As filed with the Securities and Exchange Commission
on January 10, 2001
Securities Act File No. 333-51378
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
Pre-Effective Amendment No. / / Post-Effective Amendment No. 1 /X/
KEMPER TOTAL RETURN FUND
(Exact Name of Registrant as Specified in Charter)
222 South Riverside Plaza, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
Philip J. Collora
Kemper Total Return Fund
222 South Riverside Plaza
Chicago, Illinois 60606
(Name and Address of Agent for Service)
(312) 781-1121
(Registrant's Area Code and Telephone Number)
with copies to:
Caroline Pearson, Esq. Joseph R. Fleming, Esq.
Zurich Scudder Investments, Inc. Dechert
Two International Place Ten Post Office Square - South
Boston, MA 02110-4103 Boston, MA 02109-4603
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective
immediately upon filing pursuant to Rule 485(b).
Title of Securities Being Registered:
Shares of Beneficial Interest ($.01 par value)
of Kemper Total Return Fund, a series of the Registrant
<PAGE>
No filing fee is required because the Registrant has previously registered an
indefinite number of its shares under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
<PAGE>
This Post-Effective Amendment No. 1 to this Registration Statement on
Form N-14 (the "Registration Statement") is being filed for the purpose of
incorporating by reference into Part B of the Registration Statement the
Registrant's Annual Report to Shareholders for the fiscal year ended October 31,
2000. Other than Exhibit B to Part A, which is filed herewith, information
required in the Proxy Statement/Prospectus is incorporated by reference to Part
A of the Registrant's Registration Statement on Form N-14 filed with the
Commission on December 6, 2000.
<PAGE>
EXHIBIT B
MANAGEMENT'S DISCUSSION OF KEMPER TOTAL RETURN FUND'S PERFORMANCE
PERFORMANCE UPDATE
[LANGBAUM PHOTO]
LEAD PORTFOLIO MANAGER GARY A. LANGBAUM HAS BEEN A MANAGING DIRECTOR OF SCUDDER
KEMPER INVESTMENTS, INC. SINCE 1988. LANGBAUM IS A CHARTERED FINANCIAL ANALYST
AND HAS MORE THAN 30 YEARS OF EXPERIENCE IN EQUITY RESEARCH AND PORTFOLIO
MANAGEMENT.
[MCCORMICK PHOTO]
PORTFOLIO MANAGER TRACY MCCORMICK IS A MANAGING DIRECTOR AND HAS MORE THAN 15
YEARS OF INVESTMENT INDUSTRY EXPERIENCE. MCCORMICK FOCUSES HER CONTRIBUTIONS ON
THE EQUITY PORTION OF THE PORTFOLIO. PORTFOLIO MANAGER ROBERT CESSINE, A
MANAGING DIRECTOR WITH THE FIRM, WITH NEARLY 20 YEARS OF INVESTMENT INDUSTRY
EXPERIENCE, CONTRIBUTES TO THE MANAGEMENT OF THE BOND PORTION OF THE PORTFOLIO.
HE IS ALSO A CHARTERED FINANCIAL ANALYST.
THE MANAGEMENT TEAM IS SUPPORTED BY SCUDDER KEMPER INVESTMENTS' LARGE STAFF OF
ANALYSTS, RESEARCHERS, TRADERS AND ECONOMISTS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
KEMPER TOTAL RETURN FUND MET THE MARKET VOLATILITY CHALLENGES HEAD-ON DURING
THE ANNUAL PERIOD BY POSTING A SOLID RETURN. BELOW, LEAD PORTFOLIO MANAGER GARY
LANGBAUM DISCUSSES HOW THE PORTFOLIO'S BALANCED STOCK AND BOND ALLOCATIONS
ALLOWED THE FUND TO GENERATE POSITIVE PERFORMANCE WHILE MINIMIZING RISK.
Q BEFORE YOU REVIEW KEMPER TOTAL RETURN FUND'S PERFORMANCE, WILL YOU PROVIDE US
WITH AN OVERVIEW OF THE MARKET CLIMATE DURING THE ANNUAL PERIOD?
A The 12-month period ended October 31, 2000, was a challenging time
characterized by large swings in the market. From the beginning of this period
through the first few months of 2000, we saw technology issues drive robust
market growth. Advances in the tech sector -- specifically in semiconductors and
wireless communications -- and an active initial public offering (IPO) market
drove this performance. At first, many investors continued to ride high with
tech stocks, even as concern over Y2K mounted. The tech-dominated market
maintained strength as Y2K came and went and as the Federal Reserve Board
continued to increase interest rates. However, after the market peaked in
February, there was a sharp correction in growth and technology issues as
investors began reexamining the sustainability of the revenue and earnings
growth rates as well as the high price-to-earnings multiples (P/E) of many
technology issues, and more specifically Internet-related stocks. No tech names
were immune from the correction's domino-like effect, although some rebounded
more quickly than others.
