1
 
                           KEMPER FIXED INCOME FUNDS
                            SUPPLEMENT TO PROSPECTUS
                             DATED DECEMBER 1, 1994
 
                  Kemper Adjustable Rate U.S. Government Fund
                         Kemper Diversified Income Fund
                     Kemper U.S. Government Securities Fund
                             Kemper High Yield Fund
                  Kemper Income and Capital Preservation Fund
           Kemper Portfolios comprised of the following three series:
                           Kemper Cash Reserves Fund
                           Kemper U.S. Mortgage Fund
                   Kemper Short-Intermediate Government Fund
 
                           -------------------------
 
     Kemper Corporation, the parent of Kemper Financial Services, Inc. ("KFS,"
the investment manager for the Funds), has entered into an agreement in
principle with an investor group led by Zurich Insurance Company ("Zurich")
pursuant to which Kemper Corporation would be acquired by the investor group in
a merger transaction. As part of the transaction, Zurich or an affiliate would
purchase KFS.
 
     A definitive agreement is expected in early May, 1995, subject to the
completion of the investor group's due diligence. Consummation of the
transaction is subject to a number of contingencies, including approval by the
board and stockholders of Kemper Corporation and the Zurich board and regulatory
approvals. Because the transaction would constitute an assignment of the Funds'
investment management agreements with KFS and, where applicable, Rule 12b-1
agreements under the Investment Company Act of 1940, and therefore a termination
of such agreements, it is anticipated that KFS would seek approval of new
agreements from the Funds' boards and shareholders prior to consummation of the
transaction. The transaction is expected to close early in the fourth quarter of
1995.
 
     After consummation of the transaction, it is anticipated that the KFS
management team and the Kemper Fund portfolio managers would remain in place and
that the Kemper Funds would be operated in the same manner as they are
currently.
 
     Separately, effective February 1, 1995, KFS transferred all its duties and
responsibilities as principal underwriter, distributor and administrator of the
Funds to Kemper Distributors, Inc., a wholly-owned subsidiary of KFS. KFS
continues to provide investment management services. See "Investment Manager and
Underwriter" in the prospectus.
 
April 19, 1995
KSIF-1Z  4/95                                    (LOGO)printed on recycled paper