Vice President None
Carlene D. Merold Vice President None
Diane E. Ratekin Assistant Secretary None
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All such accounts, books and other documents are maintained at the offices
of the Registrant, at the offices of Registrant's investment manager, Kemper
Financial Services, Inc. and Kemper Distributors, Inc., the Registrant's
principal underwriter, 120 South LaSalle Street, Chicago, Illinois 60603 or at
the offices of the custodian and transfer agent, Investors Fiduciary Trust
Company, 127 West 10th Street, Kansas City, Missouri 64141, at the offices of
the custodian, The Chase Manhattan Bank, Chase MetroTech Center, Brooklyn, New
York 11245 or at the offices of the shareholder services agent, Kemper Service
Company, 811 Main Street, Kansas City, Missouri 64105.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-16
<PAGE> 106
S I G N A T U R E S
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant 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 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 24th day of
February, 1995.
KEMPER GLOBAL INCOME FUND
By /s/ Stephen B. Timbers
--------------------------------------
Stephen B. Timbers, Vice President
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below on
February 24, 1995 on behalf of the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/Stephen B. Timbers Vice President (Principal
- ----------------------------------- Executive Officer)
Stephen B. Timbers and Trustee
/s/David W. Belin* Trustee
- -----------------------------------
/s/Lewis A. Burnham* Trustee
- -----------------------------------
/s/Donald L. Dunaway* Trustee
- -----------------------------------
/s/Robert B. Hoffman* Trustee
- -----------------------------------
/s/Donald R. Jones* Trustee
- -----------------------------------
/s/William P. Sommers* Trustee
- -----------------------------------
/s/Jerome L. Duffy Treasurer (Principal
- ----------------------------------- Financial and
Jerome L. Duffy Accounting Officer)
</TABLE>
*Philip J. Collora signs this document pursuant to powers of
attorney filed herewith.
/s/ Philip J. Collora
----------------------------------
Philip J. Collora
<PAGE> 107
KEMPER GLOBAL INCOME FUND
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
PAGE
REFERENCE
-----------
<S> <C> <C>
Exhibits
99.B1. Amended and Restated Agreement and Declaration of Trust.
99.B2. By-Laws.(1)
99.B3. Inapplicable.
99.B4. (a) Text of Share Certificate.
(b) Written Instrument Establishing and Designating Separate Classes
of Shares.
99.B5. Investment Management Agreement.
99.B6. (a) Underwriting and Distribution Services Agreement.
(b) Assignment and Assumption Agreement.
(c) Form of Selling Group Agreement.
99.B7. Inapplicable.
99.B8. (a) Custody Agreement (Form 1).
(b) Custody Agreement (Form 2).
99.B9. (a) Agency Agreement.
(b) Supplement to Agency Agreement.
(c) Administrative Services Agreement.
(d) Amended Appendix I for Administrative Services Agreement.
(e) Amendment to Administrative Services Agreement.
(f) Assignment and Assumption Agreement.
99.B10. Inapplicable.
99.B11. Report and Consent of Independent Auditors.
99.B12. Inapplicable.
99.B13. Inapplicable.
99.B14. (a) Kemper Retirement Plan Prototype.(3)
(b) Model Individual Retirement Account.(3)
99.B15. See 6(a) above (Class B and Class C shares).
99.B16. Performance Calculations.(2)
99.B24. Powers of Attorney.
27.All Classes Financial Data Schedule.
27.Class A Financial Data Schedule.
27.Class B Financial Data Schedule.
27.Class C Financial Data Schedule.
99.485(b)Letter Representation of Counsel (Rule 485 (b)).
</TABLE>
- ---------------
(1) Incorporated herein by reference to the Registration Statement of Registrant
on Form N-1A filed on or about June 16, 1989.
(2) Incorporated herein by reference to Post-Effective Amendment No. 1 to the
Registration Statement of Registrant on Form N-1A filed on or about February
14, 1990.
(3) Incorporated herein by reference to Post-Effective Amendment No. 4 to the
Registration Statement of Registrant on Form N-1A filed on or about October
28, 1992.
<PAGE> 1
EXHIBIT 99.B1
KEMPER GLOBAL INCOME FUND
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Article IX, Section 4 of the Amended and Restated Agreement and
Declaration of Trust of Kemper Global Income Fund dated May 24, 1989, provides
that the Agreement and Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
so to do by vote of Shareholders holding a majority of the Shares entitled to
vote; and
WHEREAS, the holders of a majority of the Shares entitled to vote have
authorized this Amendment and Restatement of said Agreement and Declaration of
Trust;
NOW, THEREFORE, said Agreement and Declaration of Trust is amended and
restated to read in its entirety as follows:
WITNESSETH
WHEREAS, this Trust has been formed for the purposes of carrying on the
business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees have acquired
and may hereafter acquire assets and properties, to hold and manage as trustees
of a Massachusetts voluntary association with transferable shares in accordance
with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets and properties which they may from time to
time acquire in any manner as Trustees hereunder IN TRUST to manage and dispose
of the same upon the following terms and conditions for the pro rata benefit of
the holders from time to time of shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
NAME AND REGISTERED AGENT
SECTION 1. This Trust shall be known as Kemper Global Income Fund and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine. The registered agent for
the Trust in
<PAGE> 2
Massachusetts shall be CT Corporation System whose address is 2 Oliver
Street, Boston, Massachusetts or such other person as the Trustees may from
time to time designate.
DEFINITIONS
SECTION 2. Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) The "Trust" refers to the Massachusetts voluntary association
established by this Agreement and Declaration of Trust, as amended from time
to time, pursuant to Massachusetts General Laws, Chapter 182;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV and then in office;
(c) "Shares" mean the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided from
time to time or, if more than one series or class of shares is authorized
under or pursuant to Article III, the equal proportionate transferable units
of interest into which each such series or class shall be divided from time to
time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 (and
any successor statute) and the Rules and Regulations thereunder, all as amended
from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Principal Underwriter" and "vote of a majority of the
outstanding voting securities" shall have the meanings given them in the 1940
Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time;
(i) "Net asset value" shall have the meaning set forth in Section 6 of
Article VI hereof;
(j) The terms "series" or "series of Shares" refers to the one or more
separate investment portfolios of the Trust authorized under or pursuant to
Article III into which the assets and liabilities of the Trust may be divided
and the Shares of the Trust representing the beneficial interest of
Shareholders in such respective portfolios; and
<PAGE> 3
(k) The terms "class" or "class of Shares" refers to the division of
Shares representing any series into two or more classes authorized under or
pursuant to Article III.
ARTICLE II
NATURE AND PURPOSE
The Trust is a voluntary association (commonly known as a business trust) of
the type referred to in Chapter 182 of the General Laws of the Commonwealth of
Massachusetts. The Trust is not intended to be, shall not be deemed to be, and
shall not be treated as, a general or a limited partnership, joint venture,
corporation or joint stock company, nor shall the Trustees or Shareholders or
any of them for any purpose be deemed to be, or be treated in any way
whatsoever as though they were, liable or responsible hereunder as partners or
joint venturers. The purpose of the Trust is to engage in, operate and carry
on the business of an open-end management investment company and to do any and
all acts or things as are necessary, convenient, appropriate, incidental or
customary in connection therewith.
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
SECTION 1. The Shares of the Trust shall be issued in one or more series as
the Trustees may, without Shareholder approval, authorize from time to time.
Each series shall be preferred over all other series in respect of the assets
allocated to that series as hereinafter provided. The beneficial interest in
each series shall at all times be divided into Shares (without par value) of
such series, each of which shall, except as provided in the following sentence,
represent an equal proportionate interest in such series with each other Share
of the same series, none having priority or preference over another Share of
the same series. The Trustees may, without Shareholder approval, divide the
Shares of any series into two or more classes, Shares of each such class having
such preferences and special or relative rights or privileges (including
conversion rights, if any) as the Trustees may determine. The number of Shares
authorized shall be unlimited, and the Shares so authorized may be represented
in part by fractional Shares. The Trustees may from time to time divide
<PAGE> 4
or combine the shares of any series or class into a greater or lesser number
without thereby changing the proportionate beneficial interests in the series
or class. Without limiting the authority of the Trustees set forth in this
Section 1 to establish and designate any further series or class, the Trustees
hereby establish and designate one series of Shares to be known as the "Initial
Portfolio." The establishment and designation of any series or class of Shares
in addition to the foregoing shall be effective upon the execution by a
majority of the then Trustees of an instrument setting forth such establishment
and designation and the relative rights and preferences of such series or
class. As provided in Article IX, Section 1 hereof, any series or class of
Shares (whether or not there shall then be Shares outstanding of said series or
class) may be terminated by the Trustees by written notice to the Shareholders
of such series or class or by the vote of the Shareholders of such series or
class entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter. In the event of any such termination, a majority of the
then Trustees shall execute an instrument setting forth the termination of such
series or class.
OWNERSHIP OF SHARES
SECTION 2. The ownership and transfer of Shares shall be recorded on the
books of the Trust or its transfer or similar agent. No certificates
certifying the ownership of Shares shall be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as
they consider appropriate for the issuance of Share certificates, the transfer
of Shares and similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent of the Trust, as the case may be, shall
be conclusive as to who are the Shareholders of each series or class and as to
the number of Shares of each series or class held from time to time by each
Shareholder.
INVESTMENT IN THE TRUST; ASSETS OF A SERIES
SECTION 3. The Trustees may issue Shares of the Trust to such persons and
on such terms and, subject to any requirements of law, for such consideration,
which may consist of cash or tangible or intangible property or a combination
thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of a
particular series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall, irrevocably belong to such
series of Shares for all purposes, subject only to the
<PAGE> 5
rights of creditors, and shall be so handled upon the books of account of the
Trust and are herein referred to as "assets of" such series. Any allocation of
the assets of a series among any classes of Shares of such series shall be made
in a manner consistent with the preferences and special or relative rights or
privileges of such classes.
RIGHT TO REFUSE ORDERS
SECTION 4. The Trust by action of its Trustees shall have the right to
refuse to accept any subscription for its Shares at any time without any cause
or reason therefore whatsoever. Without limiting the foregoing, the Trust shall
have the right not to accept subscriptions under circumstances or in amounts as
the Trustees in their sole discretion consider to be disadvantageous to
existing Shareholders and the Trust may from time to time set minimum and/or
maximum amounts which may be invested in Shares by a subscriber.
ORDER IN PROPER FORM
SECTION 5. The criteria for determining what constitutes an order in proper
form and the time of receipt of such an order by the Trust shall be prescribed
by resolution of the Trustees.
WHEN SHARES BECOME OUTSTANDING
SECTION 6. Shares subscribed for and for which an order in proper form has
been received shall be deemed to be outstanding as of the time of acceptance of
the order therefor and the determination of the net price thereof, which price
shall be then deemed to be an asset of the Trust.
MERGER OR CONSOLIDATION
SECTION 7. In connection with the acquisition of all or substantially all
the assets or stock of another investment company, investment trust, or of a
company classified as a personal holding company under Federal Income Tax laws,
the Trustees may issue or cause to be issued Shares of a series or class and
accept in payment therefor, in lieu of cash, such assets at their market value,
or such stock at the market value of the assets held by such investment company
or investment trust, either with or without adjustment for contingent costs or
liabilities.
NO PREEMPTIVE RIGHTS, ETC.
SECTION 8. Shareholders shall have no preemptive or other
<PAGE> 6
right to receive, purchase or subscribe for any additional Shares or other
securities issued by the Trust. The Shareholders shall have no appraisal
rights with respect to their Shares and, except as otherwise determined by the
Trustees in their sole discretion, shall have no exchange or conversion rights
with respect to their Shares.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
SECTION 9. Shares shall be deemed to be personal property giving only the
rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to the
terms of the Declaration of Trust and to have become a party thereto. The
death of a Shareholder during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any deceased Shareholder
to an accounting or to take any action in court or elsewhere against the Trust
or the Trustees, but only to the rights of said decedent under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically provided herein to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay.
SHAREHOLDER INSPECTION RIGHTS
SECTION 10. Any Shareholder or his agent may inspect and copy during normal
business hours any of the following documents of the Trust: By-Laws, minutes
of the proceedings of the Shareholders and annual financial statements of the
Trust, including a balance sheet and financial statements of operations. The
foregoing rights of inspection of Shareholders of the Trust are the exclusive
and sole rights of the Shareholders with respect thereto and no Shareholder of
the Trust shall have, as a Shareholder, the right to inspect or copy any of the
books, records or other documents of the Trust except as specifically provided
in this Section 10 of this Article III or except as otherwise determined by the
Trustees.
<PAGE> 7
ARTICLE IV
THE TRUSTEES
NUMBER, DESIGNATION, ELECTION, TERM, ETC.
SECTION 1.
(a) INITIAL TRUSTEE. Robert J. Engling, the initial Trustee, appointed
other Trustees pursuant to subsection (c) of this Section 1 and then resigned.
(b) NUMBER. The Trustees serving as such, whether named above or hereafter
becoming Trustees, may increase or decrease the number of Trustees to a number
other than the number theretofore determined which number shall not be less
than three nor more than fifteen except during the period that the initial
Trustee named above is sole Trustee. No decrease in the number of Trustees
shall have the effect of removing any Trustee from office prior to the
expiration of his term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to subsection (e) of this
Section 1.
(c) TERM AND ELECTION. Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee until the next meeting of
Shareholders, if any, called for the purpose of considering the election or
re-election of such Trustee or of a successor to such Trustee, and until the
election and qualification of his successor, if any, elected at such meeting,
or until such Trustee sooner dies, resigns, retires or is removed. Upon the
election and qualification of a new Trustee, the Trust estate shall vest in the
new Trustee (together with the continuing or other new Trustees) without any
further act or conveyance. Prior to any sale of Shares pursuant to any public
offering, the initial Trustee named above shall have the right to appoint other
persons as Trustees each to serve as Trustees as aforesaid until the first
meeting of Shareholders called for the purpose of the election or re-election
of such Trustee or of a successor to such Trustee.
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to the Chairman of the Board, if any, the President or the
Secretary of the Trust, and such resignation or retirement shall take effect
upon such delivery or upon such later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed for cause at any time by written
instrument, signed by at least a majority of the number of Trustees prior to
such removal, specifying the
<PAGE> 8
date upon which such removal shall become effective. Any Trustee may be
removed with or without cause (i) by the vote of the Shareholders entitled to
vote more than fifty percent (50%) of the votes entitled to be cast on the
matter voting together without regard to series or class at any meeting called
for such purpose, or (ii) by a written consent filed with the custodian of the
Trust's portfolio securities and executed by the Shareholders entitled to vote
more than fifty percent (50%) of the votes entitled to be cast on the matter
voting together without regard to series or class.
Whenever ten or more Shareholders of record who have been such for at least
six months preceding the date of application, and who hold in the aggregate
Shares constituting at least one percent of the outstanding Shares of the
Trust, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a meeting to consider removal of a Trustee and accompanied by a
form of communication and request that they wish to transmit, the Trustees
shall within five business days after receipt of such application inform such
applicants as to the approximate cost of mailing to the Shareholders of record
the proposed communication and form of request. Upon the written request of
such applicants, accompanied by a tender of the material to be mailed and of the
reasonable expenses of mailing, the Trustees shall, within reasonable
promptness, mail such material to all Shareholders of record at their addresses
as recorded on the books of the Trust. Notwithstanding the foregoing, the
Trustees may refuse to mail such material on the basis and in accordance with
the procedures set forth in the last two paragraphs of Section 16(c) of the
1940 Act.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees by the other Trustees may (but so long as there are at
least three remaining Trustees, need not unless required by the 1940 Act) be
filled either by a majority of the remaining Trustees, even if less than a
quorum, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine or, whenever deemed
appropriate by the remaining Trustees, by the election by the Shareholders, at
a meeting called for such purpose, of a person to fill such vacancy. Upon the
appointment or election and qualification of a new Trustee as aforesaid, the
Trust estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance, except that any such
appointment or election in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to be effective at
a later date shall become effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees.
<PAGE> 9
(g) MANDATORY ELECTION BY SHAREHOLDERS. Notwithstanding the foregoing
provisions of this Section 1, the Trustees shall call a meeting of the
Shareholders for the election of one or more Trustees at such time or times as
may be required in order that the provisions of the 1940 Act may be complied
with, and the authority hereinabove provided for the Trustees to appoint any
successor Trustee or Trustees shall be restricted if such appointment would
result in failure of the Trust to comply with any provision of the 1940 Act.
(h) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall not operate to
annul or terminate the Trust or to revoke or terminate any existing agency or
contract created or entered into pursuant to the terms of this Declaration of
Trust.
(i) NO ACCOUNTING. Except under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a result of his death,
resignation, retirement, removal or incapacity (nor the estate of any such
person) shall be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
POWERS
SECTION 2. The Trustees, subject only to the specific limitations contained
in this Declaration of Trust or otherwise imposed by the 1940 Act or other
applicable law, shall have, without further or other authorization and free
from any power or control of the Shareholders, full, absolute and exclusive
power, control and authority over the Trust assets and the business and affairs
of the Trust to the same extent as if the Trustees were the sole and absolute
owners thereof in their own right and to do all such acts and things as in
their sole judgment and discretion are necessary and incidental to, or
desirable for the carrying out of any of the purposes of the Trust or
conducting the business of the Trust. Any determination made in good faith by
the Trustees of the purposes of the Trust or the existence of any power or
authority hereunder shall be conclusive. In construing the provisions of this
Declaration of Trust, there shall be a presumption in favor of the grant of
power and authority to the Trustees. Without limiting the foregoing, the
Trustees may adopt By-Laws not inconsistent with this Declaration of Trust
containing provisions relating to the business of the Trust, the conduct of
its affairs, its rights or powers and the rights or powers of its Shareholders,
Trustees, officers, employees and other agents and may amend and repeal them to
the extent that such By- Laws do not reserve that right to the Shareholders;
fill vacancies in their number, including vacancies resulting from increases in
their number, unless a vote of the Trust't Shareholders is required to
fill such vacancies pursuant to the
<PAGE> 10
1940 Act; elect and remove such officers and appoint and terminate such agents
as they consider appropriate; appoint from their own number, and terminate, any
one or more committees consisting of two or more Trustees, including an
executive committee which may, when the Trustees are not in session, exercise
some or all of the powers and authority of the Trustees as the Trustees may
determine; appoint an advisory board, the members of which shall not be
Trustees and need not be Shareholders; employ one or more investment advisers
or managers as provided in Section 6 of this Article IV; employ one or more
custodians of the assets of the Trust and authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a system or
systems for the central handling of securities; retain a transfer agent or a
Shareholder services agent, or both; provide for the distribution of Shares by
the Trust, through one or more principal underwriters or otherwise; set record
dates for the determination of Shareholders with respect to various matters;
and in general delegate such authority as they consider desirable to any
officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian or underwriter.
In furtherance of and not in limitation of the foregoing, the Trustees shall
have power and authority:
(a) To invest and reinvest in, to buy or otherwise acquire, to hold, for
investment or otherwise, to sell or otherwise dispose of, to lend or to pledge,
to trade in or deal in securities or interests of all kinds, however evidenced,
or obligations of all kinds, however evidenced, or rights, warrants, or
contracts to acquire such securities, interests, or obligations, of any private
or public company, corporation, association, general or limited partnership,
trust or other enterprise or organization, foreign or domestic, or issued or
guaranteed by any national or state government, foreign or domestic, or their
agencies, instrumentalities or subdivisions (including but not limited to,
bonds, debentures, bills, time notes and all other evidences of indebtedness);
negotiable or non-negotiable instruments; any and all futures contracts;
government securities and money market instruments (including but not limited
to, bank certificates of deposit, finance paper, commercial paper, bankers
acceptances, and all kinds of repurchase agreements);
(b) To invest and reinvest in, to buy or otherwise acquire, to hold, for
investment or otherwise, to sell or otherwise dispose of foreign currencies,
and funds and exchanges, and make deposits in banks, savings banks, trust
companies, and savings and loan associations, foreign or domestic;
(c) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop, and dispose of (by sale or
<PAGE> 11
otherwise) any property, real or personal, and any interest therein;
(d) To sell, exchange, lend, pledge, mortgage, hypothecate, write options
on and lease any or all of the assets of the Trust;
(e) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(f) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(g) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name of the
Trustees or of the Trust or in the name of a custodian, subcustodian or other
depositary or a nominee or nominees or otherwise;
(h) Subject to the provisions of Article III, to allocate assets,
liabilities, income and expenses of the Trust to a particular series of Shares
or to apportion the same among two or more series, provided that any
liabilities or expenses incurred by a particular series shall be payable solely
out of the assets of that series; and to the extent necessary or appropriate to
give effect to the preferences and special or relative rights or privileges of
any classes of Shares, to allocate assets, liabilities, income and expenses of a
series to a particular class of Shares of that series or to apportion the same
among two or more classes of Shares of that series;
(i) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or property
of which is or was held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer, and to
pay calls or subscriptions with respect to any security held in the Trust;
(j) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall
deem proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall
deem proper;
<PAGE> 12
(k) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(l) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or other obligations
of any person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust property or
any part thereof to secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property such insurance
as they may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of the
Trust and payment of distribution and principal on its portfolio investments,
and insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers or managers, principal underwriters, or
independent contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such person as Shareholder, Trustee, officer, employee,
agent, investment adviser or manager, principal underwriter, or independent
contractor, including any action taken or omitted that may be determined to
constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability; and
(p) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life
insurance and annuity contracts as a means of providing such retirement and
other benefits, for any or all of the Trustees, officers, employees and agents
of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees of common law trusts.
Except as otherwise provided herein or from time to time in the By-Laws, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (if a quorum by present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can communicate with each other simultaneously and participation by
such means shall constitute presence in person at a meeting, or by written
consents of a majority of the
<PAGE> 13
Trustees then in office.
PAYMENT OF EXPENSES, ALLOCATION OF LIABILITIES
SECTION 3. The Trustees are authorized to pay or to cause to be paid out of
the principal or income of the Trust, or partly out of principal and partly out
of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, principal underwriter,
auditor, counsel, custodian, transfer agent, shareholder servicing agent, and
such other agents or independent contractors and such other expenses and
charges as the Trustees may deem necessary or proper to incur.
The assets of a particular series of Shares shall be charged with the
liabilities (including, in the discretion of the Trustees or their delegate,
accrued expenses and reserves) incurred in respect of such series (but not with
liabilities incurred in respect of any other series) and such series shall also
be charged with its share of any other liabilities. Any allocation of the
liabilities of a series among classes of Shares of that series shall be done in
a manner consistent with the preferences and special or relative rights or
privileges of such classes. The determination of the Trustees shall be final
and conclusive as to the amount of liabilities to be charged to one or more
particular series or class. The Trustees may delegate from time to time the
power to make such allocation to one or more Trustees or to an agent of the
Trust appointed for such purpose. The liabilities with which a series is so
charged are herein referred to as the "liabilities of" such series.
SECTION 4. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder to pay directly, in advance or arrears,
for charges for the Trust's custodian or transfer or shareholder service or
similar agent, an amount fixed from time to time by the Trustees, by setting
off such charges due from such Shareholder from declared but unpaid dividends
owed such Shareholder and/or by reducing the number of Shares in the account of
such Shareholder by that number of full and/or fractional shares which
represents the outstanding amount of such charges due from such Shareholder.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 5. Title to all of the assets of each series of the Trust and of
the Trust shall at all times be considered as vested in the Trustees.