Spooked by the correction, many investors moved into nontech, large-cap names,
which was good news for more defensive areas of the market. Value stocks gained
some ground on growth stocks during this period on fears about the more
aggressive Fed policy and the continued concerns over high valuations of tech
stocks. But some growth areas with more defensive characteristics also
benefited, such as select pharmaceuticals and financial services. Surprisingly,
big discount retail names that historically perform well during this type of
market posted disappointing returns on the heels of the correction.
The market has shown some signs of rebounding, but economic data suggest that
the Fed has succeeded in slowing the economy. As the one-year period came to a
close, the market remained volatile as performance continued to broaden beyond
tech names.
Q HOW DID THE FUND PERFORM DURING THIS ONE-YEAR PERIOD? HOW DID THIS PERFORMANCE
COMPARE WITH ITS BENCHMARKS?
A Kemper Total Return Fund gained 6.52 percent (Class A shares, unadjusted for
any sales charges), outperforming the S&P 500 stock index which was up 6.08
percent. The fund slightly trailed its typical peer -- the average return for
the Lipper Balanced Fund category was 7.88 percent -- lagging due to its higher
equity exposure in a challenging market and its greater exposure to growth
stocks versus value names.
When comparing fund returns with the all-equity S&P 500 stock index, it is
important to keep in mind that Kemper Total Return Fund is a balanced fund.
Balanced funds invest in both stocks and bonds. During the annual period, we did
not change the portfolio's asset allocation mix -- the fund generally held 65
percent of its assets in stocks. The remaining 35 percent was invested in a core
bond portfolio that included a mix of high-grade and high-yield corporate bonds,
as well as U.S. Treasury and agency bonds. For comparison purposes, you should
also examine the Lehman Brothers Government/ Corporate Bond index*, which rose
7.13 percent for the annual period.
* THE LEHMAN BROTHERS GOVERNMENT/ CORPORATE BOND INDEX IS AN UNMANAGED INDEX
COMPRISING INTERMEDIATE- AND LONG-TERM GOVERNMENT AND INVESTMENT-GRADE
CORPORATE DEBT SECURITIES. SOURCE IS LIPPER, INC. AS OF 10/31/00.
Q WHAT EFFECT DID THE FUND'S BALANCED APPROACH HAVE ON PERFORMANCE?
A As you know, Kemper Total Return Fund seeks both capital growth and current
income. To pursue these goals, we combine stocks and bonds in a single
portfolio. Stocks generally have a higher return potential but also tend to be
more volatile. Bonds, meanwhile, typically offer a lower level of return but
also carry a lower degree of risk compared with stocks. Because the fund
provides exposure to both stocks and bonds, our shareholders' eggs aren't all in
one basket. If stocks falter, bond returns may partially offset the losses.
The fund performed as it was designed to during this type of volatile market
climate and protected principal. Early in the period, stocks -- particularly
technology stocks -- dramatically outperformed everything else. Our significant
bond position, while appropriate for this balanced fund, limited gains in
comparison with all-equity funds. As the market shifted in March and many stocks
fell, the fund's bond position limited losses. Since then, the bond portion of
the portfolio has made a significant contribution to fund performance as
weakness in the equity markets broadened. Overall, our balanced stock and bond
allocation allowed us to post positive returns while minimizing downside risk.
Q HOW DID RISING INTEREST RATES IMPACT PORTFOLIO PERFORMANCE?
A Rising interest rates have had an impact on the fund. However, that impact was
not all negative; the portfolio's mixture of stocks and bonds once again
assisted in limiting fund losses usually associated with rising rates.
Bond market returns for the 12 months were generally positive across the
board. Early in the period, as interest rates rose, bonds struggled, but as
rates began to level off, bonds staged a rally. This exemplifies the inverse
relationship between bonds and interest rates. Typically, when interest rates
rise, the prices of bonds fall. As the equity markets corrected, investors
gravitated to investments that provided more security. Government bonds posted
the best performance, up 8 percent. High-grade and high-yield corporate bonds
also posted positive returns. The bond portion of the portfolio did what it was
supposed to -- it tempered volatility and mitigated losses as the stock market
tumbled.