<PAGE> 14
ADVISORY, MANAGEMENT AND DISTRIBUTION
SECTION 6. Subject to a favorable vote of a majority of the outstanding
voting securities of a series of the Trust, the Trustees may on behalf of such
series, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services for such series with a
corporation, trust, association or other organization, every such contract to
comply with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms interpretive of or
in addition to said requirements and restrictions as the Trustees may
determine, including, without limitation, authority to determine from time to
time what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of such series shall be held uninvested and to
make changes in such series' investments. The Trustees may also, at any time
and from time to time, contract with a corporation, trust, association or
other organization, appointing it exclusive or nonexclusive distributor or
principal underwriter for the Shares, every such contract to comply with such
requirements and restrictions as may be set forth in the By-Laws; and any such
contract may contain such other terms interpretive of or in addition to said
requirements and restrictions as the Trustees may determine.
The fact that:
(a) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, advisor,
principal underwriter, or distributor or agent of or for any corporation,
trust, association, or other organization, or of or for any parent or affiliate
of any organization, with which an advisory or management or principal
underwriter's or distributor's contract, or transfer, shareholder services or
other agency contract may have been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a Shareholder or has an
interest in the Trust, or that
(b) any corporation, trust, association or other organization with which an
advisory or management or principal underwriter's or distributor's contract, or
transfer, shareholder services or other agency contract may have been or may
hereafter be made also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, shareholder services or
other agency contract with one or more other corporations, trusts,
associations, or other organizations, or has other businesses or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same or create any liability or accountability to the Trust or its
Shareholders.
<PAGE> 15
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. Subject to the voting provisions of one or more classes of
Shares, the Shareholders shall have power to vote only: (a) for the election or
removal of Trustees as provided in Article IV, Section 1; (b) with respect to
any investment advisor or manager as provided in Article IV, Section 6; (c) with
respect to any termination or reorganization of the Trust or any series or
class thereof to the extent and as provided in Article IX, Section 1; (d) with
respect to any amendment of this Declaration of Trust to the extent and as
provided in Article IX, Section 4; and (e) with respect to such additional
matters relating to the Trust as may be required by law, the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Securities and Exchange Commission (or any successor agency) or any state, or
as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. Notwithstanding any other provision of the
Declaration of Trust, on any matter submitted to a vote of Shareholders all
Shares of the Trust then entitled to vote shall, except to the extent otherwise
required or permitted by the preferences and special or relative rights or
privileges of any class of Shares, be voted by individual series and not in the
aggregate or by class, except (a) when required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual series; and (b) when the
Trustees have determined that the matter affects only the interests of one or
more series or classes, then only Shareholders of such series or class shall
be entitled to vote thereon. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares of any series or class are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-
<PAGE> 16
Laws to be taken by Shareholders of such series or class.
SHAREHOLDER MEETINGS
SECTION 2. Meetings of Shareholders (including meetings involving only one
or more but less than all series or classes) may be called and held from time to
time for the purpose of taking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Such meetings shall be
held at the principal office of the Trust as set forth in the By-Laws of the
Trust or at any such other place within the United States as may be designated
in the call thereof, which call shall be made by the Trustees or the President
of the Trust. Meetings of Shareholders may be called by the Trustees or such
other person or persons as may be specified in the By-Laws upon written
application by Shareholders holding at least twenty-five percent (25%) (or
ten percent (10%)) if the purpose of the meeting is to determine if a Trustee
is to be removed from office) of the Shares then outstanding of all series and
classes entitled to vote at such meeting requesting a meeting be called for a
purpose requiring action by the Shareholders as provided herein or in the
By-Laws which purpose shall be specified in any such written application.
Shareholders shall be entitled to at least seven days' written notice of any
meeting of the Shareholders.
QUORUM AND REQUIRED VOTE
SECTION 3. The presence at a meeting of Shareholders in person or by proxy
of Shareholders entitled to vote at least thirty percent (30%) of all votes
entitled to be cast at the meeting of each series or class entitled to vote as
a series or class shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that the holders of Shares shall vote
in the aggregate and not as a series or class, then the presence in person or
by proxy of Shareholders entitled to vote at least thirty percent (30%) of all
votes entitled to be cast at the meeting (without regard to series or class)
shall constitute a quorum. Any lesser number, however, shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice.
Except when a larger vote is required by any provisions of the 1940 Act,
this Declaration of Trust or the By-Laws, a majority of the Shares of each
series or class voted on the matter shall decide that matter insofar as that
series or class
<PAGE> 17
is concerned, provided that where any provision of law, this Declaration of
Trust or the By-Laws permits or requires that the holders of Shares vote in the
aggregate and not as a series or class, then a majority of the Shares voted on
any matter (without regard to series or class) shall decide such matter and a
plurality shall elect a Trustee.
ACTION BY WRITTEN CONSENT
SECTION 4. Any action taken by Shareholders may be taken without a meeting
if Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter of each series or class or, where any
provision of law, this Declaration of Trust or the By-Laws permits or requires
that the holders of Shares vote in the aggregate and not as a series or class,
if Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast thereon (without regard to series or class) (or in either
case such larger vote as shall be required by any provision of this Declaration
of Trust or the By-Laws) consent to the action in writing and such written
consents are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ADDITIONAL PROVISIONS
SECTION 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters not inconsistent with the provisions
hereof.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
DISTRIBUTIONS
SECTION 1. The Trustees may in their sole discretion from time to time
distribute to the Shareholders of any series such income and gains, accrued or
realized, as the Trustees may determine, after providing for actual and accrued
expenses and liabilities of such series (including such reserves as the
Trustees may establish) determined in accordance with this Declaration of Trust
and good accounting practices. The Trustees shall have full discretion to
determine which items shall be treated as income and which items as capital and
their determination shall be binding upon the Shareholders. Distribu-
<PAGE> 18
tions to any series, if any be made, shall be in Shares of such series, in cash
or otherwise and on a date or dates determined by the Trustees. At any time
and from time to time in their discretion, the Trustees may distribute to the
Shareholders of any series as of a record date or dates determined by the
Trustees, in Shares of such series, in cash or otherwise, all or part of any
gains realized on the sale or disposition of property of the series or
otherwise, or all or part of any other principal of the Trust attributable to
the series. Except to the extent otherwise required or permitted by the
preferences and special or relative rights or privileges of any classes of
Shares of that series, each distribution pursuant to this Section 1 shall be
made ratably according to the number of Shares of the series held by the
several Shareholders on the applicable record date thereof, provided that
distributions from assets of a series may only be made to the holders of the
Shares of such series and provided that no distributions need be made on Shares
purchased pursuant to orders received, or for which payment is made, after such
time or times as the Trustees may determine. Any distribution to the
Shareholders of a particular class of Shares shall be made to such Shareholders
prorata in proportion to the number of Shares of such class held by each of
them. Any distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with this Declaration of Trust. The
Trustees have the power, in their discretion, to distribute for any year
amounts sufficient to enable the Trust to qualify as a "regulated investment
company" under the Internal Revenue Code as amended (or any successor thereto)
to avoid any liability for federal income tax in respect of that year.
REDEMPTIONS AND REPURCHASES
SECTION 2. Any holder of Shares of the Trust may, by presentation of a
request in proper form, together with his certificates, if any, for such
Shares, in proper form for transfer to the Trust or duly authorized agent of
the Trust, request redemption of his shares for the net asset value thereof
determined and computed in accordance with the provisions of this Section 2 and
the provisions of Section 6 of this Article VI.
Upon receipt by the Trust or its duly authorized agent, as the case may be,
of such a request for redemption of Shares in proper form, such Shares shall be
redeemed at the net asset value per share of the particular series or class
next determined after such request is received or determined as of such other
time fixed by the Trustees as may be permitted or required by the 1940 Act.
The criteria for determining what constitutes a request for redemption in
proper form and the time of receipt of such request shall be fixed by the
Trustees.
The obligation of the Trust to redeem its Shares as set
<PAGE> 19
forth above in this Section 2 shall be subject to the condition that
such obligation may be suspended by the Trust by or under authority of the
Trustees during any period or periods when and to the extent permissible under
the 1940 Act. If there is such a suspension, any Shareholder may withdraw any
request for redemption which has been received by the Trust during any such
period and the applicable net asset value with respect to which would but for
such suspension be calculated as of a time during such period. Upon such
withdrawal, the Trust shall return to the Shareholder the certificates
therefor, if any.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustee may from time to time authorize at a price not exceeding the net
asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made. Shares redeemed or repurchased by
the Trust hereunder shall be canceled upon such redemption or repurchase
without further action by the Trust or the Trustees and the number of issued
and outstanding Shares of the relevant series and class shall thereupon by
reduced by such amount.
PAYMENT FOR SHARES REDEEMED
SECTION 3. Payment of the redemption price for Shares redeemed pursuant to
this Article VI shall be made by the Trust or its duly authorized agent after
receipt by the Trust or its duly authorized agent of a request for redemption
in proper form (together with any certificates for such Shares as provided in
Section 2 above) in accordance with procedures and subject to conditions
prescribed by the Trustees; provided, however, that payment may be postponed
during the period in which the redemption of Shares is suspended under Section
2 above. Subject to any generally applicable limitation imposed by the
Trustees, any payment on redemption, purchase or repurchase by the Trust of
Shares may, if authorized by the Trustees, be made wholly or partly in kind,
instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property
then held by the series of Shares being redeemed, purchased or repurchased (but
not necessarily involving a portion of each of the series' holdings) and taken
at their value used in determining the net asset value of the Shares in
respect of which payment is made.
REDEMPTIONS AT THE OPTION OF THE TRUST
SECTION 4. The Trust shall have the right at its option and at any time and
from time to time to redeem Shares of any Shareholder at the net asset value
thereof as determined in
<PAGE> 20
accordance with Section 6 of this Article VI, if at such time such Shareholder
owns fewer shares of a series or class than, or Shares of a series or class
having an aggregate net asset value of less than, an amount determined from
time to time by the Trustees. Any such redemption at the option of the Trust
shall be made in accordance with such other criteria and procedures for
determining the Shares to be redeemed, the redemption date and the means of
effecting such redemption as the Trustees may from time to time authorize.
ADDITIONAL PROVISIONS RELATING TO DIVIDENDS, REDEMPTIONS AND
REPURCHASES
SECTION 5. The completion of redemption, purchase or repurchase of Shares
shall constitute a full discharge of the Trust and the Trustees with respect to
such Shares. No dividend or distribution (including, without limitation, any
distribution paid upon termination of the Trust or of any series or class) with
respect to, nor any redemption or repurchase of, the Shares of any series or
class shall be effected by the Trust other than from the assets of such series.
DETERMINATION OF NET ASSET VALUE
SECTION 6. The term "net asset value" of each Share of a series or class
as of any particular time shall be the quotient obtained by dividing the value,
as at such time, of the net assets of such series or class (i.e., the value of
the assets of such series or class less the liabilities of such series or class,
exclusive of liabilities represented by the Shares of such series or class) by
the total number of Shares of such series or class outstanding at such time,
all determined and computed in accordance with the Trust's current prospectus.
The Trustees, or any officer, or officers or agent of the Trust designated
for the purpose by the Trustees shall determine the net asset value of the
Shares of each series or class, and the Trustees shall fix the time or times
as of which the net asset value of the Shares of each series or class shall be
determined and shall fix the periods during which any such net asset value
shall be effective as to sales, redemptions and repurchases of, and other
transactions in, the Shares of such series or class, except as such times and
periods for any such transaction may be fixed by other provisions of this
Declaration of Trust or by the By-Laws.
Determinations in accordance with this Section 6 made in good faith shall be
binding on all parties concerned.
<PAGE> 21
HOW LONG SHARES ARE OUTSTANDING
SECTION 7. Shares of the Trust surrendered to the Trust for redemption by
it pursuant to the provisions of Section 2 of this Article VI shall be deemed to
be outstanding until the redemption price thereof is determined pursuant to
this Article VI and, thereupon and until paid, the redemption price thereof
shall be deemed to be a liability of the Trust. Shares of the Trust purchased
by the Trust in the open market shall be deemed to be outstanding until
confirmation of purchase thereof by the Trust and, thereupon and until paid,
the purchase price thereof shall be deemed to be a liability of the Trust.
Shares of the Trust redeemed by the Trust pursuant to Section 4 of this Article
VI shall be deemed to be outstanding until said Shares are deemed to be
redeemed in accordance with procedures adopted by the Trustees pursuant to said
Section 4.
ARTICLE VII
Compensation and Limitation of Liability of
Trustees and Shareholders
SECTION 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust if the rate thereof is prescribed by such Trustees.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust, it being recognized that such employment
may result in such Trustee being considered an Affiliated Person or an
Interested Person.
LIMITATION OF LIABILITY
SECTION 2. The Trustees shall not be responsible or liable in any event for
any neglect or wrongdoing of any officer, agent, employee, investment advisor
or manager, principal underwriter or custodian, nor shall any Trustee be
responsible for the act or omission of any other Trustee. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate, Share or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustee or any of them in connection with the Trust shall be
conclusively deemed
<PAGE> 22
to have been executed or done only in or with respect to their or his capacity
as Trustees or Trustee and neither such Trustees or Trustee nor the
Shareholders shall be personally liable thereon.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts and shall recite that the same was executed or
made by or on behalf of the Trust by them as Trustees or Trustee or as officers
or officer and not individually and that the obligations of such instrument are
not binding upon any of them or the Shareholders individually but are binding
only upon the assets and property of the Trust or a particular series of
Shares, and may contain such further recital as he or they may deem
appropriate, but the omission thereof shall not operate to bind any Trustees or
Trustee or officers or officer or Shareholders or Shareholder individually.
All persons extending credit to, contracting with or having any claim
against the Trust or a particular series of Shares shall look only to the
assets of the Trust or the assets of that particular series of Shares, as the
case may be, for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY1
SECTION 3. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
only for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees hereunder, and shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
In discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written
reports made to the Trustees by any officer appointed by them, any independent
public accountant and (with respect to the subject matter of the contract
involved) any officer, partner or responsible employee of any other party to
any contract entered into pursuant to Section 2 of Article IV. The Trustees
shall not be required to give any bond as such, nor any surety if a bond
is required.
<PAGE> 23
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
SECTION 4. No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
ARTICLE VIII
INDEMNIFICATION
Subject to the exceptions and limitations contained in this Article, every
person who is, or has been, a Trustee or officer of the Trust (including
persons who serve at the request of the Trust as directors, officers or
trustees of another organization in which the Trust has an interest as a
shareholder, creditor or otherwise) hereinafter referred to as a "Covered
Person", shall be indemnified by the Trust to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having been
such a Trustee, director or officer and against amounts paid or incurred by him
in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(c) in the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b)) and resulting in a pay
ment by a Covered Person, unless there has been either a determination that such
Covered Person did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office by the court or other body approving the settlement or other disposition
or a reasonable determination, based on a review of readily available facts
(as opposed to a
<PAGE> 24
full trial-type inquiry) that he did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in office
act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such a Covered Person and
shall inure to the benefit of the heirs, executors and adminis- trators of such
a person. Nothing contained herein shall affect any rights to indemnification
to which Trust personnel other than Covered Persons may be entitled by contract
or otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Article
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it
is ultimately determined that he is not entitled to indemnification under this
Article, provided that either:
(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out
of any such advances; or
(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or independent legal counsel in a written opinion shall determine,
based upon a review of the readily available facts (as opposed to a full trial-
type inquiry), that there is reason to believe that the recipient ultimately
will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (a) who is not an
"interested person" of the Trust, as defined in the 1940 Act (including anyone
who has been exempted from being an "interested person" by any rule, regulation
or order of the Commission), and (b) against whom none of such actions, suits
or other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending.
As used in this Article, the words "claim", "action", "suit" or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened; and the words "liability"
and "expenses"
<PAGE> 25
shall include without limitation, attorneys' fees, cost, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
In case any Shareholder or former Shareholder shall be held to be personally
liable solely by reason of his or her being or having been a Shareholder and
not because of his or her acts or omissions or for some other reason, the
Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation
or other entity, its corporate or other general successor) shall be entitled to
be held harmless from and indemnified against all loss and expense arising from
such liability but only out of the assets of the particular series of Shares of
which he or she is or was a Shareholder; provided, however, there shall be no
liability or obligation of the Trust arising hereunder to reimburse any
Shareholder for taxes paid by reason of such Shareholder's ownership of Shares
or for losses suffered by reason of any changes in value of any Trust assets.
ARTICLE IX
MISCELLANEOUS
DURATION, TERMINATION AND REORGANIZATION OF TRUST
SECTION 1. Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by the
Trustees by written notice to the Shareholders without a vote of the
Shareholders of the Trust or by the vote of the Shareholders entitled to vote
more than fifty percent (50%) of the votes of each series or class entitled to
be cast on the matter. Any series or class of Shares may be terminated at any
time by the Trustees by written notice to the Shareholders of such series or
class without a vote of the Shareholders of such series or class or by the vote
of the Shareholders of such series or class entitled to vote more than fifty
percent (50%) of the votes entitled to be cast on the matter.
Upon termination of the Trust or of any one or more series or classes of
Shares, after paying or otherwise providing for all charges, taxes, expenses
and liabilities, whether due or accrued or anticipated, of the particular
series or class as may be determined by the Trustees, the Trust shall in
accordance with such procedures as the Trustees consider appropriate reduce to
the extent necessary the remaining assets of the particular series to
distributable form in cash or other securities, or any combination thereof,
and distribute the proceeds to the
<PAGE> 26
Shareholders of the series or class involved, ratably according the number of
Shares of such series or class held by the several Shareholders of such series
or class on the date of termination. Any such distributions with respect to any
series which has one or more classes of Shares outstanding shall be made
ratably to such classes in the same proportion as the number of Shares of each
class bears to the total number of Shares of the series, except to the extent
otherwise required or permitted by the preferences and special or relative
rights or privileges of any classes of Shares of any such series.
At any time by the affirmative vote of the Shareholders of the affected
series entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter, the Trustees may sell, convey and transfer the assets of
the Trust, or the assets belonging to any one or more series, to another trust,
partnership, association or corporation organized under the laws of any state
of the United States, or to the Trust to be held as assets belonging to another
series of the Trust, in exchange for cash, shares or other securities
(including, in the case of a transfer to another series of the Trust, Shares of
such other series) with such transfer being made subject to or with the
assumption by the transferee of, the liabilities belonging to each series the
assets of which are so distributed. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
series the assets belonging to which have so been transferred) among the
Shareholders of the series the assets belonging to which have been so
transferred; and if all the assets of the Trust have been so distributed, the
Trust shall be terminated.
FILING OF COPIES, REFERENCES, HEADINGS
SECTION 2. The original or a copy of this instrument and of each amendment
hereto shall be kept at the office of the Trust where it may be inspected by
any Shareholder. A copy of this instrument and of each amendment hereto shall
be filed by the Trust with the Secretary of State of The Commonwealth of
Massachusetts and with the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing
with the Trust may rely on a certificate by any officer of the Trust as to
whether or not any such amendments have been made and as to any matters in
connection with the Trust hereunder; and, with the same effect as if it were
the original, may rely on a copy certified by an officer of the Trust to be a
copy of this instrument or of any such amendments. In this instrument and in
any such amendment, references to this instrument, and all expressions like
"herein", "hereof", and "hereunder", shall be deemed to refer to this
instrument as amended from time to time. Headings are placed herein for
convenience of reference only and shall not
<PAGE> 27
be taken as a part hereof or control or affect the meaning, construction or
effect of this instrument. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
APPLICABLE LAW
SECTION 3. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall
be of the type commonly called a Massachusetts business trust, and without
limiting the provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust.
AMENDMENTS
SECTION 4. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
so to do by vote of Shareholders holding more than fifty percent (50%) of the
Shares of each series entitled to vote, except that an amendment which in the
determination of the Trustees shall affect the holders of one or more series or
classes of Shares but not the holders of all outstanding series and classes
shall be authorized by vote of the Shareholders holding more than fifty percent
(50%) of the Shares entitled to vote of each series or class affected and no
vote of Shareholders of a series or class not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
provision which is defective or inconsistent with the 1940 Act or with the
requirements of the Internal Revenue Code and the regulations thereunder for
the Trust's obtaining the most favorable treatment thereunder available to
regulated investment companies shall not require authorization by Shareholder
vote.
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands and seals for themselves and their assigns, as of this
27th day of May, 1994.
/s/ Charles M. Kierscht
----------------------------
(SEAL) Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
(signatures continue)
<PAGE> 28
/s/ David W. Belin
----------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
----------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
----------------------------
Donald L. Dunaway, Trustee
235A North Elm Grove Road
Brookfield, Wisconsin 53005
/s/ Robert B. Hoffman
----------------------------
Robert B. Hoffman, Trustee
1448 North Lake Shore Drive,
Apt. 7-8A
Chicago, IL 60610
/s/ Donald R. Jones
----------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
----------------------------
Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
/s/ William P. Sommers
----------------------------
William P. Sommers, Trustee
2181 Parkside Ave.
Hillsborough, California 94010
/s/ Stephen B. Timbers
----------------------------
Stephen B. Timbers, Trustee
1448 North Lake Shore Drive,
Apt. 12 1/2 C
Chicago, Illinois 60610
<PAGE> 29
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
Then personally appeared the afore-named David W. Belin, Lewis A. Burnham,
Donald L. Dunaway, Robert B. Hoffman, Donald R. Jones, Charles M. Kierscht,
William P. Sommers and Stephen B. Timbers who acknowledged the foregoing
instrument to be their free act and deed, before me this 27th day of May, 1994.
/s/ Mary A. McCallister
-------------------------------
NOTARY PUBLIC
<PAGE> 1
EXHIBIT 99.B4(a)
[Name]
is the owner of [number] shares of beneficial
interest in the above noted Fund (the "FUND"), of the series and class, if any,
specified, fully paid and nonassessable, the said shares being issued and held
subject to the provisions of the Agreement and Declaration of Trust of the
Fund, and all amendments thereto, copies of which are on file with the
Secretary of The Commonwealth of Massachusetts. The said owner by accepting
this certificate agrees to and is bound by all of the said provisions. The
shares represented hereby are transferable in writing by the owner thereof in
person or by attorney upon surrender of this certificate to the Fund properly
endorsed for transfer. This certificate is executed on behalf of the Trustees
of the Fund as Trustees and not individually and the obligations hereof are not
binding upon any of the Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Fund or, if applicable, the
specified series of the Fund. The shares may be subject to a contingent
deferred sales charge. This certificate is not valid unless countersigned by
the Transfer Agent.
<PAGE> 1
EXHIBIT 99.B4(b)
KEMPER GLOBAL INCOME FUND
WRITTEN INSTRUMENT ESTABLISHING
AND DESIGNATING SEPARATE CLASSES OF SHARES
The undersigned constitute all the Trustees of Kemper Global Income Fund
(the "Fund"), a Massachusetts business trust governed by an Amended and
Restated Agreement and Declaration of Trust dated May 27, 1994 (the "Amended
Declaration of Trust"). This instrument is executed pursuant to Section 1 of
Article III of the Amended Declaration of Trust in order to establish and
designate separate classes of shares of any series of the Fund, and it is based
in part upon resolutions of the Board of Trustees of the Fund adopted at a
meeting on January 14, 1994.