Although many stocks were adversely affected by the correction in the equity
market, some stocks benefited from rate hikes. We chose to focus on financial
stocks that are less sensitive to rate movements, such as brokerage and
diversified financial firms Morgan Stanley Dean Witter, Marsh & McLennan and
Merrill Lynch. These types of firms benefited from a strong IPO market and an
overall healthy economy. But weakness in the financials subsector could be found
in banks, which suffered because of investor concern that bank loan business
would decline as rates rose. The portfolio had a below-average position in these
types of interest-rate-sensitive stocks, however, so overall, the fund benefited
from its stake in the financial sector.
Q WILL YOU EXPLAIN YOUR STOCK SELECTION PROCESS?
A We understand that investors choose Kemper Total Return Fund for its
quality-focused approach. Accordingly, within our stock allocation, we favor
established, large-cap growth domestic companies with excellent fundamentals,
strong earnings-growth potential and reasonable stock prices. We are currently
not invested in small-cap stocks (under $1 billion in market capitalization) and
have minimal exposure in mid-cap stocks (between $1 billion and $5 billion in
market capitalization). The portfolio has virtually no foreign stock exposure,
although we do have the ability to invest in any size company, as well as
foreign companies. Generally, we begin to sell stocks when their prices reach
our predetermined targets. A key objective of this discipline is to have logic,
not emotion, drive the process. We also sell stocks when we see indications of
potentially deteriorating fundamentals or signs of slowing earnings growth. We
rely on independent and rigorous research to guide our stock selection. We use
both fundamental and quantitative measures. Throughout, we actively leverage
Scudder Kemper Investments' extensive research and analytical capabilities.
Q MICROSOFT HAS BEEN A TOPIC OF MUCH DISCUSSION THIS YEAR AND REMAINED A TOP
HOLDING IN THE PORTFOLIO DURING THE ANNUAL PERIOD. WHAT IS YOUR OUTLOOK ON THIS
ISSUE?
A The worst of Microsoft's legal troubles may be behind it. However, the stock
has been a disappointment, and its drop in price had a negative effect on fund
performance. The litigation created anxiety among investors, and we saw that
anxiety reflected in the volatility of the company's short-term stock price. We
had hoped that the legal proceedings would not be a major issue and looked
forward to a resolution with the government. When that didn't come, the stock
reacted adversely. But as the legal troubles have begun to fade, the price has
rebounded somewhat.
Our fundamental analysis of Microsoft's business prospects shows that the
company and its technology-sector peers are well positioned to expand sales and
earnings in the coming months. Given this outlook, we have not changed our
holdings during the sell-off, content that we are well positioned in Microsoft
and its tech-sector peers.
Q HOW IS KEMPER TOTAL RETURN FUND INVESTING IN OTHER AREAS OF TECHNOLOGY?
A The portfolio is diversified across a variety of tech subsectors, such as
computer hardware and software services. While Internet companies, up until
March and April, had been some of the most dynamic market performers, we had
exposure to this subsector only by investing in more established companies that
provide goods and services that make the Internet work. Companies such as Oracle
and Sun Microsystems rallied alongside the Internet frenzy but carried less risk
due to their diverse businesses, long-term track records and strong
fundamentals. So, when the market corrected in March, these more conservative,
established names generally proved more resilient than many of the unproven,
Internet-focused start-ups. This is one reason the fund has not been investing
directly in the "dot-com" stocks. However, we do believe that the portfolio is
well positioned to participate in the still-growing technology sector.
Another way we are participating is through investments in companies that are
using the Internet to build their market share and increase profit potential.
More and more established companies are embracing the Internet business model.
We're watching companies closely, placing a premium on companies that have the
"first move" advantage when it comes to exploiting the opportunities of
electronic commerce. Although tech is off from its high earlier in the year, the
long-term outlook for these types of established, well-managed companies remains
positive.
One tech subsector that has shown such signs of resiliency lately is
semiconductors, where equipment manufacturers helped support the fund's
performance. These firms produce the equipment needed to manufacture chips, as
well as the chips themselves, which are the building blocks for cellular and
wireless telecommunications, computers, calculators and a host of other goods.
In this subsector, Intel, Applied Materials and Teradyne were all huge winners.
And semiconductor demand continues to grow on a global basis. Despite its recent
downturn, the fund's best-performing sector during the annual period was still
technology. Therefore, we are maintaining our slight overweight position
relative to the S&P 500 benchmark.
Q WHAT WORKED FOR KEMPER TOTAL RETURN FUND DURING THIS PERIOD?
A Besides the previously mentioned technology issues, we found strength in other
select stocks. But it was challenging because, like technology, market weakness
was broad, and positive-performing issues were difficult to find.
The energy sector contributed notable returns to the fund. The big integrated
oil companies, such as Exxon Mobil, have seen good performance as of late. But
the real story has been in oil services, specifically drilling and exploration
companies. The fund's position in these types of oil service stocks benefited
from higher-than-usual oil prices as companies increased their budgets to search
for oil. We anticipate that these higher oil prices will be maintained, and that
should continue to help boost returns for many oil-related stocks.
Health care is an area we continue to examine closely. We have had exposure in
both the large-cap pharmaceuticals and rapidly growing specialty
pharmaceuticals, as well as the fastest growing companies in health care -- the
biotech sector. We saw some price appreciation here as investors, concerned
about technology valuations, made a defensive shift into large-cap
pharmaceutical issues with consistent earnings. We still like the long-term
outlook for this sector and continue to seek out opportunities in companies with
acceptable valuations.
Q WHAT WERE SOME AREAS THAT DID NOT PERFORM AS WELL AS ANTICIPATED?
A In addition to the weaknesses in banks and some specific technology companies,
areas such as retail and media did not perform as well as we had anticipated. We
remain optimistic about retail companies, although many big names here such as
Home Depot and WalMart underperformed during the period amid concerns of an
economic slowdown. We believe this underperformance is just a temporary
situation. Looking ahead, we see demographics continuing to favor growth in the
labor force, which would create more income and likely result in increased
consumer discretionary spending. This would, of course, be positive for retail
stocks.
Media holdings were solid performers for the fund during much of the annual
period but were recently hurt due to mergers within the industry, as well as the
loss of advertising revenue from the coffers of Internet start-ups that folded.
Q WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
A There are still attractive issues in the market. Some of these names are in
technology, where valuations have come down to more reasonable levels and growth
rates still look very good. But we need to keep an especially close eye on tech
as market volatility continues. The fundamentals appear to be in place for a
positive market cycle: inflation is in check, the Fed appears to be finished
raising rates, and although the economy has slowed, it is still strong overall.
We believe this economic slowdown has been fundamentally sound and good for the
market as a whole. But if the slowdown turns into a recession, that would not be
good for stocks. Regardless of market direction, we feel that because of the
portfolio's stock/bond mix, the fund is well positioned to take advantage of
continuing volatility.
TERMS TO KNOW
BENCHMARK A point of comparison for gauging relative performance. A fund's
benchmark may be the overall stock market, an index or a peer-group average. To
use a given benchmark effectively, it's essential to consider any differences
between the benchmark and the fund.
CONSUMER STAPLE Consumer staple companies produce nondurable goods or services
that tend to be consumed or replaced within a relatively short period of time.
Due to the steadier demand for consumer nondurables, stocks in this sector are
often considered more defensive in nature than other stocks.
CYCLICAL STOCK Cyclical stocks carry a higher degree of economic sensitivity. In
accelerating economies, cyclical stocks tend to rise quickly; in decelerating
economies, they tend to decline quickly. Cyclical industries include industrial
machinery, paper and forestry, automobiles and construction.
GROWTH STOCK A stock in a company that is expected to experience rapid growth
resulting from strong sales, talented management and dominant market position.
Because growth stocks are typically in demand, they tend to carry relatively
high price tags and also can be volatile, based on changing perceptions of the
companies' growth.
PRICE-TO-EARNINGS RATIO (P/E) The P/E ratio indicates how much investors are
paying for a company's earning power. The higher the P/E, the more investors are
paying and the more earnings growth they are expecting.
<PAGE>
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS*
FOR PERIODS ENDED OCTOBER 31, 2000 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
LIFE OF
1-YEAR 5-YEAR 10-YEAR FUND
--------------------------------------------------------------------------------
KEMPER TOTAL RETURN FUND CLASS A 0.42% 12.39% 13.09% 11.80% (since 3/2/64)
................................................................................
KEMPER TOTAL RETURN FUND CLASS B 2.58 12.53 n/a 12.46 (since 5/31/94)
................................................................................
KEMPER TOTAL RETURN FUND CLASS C 5.63 12.70 n/a 12.55 (since 5/31/94)
................................................................................