WHEREAS, Under the Amended Declaration of Trust the Board of Trustees has
the authority, in its discretion and without shareholder approval, to divide
the shares of any series of the Fund into separate classes of shares;
WHEREAS, This Board of Trustees has previously approved, subject to
various conditions, the division of the shares of each series of the Fund into
four classes of shares, to be named "Class A Shares," "Class B Shares," "Class
C Shares" and "Class I Shares;"
WHEREAS, This Board of Trustees deems it desirable and in the best
interests of the Fund to divide the shares of each series of the Fund, whether
now existing or hereafter created (the "series"), into four separate classes of
shares to be named, as previously indicated, "Class A Shares," "Class B
Shares," "Class C Shares" and "Class I Shares" and to provide investors with a
conversion feature from Class B Shares to the Class A Shares, which conversion
feature would thereby eliminate any distribution services fee then in effect
under any plan adopted pursuant to Rule 12b-1 of the Investment Company Act of
1940 ("1940 Act") for such Class B Shares; and
WHEREAS, This Board of Trustees believes that the creation of four
separate classes of shares as provided herein will be in the best interests of
and will have no negative effects upon the current shareholders of the Fund;
NOW, THEREFORE, the establishment and designation of separate classes of
shares of any series of the Fund is approved in accordance with the following
provisions:
1. Subject to the conditions hereinafter set forth, the shares of any
series shall be divided into four classes to be known respectively as the
"Class A Shares," the "Class B Shares," the "Class C Shares" and the "Class I
Shares," which classes shall have such preferences and special or relative
rights and privileges as may be determined from time to time by this Board of
Trustees
<PAGE> 2
subject always to the Amended Declaration of Trust and the 1940 Act and the
rules and regulations thereunder.
2. Subject to the terms of the Amended Declaration of Trust, the Class A
Shares, Class B Shares, Class C Shares and Class I Shares will have the same
rights and privileges except that:
(A) the Class A Shares
(1) shall be sold subject to an initial sales charge as described in
the prospectus for the Fund as from time to time in effect or shall be issued
to shareholders in connection with the conversion feature as hereinafter
described;
(2) shall have an administrative service fee;
(3) shall not have a plan of distribution adopted under Rule 12b-1 of
the 1940 Act ("Rule 12b-1 plan") and no fees payable under the Rule 12b-1 plans
for the Class B Shares or Class C Shares shall be allocated or charged to the
Class A Shares; and
(4) shall have such dividend reinvestment, exchange and redemption
rights and privileges as may be described in the prospectus for the Fund as
from time to time in effect; and
(B) the Class B Shares
(1) shall be sold without an initial sales charge but subject to a
contingent deferred sales charge imposed upon the redemption of the Class B
shares as described in the prospectus of the Fund as from time to time in
effect;
(2) shall have an administrative service fee;
(3) shall have a Rule 12b-1 plan and any fees payable from time to
time under such plan shall be allocated and charged to, and any voting rights
with respect to such plan shall be exercisable by, the Class B Shares only;
(4) shall convert to Class A Shares within a specified number of
years as hereinafter described; and
(5) shall have such purchase, dividend reinvestment, exchange and
redemption rights and privileges associated therewith as may be described in
the prospectus for the Fund as from time to time in effect; and
(C) the Class C Shares
(1) shall be sold without any initial sales charge or any contingent
deferred sales charge;
(2) shall have an administrative service fee;
<PAGE> 3
(3) shall have a Rule 12b-1 plan and any fees payable from time to
time under such plan shall be allocated and charged to, and any voting rights
with respect to such plan shall be exercisable by, the Class C Shares only; and
(4) shall have such purchase, dividend reinvestment, exchange and
redemption rights and privileges associated therewith as may be described in
the prospectus for the Fund as from time to time in effect; and
(D) the Class I Shares
(1) shall be sold without any initial sales charge or any contingent
deferred sales charge;
(2) shall not have an administrative service fee;
(3) shall not have a Rule 12b-1 plan and no fees payable under the
plans for the Class B Shares or Class C Shares shall be allocated or charged to
the Class I Shares; and
(4) shall have such dividend reinvestment, exchange and redemption
rights and privileges as may be described in the prospectus for the Fund as
from time to time in effect.
3. Any shares of the Fund that are issued and outstanding at the time
when shares of the Fund are effectively divided into separate classes of shares
as set forth above shall be classified as Class A Shares.
4. Class A Shares of a series shall be issued to holders of Class B
Shares of the same series pursuant to the following described conversion
feature:
(A) Class B Shares will convert to Class A Shares six years after
issuance of such Class B Shares; provided, however, that any Class B Shares
issued in exchange for shares originally classified as Initial Shares of Kemper
Portfolios, formerly known as Kemper Investment Portfolios (KP), whether in
connection with a reorganization with a series of KP or otherwise, shall
convert to Class A Shares seven years after issuance of such Initial Shares if
such Initial Shares were issued prior to February 1, 1991;
(B) Class B Shares issued upon reinvestment of income and capital
gain dividends and other distributions will convert to Class A Shares on a pro
rata basis with other Class B Shares; and
(C) Conversion to Class A Shares shall be based upon the relative net
asset values of the Class A Shares and the Class B Shares at the time of
conversion.
IN WITNESS WHEREOF, the undersigned have this 27th day of May, 1994 signed
these presents.
<PAGE> 4
/s/ Charles M. Kierscht
--------------------------------
Charles M. Kierscht
321 Princeton Road
Hinsdale, Illinois 60521
(signatures continue)
/s/ David W. Belin
--------------------------------
David W. Belin, Trustee
1705 Plaza Circle
Des Moines, Iowa 50322
/s/ Lewis A. Burnham
--------------------------------
Lewis A. Burnham, Trustee
16410 Avila Boulevard
Tampa, Florida 33613
/s/ Donald L. Dunaway
--------------------------------
Donald L. Dunaway, Trustee
235A North Elm Grove Road
Brookfield, Wisconsin 53005
/s/ Robert B. Hoffman
--------------------------------
Robert B. Hoffman, Trustee
1448 North Lake Shore Drive,
Apt. 7-8A
Chicago, IL 60610
/s/ Donald R. Jones
--------------------------------
Donald R. Jones, Trustee
1776 Beaver Pond Road
Inverness, Illinois 60067
--------------------------------
Charles M. Kierscht, Trustee
321 Princeton Road
Hinsdale, Illinois 60521
/s/ William P. Sommers
--------------------------------
William P. Sommers, Trustee
2181 Parkside Ave.
Hillsborough, California 94010
/s/ Stephen B. Timbers
--------------------------------
Stephen B. Timbers, Trustee
1448 North Lake Shore Drive,
Apt. 12 1/2 C
Chicago, Illinois 60610
<PAGE> 1
EXHIBIT 99.B5
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 28th day of May, 1994, by and between KEMPER GLOBAL
INCOME FUND, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation (the "Adviser").
WHEREAS, the Fund is an open-end management investment company registered
under the Investment Company Act of 1940, the shares of beneficial interest
("Shares") of which are registered under the Securities Act of 1933;
WHEREAS, the Fund is authorized to issue Shares in separate series or
portfolios with each representing the interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund currently offers or intends to offer Shares in one
portfolio, the Initial Portfolio, together with any other Fund portfolios which
may be established later and served by the Adviser hereunder, being herein
referred to collectively as the "Portfolios" and individually referred to as a
"Portfolio"; and
WHEREAS, the Fund desires at this time to retain the Adviser to render
investment advisory and management services to the Initial Portfolio, and the
Adviser is willing to render such services;
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the investment adviser for
the Initial Portfolio and other Portfolios hereunder and to manage the
investment and reinvestment of the assets of each such Portfolio in accordance
with the applicable investment objectives and policies and limitations, and to
administer the affairs of each such Portfolio to the extent requested by and
subject to the supervision of the Board of Trustees of the Fund for the period
and upon the terms herein set forth, and to place orders for the purchase or
sale of portfolio securities for the Fund's account with brokers or dealers
selected by it; and, in connection therewith, the Adviser is authorized as the
agent of the Fund to give instructions to the Custodian of the Fund as to the
deliveries of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of
such orders, the Adviser is directed to seek for the Fund best execution of
orders. Subject to such policies as the Board of Trustees of the Fund
determines, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty, created by this Agreement or otherwise, solely by reason of
its having caused
<PAGE> 2
the Fund to pay a broker or dealer an amount of commission for effecting a
securities transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Adviser
determined in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the clients of the Adviser
as to which the Adviser exercises investment discretion. The Fund recognizes
that all research services and research that the Adviser receives or generates
are available for all clients, and that the Fund and other clients may benefit
thereby. The investment of funds shall be subject to all applicable
restrictions of the Agreement and Declaration of Trust and By-Laws of the Fund
as may from time to time be in force.
The Adviser accepts such employment and agrees during such period to
render such services, to furnish office facilities and equipment and clerical,
bookkeeping and administrative services for the Fund, to permit any of its
officers or employees to serve without compensation as trustees or officers of
the Fund if elected to such positions and to assume the obligations herein set
forth for the compensation herein provided. The Adviser shall for all purposes
herein provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund. It
is understood and agreed that the Adviser, by separate agreements with the
Fund, may also serve the Fund in other capacities.
2. In the event that the Fund establishes one or more portfolios other than
the Initial Portfolio with respect to which it desires to retain the Adviser to
render investment advisory and management services hereunder, it shall notify
the Adviser in writing. If the Adviser is willing to render such services, it
shall notify the Fund in writing whereupon such portfolio or portfolios shall
become a Portfolio or Portfolios hereunder.
3. For the services and facilities described in Section 1, the Fund will pay
to the Adviser at the end of each calendar month, an investment management fee
for each Portfolio computed by applying the following annual rates to the
applicable average daily net assets of the Portfolio:
<PAGE> 3
Applicable Average
Daily Net Assets
<TABLE>
<CAPTION>
(Thousands) Annual Rate
------------------- -----------
<S> <C>
$0 - $ 250,000 .75 of 1%
$ 250,000 - $ 1,000,000 .72 of 1%
$ 1,000,000 - $ 2,500,000 .70 of 1%
$ 2,500,000 - $ 5,000,000 .68 of 1%
$ 5,000,000 - $ 7,500,000 .65 of 1%
$ 7,500,000 - $10,000,000 .64 of 1%
$10,000,000 - $12,500,000 .63 of 1%
Over $12,500,000 .62 of 1%
</TABLE>
The fee as computed above shall be computed separately for, and charged as
an expense of, each Portfolio based upon the average daily net assets of such
Portfolio. For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year,
respectively.
4. The services of the Adviser to the Fund under this Agreement are not to be
deemed exclusive, and the Adviser shall be free to render similar services or
other services to others so long as its services hereunder are not impaired
thereby.
5. In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by a custodian for the safekeeping of the Fund's
securities or other property, for keeping its books of account, for any other
charges of the custodian, and for calculating the net asset value of the Fund
as provided in the prospectus of the Fund. The Adviser shall not be required
to pay and the Fund shall assume and pay the charges and expenses of its
operations, including compensation of the trustees (other than those affiliated
with the Adviser), charges and expenses of independent auditors, of legal
counsel, of any transfer or dividend disbursing agent, and of any registrar of
the Fund, costs of acquiring and disposing of portfolio securities, interest,
if any, on obligations incurred by the Fund, costs of share certificates and of
reports, membership dues in the Investment Company Institute or any similar
organization, costs of reports and notices to shareholders, other like
miscellaneous expenses and all taxes and fees payable to federal, state or
other governmental agencies on account of the registration of securities issued
by the Fund, filing of trust documents or otherwise. The Fund
<PAGE> 4
shall not pay or incur any obligation for any expenses for which the Fund
intends to seek reimbursement from the Adviser as herein provided without first
obtaining the written approval of the Adviser. The Adviser shall arrange, if
desired by the Fund, for officers or employees of the Adviser to serve, without
compensation from the Fund, as trustees, officers or agents of the Fund if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law.
If expenses borne by the Fund for those Portfolios which the Adviser
manages in any fiscal year (including the Adviser's fee, but excluding
interest, taxes, fees incurred in acquiring and disposing of portfolio
securities, distribution services fees, extraordinary expenses and any other
expenses excludable under state securities law limitations) exceed any
applicable limitation arising under state securities laws, the Adviser will
reduce its fee or reimburse the Fund for any excess to the extent required by
such state securities laws. If for any month the expenses of the Fund properly
chargeable to the income account shall exceed 1/12 of the percentage of average
net assets allowable as expenses, the payment to the Adviser for that month
shall be reduced and if necessary the Adviser shall make a refund payment to
the Fund so that the total net expense will not exceed such percentage. As of
the end of the Fund's fiscal year, however, the foregoing computations and
payments shall be readjusted so that the aggregate compensation payable to the
Adviser for the year is equal to the percentage calculated in accordance with
Section 3 hereof of the average net asset value as determined as described
herein throughout the fiscal year, diminished to the extent necessary so that
the total of the aforementioned expense items of the Fund shall not exceed the
expense limitation. The aggregate of repayments, if any, by the Adviser to the
Fund for the year shall be the amount necessary to limit the said net expense
to said percentage in accordance with the foregoing.
The net asset value for each Portfolio shall be calculated in accordance
with the provisions of the Fund's prospectus or as the trustees may determine
in accordance with the provisions of the Investment Company Act of 1940. On
each day when net asset value is not calculated, the net asset value of a
Portfolio shall be deemed to be the net asset value of such Portfolio as of the
close of business on the last day on which such calculation was made for the
purpose of the foregoing computations.
6. Subject to applicable statutes and regulations, it is understood that
trustees, officers or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise, and that the
officers, directors, shareholders and agents of the Adviser may be interested
in the Fund otherwise than as a trustee, officer or agent.
<PAGE> 5
7. The Adviser shall not be liable for any error of judgment or of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Adviser in the performance of its
obligations and duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
8. This Agreement shall become effective with respect to the Initial
Portfolio on the date hereof and shall remain in full force until March 1,
1995, unless sooner terminated as hereinafter provided. This Agreement shall
continue in force from year to year thereafter with respect to each Portfolio,
but only as long as such continuance is specifically approved for each
Portfolio at least annually in the manner required by the Investment Company
Act of 1940 and the rules and regulations thereunder; provided, however, that
if the continuation of this Agreement is not approved for a Portfolio, the
Adviser may continue to serve in such capacity for such Portfolio in the manner
and to the extent permitted by the Investment Company Act of 1940 and the rules
and regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by the Adviser on sixty (60) days written notice to the other
party. The Fund may effect termination with respect to any Portfolio by action
of the Board of Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio.
This Agreement may be terminated with respect to any Portfolio at any time
without the payment of any penalty by the Board of Trustees or by vote of a
majority of the outstanding voting securities of such Portfolio in the event
that it shall have been established by a court of competent jurisdiction that
the Adviser or any officer or director of the Adviser has taken any action
which results in a breach of the covenants of the Adviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Investment Company Act of
1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
3 earned prior to such termination.
9. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
<PAGE> 6
10. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such notice.
11. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers, or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by the Adviser for recovery of that portion of the
investment management fee (or any other liability of the Fund arising
hereunder) allocated to a particular Portfolio, whether in accordance with the
express terms hereof or otherwise, the Adviser shall have recourse solely
against the assets of that Portfolio to satisfy such claim and shall have no
recourse against the assets of any other Portfolio for such purpose.
12. This Agreement shall be construed in accordance with applicable federal
law and (except as to Section 11 hereof which shall be construed in accordance
with the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
13. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed as of the day and year first above written.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
-------------------------------
Title: Vice President
ATTEST:
/s/ Philip J. Collora
- -------------------------
Title: Asst. Secretary
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-------------------------------
Title: Sr. Vice President
ATTEST:
/s/ David F. Dierenfeldt
- -------------------------
Title: Asst. Secretary
<PAGE> 1
EXHIBIT 99.B6(a)
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made this 28th day of May, 1994, between KEMPER GLOBAL INCOME
FUND, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation ("KFS").
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KFS to act as agent for the distribution of
shares of beneficial interest (hereinafter called "shares") of the Fund in
jurisdictions wherein shares of the Fund may legally be offered for sale;
provided, however, that the Fund in its absolute discretion may (a) issue or
sell shares directly to holders of shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the
payment or reinvestment of dividends or distributions, or otherwise; or (b)
issue or sell shares at net asset value to the shareholders of any other
investment company, for which KFS shall act as exclusive distributor, who wish
to exchange all or a portion of their investment in shares of such other
investment company for shares of the Fund. KFS shall appoint various financial
service firms ("Firms") to provide distribution services to investors. The
Firms shall provide such office space and equipment, telephone facilities,
personnel, literature distribution, advertising and promotion as is necessary
or beneficial for providing information and distribution services to existing
and potential clients of the Firms. KFS may also provide some of the above
services for the Fund.
KFS accepts such appointment as distributor and principal underwriter and
agrees to render such services and to assume the obligations herein set forth
for the compensation herein provided. KFS shall for all purposes herein
provided be deemed to be an independent contractor and, unless expressly
provided herein or otherwise authorized, shall have no authority to act for or
represent the Fund in any way. KFS, by separate agreement with the Fund, may
also serve the Fund in other capacities. The services of KFS to the Fund under
this Agreement are not to be deemed exclusive, and KFS shall be free to render
similar services or other services to others so long as its services hereunder
are not impaired thereby.
In carrying out its duties and responsibilities hereunder, KFS will,
pursuant to separate written contracts, appoint various Firms to provide
advertising, promotion and other distribution services contemplated hereunder
directly to or for the benefit of existing and potential shareholders who may
be clients of such Firms. Such Firms shall at all times be deemed to be
independent contractors retained by KFS and not the Fund.
<PAGE> 2
KFS shall use its best efforts with reasonable promptness to sell such
part of the authorized shares of the Fund remaining unissued as from time to
time shall be effectively registered under the Securities Act of 1933
("Securities Act"), at prices determined as hereinafter provided and on terms
hereinafter set forth, all subject to applicable federal and state laws and
regulations and to the Agreement and Declaration of Trust of the Fund.
2. KFS shall sell shares of the Fund to or through qualified Firms in such
manner, not inconsistent with the provisions hereof and the then effective
registration statement (and related prospectus) of the Fund under the
Securities Act, as KFS may determine from time to time, provided that no Firm
or other person shall be appointed or authorized to act as agent of the Fund
without the prior consent of the Fund. In addition to sales made by it as
agent of the Fund, KFS may, in its discretion, also sell shares of the Fund as
principal to persons with whom it does not have selling group agreements.
Shares of any class of any series of the Fund offered for sale or sold by
KFS shall be so offered or sold at a price per share determined in accordance
with the then current prospectus. The price the Fund shall receive for all
shares purchased from it shall be the net asset value used in determining the
public offering price applicable to the sale of such shares. Any excess of the
sales price over the net asset value of the shares of the Fund sold by KFS as
agent shall be retained by KFS as a commission for its services hereunder. KFS
may compensate Firms for sales of shares at the commission levels provided in
the Fund's prospectus from time to time. KFS may pay other commissions, fees
or concessions to Firms, and may pay them to others in its discretion, in such
amounts as KFS shall determine from time to time. KFS shall be entitled to
receive and retain any applicable contingent deferred sales charge as described
in the Fund's prospectus. KFS shall also receive any distribution services fee
payable by the Fund as provided in Section 8 hereof.
KFS will require each Firm to conform to the provisions hereof and the
Registration Statement (and related prospectus) at the time in effect under the
Securities Act with respect to the public offering price or net asset value, as
applicable, of the Fund's shares, and neither KFS nor any such Firms shall
withhold the placing of purchase orders so as to make a profit thereby.
3. The Fund will use its best efforts to keep effectively registered under
the Securities Act for sale as herein contemplated such shares as KFS shall
reasonably request and as the Securities and Exchange Commission shall permit
to be so registered. Notwithstanding any other provision hereof, the Fund may
terminate, suspend or withdraw the offering of shares whenever, in its sole
discretion, it deems such action to be desirable.
<PAGE> 3
4. The Fund will execute any and all documents and furnish any and all
information that may be reasonably necessary in connection with the
qualification of its shares for sale (including the qualification of the Fund
as a dealer where necessary or advisable) in such states as KFS may reasonably
request (it being understood that the Fund shall not be required without its
consent to comply with any requirement which in its opinion is unduly
burdensome). The Fund will furnish to KFS from time to time such information
with respect to the Fund and its shares as KFS may reasonably request for use
in connection with the sale of shares of the Fund.
5. KFS shall issue and deliver or shall arrange for various Firms to issue
and deliver on behalf of the Fund such confirmations of sales made by it
pursuant to this agreement as may be required. At or prior to the time of
issuance of shares, KFS will pay or cause to be paid to the Fund the amount due
the Fund for the sale of such shares. Certificates shall be issued or shares
registered on the transfer books of the Fund in such names and denominations as
KFS may specify.
6. KFS shall order shares of the Fund from the Fund only to the extent that
it shall have received purchase orders therefor. KFS will not make, or
authorize Firms or others to make (a) any short sales of shares of the Fund; or
(b) any sales of such shares to any trustee or officer of the Fund or to any
officer or director of KFS or of any corporation or association furnishing
investment advisory, managerial or supervisory services to the Fund, or to any
corporation or association, unless such sales are made in accordance with the
then current prospectus relating to the sale of such shares. KFS, as agent of
and for the account of the Fund, may repurchase the shares of the Fund at such
prices and upon such terms and conditions as shall be specified in the current
prospectus of the Fund. In selling or reacquiring shares of the Fund for the
account of the Fund, KFS will in all respects conform to the requirements of
all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., relating to such sale or
reacquisition, as the case may be, and will indemnify and save harmless the
Fund from any damage or expense on account of any wrongful act by KFS or any
employee, representative or agent of KFS. KFS will observe and be bound by all
the provisions of the Agreement and Declaration of Trust of the Fund (and of
any fundamental policies adopted by the Fund pursuant to the Investment Company
Act of 1940, notice of which shall have been given to KFS) which at the time in
any way require, limit, restrict, prohibit or otherwise regulate any action of
the part of KFS hereunder.
7. The Fund shall assume and pay all charges and expenses of its operations
not specifically assumed or otherwise to be provided by KFS under this
Agreement. The Fund will pay or cause to be paid expenses (including the fees
and disbursements of its own counsel) of any registration of the Fund and its
shares under the United States securities laws and expenses incident to the
issuance of shares of beneficial interest, such as the cost of share
<PAGE> 4
certificates, issue taxes, and fees of the transfer agent. KFS will pay all
expenses (other than expenses which one or more Firms may bear pursuant to any
agreement with KFS) incident to the sale and distribution of the shares issued
or sold hereunder, including, without limiting the generality of the foregoing,
all (a) expenses of printing and distributing any prospectus and of preparing,
printing and distributing or disseminating any other literature, advertising
and selling aids in connection with the offering of the shares for sale (except
that such expenses need not include expenses incurred by the Fund in connection
with the preparation, typesetting, printing and distribution of any
registration statement or prospectus, report or other communication to
shareholders in their capacity as such), (b) expenses of advertising in
connection with such offering and (c) expenses (other than the Fund's auditing
expenses) of qualifying or continuing the qualification of the shares for sale
and, in connection therewith, of qualifying or continuing the qualification of
the Fund as a dealer or broker under the laws of such states as may be
designated by KFS under the conditions herein specified. No transfer taxes, if
any, which may be payable in connection with the issue or delivery of shares
sold as herein contemplated or of the certificates for such shares shall be
borne by the Fund, and KFS will indemnify and hold harmless the Fund against
liability for all such transfer taxes.