KEMPER TOTAL RETURN FUND CLASS A Growth of an assumed $10,000 investment in
Class A shares from 12/31/72 to 10/31/00
[LINE GRAPH]
LEHMAN BROTHERS
KEMPER TOTAL RETURN STANDARD & POOR'S 500 GOVERNMENT/CREDIT
FUND CLASS A1 STOCK INDEX+ INDEX++
------------------- --------------------- -----------------
12/31/72 9416.00 10000.00 10000.00
8553.00 8263.00 10228.00
7117.00 5808.00 10245.00
9641.00 7640.00 11505.00
13042.00 9103.00 13298.00
13689.00 8056.00 13695.00
15172.00 8141.00 13857.00
19959.00 9144.00 14176.00
28219.00 11500.00 14610.00
12/31/81 28308.00 10381.00 15670.00
34772.00 11914.00 20543.00
41737.00 13971.00 22185.00
41273.00 14167.00 25517.00
53023.00 17898.00 30953.00
62404.00 20514.00 35788.00
60882.00 20930.00 36609.00
66218.00 23526.00 39384.00
12/31/89 79353.00 29936.00 44991.00
82610.00 27973.00 48717.00
115783.00 35332.00 56573.00
118669.00 36909.00 60862.00
132420.00 39513.00 67576.00
120270.00 38905.00 65205.00
151301.00 52175.00 77752.00
175882.00 62748.00 80009.00
209548.00 82205.00 87816.00
242896.00 104128.00 96148.00
278353.00 124460.00 94069.00
10/31/00 280269.00 121085.00 101438.00
KEMPER TOTAL RETURN FUND CLASS B Growth of an assumed $10,000 investment in
Class B shares from 05/31/94 to 10/31/00
[LINE GRAPH]
LEHMAN BROTHERS
KEMPER TOTAL RETURN STANDARD & POOR'S 500 GOVERNMENT/CREDIT
FUND CLASS B1 STOCK INDEX+ INDEX++
------------------- --------------------- ----------------
5/31/94 10000.00 10000.00 10000.00
9556.00 9732.00 9977.00
9850.00 10136.00 10026.00
9644.00 10061.00 10063.00
10282.00 10968.00 10564.00
11060.00 11933.00 11250.00
11606.00 12802.00 11465.00
12011.00 13492.00 11999.00
3/31/96 12241.00 14140.00 11718.00
12600.00 14691.00 11774.00
13188.00 15057.00 11981.00
13847.00 16227.00 12347.00
13715.00 16585.00 12241.00
15460.00 19390.00 12685.00
16338.00 20751.00 13130.00
16333.00 21258.00 13552.00
17814.00 24135.00 13758.00
18021.00 24838.00 14109.00
9/30/98 16774.00 22278.00 14820.00
18731.00 26927.00 14838.00
19264.00 28179.00 14661.00
20149.00 30070.00 14501.00
19270.00 28099.00 14577.00
21271.00 32185.00 14517.00
21572.00 32828.00 14906.00
21258.00 31864.00 15122.00
21451.00 31468.00 15556.00
10/31/00 21264.00 31312.00 15654.00
KEMPER TOTAL RETURN FUND CLASS C Growth of an assumed $10,000 investment in
Class C shares from 05/31/94 to 10/31/00
[LINE GRAPH]
LEHMAN BROTHERS
KEMPER TOTAL RETURN STANDARD & POOR'S 500 GOVERNMENT/CREDIT
FUND CLASS C1 STOCK INDEX+ INDEX++
------------------ --------------------- -----------------
5/31/94 10000.00 10000.00 10000.00
9567.00 9732.00 9977.00
9851.00 10136.00 10026.00
9646.00 10061.00 10063.00
10286.00 10968.00 10564.00
11079.00 11933.00 11250.00
11640.00 12802.00 11465.00
12052.00 13492.00 11999.00
3/31/96 12274.00 14140.00 11718.00
12638.00 14691.00 11774.00
13230.00 15057.00 11981.00
13894.00 16227.00 12347.00
13763.00 16585.00 12241.00
15515.00 19390.00 12685.00
16398.00 20751.00 13130.00
16394.00 21258.00 13552.00
17882.00 24135.00 13758.00
18096.00 24838.00 14109.00
9/30/98 16867.00 22278.00 14820.00
18819.00 26927.00 14838.00
19350.00 28179.00 14661.00
20238.00 30070.00 14501.00
19372.00 28099.00 14577.00
21375.00 32185.00 14517.00
21684.00 32828.00 14906.00
21395.00 31864.00 15122.00
21576.00 31468.00 15556.00
10/31/00 21368.00 31312.00 15654.00
PERFORMANCE IS HISTORICAL AND INCLUDES REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH CHANGING
MARKET CONDITIONS, SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS
THAN ORIGINAL COST.
*THE MAXIMUM SALES CHARGE FOR CLASS A SHARES IS 5.75%. FOR CLASS B SHARES, THE
MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC) IS 4%. CLASS C SHARES HAVE NO
SALES CHARGE ADJUSTMENT, BUT REDEMPTIONS WITHIN ONE YEAR OF PURCHASE MAY BE
SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1%. SHARE CLASSES INVEST IN
THE SAME UNDERLYING PORTFOLIO. DURING THE PERIODS NOTED, SECURITIES PRICES
FLUCTUATED. FOR ADDITIONAL INFORMATION, SEE THE PROSPECTUS, STATEMENT OF
ADDITIONAL INFORMATION AND THE FINANCIAL HIGHLIGHTS AT THE END OF THIS REPORT.
(1)PERFORMANCE INCLUDES REINVESTMENT OF DIVIDENDS AND ADJUSTMENT FOR THE
MAXIMUM SALES CHARGE FOR CLASS A SHARES AND THE CONTINGENT DEFERRED SALES
CHARGE IN EFFECT AT THE END OF THE PERIOD FOR CLASS B SHARES. WHEN REVIEWING
THE PERFORMANCE CHART, PLEASE NOTE THAT THE INCEPTION DATE FOR THE LEHMAN
BROTHERS GOVERNMENT/ CREDIT BOND INDEX IS DECEMBER 31, 1972. AS A RESULT, WE
ARE UNABLE TO ILLUSTRATE THE LIFE-OF-FUND PERFORMANCE (SINCE MARCH 2, 1964)
FOR KEMPER TOTAL RETURN FUND CLASS A SHARES. IN COMPARING THE KEMPER TOTAL
RETURN FUND WITH THE INDICES, YOU SHOULD ALSO NOTE THAT THE FUND'S
PERFORMANCE REFLECTS THE MAXIMUM SALES CHARGE, WHILE NO SUCH CHARGES ARE
REFLECTED IN THE PERFORMANCE OF THE INDICES.
+ THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX
GENERALLY REPRESENTATIVE OF THE U.S. STOCK MARKET. SOURCE IS
WIESENBERGER(R).
++ THE LEHMAN BROTHERS GOVERNMENT/ CREDIT BOND INDEX IS AN UNMANAGED INDEX
COMPRISING INTERMEDIATE-AND LONG-TERM GOVERNMENT AND INVESTMENT-GRADE
CORPORATE DEBT SECURITIES. SOURCE IS WIESENBERGER(R).
<PAGE>
PART B
KEMPER TOTAL RETURN FUND
-----------------------------------------
Statement of Additional Information
March [ ], 2001
------------------------------------------
Acquisition of the Assets of By and in Exchange for Shares of
Kemper Horizon 5, Kemper Total Return Fund (the "Acquiring Trust"),
Kemper Horizon 10+, and 222 South Riverside Plaza
Kemper Horizon 20+, Chicago, IL 60606
each a series of
Kemper Horizon Fund
222 South Riverside Plaza
Chicago, IL 60606
This Statement of Additional Information is available to the
shareholders of Kemper Total Return Fund in connection with a proposed
transaction whereby Kemper Total Return Fund will acquire all or substantially
all of the assets and all of the liabilities of Kemper Horizon Fund in exchange
for shares of the Acquiring Fund (the "Reorganization").
This Statement of Additional Information of the Acquiring Trust
contains material which may be of interest to investors but which is not
included in the Proxy Statement/Prospectus of the Acquiring Trust relating to
the Reorganization. This Statement of Additional Information consists of this
cover page and the following documents:
1. Kemper Total Return Fund's statement of additional information dated February
1, 2001, which was previously filed with the Securities and Exchange Commission
(the "Commission") via EDGAR on November 30, 2000 (File No. 811-1236) and is
incorporated by reference herein.
2. Kemper Total Return Fund's annual report to shareholders for the fiscal year
ended October 31, 2000, which was previously filed with the Commission via EDGAR
on December 28, 2000 (File No. 811-1236) and is incorporated by reference
herein.
3. Kemper Horizon Fund's prospectus dated December 1, 2000, which was previously
filed with the Commission via EDGAR on November 30, 2000 (File No. 811-7365) and
is incorporated by reference herein.
4. Kemper Horizon Fund's statement of additional information dated December 1,
2000, which was previously filed with the Commission via EDGAR on November 30,
2000 (File No. 811-7365) and is incorporated by reference herein.
5. Kemper Horizon Fund's annual report to shareholders for the fiscal year ended
July 31, 2000, which was previously filed with the Commission via EDGAR on
September 27, 2000 (File No. 811-7365) and is incorporated by reference herein.
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated March [ ], 2001 relating to the Reorganization may be
obtained by writing Kemper Total Return Fund at 222 South Riverside Drive,
Chicago, IL 60606 or by calling [ ] at 1-800-[ ]. This Statement of Additional
Information should be read in conjunction with the Proxy Statement/Prospectus.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification.