8. For the services and facilities described herein in connection with Class
B shares and Class C shares of each series of the Fund, the Fund will pay to
KFS at the end of each calendar month a distribution services fee computed at
the annual rate of .75% of average daily net assets attributable to the Class B
shares and Class C shares of each such series. For the month and year in which
this Agreement becomes effective or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement is in effect
during the month and year, respectively. The foregoing fee shall be in
addition to and shall not be reduced or offset by the amount of any contingent
deferred sales charge received by KFS under Section 2 hereof.
The net asset value shall be calculated in accordance with the provisions
of the Fund's current prospectus. On each day when net asset value is not
calculated, the net asset value of a share of any class of any series of the
Fund shall be deemed to be the net asset value of such a share as of the close
of business on the last previous day on which such calculation was made. The
distribution services fee for any class of a series of the Fund shall be based
upon average daily net assets of the series attributable to the class and such
fee shall be charged only to such class.
9. KFS shall prepare reports for the Board of Trustees of the Fund on a
quarterly basis in connection with the Fund's distribution plan for Class B
shares and Class C shares showing amounts paid to the various Firms and such
other information as from time to time shall be reasonably requested by the
Board of Trustees.
<PAGE> 5
10. To the extent applicable, this Agreement constitutes the plan for the
Class B shares and Class C shares of each series of the Fund pursuant to Rule
12b-1 under the Investment Company Act of 1940; and this Agreement and plan
shall be approved and renewed in accordance with Rule 12b-1 for such Class B
shares and Class C shares separately.
This Agreement shall become effective on the date hereof and shall
continue until March 1, 1995; and shall continue from year to year thereafter
only so long as such continuance is approved in the manner required by the
Investment Company Act of 1940.
This Agreement shall automatically terminate in the event of its
assignment and may be terminated at any time without the payment of any penalty
by the Fund or by KFS on sixty (60) days written notice to the other party.
The Fund may effect termination with respect to any class of any series of the
Fund by a vote of (i) a majority of the Board of Trustees, (ii) a majority of
the trustees who are not interested persons of the Fund and who have no direct
or indirect financial interest in this Agreement or in any agreement related to
this Agreement, or (iii) a majority of the outstanding voting securities of the
class. Without prejudice to any other remedies of the Fund, the Fund may
terminate this Agreement at any time immediately upon KFS' failure to fulfill
any of its obligations hereunder.
This Agreement may not be amended to increase the amount to be paid to KFS
by the Fund for services hereunder with respect to a class of any series of the
Fund without the vote of a majority of the outstanding voting securities of
such class. All material amendments to this Agreement must in any event be
approved by a vote of the Board of Trustees of the Fund including the trustees
who are not interested persons of the Fund and who have no direct or indirect
financial interest in this Agreement or in any agreement related to this
Agreement, cast in person at a meeting called for such purpose.
The terms "assignment", "interested" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940 and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of KFS to receive
payments on any unpaid balance of the compensation described in Section 8
earned prior to such termination.
11. KFS will not use or distribute, or authorize the use, distribution or
dissemination by Firms or others in connection with the sale of Fund shares any
statements other than those contained in the Fund's current prospectus, except
such supplemental literature or advertising as shall be lawful under federal
and state securities laws and regulations. KFS will furnish the Fund with
copies of all such material.
<PAGE> 6
12. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
13. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
14. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust, and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the Trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
With respect to any claim by KFS for recovery of any liability of the Fund
arising hereunder allocated to a particular series or class, whether in
accordance with the express terms hereof or otherwise, KFS shall have recourse
solely against the assets of that series or class to satisfy such claim and
shall have no recourse against the assets of any other series or class for such
purpose.
15. This Agreement shall be construed in accordance with applicable federal
law and (except as to Section 14 hereof which shall be construed in accordance
with the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
16. This Agreement is the entire contract between the parties relating to the
subject matter hereof and supersedes all prior agreements between the parties
relating to the subject matter hereof.
IN WITNESS WHEREOF, the Fund and KFS have caused this Agreement to be
executed as of the day and year first above written.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
----------------------------
Title: Vice President
ATTEST:
/s/ Philip J. Collora
- -------------------------
Title: Asst. Secretary
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
----------------------------
Title: Sr. Vice President
ATTEST:
/s/ David F. Dierenfeldt
- -------------------------
Title: Asst. Secretary
<PAGE> 1
EXHIBIT 99.B6(b)
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION ("Assignment and Assumption") made and entered
into as of February 1, 1995 by and between Kemper Financial Services, Inc., a
Delaware corporation ("Assignor"), and Kemper Distributors, Inc., a Delaware
corporation ("Assignee").
WHEREAS, Assignor serves as principal underwriter for Kemper Global Income
Fund, a Massachusetts business trust (the "Fund"), pursuant to that certain
Underwriting and Distribution Services Agreement dated May 28, 1994 by and
between Assignor and the Fund (the "Agreement");
WHEREAS, Assignee is a wholly-owned subsidiary of Assignor;
WHEREAS, It has been proposed that the rights, duties and responsibilities
of Assignor under the Agreement be transferred to and assumed by Assignee;
WHEREAS, The Fund has determined that such transfer of rights, duties and
responsibilities is reasonable and in the best interests of the Fund and the
Fund's shareholders; and
NOW, THEREFORE, in consideration of the covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:
1. Assignment and Assumption. Assignor assigns and transfers to Assignee
all of Assignor's rights, interests, liabilities, duties and obligations under
the Agreement ("Assigned Rights and Obligations"). Assignee accepts the
foregoing assignment and transfer of the Assigned Rights and Obligations and
agrees to assume, pay, perform and otherwise be fully responsible for the same.
2. Further Assurances. From time to time, at the request of either
party, the other party will execute and deliver such further instruments of
assignment, transfer and assumption and take such further action as may be
required to assign, transfer and assume the Assigned Rights and Obligations.
3. Applicable Law. This Assignment and Assumption shall be governed by
the laws of the State of Illinois.
4. Amendments. This Assignment and Assumption may only be amended by the
written agreement of the parties.
<PAGE> 2
IN WITNESS WHEREOF, the parties have each caused this Assignment and
Assumption to be executed on its behalf by a duly authorized officer as of the
date first written above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-------------------------------------
Its: Senior Vice President
KEMPER DISTRIBUTORS, INC.
By: /s/ James L. Greenawalt
-------------------------------------
Its: Executive Vice President
The undersigned hereby acknowledges and consents to the foregoing Assignment
and Assumption as of February 1, 1995.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
- -----------------------------------
Its: Vice President
<PAGE> 1
EXHIBIT 99.B6(c)
SELLING GROUP AGREEMENT KEMPER DISTRIBUTORS, INC.
120 South LaSalle Street, Chicago, Illinois 60603
Dear Financial Services Firm:
As principal underwriter and distributor, we invite you to join a Selling
Group for the distribution of shares of the Kemper Mutual Funds (herein called
"Funds"), but only in those states in which the shares of the respective Funds
may legally be offered for sale. As exclusive agent of each of the Funds, we
offer to sell to you shares of the Funds on the following terms:
1. In all sales of these shares to the public you shall act as dealer for
your own account, and in no transaction shall you have any authority to act as
agent for the issuer, for us, or for any other member of the Selling Group.
2. Orders received from you will be accepted by us only at the public
offering price applicable to each order, as established by the Prospectus of
each Fund, subject to the discount, commission or other concession, if any, as
provided in such Prospectus. Upon receipt from you of any order to purchase
shares of a Fund, we shall confirm to you in writing or by wire to be followed
by a confirmation in writing. Additional instructions may be forwarded to you
from time to time. All orders are subject to acceptance or rejection by us in
our sole discretion.
3. You may offer and sell shares to your customers only at the public
offering price determined in the manner described in the applicable Prospectus.
The public offering price is the net asset value per share as provided in the
applicable Prospectus plus, with respect to certain Funds, a sales charge from
which you shall receive a discount equal to a percentage of the applicable
offering price as provided in the applicable Prospectus. You shall receive a
sales commission, with respect to certain Funds, equal to a percentage of the
amount invested as provided in the applicable Prospectus. You shall receive a
distribution service fee, for certain Funds for which such fees are available,
as provided in the applicable Prospectus which fee shall be payable with
respect to such assets, for such periods and at such intervals as are from time
to tome specified by us. The discounts or other concessions to which you may be
entitled in connection with sales to your customers pursuant to any special
features of a Fund (such as cumulative discounts, letters of intent, etc., the
terms of which shall be as described in the applicable Prospectus and related
forms) shall be in accordance with the terms of such features. You may receive
an administrative service fee, with respect to certain Funds for which such
fees are available, as provided in the applicable Prospectus, which fee shall
be payable with respect to such assets, for such periods and at such intervals
as are from time to time specified by us.
4. By accepting this agreement, you agree:
(a) To purchase shares only from us or from your customers.
(b) That you will purchase shares from us only to cover purchase
orders already received from your customers, or for your own bona fide
investments.
<PAGE> 2
(c) That you will not purchase shares from your customers at a price
lower than the bid price then quoted by or for the Fund involved. You may,
however, sell shares for the account of your customer to the Fund, or to us as
agent for the Fund, at the bid price currently quoted by or for the Fund and
charge your customer a fair commission for handling the transaction.
(d) That you will not withhold placing with us orders received from
your customers so as to profit yourself as a result of such withholding.
5. We will not accept from you any conditional orders for shares.
6. If any shares confirmed to you under the terms of this agreement are
repurchased by the issuing Fund or by us as agent for the Fund, or are tendered
for repurchase, within seven business days after the date of our confirmation
of the original purchase order, you shall forthwith refund to us the full
discount, commission, finder's fee or other concession, if any, allowed or paid
to you on such shares.
7. Payment for shares ordered from us shall be in New York clearing house
funds and must be received by the appropriate Fund's shareholder service agent
within seven days after our acceptance of your order (or such shorter time
period as may be required by applicable regulations). If such payment is not
received, we reserve the right, without notice, forthwith to cancel the sale
or, at our option, to sell the shares ordered back to the Fund, in which case
we may hold you responsible for any loss, including loss of profit suffered by
us as a result of your failure to make such payment.
8. Shares sold to you hereunder shall be available in negotiable form for
delivery at the appropriate Fund's shareholder services agent, against payment,
unless other instructions have been given.
9. All sales will be made subject to our receipt of shares from the Fund.
We reserve the right, in our discretion, without notice, to suspend sales or
withdraw the offering of shares entirely. We reserve the right to modify,
cancel or change the terms of this agreement, upon 15 days prior written notice
to you. Also, the sales charges, discounts, commissions or other concessions,
service fees of any kind provided for hereunder are subject to change at any
time by the Funds and us.
10. All communications to us should be sent to the address in the heading
above. Any notice to you shall be duly given if mailed or telegraphed to you at
the address specified by you below.
11. This agreement shall be construed in accordance with the laws of
Illinois. This agreement is subject to the Prospectuses of the Funds from time
to time in effect, and, in the event of a conflict, the terms of the
Prospectuses shall control. References herein to the "Prospectus" of a Fund
shall mean the prospectus and statement of additional information of such Fund
as from time to time in effect. Any changes, modifications or additions
reflected in any such Prospectus shall be effective on the date of such
Prospectus (or supplement thereto) unless specified otherwise.
<PAGE> 3
12. This agreement is subject to the Additional Stipulations and
Conditions on the reverse side hereof, all of which are a part of this
agreement.
Kemper Distributors, Inc.
By
-------------------------------
Authorized Signature
Title
-------------------------------
We have read the foregoing agreement and accept and agree to the terms and
conditions thereof.
Firm
------------------------------
Witness
------------------------ By
-------------------------------
Authorized Representative
Dated Title
------------------------- ----------------------------
<PAGE> 4
ADDITIONAL STIPULATIONS AND CONDITIONS
13. No person is authorized to make any representations concerning shares
of any Fund except those contained in the Prospectus of such Fund and in
printed information subsequently issued by the Fund or by us as information
supplemental to such Prospectus. If you wish to use your own advertising with
respect to a Fund, all such advertising must be approved by us or by the Fund
prior to use. You shall be responsible for any required filing of such
advertising.
14. Your acceptance of this agreement constitutes a representation (i)
that you are a registered security dealer and a member in good standing of the
National Association of Securities Dealers, Inc. and that you agree to comply
with all state and federal laws, rules and regulations applicable to
transactions hereunder and to the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., including specifically Section 26,
Article III thereof, or (ii) if you are offering and selling shares of the
Funds only in jurisdictions outside of the several states, territories and
possessions of the United States and are not otherwise required to be a member
of the National Association of Securities Dealers, Inc., that you nevertheless
agree to conduct your business in accordance with the spirit of the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., and to
observe the laws and regulations of the applicable jurisdiction. You likewise
agree that you will not offer to sell shares of any Fund in any state or other
jurisdiction in which they may not lawfully be offered for sale.
15. You shall make available an investment management account for your
customers through the Funds and shall provide such office space and equipment,
telephone facilities, personnel and literature distribution as is necessary or
appropriate for providing information and services to your customer. Such
services and assistance may include, but not be limited to, establishment and
maintenance of shareholder accounts and records, processing purchase and
redemption transactions, answering routine inquiries regarding the Funds, and
such other services as may be agreed upon from time to time and as may be
permitted by applicable statute, rule, or regulation. You agree to release,
indemnify and hold harmless the Funds, us and our respective representatives
and agents from any and all direct or indirect liabilities or losses resulting
from requests, directions, actions or inactions of or by you, your officers,
employees or agents regarding the purchase, redemption or transfer of
registration of shares of the Funds for accounts of you, your customers and
other shareholders or from any unauthorized or improper use of any on-line
computer facilities. You shall prepare such periodic reports for us as shall
reasonably be requested by us. You shall immediately inform the Funds or us of
all written complaints received by you from Fund shareholders relating to the
maintenance of their accounts and shall promptly answer all such complaints and
other similar correspondence. You shall provide the Funds and us on a timely
basis with such
<PAGE> 5
information as may be required to complete various regulatory forms.
16. As a result of the necessity to compute the amount of any contingent
deferred sales charge due with respect to the redemption of shares, you may not
hold shares of a Fund imposing such a charge in an account registered in your
name or in the name of your nominee for the benefit of certain of your
customers except with our prior written consent. Except as otherwise permitted
by us, shares of such a Fund owned by a shareholder must be in a separate
identifiable account for such shareholder.
17. Shares of certain Funds have been divided into separate classes: Class
A Shares, Class B Shares and Class C Shares. Class A shares are offered at net
asset value plus an initial sales charge. Class B Shares are offered at net
asset value without an initial sales charge but are subject to a contingent
deferred sales charge and a Rule 12b-1 fee and have a conversion feature. Class
C Shares are offered at net asset value without an initial sales charge or
contingent deferred sales charge but are subject to a Rule 12b-1 fee and have
no conversion feature. Please see the appropriate Prospectuses for a more
complete description of the distinctions between the classes of shares.
It is important to investors not only to choose Funds appropriate for
their investment objectives, but also to choose the appropriate distribution
arrangement, based on the amount invested and the expected duration of the
investment. To assist investors in these decisions, we have instituted the
following policies with respect to orders for shares of the Funds. The
following policies and procedures with respect to sales of classes of shares of
the Funds apply to each broker/dealer that distributes shares of the Funds.
1. All purchase orders for $500,000 or more (not including street name or
omnibus accounts) should be for Class A Shares.
2. Any purchase order of less than $500,000 may be for either Class A,
Class B or Class C Shares in light of the relevant facts and circumstances,
including:
a. the specific purchase order dollar amount;
b. the length of time the investor expects to hold the shares; and
c. any other relevant circumstances such as the availability of
purchases under a Letter of Intent, Combined Purchases or Cumulative Discount
Privilege.
There are instances when one pricing structure may be more appropriate
than another. For example, investors who would qualify for a reduced sales
charge on Class A Shares may determine that payment of a reduced front-end
sales charge is preferable to payment of an ongoing Rule 12b-1 fee. On the
other hand, investors whose orders would not qualify for such a discount and
who plan to hold their investment for more than six years may wish to defer the
sales charge and would consider Class B Shares. Investors who prefer not to pay
an initial sales charge and who plan to redeem their shares within six years
might consider Class C Shares.
Appropriate supervisory personnel within your organization must ensure
that all employees receiving investor inquiries about the purchase of shares of
the Funds advise the investor of the
<PAGE> 6
available pricing structures offered by the Funds and the impact of choosing
one method over another, including breakpoints and the availability of Letters
of Intent, Combined Purchases and Cumulative Discounts. In some instances it
may be appropriate for a supervisory person to discuss a purchase with the
investor.
18. This agreement shall be in substitution of any prior selling group
agreement between you and us regarding these shares. This agreement shall not
be applicable to the provision of services for Cash Equivalent Fund, Tax-Exempt
California Money Market Fund, Tax Exempt New York Money Market Fund, Investors
Cash Trust and similar wholesale money market funds. The payment of related
distribution and services fees, shall be subject to separate services
agreements.
<PAGE> 1
EXHIBIT 99.B8(a)
CUSTODY AGREEMENT
AGREEMENT, made the 1st day of October, 1990 by and between Kemper Global
Income Fund, a Massachusetts business trust having its principal place of
business at 120 South LaSalle Street, Chicago, Illinois 60603 ("Fund") and
Investors Fiduciary Trust Company, a trust company organized and existing under
the laws of Missouri, having its principal place of business at Kansas City,
Missouri ("Custodian").
WHEREAS, Fund wants to appoint Investors Fiduciary Trust Company as
Custodian to have custody of a portion of Fund's portfolio securities and
monies pursuant to this Agreement; and, for purposes related to its foreign
investments held outside the United States, Fund wants another custodian to
have custody of the remainder of Fund's portfolio securities and monies
pursuant to a separate agreement; and
WHEREAS, Investors Fiduciary Trust Company wants to accept such
appointment;
NOW, THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant
and agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Fund hereby constitutes and appoints Investors Fiduciary Trust Company as
Custodian of Fund which is to include:
A. Custody of the securities and monies at any time owned by Fund and
received By Custodian; and
B. Performing certain accounting and record keeping functions
relating to its function as Custodian for Fund and each of its Portfolios.
2. DELIVERY OF CORPORATE DOCUMENTS.
Fund has delivered or will deliver to Custodian prior to the effective
date of this Agreement, copies of the following documents and all amendments or
supplements thereto, property certified or authenticated:
A. Resolutions of the Board of Trustees of Fund appointing Investors
Fiduciary Trust Company as Custodian hereunder and approving the form of this
Agreement; and
B. Resolutions of the Board of Trustees of Fund authorizing certain
persons to give instructions on behalf of Fund to Custodian and authorizing
Custodian to rely upon written instructions over their signatures.
<PAGE> 2
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
All Fund's securities and moneys, except as permitted by the
Investment Company Act of 1940 ("1940 Act"), will be delivered either to
Custodian or to The Chase Manhattan Bank, N.A., pursuant to a separate custody
agreement. Fund will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as practicable, and
from time to time thereafter, portfolio securities acquired by it and monies
then owned by it except as permitted by the 1940 Act or from time to time
coming into its possession during the time this Agreement shall continue in
effect. Custodian shall have no responsibility or liability whatsoever for or
on account of securities or monies not so delivered. All securities so
delivered to Custodian (other than bearer securities) shall be registered in
the name of Fund or its nominee, or of a nominee of Custodian, or shall be
properly endorsed and in form for transfer satisfactory to Custodian.
B. Safekeeping
Custodian will receive delivery of and keep safely the assets of Fund
delivered to it from time to time. Custodian will not deliver any such assets
to any person except as permitted by the provisions of this Agreement or any
agreement executed by it according to the terms of this Agreement. Custodian
shall be responsible only for the monies and securities of Fund held directly
by it or its nominees or sub-custodian under this Agreement. Custodian may
participate directly or indirectly through a sub-custodian in the Depository
Trust Company, the Treasury/Federal Reserve Book Entry System, the Participants
Trust Company and any other securities depository approved by the Board of
Trustees of the Fund, subject to compliance with the provisions of Rule 17f-4
under the 1940 Act including, without limitation, the specific provisions of
subsections (a) (1) through (d) (4) thereof.
C. Registration of Securities
Custodian will hold stocks and other registerable portfolio securities
of Fund registered in the name of Fund or in the name of any nominee of
Custodian for whose fidelity and liabilities Custodian shall be fully
responsible, or in street certificate form, so-called, with or without any
indication of fiduciary capacity. Unless otherwise instructed, Custodian will
register all such portfolio securities in the name of its authorized nominee.
D. Exchange of Securities
Upon receipt of instructions, Custodian will exchange, or cause to be
exchanged, portfolio securities held by it for the account of Fund for other
securities or cash issued or paid in connection with any reorganization,
recapitalization, merger,
<PAGE> 3
consolidation, split-up of shares, change of par value, conversion or
otherwise, and will deposit any such securities in accordance with the terms of
any reorganization or protective plan. Without instructions, Custodian is
authorized to exchange securities held by it in temporary form for securities
in definitive form, to effect an exchange of shares when the par value of the
stock is changed, and, upon receiving payment therefore, to surrender bonds or
other securities held by it at maturity or when advised of earlier call for
redemption, except that Custodian shall receive instructions prior to
surrendering any convertible security.
E. Purchases or Sales of Investments of Fund
Fund shall, on each business day on which a purchase or sale of a
portfolio security shall be made by it, deliver to Custodian instructions which
shall specify with respect to each such transaction:
(1) The name of the issuer and description of the security;
(2) The number of shares or the principal amount purchased or sold, and
accrued interest, if any;
(3) The trade date;
(4) The settlement date;
(5) The date when the securities sold were purchased by Fund or other
information identifying the securities sold and to be delivered;
(6) The price per unit and the brokerage commission, taxes and other
expenses in connection with the transaction;
(7) The total amount payable or receivable upon such transaction; and
(8) The name of the person from whom or the broker or dealer through
whom the transaction was made.
In accordance with such purchase instructions, Custodian shall pay for out of
monies held for the account of Fund, but only insofar as monies are available
therein for such purpose, and receive the portfolio securities so purchased by
or for the account of Fund. Such payment shall be made only upon receipt by
Custodian of the securities so purchased in form for transfer satisfactory to
Custodian.
In accordance with such sales instructions, Custodian will deliver or cause to
be delivered the securities thus designated as sold for the account of Fund to
the broker or other person specified in the instructions relating to such sale,
such delivery to be made only upon receipt of payment therefor in such form as
shall be satisfactory to Custodian, with the understanding that Custodian
<PAGE> 4
may deliver or cause to be delivered securities for payment in accordance with
the customs prevailing among dealers in securities.
F. Purchases or Sales of Options and Futures Transactions
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such purchase or sale:
(1) Securities Options
(a) The underlying security;
(b) The price at which purchased or sold;
(c) The expiration date;
(d) The number of contracts;
(e) The exercise price;
(f) Whether opening, exercising, expiring or closing the transaction;
(g) Whether the transaction involves a put or call;
(h) Whether the option is written or purchased;
(i) Market on which option traded; and
(j) Name and address of the broker or dealer through whom the sale
or purchase was made.
(2) Options on Indices
(a) The index;
(b) The price at which purchased or sold;
(c) The exercise price;
(d) The premium;
(e) The multiple;
(f) The expiration date;
(g) Whether the transaction is an opening, exercising, expiring or
closing transaction;
(h) Whether the transaction involves a put or call;
(i) Whether the option is written or purchased; and
<PAGE> 5
(j) Name and address of the broker or dealer through whom the sale or
purchase was made.
(3) Securities Index Futures Transactions
(a) The last trading date specified in the contract and, when
available, the closing level, thereof;
(b) The index level on the date the contract is entered into;
(c) The multiple;
(d) Any margin requirements;
(e) The need for a segregated margin account (in addition to
instructions; and, if not already in the possession of Custodian, Fund shall
deliver a substantially complete and executed custodial safekeeping account and
procedural agreement which shall be incorporated into this Custody Agreement);
and
(f) The name and address of the futures commission merchant through
whom the sale or purchase was made.
(4) Options on Index Futures Contracts
(a) The underlying index futures contract;
(b) The premium;
(c) The expiration date;
(d) The number of options;
(e) The exercise price;
(f) Whether the transaction involves an opening, exercising, expiring
or closing transaction;
(g) Whether the transaction involves a put or call;
(h) Whether the option is written or purchased; and
(i) The market on which the option is traded.
G. Securities Pledged to Secure Loans
(1) Upon receipt of instructions, Custodian will release or cause to
be released securities held in custody to the pledgee designated in such
instructions by way of pledge or hypothecation to secure any loan incurred by
Fund; provided, however, that the securities shall be released only upon
payment to Custodian of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, further
securities
<PAGE> 6
may be released or caused to be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian will pay, but only from
funds available for such purpose, any such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon surrender of the note or
notes evidencing such loan.
(2) Upon receipt of instructions, Custodian will release securities
held in custody to the borrower designated in such instructions; provided,
however, that the securities shall be released only upon deposit with Custodian
of full cash collateral as specified in such instructions, and that Fund will
retain the right to any dividends, interest or distribution on such loaned
securities. Upon receipt of instructions and the loaned securities, Custodian
will release the cash collateral to the borrower.
H. Routine Matters
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution, purchase,
transfer, or other dealings with securities or other property of Fund except as
may be otherwise provided in this Agreement or directed from time to time by
the Board of Trustees of Fund.
I. Demand Deposit Account
Custodian will open and maintain a demand deposit account or accounts
in the name of Custodian, subject only to draft or order by Custodian upon
receipt of instructions. All monies received by Custodian from or for the
account of Fund shall be deposited in said account or accounts.
When properly authorized by a resolution of the Board of Trustees of
Fund, Custodian may open and maintain an additional demand deposit account or
accounts in such other banks or trust companies as may be designated in such
resolution, such accounts, however, to be in the name of Custodian and subject
only to its draft or order.
J. Income and Other Payments to Fund
Custodian will:
(1) collect, claim and receive and deposit for the account of Fund
all income and other payments which become due and payable on or after the
effective date of this Agreement with respect to the securities deposited under
this Agreement, and credit the account of Fund with such income on the payable
date;
(2) execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the collection of bond
and note coupons; and
<PAGE> 7
(3) take such other action as may be necessary or proper
in connection with:
(a) the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for payment of:
(1) all coupons and other income items requiring presentation;
(2) all other securities which may mature or be called, redeemed,
retired or otherwise become payable and regarding which the Custodian has
actual knowledge, or notice of which is contained in publications of the type
to which it normally subscribes for such purpose; and
(b) the endorsement for collection, in the name of Fund, of all
checks, drafts or other negotiable instruments.
Custodian, however, shall not be required to institute suit or take
other extraordinary action to enforce collection except upon receipt of
instructions and upon being indemnified to its satisfaction against the costs
and expenses of such suit or other actions. Custodian will receive, claim and
collect all stock dividends, rights and other similar items and deal with the
same pursuant to instructions. Unless prior instructions have been received to
the contrary, Custodian will, without further instructions, sell any rights
held for the account of Fund on the last trade date prior to the date of
expiration of such rights.
K. Payment of Dividends and Other Distributions
On the declaration of any dividend or other distribution on the shares
of beneficial interest of any Portfolio ("Portfolio Shares") by the Board of
Trustees of Fund, Fund shall deliver to Custodian instructions with respect
thereto, including a copy of the Resolution of said Board of Trustees certified
by the Secretary or an Assistant Secretary of Fund wherein there shall be set
forth the record date as of which shareholders are entitled to receive such
dividend or distribution, and the amount payable per share on such dividend or
distribution.
On the date specified in such Resolution for the payment of such
dividend or other distribution, Custodian shall pay out of the monies held for
the account of Fund, insofar as the same shall be available for such purposes,
and credit to the account of the Dividend Disbursing Agent for Fund, such
amount as may be necessary to pay the amount per share payable in cash on
Portfolio Shares issued and outstanding on the record date established by such
Resolution.
L. Portfolio Shares Purchased by Fund
<PAGE> 8
Whenever any Portfolio Shares are purchased by Fund, Fund
or its agent shall advise Custodian of the aggregate dollar amount to be paid
for such shares and shall confirm such advice in writing. Upon receipt of such
advice, Custodian shall charge such aggregate dollar amount to the custody
account of Fund and either deposit the same in the account maintained for the
purpose of paying for the purchase of Portfolio Shares or deliver the same in
accordance with such advice.
M. Portfolio Shares Purchased from Fund
Whenever Portfolio Shares are purchased from Fund, Fund will deposit
or cause to be deposited with Custodian the amount received for such shares.
Custodian shall not have any duty or responsibility to determine that Fund
Shares purchased from Fund have been added to the proper shareholder account or
accounts or that the proper number of such shares have been added to the
shareholder records.
N. Proxies and Notices
Custodian will promptly deliver or mail to Fund all proxies properly
signed, all notices of meetings, all proxy statements and other notices,
requests or announcements affecting or relating to securities held by Custodian
for Fund and will, upon receipt of instructions, execute and deliver or cause
its nominee to execute and deliver such proxies or other authorizations as may
be required. Except as provided by this Agreement or pursuant to instructions
hereafter received by Custodian, neither it nor its nominee shall exercise any
power inherent in any such securities, including any power to vote the same, or
execute any proxy, power of attorney, or other similar instrument voting any of
such securities, or give any consent, approval or waiver with respect thereto,
or take any other similar action.
O. Disbursements
Custodian will pay or cause to be paid insofar as funds are available
for the purpose, bills, statements and other obligations of Fund (including but
not limited to obligations in connection with the conversion, exchange or
surrender of securities owned by Fund, interest charges, variation margin,
dividend disbursements, taxes, management fees, administration-distribution
fees, custodian fees, legal fees, auditors' fees, transfer agents' fees,
brokerage commissions, compensation to personnel, and other operating expenses
of Fund) pursuant to instructions of Fund setting forth the name of the person
to whom payment is to be made, the amount of the payment, and the purpose of
the payment.
P. Books, Records and Accounts
Custodian acknowledges that all the records it shall prepare and
maintain pursuant to this Agreement shall be the property of Fund and that upon
request of Fund it shall make Fund's
<PAGE> 9
records available to it, along with such other information and data as are
reasonably requested by Fund, for inspection, audit or copying, or turn said
records over to Fund.
Custodian shall, within a reasonable time, render to Fund as of the
close of business on each day, a detailed statement of the amounts received or
paid and of securities received or delivered for the account of Fund during
said day. Custodian shall, from time to time, upon request by Fund, render a
detailed statement of the securities and monies held for Fund under this
Agreement, and Custodian shall maintain such books and records as are necessary
to enable it do so and shall permit such persons as are authorized by Fund,
including Fund's independent public accountants, to examine such records or to
confirm the contents of such records; and, if demanded, shall permit federal
and state regulatory agencies to examine said securities, books and records.
Upon the written instructions of Fund or as demanded by federal or state
regulatory agencies, Custodian shall instruct any sub-custodian to permit such
persons as are authorized by Fund to examine the books, records and securities
held by such sub-custodian which relate to Fund.
Q. Appointment of Sub-Custodian
Notwithstanding any other provisions of this Agreement, all or any of
the monies or securities of Fund may be held in Custodian's own custody or in
the custody of one or more other banks or trust companies acting as
sub-custodians as may be approved by resolutions of Fund's Board of Trustees,
evidenced by a copy thereof certified by the Secretary or Assistant Secretary
of Fund. Any such sub-custodian must have the qualifications required for
custodians under the 1940 Act unless exempted therefrom. The sub-custodian may
participate directly or indirectly in the Depository Trust Company, the
Treasury/ Reserve Book Entry System, the Participants Trust Company and any
other securities depository approved by the Board of Trustees of the Fund, to
the same extent and subject to the same conditions as Custodian hereunder.
Neither Custodian nor sub-custodian shall be entitled to reimbursement by Fund
for any fees or expenses of any sub-custodian. The appointment of a
sub-custodian shall not relieve Custodian of any of its obligations hereunder.
R. Multiple Portfolios
If Fund shall issue shares of more than one Portfolio during the term
hereof, Custodian agrees that all securities and other assets of Fund shall be
segregated by Portfolio and all books and records, account values or actions
shall be maintained, held, made or taken, as the case may be, separately for
each Portfolio.
S. Other Custodian
<PAGE> 10
Pursuant to instructions, Custodian will transmit
securities and moneys of Fund to The Chase Manhattan Bank, N.A., as custodian
for Fund.
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written or oral
instructions to Custodian from an authorized person of Fund. Certified copies
of resolutions of the Board of Trustees of Fund naming one or more persons
authorized to give instructions in the name and on behalf of Fund may be
received and accepted by Custodian as conclusive evidence of the authority of
any person so to act and may be considered to be in full force and effect (and
Custodian shall be fully protected in acting in reliance thereon) until receipt
by Custodian of notice to the contrary. Unless the resolution authorizing any
person to give instructions specifically requires that the approval of anyone
else shall first have been obtained, Custodian shall be under no obligation to
inquire into the right of the person giving such instructions to do so.
Notwithstanding any of the foregoing provisions of this Section 4, no
authorizations or instructions received by Custodian from Fund shall be deemed
to authorize or permit any trustee, officer, employee, or agent of Fund to
withdraw any of the securities or monies of Fund upon the mere receipt of
instructions from such trustee, officer, employee or agent.
B. No later than the next business day immediately following each
oral instruction referred to herein, Fund shall give Custodian written
confirmation of each such oral instruction. Either party may electronically
record any oral instruction whether given in person or via telephone.
5. LIMITATION OF LIABILITY OF CUSTODIAN
A. Custodian shall hold harmless and indemnify Fund from and against
any loss or liability arising out of Custodian's failure to comply with the
terms of this Agreement or arising out of Custodian's negligence, willful
misconduct, or bad faith. Custodian may request and obtain the advice and
opinion of counsel for Fund or of its own counsel with respect to questions or
matters of law, and it shall be without liability to Fund for any action taken
or omitted by it in good faith, in conformity with such advice or opinion.
B. If Fund requires Custodian in any capacity to take, with respect
to any securities, any action which involves the payment of money by it, or
which in Custodian's opinion might make it or its nominee liable for payment of
monies or in any other way, Custodian shall be and be kept indemnified by Fund
in an amount and form satisfactory to Custodian against any liability on
account of such action.
C. Custodian shall be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for such cash
<PAGE> 11
disbursements, costs and expenses as may be agreed upon from time
to time by Custodian and Fund.
D. Custodian shall be protected in acting as custodian hereunder upon
any instructions, advice, notice, request, consent, certificate or other
instrument or paper reasonably appearing to it to be genuine and to have been
properly executed and shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained from Fund hereunder, a certificate signed by Fund's President, or
other officer specifically authorized for such purpose.
E. Without limiting the generality of the foregoing, Custodian shall
be under no duty or obligation to inquire into, and shall not be liable for:
(1) The validity of the issue of any securities purchased by or
for Fund, the legality of the purchase thereof or evidence of ownership
required by Fund to be received by Custodian, or the propriety of the decision
to purchase or amount paid therefor;
(2) The legality of the sales of any securities by or for Fund,
or the propriety of the amount paid therefor;
(3) The legality of the issue or sale of any shares of Fund, or
the sufficiency of the amount to be received therefor;
(4) The legality of the purchase of any shares of Fund, or the
propriety of the amount to be Paid therefor; or
(5) The legality of the declaration of any dividend by Fund, or
the legality of the issue of any shares of Fund in payment of any share
dividend.
F. Custodian shall not be liable for, or considered to be the
custodian of, any money represented by any check, draft, wire transfer,
clearing house funds, uncollected funds, or instrument for the payment of money
received by it on behalf of Fund, until Custodian actually receives such money,
provided only that it shall advise Fund promptly if it fails to receive any
such money in the ordinary course of business, and use its best efforts and
cooperate with Fund toward the end that such money shall be received.
G. Subject to the obligations of Custodian under Section 3.B. hereof,
Custodian shall not be responsible for loss occasioned by the acts, neglects,
defaults or insolvency of any broker, bank, trust company, or any other person
with whom Custodian may deal in the absence of negligence, misconduct or bad
faith on the part of Custodian.
H. Custodian shall provide Fund for its approval by its Board of
Trustees agreements with banks or trust companies which will act as
sub-custodian for Fund pursuant to this Agreement; and,
<PAGE> 12
as set forth in Section 3.B. hereof, Custodian shall be responsible for the
monies and securities of the Fund held by it or its nominees or sub-custodians
under this Agreement.
6. COMPENSATION.
Fund shall pay to Custodian such compensation at such times as may from
time to time be agreed upon in writing by Custodian and Fund. Custodian may
charge such compensation against monies held by it for the account of Fund.
Custodian shall also be entitled, notwithstanding the provisions of Sections 5B
or 5C hereof, to charge against any monies held by it for the account of Fund
the amount of any loss, damage, liability or expense for which it shall be
entitled to reimbursement under the provisions of this Agreement. Custodian
shall not be entitled to reimbursement by Fund for any loss or expenses of any
sub-custodian.
7. TERMINATION.
Either party to this Agreement may terminate the same by notice in
writing, delivered or mailed, postage prepaid, to the other party hereto and
received not less than sixty (60) days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, Fund shall
pay to Custodian such compensation for its reimbursable disbursements, costs
and expenses paid or incurred to such date and Fund shall use its best efforts
to obtain a successor custodian. Unless the holders of a majority of the
outstanding shares of Fund vote to have the securities, funds and other
properties held under this Agreement delivered and paid over to some other
person, firm or corporation specified in the vote, having not less the Two
Million Dollars ($2,000,000) aggregate capital, surplus and undivided profits,
as shown by its last published report, and meeting such other qualifications
for custodian as set forth in the Bylaws of Fund, the Board of Trustees of Fund
shall, forthwith upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian a bank or trust company having such
qualifications. Custodian shall, upon termination of this Agreement, deliver
to the successor custodian so specified or appointed, at custodian's office,
all securities then held by Custodian hereunder, duly endorsed and in form for
transfer, and all funds and other properties of Fund deposited with or held by
Custodian hereunder, and shall cooperate in effecting changes in book-entries
at the Depository Trust Company, the Treasury/Federal Reserve Book-Entry
System, the Participants Trust Company and any other securities depository
holding assets of the Fund. In the event no such vote has been adopted by the
shareholders of Fund and no written order designating a successor custodian
shall have been delivered to Custodian on or before the date when such
termination shall become effective, then Custodian shall deliver the
securities, funds and properties of Fund to a bank or trust company at the
selection of Custodian and meeting the qualifications for custodian, if any,
set forth in the Bylaws of Fund and having not less than Two Million Dollars
($2,000,000) aggregate capital, surplus and undivided
<PAGE> 13
profits, as shown by its last published report. Upon either such delivery to a
successor custodian, Custodian shall have no further obligations or liabilities
under this Agreement. Thereafter such bank or trust company shall be the
successor custodian under this Agreement and shall be entitled to reasonable
compensation for its services. In the event that no such successor custodian
can be found, Fund will submit to its shareholders, before permitting delivery
of the cash and securities owned by Fund to anyone other than a successor
custodian, the question of whether Fund shall be liquidated or shall function
without a custodian. Notwithstanding the foregoing requirement as to delivery
upon termination of this Agreement, Custodian may make any other delivery of
the securities, funds and property of Fund which shall be permitted by the 1940
Act and Fund's Agreement and Declaration of Trust and Bylaws then in effect.
Except as otherwise provided herein, neither this Agreement nor any portion
thereof may be assigned by Custodian without the consent of Fund, authorized or
approved by a resolution of its Board of Trustees.
8. NOTICES.
Notices, requests, instructions and other writings received by Fund at 120
South LaSalle Street, Chicago, Illinois 60603 or at such other address as Fund
may have designated by certified resolution of the Board of Trustees to
Custodian and notices, requests, instructions and other writings received by
Custodian at its offices at 21 West 10th Street, Kansas City, Missouri 64105,
or to such other address as it may have designated to Fund in writing, shall be
deemed to have been properly given hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of Missouri
and shall be governed by the laws of the State of Missouri (except as to
Section 9.H. hereof which shall be governed in accordance with the laws of The
Commonwealth of Massachusetts).
B. All the terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective successors
and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
E. This Agreement shall become effective at the close of business on
the date hereof.
<PAGE> 14
F. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
H. All parties hereto are expressly put on notice of Fund's Agreement
and Declaration of Trust, which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Fund by its representatives as such representatives and not individually,
and the obligations of Fund hereunder are not binding upon any of the Trustees,
officers of shareholders of Fund individually but are binding upon only the
assets and property of Fund. With respect to any claim by Custodian for
recovery of that portion of the compensation (or any other liability of Fund
arising hereunder) allocated to a particular Portfolio, whether in accordance
with the express terms hereof or otherwise, Custodian shall have recourse
solely against the assets of that Portfolio to satisfy such claim and shall
have no recourse against the assets of any other Portfolio for such purpose.
I. This Agreement, together with the Fee Schedule, is the entire
contract between the parties relating to the subject matter hereof and
supersedes all prior agreements between the parties relating to the subject
matter hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective authorized officers, and their respective seals to be
affixed.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
--------------------------
Title: Vice President
Attest: /s/ Robert J. Engling
-----------------------------
Title: Vice President & Secretary
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ R.A. Winegar
--------------------------
Title: EVP
Attest: /s/ Cheryl Naegler
-------------------------
Title: Asst. Secretary
<PAGE> 1
EXHIBIT 99.B8(b)
FOREIGN CUSTODY AGREEMENT
AGREEMENT dated September 1, 1989 between THE CHASE MANHATTAN BANK, N.A.
("Bank") and Kemper Global Income Fund.
1. Custody Account. The Bank agrees to establish and maintain (a) a
custody account in the name of the Fund ("Custody Account") for any and all
stocks, shares, bonds, debentures, notes, mortgages or other obligations for
the payment of money and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the same
or evidencing or representing any other rights or interests therein and other
similar property (hereinafter called "Securities") and from time to time
received by the Bank or its subcustodian (as defined in the last sentence of
Section 3) for the account of the Fund, and (b) a deposit account in the name
of the Fund ("Deposit Account") for any and all cash in any currency received
by the Bank or its subcustodian for the account of the Fund, which cash shall
not be subject to withdrawal by draft or check.
2. Maintenance of Securities Abroad. Securities in the Custody Account
shall be held in the country or other jurisdiction as shall be specified from
time to time in Instructions, provided that such country or other jurisdiction
shall be one in which the principal trading market for such Securities is
located or the country or other jurisdiction in which such Securities are to be
presented for payment or are acquired for the Custody Account and cash in the
Deposit Account shall be credited to an account in such amounts and in the
country or other jurisdiction as shall be specified from time to time in
Instructions, provided that such country or other jurisdiction shall be one in
which such cash is the legal currency for the payment of public or private
debts.
3. Eligible Foreign Custodians and Securities Depositories. The Fund's
Board of Trustees authorizes the Bank to hold the Securities in the Custody
Account and the cash in the Deposit Account in custody and deposit accounts,
respectively, which have been established by the Bank with one of its branches,
a branch of a qualified U.S. bank, an eligible foreign custodian or an eligible
foreign securities depository; provided, however, that the Bank has recommended
and the Board has approved the use of, and the Bank's contract with, such
eligible foreign custodian or eligible foreign securities depository by
resolution, and a certified copy of such resolution has been provided to the
Bank. Furthermore, if one of its branches, a branch of a qualified U.S. bank
or an eligible foreign custodian is selected to act as the Bank's subcustodian
to hold any of the Securities or cash, such entity is authorized to hold such
Securities or cash in its account with any eligible foreign securities
depository in which it participates. For purposes of this Agreement (a)
"qualified U.S. bank" shall mean a qualified U.S. bank as defined in Rule
17f-5 under the Investment Company Act of 1940 ("Investment Company Act"); (b)
"eligible foreign custodian" shall mean (i) a banking institution or trust
<PAGE> 2
company incorporated or organized under the laws of a country other than the
United States that is regulated as such by that country's government or an
agency thereof and that has shareholders' equity in excess of $200 million in
U.S. currency (or a foreign currency equivalent thereof), (ii) a majority owned
direct or indirect subsidiary of a qualified U.S. bank or bank holding company
that is incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100 million in
U.S. currency (or a foreign currency equivalent thereof) or (iii) a banking
institution or trust company incorporated or organized under the laws of a
country other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the United
States which has such other qualifications as shall be authorized or permitted
by a rule, regulation, interpretation or exemptive order promulgated by or
under the authority of the Securities and Exchange Commission, specified in
Instructions and approved by the Bank; and (c) "eligible foreign securities
depository" shall mean a securities depository or clearing agency, incorporated
or organized under the laws of a country other than the United States, which
operates (i) the central system for handling of securities or equivalent
book-entries in that country or (ii) a transnational system for the central
handling of securities or equivalent book-entries.
Hereinafter the term "subcustodian" will refer to any branch of a
qualified U.S. bank, any eligible foreign custodian or any eligible foreign
securities depository with which the Bank has entered an agreement of the type
contemplated hereunder regarding Securities and/or cash held in or to be
acquired for the Custody Account or the Deposit Account.
4. Use of Subcustodian. With respect to Securities and other assets
which are maintained by the Bank in the physical custody of a subcustodian
pursuant to Section 3 (as used in this Section 4, the term "Securities" means
such Securities and other assets),
(a) The Bank will identify on its books as belonging to the Fund any
Securities held by such subcustodian.
(b) In the event that a subcustodian permits any of the Securities
placed in its care to be held in an eligible foreign securities depository,
such subcustodian will be required by its agreement with the Bank to identify
on its books such Securities as being held for the account of the Bank as a
custodian for its customers.
(c) Any Securities in the Custody Account held by a subcustodian of
the Bank will be subject only to the instructions of the Bank or its agents;
and any Securities held in an eligible foreign securities depository for the
account of a subcustodian will be subject only to the instructions of such
subcustodian.