Article VIII of the Registrant's Agreement and Declaration of
Trust (Exhibit 23(a) hereto, which is incorporated herein by
reference) provides in effect that the Registrant will
indemnify its officers and trustees under certain
circumstances. However, in accordance with Section 17(h) and
17(i) of the Investment Company Act of 1940 and its own terms,
said Article of the Agreement and Declaration of Trust does
not protect any person against any liability to the Registrant
or its shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of
his office.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a trustee, officer, or
controlling person of the Registrant in the successful defense
of any action, suit, or proceeding) is asserted by such
trustee, officer, or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification
by it is against public policy as expressed in the Act and
will governed by the final adjudication of such issue.
On June 26, 1997, Zurich Insurance Company ("Zurich"), ZKI
Holding Corp. ("ZKIH"), Zurich Kemper Investments, Inc.
("ZKI"), Scudder, Stevens & Clark, Inc. ("Scudder") and the
representatives of the beneficial owners of the capital stock
of Scudder ("Scudder Representatives") entered into a
transaction agreement ("Transaction Agreement") pursuant to
which Zurich became the majority stockholder in Scudder with
an approximately 70% interest, and ZKI was combined with
Scudder ("Transaction"). In connection with the trustees'
evaluation of the Transaction, Zurich agreed to indemnify the
Registrant and the trustees who were not interested persons of
ZKI or Scudder (the "Independent Trustees") for and against
any liability and expenses based upon any action or omission
by the Independent Trustees in connection with their
consideration of and action with respect to the Transaction.
In addition, Scudder has agreed to indemnify the Registrant
and the Independent Trustees for and against any liability and
expenses based upon any misstatements or omissions by Scudder
to the Independent Trustees in connection with their
consideration of the Transaction.
Item 16. Exhibits.
(1) (a)(1) Amended and Restated Agreement and Declaration of
Trust. (Incorporated by reference to Post-Effective
Amendment No. 49 to Registrant's Registration
Statement on Form N-1A which was filed on January 30,
1996.)
(a)(2) Text of Share Certificate. (Incorporated by reference
to Post-Effective Amendment No. 49 to the
Registrant's Registration Statement on Form N-1A
which was filed on January 30, 1996.)
(a)(3) Written Instrument Establishing and Designating
Separate Classes of Shares. (Incorporated by
reference to Post-Effective Amendment No. 49 to the
Registrant's Registration Statement on Form N-1A
which was filed on January 30, 1996.)
(a)(4) Amended and Restated Written Instrument Establishing
and Designating Separate Classes of Shares.
(Incorporated by reference to Post-Effective
Amendment No. 50 to the Registrant's Registration
Statement on Form N-1A which was filed on December
24, 1996.)
(2) (b)(1) By laws. (Incorporated by reference to Post-Effective
Amendment No. 49 to Registrant's Registration
Statement on Form N-1A which was filed on January 30,
1996.)
(3) Inapplicable.
Form of Agreement and Plan of Reorganization is
(4) incorporated by reference to Exhibit A to Part A of
the Registrant's Registration Statement on Form N-14
filed with the Securities and Exchange Commission on
December 6, 2000.
(5) Inapplicable.
(6) (d)(1) Investment Advisory Contract (IMA) between the
Registrant, on behalf of Kemper Total Return Fund,
and Scudder Kemper Investments, Inc. dated September
7, 1998 is incorporated by reference to
Post-Effective Amendment No. 52 to Registrant's
Registration Statement on Form N-1A which was filed
on December 3, 1998).
(7) (e)(1) Underwriting and Distribution Services Agreement
between the Registrant, on behalf of Kemper Total
Return Fund, and Kemper Distributors, Inc. dated
October 1, 1999 is incorporated by reference to
Post-Effective Amendment No. 52 to Registrant's
Registration Statement on Form N-1A which was filed
on December 3, 1998).
(8) Inapplicable.
(9) (g)(1) Custodian Agreement between the Registrant, on behalf
of Kemper Total Return Fund, and Investors Fiduciary
Trust Company is incorporated by reference to
Post-Effective Amendment No. 49 to Registrant's
Registration Statement on Form N-1A which was filed
on January 30, 1996).
(g)(2) Foreign Custody Agreement between the Registrant, on
behalf of Kemper Total Return Fund, and The Chase
Manhattan Bank. (Incorporated by reference to
Post-Effective Amendment No. 49 to Registrant's
Registration Statement on Form N-1A which was filed
on January 30, 1996.)
(10) (m)(1) Rule 12b-1 Plan between Kemper Total Return Fund
(Class B Shares) and Kemper Distributors, Inc. dated
August 1, 1998. (Incorporated by reference to
Post-Effective Amendment No. 52 to the Registrant's
Registration Statement on Form N-1A which was filed
on December 3, 1998.)