<PAGE> 3
(d) The Bank will only deposit Securities in an account
with a subcustodian which includes exclusively the assets held by the Bank for
its customers, and the Bank will cause such account to be designated by such
subcustodian as a special custody account for the exclusive benefit of
customers of the Bank.
(e) Any agreement the Bank shall enter into with a subcustodian with
respect to the holding of Securities shall require that (i) the Securities are
not subject to any right, charge, security interest, lien or claim of any kind
in favor of such subcustodian except for their safe custody or administration
and (ii) beneficial ownership of such Securities is freely transferable without
the payment of money or value other than for safe custody or administration;
provided, however, that the foregoing shall not apply to the extent that any of
the above-mentioned rights, charges, etc. result from any compensation or other
expenses arising with respect to the safekeeping of Securities pursuant to such
agreement or from any arrangements made by the Fund with any such subcustodian.
(f) The Bank shall allow independent public accountants
of the Fund such reasonable access to the records of the Bank relating to the
Securities held in the Custody Account as is required by such accountants in
connection with their examination of the books and records pertaining to the
affairs of the Fund. The Bank shall, subject to restrictions under applicable
law, also obtain from any subcustodian with which the Bank maintains the
physical possession of any Securities in the Custody Account an undertaking to
permit independent public accountants of the Fund such reasonable access to the
records of such subcustodian as may be required in connection with their
examination of the books and records pertaining to the affairs of the Fund.
The Bank shall furnish to the Fund such reports (or portions thereof) of the
Bank's external auditors as relate directly to the Bank's system of internal
accounting controls applicable to the Bank's duties under this Agreement. The
Bank shall use its best efforts to obtain and furnish the Fund with similar
reports with respect to each eligible foreign custodian and eligible foreign
securities depository holding Securities of the Fund.
(g) The Bank will supply to the Fund from time to time as mutually
agreed upon a statement in respect to any Securities in the Custody Account
held by a subcustodian, including an identification of the entity having
possession of the Securities, and the Bank will send to the Fund an advice or
notification of any transfers of Securities to or from the Custody Account,
indicating, as to Securities acquired for the Fund, the identity of the entity
having physical possession of such Securities. In the absence of the filing in
writing with the Bank by the Fund of exceptions or objections to any such
statement within sixty (60) days following receipt of the statement, the Fund
shall be deemed to have approved such statement; and in such case or upon
written approval of the Fund of any such statement the Bank shall, to the
extent permitted by law, be released, relieved and discharged with respect to
all
<PAGE> 4
matters and things set forth in such statement as though such statement had
been settled by the decree of a court of competent jurisdiction in an action in
which the Fund and all persons having any equity interest in the Fund were
parties.
(h) The Bank hereby warrants to the Fund that in its opinion, after
due inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank, each eligible foreign custodian and each
eligible foreign securities depository holding the Fund's Securities pursuant
to this Agreement afford protection for such Securities at least equal to that
afforded by the Bank's established procedures with respect to similar
securities held by the Bank (and its securities depositories) in New York.
5. Deposit Account Payments. Subject to the provisions of
Section 7, the Bank shall make, or cause its subcustodians to make, payments
of cash credited to the Deposit Account only
(a) in connection with the purchase of Securities for the Fund and
the delivery of such Securities to, or the crediting of such Securities to the
account of, the Bank or its subcustodian, each such payment to be made at
prices as its subcustodian, each such payment to be made at prices as confirmed
by Instructions (as defined in Section 9 hereof) from Authorized persons (as
defined in Section 10 hereof);
(b) for the purchase or redemption of shares of the capital stock of
the Fund and the delivery to, or crediting to the account of, the Bank or its
subcustodian of such shares to be so purchased or redeemed;
(c) for the payment for the account of the Fund of dividends,
interest, taxes, management or supervisory fees, capital distributions or
operating expenses;
(d) for the payments to be made in connection with the conversion,
exchange or surrender of Securities held in the Custody Account;
(e) for transmittal either to United Missouri Bank of Kansas City,
National Association, or to Investors Fiduciary Trust Company, Custodian for
the Fund;
(f) for other proper corporate purposes of the Fund; or
(g) upon the termination of this Custody Agreement as hereinafter set
forth.
All payments of cash for a purpose permitted by subsection (a), (b), (c),
(d) or (e) of this Section 5 will be made only upon receipt by the Bank of
Instructions from Authorized Persons which shall specify the purpose for which
the payment is to be made and the applicable subsection of this Section 5. In
the case of any
<PAGE> 5
payment to be made for the purpose permitted by subsection (f) of this Section
5, the Bank must first receive a certified copy of a resolution of the Board
adequately describing such payment, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment is to be made.
Any payment pursuant to subsection (g) of this Section 5 will be made in
accordance with Section 17.
In the event that any payment made under this Section 5 exceeds the funds
available in the Deposit Account, the Bank may, in its discretion, advance the
Fund an amount equal to such excess and such advance shall be deemed a loan
from the Bank to the Fund, payable on demand, bearing interest at the rate of
interest customarily charged by the Bank on similar loans.
If the Bank causes the Deposit Account to be credited on the payable date
for interest, dividends or redemptions, the Fund will promptly return to the
Bank any such amount or property so credited upon oral or written notification
that neither the Bank nor its subcustodian can collect such amount or property
in the ordinary course of business. The Bank or its subcustodian, as the case
may be, shall have no duty or obligation to institute legal proceedings, file a
claim or proof of claim in any insolvency proceeding or take any other action
with respect to the collection of such amount or property beyond its ordinary
collection procedures.
6. Custody Account Transactions. Subject to the provisions of Section 7,
Securities in the Custody Account will be transferred, exchanged or delivered
by the Bank or its subcustodians only
(a) upon sale of such Securities for the Fund and receipt by the Bank
or its subcustodian only of payment therefor, each such payment to be in the
amount confirmed by Instructions from Authorized persons;
(b) when such Securities are called, redeemed or retired, or
otherwise become payable;
(c) in exchange for or upon conversion into other Securities along or
other Securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to their terms into
other Securities;
(e) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(f) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
<PAGE> 6
(g) for the purpose of delivery either to United Missouri Bank of
Kansas City, National Association, or to Investors Fiduciary Trust Company, as
Custodian for the Fund:
(h) for the purpose of redeeming in kind shares of the Fund against
delivery to the Bank or its subcustodian of such shares to be so redeemed;
(i) for other proper trust purposes of the Fund;
(j) upon the termination of this Custody Agreement as hereinafter set
forth.
All transfers, exchanges or deliveries of Securities in the Custody Account
for a purpose permitted by either subsection (a), (b), (c), (d), (e), (f) or
(g) of this Section 6 will be made, except as provided in Section 8, only upon
receipt by the Bank of Instructions from Authorized Persons which shall specify
the purpose of the transfer, exchange or delivery to be made and the applicable
subsection of this Section 6. In the case of any transfer or delivery to be
made for the purpose permitted by subsection (h) of this Section 6, the Bank
must first receive Instructions from Authorized Persons specifying the shares
held by the Bank or its subcustodian to be so transferred or delivered and
naming the person or persons to whom transfers or delivery of such shares shall
be made. In the case of any transfer, exchange or delivery to be made for the
purpose permitted by subsection (i) of this Section 6, the Bank must first
receive a certified copy of a resolution of the Board adequately describing
such transfer, exchange or delivery, declaring such purpose to be a proper
trust purpose, and naming the person or persons to whom delivery of such
Securities shall be made. Any transfer or delivery pursuant to subsection (j)
of this Section 6 will be made in accordance with Section 17.
7. Custody Account Procedures. With respect to any transaction involving
Securities held in or to be acquired for the Custody Account, the Bank in its
discretion may cause the Deposit Account to be credited on the contractual
settlement date with the proceeds of any sale or exchange of Securities from
the Custody Account and to be debited on the contractual settlement date for
the cost of Securities purchased or acquired for the Custody Account. The Bank
may reverse any such credit or debit if the transaction with respect to which
such credit or debit were made fails to settle within a reasonable period,
determined by the Bank in its discretion, after the contractual settlement
date, except that if any Securities delivered pursuant to this Section 7 are
returned by the recipient thereof, the Bank may cause any such credits and
debits to be reversed at any time. With respect to any transactions as to
which the Bank does not determine so to credit or debit the Deposit Account,
the proceeds from the sale or exchange of Securities will be credited and the
cost of such Securities purchased or acquired will be debited to the Deposit
<PAGE> 7
Account on the date such proceeds or Securities are received by the Bank.
Notwithstanding the preceding paragraph, settlement and payment for
Securities received for, and delivery of Securities out of, the Custody Account
may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the jurisdiction
or market in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the expectation of
receiving later payment for such Securities from such purchaser or dealer.
8. Actions of the Bank. Until the Bank receives instructions from
Authorized Persons to the contrary, the Bank will, or will instruct its
subcustodian to,
(a) present for payment any Securities in the Custody Account which
are called, redeemed or retired or otherwise become payable and all coupons and
other income items which call for payment upon presentation to the extent that
the Bank or subcustodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance with the
provisions of Sections 2, 3 and 4 of this Agreement;
(b) in respect of Securities in the Custody Account, execute in the
name of the Fund such ownership and other certificates as may be required to
obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in the Custody
Account for definitive Securities;
(d) convert moneys received with respect to Securities of foreign
issue into United States dollars or any other currency necessary to effect any
transaction involving the Securities whenever it is practicable to do so
through customary banking channels, using any method or agency available,
including, but not limited to, the facilities of the Bank, its subsidiaries,
affiliates or subcustodians; and
(e) in the event of any loss of Securities or Cash, use its best
efforts to ascertain the circumstances relating to such loss and promptly
report the same to the Fund.
9. Instructions. As used in this Agreement, the term "Instructions"
means instructions of the Fund received by the Bank, via telephone, telex, TWX,
facsimile transmission, bank wire or other teleprocess or electronic
instruction system acceptable to the Bank which the Bank reasonably believes in
good faith to have been given by Authorized Persons or which are transmitted
with proper testing or authentication pursuant to terms and conditions which
the Bank may specify.
<PAGE> 8
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the Fund will hold the
Bank harmless for its failure to send such confirmation in writing, the failure
of such confirmation to conform to the telephone instructions received or the
Bank's failure to produce such confirmation at any subsequent time provided
that the Bank has timely advised the Fund of its failure to send such
confirmation in writing or the failure of such confirmation to conform to the
telephone instructions received. Unless otherwise expressly provided, all
Instructions shall continue in full force and effect until cancelled or
superseded. If the Bank requires test arrangements, authentication methods or
other security devices to be used with respect to instructions, any
Instructions given by the Fund thereafter shall be given and processed in
accordance with such terms and conditions for the use of such arrangements,
methods or devices as the Bank may put into effect and modify from time to
time. The Fund shall safeguard any testkeys, identification codes or other
security devices which the Bank shall make available to it. The Bank may
electronically record any Instructions given by telephone, and any other
telephone discussions, with respect to the Custody Account.
10. Authorized Persons. As used in this Agreement, the term "Authorized
Persons" means such officers or such agents of the Fund as have been designated
by a resolution of the Board, a certified copy of which has been provided to
the Bank, to act on behalf of the Fund in the performance of any acts which
Authorized Persons may do under this Agreement. Such persons shall continue to
be Authorized Persons until such time as the Bank receives instructions from
Authorized Persons that any such officer or agent is no longer an Authorized
Person.
11. Nominees. Securities in the Custody Account which are ordinarily held
in registered form may be registered in the name of the Bank's nominee or, as
to any Securities in the possession of an entity other than the Bank, in the
name of such entity's nominee. The Fund agrees to hold any such nominee
harmless from any liability as a holder of record of such Securities. The
Bank may without notice to the Fund cause any such Securities to cease to be
registered in the name of any such nominee and to be registered in the name of
the Fund. In the event that any Securities registered in the name of the
Bank's nominee or held by one of its subcustodians and registered in the name
of such subcustodian's nominee are called for partial redemption by the issuer
of such Security, the Bank may allot, or cause to be allotted, the called
portion to the respective beneficial holders of such class of security in any
manner the Bank deems to be fair and equitable.
12. Standard of Care. The Bank shall be responsible for the performance
of only such duties as are set forth herein or contained in Instructions given
to the Bank by Authorized Persons which are not contrary to the provisions of
this Agreement. The Bank will use reasonable care with respect to the
safekeeping of
<PAGE> 9
Securities in the Custody Account. The Bank shall be liable to the Fund for any
loss which shall occur as the result of the failure of a subcustodian or an
eligible foreign securities depository engaged by such subcustodian to exercise
reasonable care with respect to the safekeeping of such Securities and other
assets to the same extent that the Bank would be liable to the Fund if the Bank
were holding such Securities and other assets in New York. In the event of any
loss to the Fund by reason of the failure of the Bank or its subcustodian or an
eligible foreign securities depository engaged by such subcustodian to utilize
reasonable care, the Bank shall be liable to the Fund to the extent of the
Fund's damages, to be determined based on the market value of the property
which is the subject of the loss at the date of discovery of such loss and
without reference to any special conditions or circumstances. The Bank shall
be held to the exercise of reasonable care in carrying out this Agreement but
shall be indemnified by, and shall be without liability to, the Fund for any
action taken or omitted by the Bank in good faith without negligence. The Bank
shall be entitled to rely, and may act, on advice of counsel (who may be
counsel for the Fund) on all matters and shall be without liability for any
action reasonably taken or omitted pursuant to such advice.
The Bank need not maintain any insurance for the benefit of the Fund.
However, the Bank represents and warrants that it presently maintains a
bankers' blanket bond ("Bond") which provides standard fidelity and
non-negligent loss coverage with respect to securities which may be held by the
Bank and securities which may be held in the offices of foreign banks and
foreign securities depositories which may be utilized by the Bank pursuant to
this Agreement. The Bank agrees that if at any time the Bank for any reason
discontinues such coverage, it shall immediately notify the Fund in writing.
The Bank represents that only the named insured on the Bond, which includes the
Bank but not any of the Bank's customers, is directly protected against loss.
The Bank represents that while it might resist a claim of one of its customers
to recover for a loss not covered by the Bond, as a practical matter, where a
claim is brought and loss is possibly covered by the Bond, the Bank would give
notice of the claim to its insurer, and the insurer would normally determine
whether to defend the claim against the Bank or to pay the claim on behalf of
the Bank.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Fund.
The Bank shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Bank or by its subcustodian of any payment, redemption
or other transaction regarding Securities in the Custody Account in respect of
which the Bank has agreed to take action as provided in Section 8 hereof. The
Bank shall not be liable for any action taken in good faith upon Instructions
or upon any certified copy of any resolution of the Board and may rely on the
genuineness of any such documents which it may in good faith believe to be
validly executed. The Bank shall not be liable for any loss resulting from, or
caused by, the direction of the Fund to maintain custody
<PAGE> 10
of any Securities or cash in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
13. Compliance with Securities and Exchange Commission Rules and Orders.
To the extent that a condition of a rule, regulation, interpretation or
exemptive order promulgated by or under the authority of the Securities and
Exchange Commission applies to the Bank or the Fund each shall be solely
responsible to assure that this Agreement and the maintenance of Securities and
cash under this Agreement complies with any such rule, regulation,
interpretation or exemptive order.
14. Corporate Action. The Bank or its subcustodian is to forward promptly
to the Fund all communications relative to the Securities in the Custody
Account. Such communications as call for voting or the exercise of rights or
other specific action (including material relative to legal proceedings
intended to be transmitted to security holders) shall be transmitted to the
Fund by means which will permit the Fund to take timely action. The Bank or
its subcustodian will cause its nominee to execute and deliver to the Fund
proxies relating to Securities in the Custody Account registered in the name of
such nominee but without indicating the manner in which such proxies are to be
voted. Proxies relating to bearer Securities will be delivered in accordance
with written instructions from Authorized Persons.
Bank hereby agrees that Bank shall create, maintain, and retain all
records relating to its activities and obligations under this Agreement in such
manner as will meet the obligations of the Fund under the Investment Company
Act, particularly Section 31 thereof and Rules 31a-1, 31a-2 and 31a-3
thereunder, and applicable Federal, state and foreign tax laws and other laws
or administrative rules or procedures, in each case as currently in effect,
which may be applicable to the Fund. All records so maintained in connection
with the performance of its duties under this Agreement shall be preserved and
maintained as required by regulation and, in the event of termination of the
Agreement, shall be available to the Fund or its agent upon request.
15. Fees and Expenses. The Fund agrees to pay to the Bank from time to
time such compensation for its services pursuant to this Agreement as may be
mutually agreed upon in writing from time to time including reimbursement of
the Bank's reasonable out-of-pocket or incidental expenses, including legal
fees. The Fund hereby agrees to hold the Bank harmless from any liability or
loss resulting from any taxes or other governmental charges, and any expenses
related thereto, which may be imposed, or assessed with respect to the Custody
Account or any Securities in the Custody Account and also agrees to hold the
Bank, its subcustodians, and their respective nominees harmless from any
liability as a record holder of Securities in the Custody Account. The Bank is
authorized to charge any account of the Fund for such
<PAGE> 11
items and the Bank shall have a lien on Securities in the Custody Account and
on cash in the Deposit Account for any amount owing to the Bank from time to
time under this Agreement.
16. Effectiveness. This Agreement shall be effective on the date first
noted above; provided, however, that the Board has provided the Bank a
certified copy of a resolution that (i) approves each of the subcustodians
listed in Appendix A hereto and the terms of the custody agreement between the
Bank and each such subcustodian attached as Exhibits I through hereof, and (ii)
states that the Board has determined that the use of each such subcustodian and
the terms of each such subcustody agreement are consistent with the best
interests of the Fund and its shareholders.
17. Termination. This Agreement may be terminated by the Fund or the Bank
by 60 days written notice to the other, sent by registered mail, provided that
any termination by the Fund shall be authorized by a resolution of its Board, a
certified copy of which shall accompany such notice of termination, and
provided further, that such resolution shall specify the names of the persons
to whom the Bank shall deliver the Securities in the Custody Account and to
whom the cash in the Deposit Account shall be paid. If notice of termination
is given by the Bank, the Fund shall, within 60 days following the giving of
such notice, deliver to the Bank a certified copy of a resolution of its Board
specifying the names of the persons to whom the Bank shall deliver the
Securities in the Custody Account and to whom the cash in the Deposit Account
shall be paid. In either case the Bank will deliver such Securities and cash
to the persons so specified, after deducting therefrom any amounts which the
Bank determines to be owed to it under Section 15. If within 60 days following
the giving of a notice of termination by the Bank, the Bank does not receive
from the Fund a certified copy of a resolution of the Board specifying the
names of the persons to whom the Bank shall deliver the Securities in the
Custody Account and to whom the cash in the Deposit Account shall be paid, the
Bank, at its election, may deliver such Securities and pay such cash to a bank
or trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions of this Agreement, or to Authorized
Persons, or may continue to hold such Securities and cash until a certified
copy of one or more resolutions as aforesaid is delivered to the Bank.
Concurrently with the delivery of such Securities, the Bank shall deliver to
the Company, or such other person as the Company shall instruct, the records
referred to in Section 14 hereof which are in the possession or control of the
Bank. The obligations of the parties hereto regarding the use of reasonable
care, indemnities and payment of fees and expenses shall survive the
termination of this Agreement.
18. Notices. Any notice or other communication from the Fund to the Bank
is to be sent to the office of the Bank at 1211 Avenue of the Americas (33rd
floor), New York, New York, 10036, Attention Global Custody Division, or such
other address as may hereafter be
<PAGE> 12
given to the Company in accordance with the notice provisions hereunder, and
any notice from the Bank to the Fund is to be mailed postage prepaid, addressed
to the Fund at the address appearing below, or as it may hereafter be changed
on the Bank's records in accordance with notice hereunder from the Fund.
19. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors and assigns of the Fund and the
Bank.
20. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
21. Additional Portfolios. If the Fund shall issue shares of more than
one portfolio during the term hereof, the Bank agrees that all securities and
other assets of the Fund shall be segregated by portfolio and all books and
records, account values or actions shall be maintained, held, made or taken, as
the case may be, separately for each portfolio. Other than as encompassed by
the preceding sentence, references in this Agreement to "the Fund" are
applicable either to the entire trust or to a particular portfolio or
portfolios, as the context may make reasonable and appropriate. If the Fund
has more than one portfolio, instructions shall designate the portfolio or
portfolios to which they apply.
22. Disclaimer. All parties hereto are expressly put on notice of the
Fund's Agreement and Declaration of Trust and all amendments thereto, all of
which are on file with the Secretary of The Commonwealth of Massachusetts, and
the limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund. With respect to any claim by Bank for recovery of that portion of the
compensation (or any other liability of the Fund arising hereunder) allocated
to a particular portfolio, whether in accordance with the express terms hereof
or otherwise, the Bank shall have recourse solely against the assets of that
portfolio to satisfy such claim and shall have no recourse against the assets
of any other Portfolio for such purpose.
KEMPER GLOBAL INCOME FUND
By: /s/ Robert J. Engling
-------------------------------------
Title(s) Vice President and Secretary
Address for Record 120 South LaSalle Street
-------------------------------------
Chicago, Illinois 60603
-------------------------------------
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Keith R. Burris
---------------------------------
Title (Vice President)
<PAGE> 1
EXHIBIT 99.B9(a)
AGENCY AGREEMENT
AGREEMENT dated the 29th day of September, 1989, by and between KEMPER GLOBAL
INCOME FUND, a Massachusetts business trust having its principal place of
business at 120 South LaSalle Street, Chicago, IL 60603 ("Fund"), and INVESTORS
FIDUCIARY TRUST COMPANY, a state chartered trust company organized and existing
under the laws of the State of Missouri having its principal place of business
at 127 West 10th Street, Kansas City, Missouri 64105 ("IFTC").
WHEREAS, Fund wants to appoint IFTC as Transfer Agent and Dividend
Disbursing Agent, and IFTC wants to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of IFTC as Transfer Agent and
Dividend Disbursing Agent for Fund, there will be filed with IFTC the following
documents:
A. A certified copy of the resolutions of the Board of Trustees of
Fund appointing IFTC as Transfer Agent and Dividend Disbursing Agent, approving
the form of this Agreement, and designating certain persons to give written
instructions and requests on behalf of Fund.
B. A certified copy of the Agreement and Declaration of Trust of Fund
and any amendments thereto.
C. A certified copy of the Bylaws of Fund.
D. Copies of Registration Statements filed with the Securities and
Exchange Commission.
E. Specimens of all forms of outstanding share certificates as
approved by the Board of Trustees of Fund, with a certificate of the Secretary
of Fund as to such approval.
F. Specimens of the signatures of the officers of the Fund authorized
to sign share certificates and individuals authorized to sign written
instructions and requests on behalf of the Fund.
G. An opinion of counsel for Fund:
(1) With respect to Fund's organization and existence under the
laws of The Commonwealth of Massachusetts.
<PAGE> 2
(2) With respect to the status of all shares of Fund covered by
this appointment under the Securities Act of 1933, and any other applicable
federal or state statute.
(3) To the effect that all issued shares are, and all unissued
shares will be when issued, validly issued, fully paid and non-assessable.
2. Certain Representations and Warranties of IFTC. IFTC represents and
warrants to Fund that:
A. It is a trust company duly organized and existing and in good
standing under the laws of the State of Missouri.
B. It is duly qualified to carry on its business in the State of
Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and Bylaws to enter into and perform the services contemplated in
this Agreement.
D. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
E. It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
F. It is, and will continue to be, registered as a transfer agent
under the Securities Exchange Act of 1934.
3. Certain Representations and Warranties of Fund. Fund represents and
warrants to IFTC that:
A. It is a business trust duly organized and existing and in good
standing under the laws of The Commonwealth of Massachusetts.
B. It is an investment company registered under the Investment
Company Act of 1940.
C. A registration statement under the Securities Act of 1933 has been
filed and will be effective with respect to all shares of Fund being offered
for sale at any time and from time to time.
D. All requisite steps have been or will be taken to register Fund's
shares for sale in all applicable states, including the District of Columbia.
E. Fund and its Trustees are empowered under applicable laws and by
the Fund's Agreement and Declaration of Trust and Bylaws to enter into and
perform this Agreement.
<PAGE> 3
4. Scope of Appointment.
A. Subject to the conditions set forth in this Agreement, Fund hereby
employs and appoints IFTC as Transfer Agent and Dividend Disbursing Agent
effective the date hereof.
B. IFTC hereby accepts such employment and appointment and agrees
that it will act as Fund's Transfer Agent and Dividend Disbursing Agent. IFTC
agrees that it will also act as agent in connection with Fund's periodic
withdrawal payment accounts and other open-account or similar plans for
shareholders, if any.
C. IFTC agrees to provide the necessary facilities, equipment and
personnel to perform its duties and obligations hereunder in accordance with
industry practice.
D. Fund agrees to use all reasonable efforts to deliver to IFTC in
Kansas City, Missouri, as soon as they are available, all its shareholder
account records.
E. Subject to the provisions of Sections 20 and 21 hereof, IFTC
agrees that it will perform all the usual and ordinary services of Transfer
Agent and Dividend Disbursing Agent and as agent for the various shareholder
accounts, including, without limitation, the following: issuing, transferring
and cancelling share certificates, maintaining all shareholder accounts,
preparing shareholder meeting lists, mailing proxies, receiving and tabulating
proxies, mailing shareholder reports and prospectuses, withholding federal
income taxes, preparing and mailing checks for disbursement of income and
capital gains dividends, preparing and filing all required U.S. Treasury
Department information returns for all shareholders, preparing and mailing
confirmation forms to shareholders and dealers with respect to all purchases
and liquidations of Fund shares and other transactions in shareholder accounts
for which confirmations are required, recording reinvestments of dividends and
distributions in Fund shares, recording redemptions of Fund shares and
preparing and mailing checks for payments upon redemption and for disbursements
to systematic withdrawal plan shareholders.
5. Compensation and Expenses.
A. In consideration for the services provided hereunder by IFTC as
Transfer Agent and Dividend Disbursing Agent, Fund will pay to IFTC from time
to time compensation as agreed upon for all services rendered as Agent, and
also, all its reasonable out-of-pocket expenses and other disbursements
incurred in connection with the agency. Such compensation will be set forth in
a separate schedule to be agreed to by Fund and IFTC. The initial agreement
regarding compensation is attached as Exhibit A.
B. Fund agrees to promptly reimburse IFTC for all reasonable
out-of-pocket expenses or advances incurred by IFTC in connection with the
performance of services under this Agreement
<PAGE> 4
including, but not limited to, postage (and first class mail insurance in
connection with mailing share certificates), envelopes, check forms, continuous
forms, forms for reports and statements, stationery, and other similar items,
telephone and telegraph charges incurred in answering inquiries from dealers or
shareholders, microfilm used each year to record the previous year's
transactions in shareholder accounts and computer tapes used for permanent
storage of records and cost of insertion of materials in mailing envelopes by
outside firms. IFTC may, at its option, arrange to have various service
providers submit invoices directly to the Fund for payment of out-of-pocket
expenses reimbursable hereunder.
6. Efficient Operation of IFTC System.
A. In connection with the performance of its services under this
Agreement, IFTC is responsible for the accurate and efficient functioning of
its system at all times, including:
(1) The accuracy of the entries in IFTC's records reflecting purchase
and redemption orders and other instructions received by IFTC from dealers,
shareholders, Fund or its principal underwriter.
(2) The timely availability and the accuracy of shareholder lists,
shareholder account verifications, confirmations and other shareholder account
information to be produced from IFTC's records or data.
(3) The accurate and timely issuance of dividend and distribution
checks in accordance with instructions received from Fund.
(4) The accuracy of redemption transactions and payments in
accordance with redemption instructions received from dealers, shareholders or
Fund or other authorized persons.
(5) The deposit daily in Fund's appropriate special bank account of
all checks and payments received from dealers or shareholders for investment in
shares.
(6) The requiring of proper forms of instructions, signatures and
signature guarantees and any necessary documents supporting the rightfulness of
transfers, redemptions and other shareholder account transactions, all in
conformance with IFTC's present procedures with such changes as may be deemed
reasonably appropriate by IFTC or as may be reasonably approved by or on behalf
of Fund.
(7) The maintenance of a current duplicate set of Fund's essential or
required records, as agreed upon from time to time by Fund and IFTC, at a
secure distant location, in form available and usable forthwith in the event of
any breakdown or disaster disrupting its main operation.
<PAGE> 5
7. Indemnification.
A. Fund shall indemnify and hold IFTC harmless from and against any
and all claims, actions, suits, losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of or attributable to any action
or omission by IFTC pursuant to this Agreement or in connection with the agency
relationship created by this Agreement, provided that IFTC has acted in good
faith, without negligence and without willful misconduct.
B. IFTC shall indemnify and hold Fund harmless from and against any
and all claims, actions, suits, losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of or attributable to any action
or omission by IFTC pursuant to this Agreement or in connection with the agency
relationship created by this Agreement, provided that IFTC has not acted in
good faith, without negligence and without willful misconduct.
C. In order that the indemnification provisions contained in this
Section 7 shall apply, upon the assertion of a claim for which either party
(the "Indemnifying Party") may be required to provide indemnification
hereunder, the party seeking indemnification (the "Indemnitee") shall promptly
notify the Indemnifying Party of such assertion, and shall keep such party
advised with respect to all developments concerning such claim. The
Indemnifying Party shall be entitled to assume control of the defense and the
negotiations, if any, regarding settlement of the claim. If the Indemnifying
Party assumes control, the Indemnitee shall have the option to participate in
the defense and negotiations of such claim at its own expense. The Indemnitee
shall in no event confess, admit to, compromise, or settle any claim for which
the Indemnifying Party may be required to indemnify it except with the prior
written consent of the Indemnifying Party, which shall not be unreasonably
withheld.
8. Certain Covenants of IFTC and Fund.
A. All requisite steps will be taken by Fund from time to time when
and as necessary to register the Fund's shares for sale in all states in which
Fund's shares shall at the time be offered for sale and require registration.
If at any time Fund receives notice of any stop order or other proceeding in
any such state affecting such registration or the sale of Fund's shares, or of
any stop order or other proceeding under the Federal securities laws affecting
the sale of Fund's shares, Fund will give prompt notice thereof to IFTC.
B. IFTC hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to Fund for safekeeping of share certificates,
check forms, and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices. Further, IFTC agrees to carry insurance, as specified in Exhibit B
hereto, with insurers reasonably acceptable to Fund and
<PAGE> 6
in minimum amounts that are reasonably acceptable to Fund, which will not be
changed without the consent of Fund, which consent shall not be unreasonably
withheld, and which will be expanded in coverage or increased in amounts from
time to time if and when reasonably requested by Fund. If IFTC determines that
it is unable to obtain any such insurance upon commercially reasonable terms,
it shall promptly so advise Fund in writing. In such event, Fund shall have
the right to terminate this Agreement upon 30 days notice.
C. To the extent required by Section 31 of the Investment Company Act
of 1940 and Rules thereunder, IFTC agrees that all records maintained by IFTC
relating to the services to be performed by IFTC under this Agreement are the
property of Fund and will be preserved and will be surrendered promptly to Fund
on request.
D. IFTC agrees to furnish Fund semi-annual reports of its financial
condition, consisting of a balance sheet, earnings statement and any other
reasonably available financial information reasonably requested by Fund. The
annual financial statements will be certified by IFTC's certified public
accountants.
E. IFTC represents and agrees that it will use all reasonable efforts
to keep current on the trends of the investment company industry relating to
shareholder services and will use all reasonable efforts to continue to
modernize and improve its system without additional cost to Fund.
F. IFTC will permit Fund and its authorized representatives to make
periodic inspections of its operations at reasonable times during business
hours.
G. If IFTC is prevented from complying, either totally or in part,
with any of the terms or provisions of this Agreement, by reason of fire,
flood, storm, strike, lockout or other labor trouble, riot, war, rebellion,
accidents, acts of God, equipment, utility or transmission failure or damage,
and/or any other cause or casualty beyond the reasonable control of IFTC,
whether similar to the foregoing matters or not, then upon written notice to
Fund, the requirements of this Agreement that are affected by such disability,
to the extent so affected, shall be suspended during the period of such
disability; provided, however, that IFTC shall make reasonable effort to remove
such disability as soon as possible. During such period, Fund may seek
alternate sources of service without liability hereunder; and IFTC will use all
reasonable efforts to assist Fund to obtain alternate sources of service. IFTC
shall have no liability to Fund for nonperformance because of the reasons set
forth in this Section 8.G; but if a disability that, in Fund's reasonable
belief, materially affects IFTC's ability to perform its obligations under this
Agreement continues for a period of 30 days, then Fund shall have the right to
terminate this Agreement upon 10 days written notice to IFTC.
9. Adjustment.
<PAGE> 7
In case of any recapitalization, readjustment or other change in the
structure of Fund requiring a change in the form of share certificates, IFTC
will issue or register certificates in the new form in exchange for, or in
transfer of, the outstanding certificates in the old form, upon receiving the
following:
A. Written instructions from an officer of Fund.
B. Certified copy of any amendment to the Agreement and Declaration
of Trust or other document effecting the change.
C. Certified copy of any order or consent of each governmental or
regulatory authority required by law for the issuance of the shares in the new
form, and an opinion of counsel that no order or consent of any other
government or regulatory authority is required.
D. Specimens of the new certificates in the form approved by the
Board of Trustees of Fund, with a certificate of the Secretary of Fund as to
such approval.
E. Opinion of counsel for Fund:
(1) With respect to the status of the shares of Fund in the new form
under the Securities Act of 1933, and any other applicable federal or state
laws.
(2) To the effect that the issued shares in the new form are, and all
unissued shares will be when issued, validly issued, fully paid and
non-assessable.
10. Share Certificates.
Fund will furnish IFTC with a sufficient supply of blank share
certificates and from time to time will renew such supply upon the request of
IFTC. Such certificates will be signed manually or by facsimile signatures of
the officers of Fund authorized by law and Fund's Bylaws to sign share
certificates and, if required, will bear the trust seal or facsimile thereof.
11. Death, Resignation or Removal of Signing Officer.
Fund will file promptly with IFTC written notice of any change in the
officers authorized to sign share certificates, written instructions or
requests, together with two signature cards bearing the specimen signature of
each newly authorized officer, all as certified by an appropriate officer of
the Fund. In case any officer of Fund who will have signed manually or whose
facsimile signature will have been affixed to blank share certificates will
die, resign, or be removed prior to the issuance of such certificates, IFTC may
issue or register such share certificates as the share certificates of Fund
notwithstanding such death, resignation, or removal, until specifically
directed to the
<PAGE> 8
contrary by Fund in writing. In the absence of such direction, Fund
will file promptly with IFTC such approval, adoption, or
ratification as may be required by law.
12. Future Amendments of Agreement and Declaration of Trust
and Bylaws.
Fund will promptly file with IFTC copies of all material amendments to
its Agreement and Declaration of Trust and Bylaws and Registration Statement
made after the date of this Agreement.
13. Instructions, Opinion of Counsel and Signatures.
At any time IFTC may apply to any officer of Fund for instructions,
and may consult with legal counsel for Fund at the expense of Fund, or with its
own legal counsel at its own expense, with respect to any matter arising in
connection with the agency; and it will not be liable for any action taken or
omitted by it in good faith in reliance upon such instructions or upon the
opinion of such counsel. IFTC is authorized to act on the orders, directions or
instructions of such persons as the Board of Trustees of Fund shall from time
to time designate by resolution. IFTC will be protected in acting upon any
paper or document, including any orders, directions or instructions, reasonably
believed by it to be genuine and to have been signed by the proper person or
persons; and IFTC will not be held to have notice of any change of authority of
any person so authorized by Fund until receipt of written notice thereof from
Fund. IFTC will also be protected in recognizing share certificates that it
reasonably believes to bear the proper manual or facsimile signatures of the
officers of Fund, and the proper countersignature of any former Transfer Agent
or Registrar, or of a Co-Transfer Agent or Co-Registrar.
14. Papers Subject to Approval of Counsel.
The acceptance by IFTC of its appointment as Transfer Agent and
Dividend Disbursing Agent, and all documents filed in connection with such
appointment and thereafter in connection with the agencies, will be subject to
the approval of legal counsel for IFTC, which approval will not be unreasonably
withheld.
15. Certification of Documents.
The required copy of the Agreement and Declaration of Trust of Fund
and copies of all amendments thereto will be certified by the appropriate
official of The Commonwealth of Massachusetts; and if such Agreement and
Declaration of Trust and amendments are required by law to be also filed with a
county, city or other officer or official body, a certificate of such filing
will appear on the certified copy submitted to IFTC. A copy of the order or
consent of each governmental or regulatory authority required by law for the
issuance of Fund shares will be certified by the Secretary or Clerk of such
governmental or regulatory
<PAGE> 9
authority, under proper seal of such authority. The copy of the Bylaws and
copies of all amendments thereto and copies of resolutions of the Board of
Trustees of Fund will be certified by the Secretary or an Assistant Secretary
of Fund.
16. Records.
IFTC will maintain customary records in connection with its agency,
and particularly will maintain those records required to be maintained pursuant
to sub-paragraph (2)(iv) of paragraph (b) of Rule 31a-1 under the Investment
Company Act of 1940, if any.
17. Disposition of Books, Records and Cancelled Certificates.
IFTC will send periodically to Fund, or to where designated by the
Secretary or an Assistant Secretary of Fund, all books, documents, and all
records no longer deemed needed for current purposes and share certificates
which have been cancelled in transfer or in exchange, upon the understanding
that such books, documents, records, and share certificates will not be
destroyed by Fund without the consent of IFTC (which consent will not be
unreasonably withheld), but will be safely stored for possible future
reference.
18. Provisions Relating to IFTC as Transfer Agent.
A. IFTC will make original issues of share certificates upon written
request of an officer of Fund and upon being furnished with a certified copy of
a resolution of the Board of Trustees authorizing such original issue, an
opinion of counsel as outlined in Section 1.G or 9.E of this Agreement, the
certificates required by Section 10 of this Agreement and any other documents
required by Section 1 or 9 of this Agreement.
B. Before making any original issue of certificates, Fund will
furnish IFTC with sufficient funds to pay any taxes required on the original
issue of the shares. Fund will furnish IFTC such evidence as may be required by
IFTC to show the actual value of the shares. If no taxes are payable, IFTC will
upon request be furnished with an opinion of outside counsel to that effect.
C. Shares will be transferred and new certificates issued in
transfer, or shares accepted for redemption and funds remitted therefor, upon
surrender of the old certificates in form deemed by IFTC properly endorsed for
transfer or redemption accompanied by such documents as IFTC may deem necessary
to evidence the authority of the person making the transfer or redemption, and
bearing satisfactory evidence of the payment of any applicable share transfer
taxes. IFTC reserves the right to refuse to transfer or redeem shares until it
is satisfied that the endorsement or signature on the certificate or any other
document is valid and genuine, and for that purpose it may require a guarantee
of signature by such persons as may from time to time be specified in the
prospectus related to such shares or otherwise authorized by
<PAGE> 10
Fund. IFTC also reserves the right to refuse to transfer or redeem shares until
it is satisfied that the requested transfer or redemption is legally
authorized, and it will incur no liability for the refusal in good faith to
make transfers or redemptions which, in its judgment, are improper,
unauthorized, or otherwise not rightful. IFTC may, in effecting transfers or
redemptions, rely upon Simplification Acts or other statutes which protect it
and Fund in not requiring complete fiduciary documentation.
D. When mail is used for delivery of share certificates, IFTC will
forward share certificates in "nonnegotiable" form as provided by Fund by first
class mail, all such mail deliveries to be covered while in transit to the
addressee by insurance arranged for by IFTC.
E. IFTC will issue and mail subscription warrants and certificates
provided by Fund and representing share dividends, exchanges or split-ups, or
act as Conversion Agent upon receiving written instructions from any officer of
Fund and such other documents as IFTC deems necessary.
F. IFTC will issue, transfer, and split-up certificates upon
receiving written instructions from an officer of Fund and such other documents
as IFTC may deem necessary.
G. IFTC may issue new certificates in place of certificates
represented to have been lost, destroyed, stolen or otherwise wrongfully taken,
upon receiving indemnity satisfactory to IFTC, and may issue new certificates
in exchange for, and upon surrender of, mutilated certificates. Any such
issuance shall be in accordance with the provisions of law governing such
matter and any procedures adopted by the Board of Trustees of the Fund of which
IFTC has notice.
H. IFTC will supply a shareholder's list to Fund properly certified
by an officer of IFTC for any shareholder meeting upon receiving a request from
an officer of Fund. It will also supply lists at such other times as may be
reasonably requested by an officer of Fund.
I. Upon receipt of written instructions of an officer of
Fund, IFTC will address and mail notices to shareholders.
J. In case of any request or demand for the inspection of the share
books of Fund or any other books of Fund in the possession of IFTC, IFTC will
endeavor to notify Fund and to secure instructions as to permitting or refusing
such inspection. IFTC reserves the right, however, to exhibit the share books
or other books to any person in case it is advised by its counsel that it may
be held responsible for the failure to exhibit the share books or other books
to such Person.
19. Provisions Relating to Dividend Disbursing Agency.
<PAGE> 11
A. IFTC will, at the expense of Fund, provide a special form of check
containing the imprint of any device or other matter desired by Fund. Said
checks must, however, be of a form and size convenient for use by IFTC.
B. If Fund wants to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be furnished to IFTC
within a reasonable time prior to the date of mailing of the dividend checks,
at the expense of Fund.
C. If Fund wants its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to IFTC but the size
and form of said envelopes will be subject to the approval of IFTC. If stamped
envelopes are used, they must be furnished by Fund; or, if postage stamps are
to be affixed to the envelopes, the stamps or the cash necessary for such
stamps must be furnished by Fund.
D. IFTC will maintain one or more deposit accounts as Agent for Fund,
into which the funds for payment of dividends, distributions, distributions,
redemptions or other disbursements provided for hereunder will be deposited,
and against which checks will be drawn.
20. Termination of Agreement.
A. This Agreement may be terminated by either party upon sixty (60)
days prior written notice to the other party.
B. Fund, in addition to any other rights and remedies, shall have the
right to terminate this Agreement forthwith upon the occurrence at any time of
any of the following events:
(1) Any interruption or cessation of operations by IFTC or its
assigns which materially interferes with the business operation of Fund.
(2) The bankruptcy of IFTC or its assigns or the appointment of a
receiver for IFTC or its assigns.
(3) Any merger, consolidation or sale of substantially all the
assets of IFTC or its assigns.
(4) The acquisition of a controlling interest in IFTC or its
assigns, by any broker, dealer, investment adviser or investment company except
as may presently exist.
(5) Failure by IFTC or its assigns to perform its duties in
accordance with this Agreement, which failure materially adversely affects the
business operations of Fund and which failure continues for thirty (30) days
after written notice from Fund.
<PAGE> 12
(6) The registration of IFTC or its assigns as a transfer agent
under the Securities Exchange Act of 1934 is revoked, terminated or suspended
for any reason.
C. In the event of termination, Fund will promptly pay IFTC all
amounts due to IFTC hereunder. Upon termination of this Agreement, IFTC shall
deliver all shareholder and account records pertaining to Fund either to Fund
or as directed in writing by Fund. 21. Assignment. A. Except for the
assignment of responsibilities pursuant to the Services Agreement ("Services
Agreement") between IFTC and Kemper Service Company ("KSVC"), which Fund has
approved, neither this Agreement nor any rights or obligations hereunder may be
assigned by IFTC without the written consent of Fund; provided, however, no
assignment will relieve IFTC of any of its obligations hereunder. B. This
Agreement including, without limitation, the provisions of Section 7 will inure
to the benefit of and be binding upon the parties and their respective
successors and assigns including KSVC pursuant to the aforesaid Services
Agreement.
C. KSVC is authorized by Fund to use the system services of DST
Systems, Inc.
22. Confidentiality.
A. Except as provided in the last sentence of Section 18.J hereof, or
as otherwise required by law, IFTC will keep confidential all records of and
information in its possession relating to Fund or its shareholders or
shareholder accounts and will not disclose the same to any person except at the
request or with the consent of Fund.
B. Except as otherwise required by law, Fund will keep confidential
all financial statements and other financial records (other than statements and
records relating solely to Fund's business dealings with IFTC) and all manuals,
systems and other technical information and data, not publicly disclosed,
relating to IFTC's operations and programs furnished to it by IFTC pursuant to
this Agreement and will not disclose the same to any person except at the
request or with the consent of IFTC. Notwithstanding anything to the contrary
in this Section 22.B, if an attempt is made pursuant to subpoena or other legal
process to require Fund to disclose or produce any of the aforementioned
manuals, systems or other technical information and data, Fund shall give IFTC
prompt notice thereof prior to disclosure or production so that IFTC may, at
its expense, resist such attempt.
23. Survival of Representations and Warranties.
All representations and warranties by either party herein contained
will survive the execution and delivery of this Agreement.
24. Miscellaneous.
<PAGE> 13
-------------
A. This Agreement is executed and delivered in the State of Illinois
and shall be governed by the laws of said state (except as to Section 24.G
hereof which shall be governed by the laws of The Commonwealth of
Massachusetts).
B. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
C. The captions in this Agreement are included for convenience of
reference only, and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
D. This Agreement shall become effective as of the date hereof.
E. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
F. If any part, term or provision of this Agreement is held by the
courts to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
G. All parties hereto are expressly put on notice of Fund's Agreement
and Declaration of Trust which is on file with the Secretary of The
Commonwealth of Massachusetts, and the limitation of shareholder and trustee
liability contained therein. This Agreement has been executed by and on behalf
of Fund by its representatives as such representatives and not individually,
and the obligations of Fund hereunder are not binding upon any of the Trustees,
officers or shareholders of the Fund individually but are binding upon only the
assets and property of Fund. With respect to any claim by IFTC for recovery of
that portion of the compensation and expenses (or any other liability of Fund
arising hereunder) allocated to a particular Portfolio, whether in accordance
with the express terms hereof or otherwise, IFTC shall have recourse solely
against the assets of that Portfolio to satisfy such claim and shall have no
recourse against the assets of any other Portfolio for such purpose.
H. This Agreement, together with the Fee Schedule, is the entire
contract between the parties relating to the subject matter hereof and
supersedes all prior agreements between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officer as of the day and year first set forth
above.
<PAGE> 14
KEMPER GLOBAL INCOME FUND
By: /s/ Thomas Williams
------------------------
Title: Vice Pres.