(m)(2) Rule 12b-1 Plan between Kemper Total Return Fund
(Class C Shares) and Kemper Distributors, Inc. dated
August 1, 1998. (Incorporated by reference to
Post-Effective Amendment No. 52 to the Registrant's
Registration Statement on Form N-1A which was filed
on December 3, 1998.)
(m)(3) Rule 18f-3 Plan. (Incorporated by reference to
Post-Effective Amendment No. 50 to Registrant's
Registration Statement on Form N-1A which was filed
on December 24, 1996.)
(11) Opinion and Consent of Dechert is incorporated by
reference to Exhibit 11 to the Registrant's
Registration Statement on Form N-14 filed with the
Securities and Exchange Commission on December 6,
2000.
(12) Opinion and Consent of Willkie Farr & Gallagher is to
be filed by post-effective amendment.
(13) (h)(1) Agency Agreement. (Incorporated by reference to
Post-Effective Amendment No. 49 to Registrant's
Registration Statement on Form N-1A which was filed
on January 30, 1996.)
(h)(2) Administrative Services Agreement between the
Registrant and Kemper Distributors, Inc. dated April
1, 1997. (Incorporated by reference to Post-Effective
Amendment No. 51 to the Registrant's Registration
Statement on Form N-1A which was filed on January 27,
1998.)
(h)(3) Supplement to Agency Agreement between Registrant and
Investors Fiduciary Trust Company dated June 1, 1997.
(Incorporated by reference to Post-Effective
Amendment No. 51 to the Registrant's Registration
Statement on Form N-1A which was filed on January 27,
1998.)
(h)(4) Fund Accounting Agreement between Kemper Total Return
Fund and Scudder Fund Accounting Corporation dated
December 31, 1997. (Incorporated by reference to
Post-Effective Amendment No. 51 to the Registrant's
Registration Statement on Form N-1A which was filed
on January 27, 1998.)
(14) Consent of Independent Auditors is filed herein.
(15) Inapplicable.
(16) Powers of Attorney are incorporated by reference to
Exhibit 16 to the Registrant's Registration Statement
on Form N-14 filed with the Securities and Exchange
Commission on December 6, 2000.
(17) Form of Proxy is incorporated by reference to Exhibit
17 to the Registrant's Registration Statement on Form
N-14 filed with the Securities and Exchange
Commission on December 6, 2000.
Item 17. Undertakings.
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus
which is a part of this registration statement by any person or party
who is deemed to be an underwriter within the meaning of Rule 145(c) of
the Securities Act [17 CFR 230.145c], the reoffering prospectus will
contain the information called for by the applicable registration form
for C-8 350 reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the
applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment
to the registration statement and will not be used until the amendment
is effective, and that, in determining any liability under the 1933
Act, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
(3) The undersigned Registrant undertakes to file, by post-effective
amendment, an opinion of counsel supporting the tax consequences of the
proposed reorganization within a reasonable time after receipt of such
opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Kemper Total Return Fund certifies that it meets
all of the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933, and Kemper
Total Return Fund has duly caused this Registration Statement on Form N-14 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Boston and the Commonwealth of Massachusetts on the 10th day of January,
2001.
KEMPER TOTAL RETURN FUND
/s/ Mark S. Casady
By:
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Mark S. Casady President January 10, 2001
Mark S. Casady
/s/ John W. Ballantine* Trustee January 10, 2001
John W. Ballantine
/s/ Lewis A. Burnham* Trustee January 10, 2001
Lewis A. Burnham
/s/ Linda C. Coughlin* Trustee January 10, 2001
Linda C. Coughlin
/s/ Donald L. Dunaway* Trustee January 10, 2001
Donald L. Dunaway
/s/ Robert B. Hoffman* Trustee January 10, 2001
Robert B. Hoffman
/s/ Donald R. Jones* Trustee January 10, 2001
Donald R. Jones
/s/Thomas W. Littauer* Chairman and Trustee January 10, 2001
Thomas W. Littauer
/s/ Shirley D. Peterson* Trustee January 10, 2001
Shirley D. Peterson
/s/ William P. Sommers* Trustee January 10, 2001
William P. Sommers
/s/ John R. Hebble Treasurer (Principal Financial January 10, 2001
John R. Hebble and Accounting Officer)
/s/ Caroline Pearson
*By: January 10, 2001
Caroline Pearson, Attorney-in-fact
*Executed pursuant to powers of attorney previously filed as an exhibit to the
Registrant's Registration Statement on Form N-14 filed with the Securities and
Exchange Commission on December 6, 2000.