----------
ATTEST:
/s/ Robert J. Engling
- ---------------------
Title: VP & Secy
---------
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Gerard P. Dipoto
-------------------------
Title: Vice President
--------------
ATTEST:
/s/ Cheryl Naegler
- ------------------
Title: Asst Secretary
--------------
<PAGE> 15
EXHIBIT A
FEE SCHEDULE
<TABLE>
<CAPTION>
Transfer Agency Function Fee Payable by Fund
- ------------------------ -------------------
<S> <C> <C>
1. Maintenance of open shareholder $6.00 per year per account
account.
2. Maintenance of closed shareholder $6.00 per year per account
account.
3. Establishment of new shareholder $4.00 per new account
account.
4. Payment of dividend. $.25 per dividend payment
per account
5. Dividend reinvestment from Kemper $.50 per transaction
Unit Investment Trusts.
6. Process purchase or redemption of $1.00 per transaction
shares transaction.
7. All other shareholder account $1.00 per transaction
transactions.
</TABLE>
The out-of-pocket expenses of IFTC will be reimbursed by Fund in accordance
with the provisions of paragraph 5 of the Agency Agreement. All fees will be
subject to offset by earnings allowances under the Custody Agreement between
Fund and IFTC.
<PAGE> 16
EXHIBIT B
IFTC INSURANCE COVERAGE
DESCRIPTION OF POLICY:
Brokers Blanket Bond, Standard Form 14
Covering losses caused by dishonesty of employees, physical loss of
securities on or outside of premises while in possession of authorized person,
loss caused by forgery or alteration of checks or similar instruments.
Errors and Omissions Insurance
Covering replacement of destroyed records and computer
errors and omissions.
Special Forgery Bond
Covering losses through forgery or alteration of checks or drafts of
customers processed by insured but drawn on or against them.
Mall Insurance (applies to all full service operations)
Provides indemnity for the following types of securities lost in the
mails:
Non-negotiable securities mailed to domestic locations via
registered mail.
Non-negotiable securities mailed to domestic locations via first-
class or certified mail.
Non-negotiable securities mailed to foreign locations via
registered mail.
Negotiable securities mailed to all locations via registered mail.
<PAGE> 1
EXHIBIT 99.B9(b)
Supplement to Agency Agreement
Supplement to Agency Agreement ("Supplement") made as of May 31, 1994 by
and between the registered investment company executing this document (the
"Fund") and Investors Fiduciary Trust Company ("Agent").
WHEREAS, the Fund and Agent are parties to an Agency Agreement ("Agency
Agreement") dated September 29, 1989, as supplemented from time to time;
WHEREAS, Section 5.A. of the Agency Agreement provides that the fees
payable by the Fund to Agent thereunder shall be as set forth in a separate
schedule to be agreed to by the Fund and Agent; and
WHEREAS, the parties desire to reflect in this Supplement the revised fee
schedule for the Agency Agreement as in effect as of the date hereof;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein provided, the parties agree as follows:
1. The revised fee schedule for services provided by Agent to the Fund
under the Agency Agreement as in effect as of the date hereof is set forth in
Exhibit A attached hereto.
2. This Supplement shall become a part of the Agency Agreement and
subject to its terms and shall supersede all previous fee schedules under such
agreement as of the date hereof.
IN WITNESS WHEREOF, the Fund and Agent have duly executed this Supplement
as of the day and year first set forth above.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
-------------------------------
Title: Vice President
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Joseph F. Smith
-------------------------------
Title: EVP
<PAGE> 2
EXHIBIT A
FEE SCHEDULE (Multiple Classes of Shares)
<TABLE>
<CAPTION>
Transfer Agency Function Fee Payable by Fund
------------------------ -------------------
Class A, C and I Class B
---------------- -------
<S> <C> <C> <C>
1. Annual open shareholder account
fee (per year per account).
a. Non-daily dividend series. $6.00 $6.00
b. Daily dividend series. $8.00 $8.00
2. Annual closed shareholder
account fee (per year
per account). $6.00 $6.00
3. Contingent deferred sales charge
account fee (per year per Not
open account). Applicable $2.25
4. Establishment of new shareholder
account (per new account). $4.00 $4.00
5. Payment of dividend (per dividend
per account). $.40 $.40
6. Automated transaction (per
transaction).** $.50 $.50
7. Non-monetary transactions fee
(per year per open account). $2.00 $2.00
8. All other shareholder inquiry,
correspondence and research
transactions (per transaction). $1.25 $1.25
9. Disaster recovery fee (per year
per open and closed account). $.40 $.40
</TABLE>
2
<PAGE> 3
The out-of-pocket expenses of IFTC will be reimbursed by Fund in accordance
with the provisions of Section 5 of the Agency Agreement. All fees will be
subject to offset by earnings allowances under the Custody Agreement between
Fund and IFTC.
______________________
* The new shareholder account fee is not applicable to Class A Share
accounts established in connection with a conversion from Class B Shares.
** Automated transaction includes, without limitation, money market series
purchases and redemptions, ACH purchases, systematic exchanges and conversions
from Class B Shares to Class A Shares.
3
<PAGE> 1
EXHIBIT 99.B9(c)
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT dated this 1st day of August, 1990, by and between KEMPER GLOBAL
INCOME FUND, a Massachusetts business trust (the "Fund"), and KEMPER FINANCIAL
SERVICES, INC., a Delaware corporation ("KFS").
In consideration of the mutual covenants hereinafter contained, it is hereby
agreed by and between the parties hereto as follows:
1. The Fund hereby appoints KFS to provide information and administrative
services for the benefit of the Fund and its shareholders. In this regard, KFS
shall appoint various broker-dealer firms and other financial services firms
("Firms") to provide related services and facilities for their clients who are
shareholders of the Fund ("clients"). The Firms shall provide such office
space and equipment, telephone facilities and personnel as is necessary or
beneficial for providing information and services to shareholders of the Fund.
Such services and assistance may include, but are not limited to, establishing
and maintaining shareholder accounts and records, processing purchase and
redemption transactions, answering routine client inquiries regarding the Fund
and its special features, assistance to clients in changing dividend and
investment options, account designations and addresses, and such other services
as the Fund or KFS may reasonably request. KFS may also provide some of the
above services for the Fund directly.
KFS accepts such appointment and agrees during such period to render such
services and to assume the obligations herein set forth for the compensation
herein provided. KFS shall for all purposes herein provided be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund. KFS, by separate agreement with the
Fund, may also serve the Fund in other capacities. In carrying out its duties
and responsibilities hereunder, KFS will appoint various Firms to provide
administrative and other services described herein directly to or for the
benefit of shareholders of the Fund who may be clients of such Firms. Such
Firms shall at all times be deemed to be independent contractors retained by
KFS and not the Fund. KFS and not the Fund will be responsible for the payment
of compensation to such Firms for such services.
2. For the services and facilities described in Section 1, the Fund will pay
to KFS at the end of each calendar month an administrative service fee computed
at an annual rate of up to 0.25 of 1% of the average daily net assets of the
Fund. The current fee schedule is set forth as Appendix I hereto. For the
month and year in which this Agreement becomes effective or terminates, there
shall be an appropriate proration on the basis of the number of days that the
Agreement is in effect during such month and year, respectively. The services
of KFS to the Fund under this Agreement
<PAGE> 2
are not to be deemed exclusive, and KFS shall be free to render similar
services or other services to others.
The net asset value for each share of the Fund shall be calculated in
accordance with the provisions of the Fund's current prospectus. On each day
when net asset value is not calculated, the net asset value of a share of the
Fund shall be deemed to be the net asset value of such a share as of the close
of business on the last day on which such calculation was made for the purpose
of the foregoing computations.
3. The Fund shall assume and pay all charges and expenses of its operations
not specifically assumed or otherwise to be provided by KFS under this
Agreement.
4. This Agreement may be terminated at any time without the payment of any
penalty by the Fund or by KFS on sixty (60) days written notice to the other
party. Termination of this Agreement shall not affect the right of KFS to
receive payments on any unpaid balance of the compensation described in Section
2 hereof earned prior to such termination. This Agreement may not be amended
to increase the amount to be paid to KFS for services hereunder above .25 of 1%
of the average daily net assets of the Fund without the vote of a majority of
the outstanding voting securities of the Fund. All material amendments to this
Agreement must in any event be approved by vote of the Board of Trustees of the
Fund. This Agreement supersedes all prior agreements between the parties
regarding the subject matter hereof.
5. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder shall not be thereby
affected.
6. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
7. All parties hereto are expressly put on notice of the Fund's Agreement and
Declaration of Trust and all amendments thereto, all of which are on file with
the Secretary of The Commonwealth of Massachusetts, and the limitation of
shareholder and trustee liability contained therein. This Agreement has been
executed by and on behalf of the Fund by its representatives as such
representatives and not individually, and the obligations of the Fund hereunder
are not binding upon any of the trustees, officers or shareholders of the Fund
individually but are binding upon only the assets and property of the Fund.
8. This Agreement shall be construed in accordance with applicable federal law
and (except as to Section 7 hereof which shall be construed in accordance with
the laws of The Commonwealth of Massachusetts) the laws of the State of
Illinois.
<PAGE> 3
IN WITNESS WHEREOF, the Fund and KFS have caused this Agreement to be executed
as of the day and year first above written.
KEMPER GLOBAL INCOME FUND KEMPER FINANCIAL SERVICES, INC.
By: /s/ Charles M. Kierscht By: /s/ John E. Peters
--------------------------- ----------------------------------
Title: President Title: Executive Vice President
------------------------ ------------------------------
<PAGE> 4
APPENDIX I
KEMPER GLOBAL INCOME FUND
FEE SCHEDULE FOR ADMINISTRATIVE
SERVICES AGREEMENT
Pursuant to Section 2 of the Administrative Services Agreement to which this
Appendix is attached, the Fund and KFS agree that the initial administrative
service fee will be computed at an annual rate of .15 of 1% (the "Fee Rate").
For purposes of computing the fee due KFS, the Fee Rate shall be applied
against the amount of assets of the Fund for which a broker-dealer or other
financial services firm is listed on the records of the Fund as "dealer of
record," which shall not include KFS.
Dated: August 1, 1990
KEMPER GLOBAL INCOME FUND KEMPER FINANCIAL SERVICES, INC.
By: /s/ Charles M. Kierscht By: /s/ John E. Peters
--------------------------- ----------------------------------
Title: President Title: Executive Vice President
------------------------ ------------------------------
<PAGE> 1
EXHIBIT 99.B9(d)
AMENDED APPENDIX I FOR ADMINISTRATIVE
SERVICES AGREEMENT
Amended Appendix I for Administrative Services Agreement ("Amended
Appendix I") made as of October 1, 1993 by and between the registered
investment company executing this document (the "Fund") and Kemper Financial
Services, Inc. ("KFS").
WHEREAS, the Fund and KFS are parties to an Administrative Services
Agreement ("ASF Agreement") dated August 1, 1990, as supplemented from time to
time;
WHEREAS, Section 2 of the ASF Agreement provides that the administrative
service fees currently payable by the Fund to KFS thereunder shall be as set
forth in Appendix I thereto subject to the requirement set forth in said
Section 2 that said fees not exceed an annual rate of .25% of average daily net
assets of the Fund; and
WHEREAS, the parties desire to reflect in this Amended Appendix I the
revised fee schedule for the ASF Agreement as in effect as of the date hereof;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein provided, the parties agree as follows:
1. The revised fee schedule for services provided by KFS to the Fund
under the ASF Agreement is as described hereinafter. The Fund will pay KFS an
administrative service fee at a rate sufficient to reimburse KFS for service
fee payments made by KFS to broker-dealer firms and other financial services
firms ("Firms") that are retained by KFS to provide information and
administrative services for their clients as contemplated by Section 1 of the
ASF Agreement. KFS will pay Firms a service fee at an annual rate of (a) up to
.15 of 1% of net assets of those accounts in the Fund that they maintain and
service attributable to shares acquired prior to October 1, 1993, and (b) up to
.25 of 1% of net assets of those accounts in the Fund that they maintain and
service attributable to shares acquired on or after October 1, 1993. For this
purpose, Firms shall only include broker-dealers and other financial services
firms listed on the records of the Fund as "dealer of record," and shall not
include KFS. In no event shall the fee paid to KFS exceed the limitations set
forth in Section 2 of the ASF Agreement.
2. This Amended Appendix I shall become a part of the ASF Agreement and
subject to its terms and shall supersede all previous fee schedules under such
Agreement, including the current Appendix I thereto, as of the date hereof.
<PAGE> 2
IN WITNESS WHEREOF, the Fund and KFS have duly executed this
Amended Appendix I as of the day and year first set forth above.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
-----------------------------
Title: Vice President
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Robert Jackson
-----------------------------
Title: CEO & Sen. Exec. V.P.
<PAGE> 1
EXHIBIT 99.B9(e)
AMENDMENT TO ADMINISTRATIVE
SERVICES AGREEMENT
(Class A, B, C and I Shares)
Amendment to Administrative Services Agreement ("Amendment") made as of
May 31, 1994 by and between the registered investment company executing this
document (the "Fund") and Kemper Financial Services, Inc. ("KFS").
WHEREAS, The Fund and KFS are parties to an Administrative Services
Agreement ("ASF Agreement") dated August 1, 1990 as supplemented and amended
from time to time;
WHEREAS, The Fund currently issues shares in four separate classes for
each series of the Fund, if there is more than one, being designated as Class A
Shares, Class B Shares, Class C Shares and Class I Shares; and
WHEREAS, The parties want to reflect in this Amendment the effect upon the
fee schedule under the ASF Agreement of the division of the shares of the Fund
into separate classes;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein provided, the parties agree as follows:
1. The administrative services fee under the ASF Agreement will be
calculated separately for each class of each series of the Fund as an expense
of such class at the annual rates and in accordance with the procedures
specified in the ASF Agreement; provided, however, that no administrative
services fee shall be payable with respect to the Class I Shares.
2. This Amendment shall become a part of the ASF Agreement.
IN WITNESS WHEREOF, the Fund and KFS have duly executed this Amendment as
of the day and year first set forth above.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
-----------------------------
Title: Vice President
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-----------------------------
Title: Senior Vice President
<PAGE> 1
EXHIBIT 99.B9(f)
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION ("Assignment and Assumption") made and entered
into as of February 1, 1995 by and between Kemper Financial Services, Inc., a
Delaware corporation ("Assignor"), and Kemper Distributors, Inc., a Delaware
corporation ("Assignee").
WHEREAS, Assignor serves as administrator for Kemper Global Income
Fund, a Massachusetts business trust (the "Fund"), pursuant to that certain
Administrative Services Agreement dated August 1, 1990 by and
between Assignor and the Fund, as may have been amended, (the "Agreement");
WHEREAS, Assignee is a wholly-owned subsidiary of Assignor;
WHEREAS, It has been proposed that the rights, duties and responsibilities
of Assignor under the Agreement be transferred to and assumed by Assignee;
WHEREAS, The Fund has determined that such transfer of rights, duties and
responsibilities is reasonable and in the best interests of the Fund and the
Fund's shareholders; and
NOW, THEREFORE, in consideration of the covenants hereinafter contained,
it is hereby agreed by and between the parties hereto as follows:
1. Assignment and Assumption. Assignor assigns and transfers to Assignee
all of Assignor's rights, interests, liabilities, duties and obligations under
the Agreement ("Assigned Rights and Obligations"). Assignee accepts the
foregoing assignment and transfer of the Assigned Rights and Obligations and
agrees to assume, pay, perform and otherwise be fully responsible for the same.
2. Further Assurances. From time to time, at the request of either
party, the other party will execute and deliver such further instruments of
assignment, transfer and assumption and take such further action as may be
required to assign, transfer and assume the Assigned Rights and Obligations.
3. Applicable Law. This Assignment and Assumption shall be governed by
the laws of the State of Illinois.
4. Amendments. This Assignment and Assumption may only be amended by the
written agreement of the parties.
<PAGE> 2
IN WITNESS WHEREOF, the parties have each caused this Assignment and
Assumption to be executed on its behalf by a duly authorized officer as of the
date first written above.
KEMPER FINANCIAL SERVICES, INC.
By: /s/ Patrick H. Dudasik
-----------------------------
Its: Senior Vice President
KEMPER DISTRIBUTORS, INC.
By: /s/ James L. Greenawalt
-----------------------------
Its: Executive Vice President
The undersigned hereby acknowledges and consents to the foregoing Assignment
and Assumption as of February 1, 1995.
KEMPER GLOBAL INCOME FUND
By: /s/ John E. Peters
- -----------------------------
Its: Vice President
<PAGE> 1
EXHIBIT 99.B11
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER GLOBAL INCOME FUND
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments by currency, of Kemper Global Income Fund as of
December 31, 1994, the related statement of operations for the year ended
December 31, 1994, the statement of changes in net assets for the year ended
December 31, 1994, the six months ended December 31, 1993 and the year ended
June 30, 1993, and financial highlights for each of the fiscal periods since
1990. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights 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 and financial
highlights 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 custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, 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 and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
Global Income Fund at December 31, 1994, the results of its operations, the
changes in its net assets and financial highlights for the periods referred to
above, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
February 3, 1995
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Independent Auditors and Reports to Shareholders" and to the
use of our report dated February 3, 1995 in the Registration Statement (Form
N-1A) and its incorporation by reference in the related Prospectus of Kemper
Global Income Fund, filed with the Securities and Exchange Commission in this
Post-Effective Amendment No. 7 to the Registration Statement under the
Securities Act of 1933 (File No. 33-29371) and in this Amendment No. 8 to the
Registration Statement under the Investment Company Act of 1940 (File No.
811-05829).
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
February 22, 1995
<PAGE> 1
EXHIBIT 99.B24
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Charles M. Kierscht and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Global Income Fund.
Signature Title Date
/s/ David W. Belin Trustee December 8, 1994
- -----------------------------
<PAGE> 2
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Charles M. Kierscht and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Global Income Fund.
Signature Title Date
/s/ Lewis A. Burnham Trustee December 8, 1994
- -----------------------------
<PAGE> 3
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Charles M. Kierscht and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Global Income Fund.
Signature Title Date
/s/ Donald L. Dunaway Trustee December 8, 1994
- -----------------------------
<PAGE> 4
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Charles M. Kierscht and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Global Income Fund.
Signature Title Date
/s/ Robert B. Hoffman Trustee December 8, 1994
- -----------------------------
<PAGE> 5
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Charles M. Kierscht and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Global Income Fund.
Signature Title Date
/s/ Donald R. Jones Trustee December 8, 1994
- -----------------------------
<PAGE> 6
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Charles M. Kierscht and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Global Income Fund.
Signature Title Date
/s/ William P. Sommers Trustee 12/20/94
- -----------------------------
<PAGE> 7
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Charles F.
Custer, Charles M. Kierscht and Philip J. Collora and each of them, any of whom
may act without the joinder of the others, as his attorney-in-fact to sign and
file on his behalf individually and in the capacity stated below such
registration statements, amendments, post-effective amendments, exhibits,
applications and other documents with the Securities and Exchange Commission or
any other regulatory authority as may be desirable or necessary in connection
with the public offering of shares of Kemper Global Income Fund.
Signature Title Date
/s/ Stephen B. Timbers Trustee December 8, 1994
- -------------------------
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT OF KEMPER GLOBAL INCOME FUND AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO INFORMATION IS SHOWN AT
THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR ALL CLASSES.
</LEGEND>
<CIK> 0000852067
<NAME> KEMPER GLOBAL INCOME FUND
<SERIES>
<NUMBER> 0
<NAME> COMBINED FOR ALL CLASSES
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 165,446
<INVESTMENTS-AT-VALUE> 164,908
<RECEIVABLES> 14,968
<ASSETS-OTHER> 570
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 180,546
<PAYABLE-FOR-SECURITIES> 8,600
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,246
<TOTAL-LIABILITIES> 9,846
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 231,307
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 643
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (60,696)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (554)
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,430
<OTHER-INCOME> 0
<EXPENSES-NET> (1,927)
<NET-INVESTMENT-INCOME> 7,503
<REALIZED-GAINS-CURRENT> (6,845)
<APPREC-INCREASE-CURRENT> (757)
<NET-CHANGE-FROM-OPS> (99)
<EQUALIZATION> 42
<DISTRIBUTIONS-OF-INCOME> (4,976)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (2,739)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 87,679
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (864)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,927)
<AVERAGE-NET-ASSETS> 119,179
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT OF KEMPER GLOBAL INCOME FUND AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO INFORMATION IS SHOWN AT
THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR ALL CLASSES.
</LEGEND>
<CIK> 0000852067
<NAME> KEMPER GLOBAL INCOME FUND
<SERIES>
<NUMBER> 01
<NAME> CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 13,931
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 119,101
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,204
<NUMBER-OF-SHARES-REDEEMED> (5,754)
<SHARES-REINVESTED> 532
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.29
<PER-SHARE-NII> .600
<PER-SHARE-GAIN-APPREC> (.740)
<PER-SHARE-DIVIDEND> (.380)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.220)
<PER-SHARE-NAV-END> 8.55
<EXPENSE-RATIO> .001
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT OF KEMPER GLOBAL INCOME FUND AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO INFORMATION IS SHOWN AT
THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR ALL CLASSES.
</LEGEND>
<CIK> 0000852067
<NAME> KEMPER GLOBAL INCOME FUND
<SERIES>
<NUMBER> 02
<NAME> CLASS B
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6,024
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 51,576
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,061
<NUMBER-OF-SHARES-REDEEMED> (1,104)
<SHARES-REINVESTED> 82
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.70
<PER-SHARE-NII> .300
<PER-SHARE-GAIN-APPREC> (.140)
<PER-SHARE-DIVIDEND> (.190)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.110)
<PER-SHARE-NAV-END> 8.56
<EXPENSE-RATIO> .002
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1994
ANNUAL REPORT OF KEMPER GLOBAL INCOME FUND AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT. PER SHARE AND RATIO INFORMATION IS SHOWN AT
THE CLASS LEVEL. ALL OTHER INFORMATION IS COMBINED FOR ALL CLASSES.
</LEGEND>
<CIK> 0000852067
<NAME> KEMPER GLOBAL INCOME FUND
<SERIES>
<NUMBER> 03
<NAME> CLASS C
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 23
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12
<NUMBER-OF-SHARES-REDEEMED> (9)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 8.70
<PER-SHARE-NII> .300
<PER-SHARE-GAIN-APPREC> (.140)
<PER-SHARE-DIVIDEND> (.190)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.110)
<PER-SHARE-NAV-END> 8.56
<EXPENSE-RATIO> .002
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.485(b)Letter
[VEDDER, PRICE, KAUFMAN & KAMMHOLZ LETTERHEAD]
February 23, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kemper Global Income Fund
To The Commission:
We are counsel to the above-referenced investment company (the "Fund")
and as such have participated in the preparation and review of Post-Effective
Amendment No. 7 to the Fund's registration statement being filed pursuant to
Rule 485(b) under the Securities Act of 1933. In accordance with paragraph
(b)(4) of Rule 485, we hereby represent that such amendment does not contain
disclosures which would render it ineligible to become effective pursuant to
paragraph (b) thereof.
Very truly yours,
/s/ VEDDER, PRICE, KAUFMAN & KAMMHOLZ
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
COK:km
