<PAGE> 1
KEMPER
HORIZON FUND
SEMIANNUAL REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED JANUARY 31, 1997
KEMPER HORIZON 20+
PORTFOLIO
KEMPER HORIZON 10+
PORTFOLIO
KEMPER HORIZON 5
PORTFOLIO
" . . . From a performance standpoint,
large capitalization, domestic stocks were
the place to be ."
[KEMPER FUNDS LOGO]
<PAGE> 2
AT A GLANCE
CONTENTS
3
Economic Overview
5
Performance Update
9
Statistics for 20+ Portfolio
Largest Holdings
10
Statistics for 10+ Portfolio
Largest Holdings
11
Statistics for 5 Portfolio
Largest Holdings
12
Portfolio of
Investments
30
Financial Statements
33
Notes to
Financial Statements
40
Financial Highlights
- --------------------------------------------------------------------------
KEMPER HORIZON FUND TOTAL RETURNS*
- --------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31, 1997
(UNADJUSTED FOR ANY SALES CHARGE):
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER HORIZON 20+
PORTFOLIO 15.83% 15.44% 15.27%
- --------------------------------------------------------------------------
KEMPER HORIZON 10+
PORTFOLIO 13.05% 12.54% 12.34%
- --------------------------------------------------------------------------
KEMPER HORIZON 5
PORTFOLIO 8.93% 8.53% 8.41%
- --------------------------------------------------------------------------
</TABLE>
Returns are historical and do not represent future performance. Returns and net
asset value fluctuate. Shares are redeemable at current net asset value, which
may be more or less than original cost.
* Total return measures net investment income and capital gain or loss from
portfolio investments, assuming reinvestment of all dividends. During the
period securities prices fluctuated. For additional information, see the
Prospectus and Statement of Additional Information and the Financial
Highlights at the end of this report.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
NET ASSET VALUE
- ---------------------------------------------------------------------------
AS OF AS OF
1/31/97 7/31/96
- ---------------------------------------------------------------------------
<S> <C> <C>
KEMPER HORIZON 20+ PORTFOLIO
CLASS A $11.15 $9.72
- ---------------------------------------------------------------------------
KEMPER HORIZON 20+ PORTFOLIO
CLASS B $11.10 $9.65
- ---------------------------------------------------------------------------
KEMPER HORIZON 20+ PORTFOLIO
CLASS C $11.11 $9.67
- ---------------------------------------------------------------------------
KEMPER HORIZON 10+ PORTFOLIO
CLASS A $10.73 $9.60
- ---------------------------------------------------------------------------
KEMPER HORIZON 10+ PORTFOLIO
CLASS B $10.73 $9.60
- ---------------------------------------------------------------------------
KEMPER HORIZON 10+ PORTFOLIO
CLASS C $10.72 $9.60
- ---------------------------------------------------------------------------
KEMPER HORIZON 5 PORTFOLIO
CLASS A $10.26 $9.57
- ---------------------------------------------------------------------------
KEMPER HORIZON 5 PORTFOLIO
CLASS B $10.26 $9.57
- ---------------------------------------------------------------------------
KEMPER HORIZON 5 PORTFOLIO
CLASS C $10.25 $9.57
- ---------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------------------------
DIVIDEND REVIEW
- ---------------------------------------------------------------------------
DURING THE PERIOD ENDED JANUARY 31, 1997, THE FUND MADE THE FOLLOWING
DISTRIBUTIONS PER SHARE:
<TABLE>
<CAPTION>
INCOME DIVIDEND
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
KEMPER HORIZON 20+
PORTFOLIO $0.1040 $0.0380 $0.0350
- ---------------------------------------------------------------------------
KEMPER HORIZON 10+
PORTFOLIO $0.1190 $0.0720 $0.0630
- ---------------------------------------------------------------------------
KEMPER HORIZON 5
PORTFOLIO $0.1590 $0.1220 $0.1205
- ---------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
INDEX An unmanaged group of securities that is considered representative of the
stock or bond markets. An index does not take into account any fees or expenses
related to the individual securities that it tracks. However, for performance
comparisons, the index is adjusted to reflect dividend reinvestment of the
securities in the index.
MARKET CAPITALIZATION A measure of the size of a publicly traded company,
capitalization is determined by multiplying the current share price by the
number of shares outstanding. The market capitalization of a company has bearing
on its perceived earnings potential and risk. Small capitalization companies
(less than $1 billion) may present the potential for greater growth than larger,
more established companies. On the other hand, the stock of small cap companies
may be more volatile and therefore a greater risk to capital.
PRICE/EARNINGS MULTIPLE A company's stock price divided by its earnings for the
past four quarters, also referred to as its P/E.
VALUE STOCK The stock of a company that is out of favor with investors because
the market underestimates its value or overlooks its potential. Stocks can
become undervalued as a result of overreaction by investors to unfavorable news
about a company, industry or the stock market in general. They can also become
undervalued as a result of a market decline, poor economic conditions, tax-loss
selling or actual or anticipated unfavorable developments affecting the company.
VOLATILITY Characteristic of a security, commodity or market to rise or fall
sharply in price within a short period of time. A stock may be volatile because
the outlook for the company is particularly uncertain or because of various
other reasons.
<PAGE> 3
ECONOMIC OVERVIEW
[TIMBERS PHOTO]
STEPHEN B. TIMBERS IS PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER OF
ZURICH KEMPER INVESTMENTS, INC. (ZKI). ZKI AND ITS AFFILIATES MANAGE
APPROXIMATELY $80 BILLION IN ASSETS, INCLUDING $45 BILLION IN RETAIL
MUTUAL FUNDS. TIMBERS IS A GRADUATE OF YALE UNIVERSITY AND HOLDS AN M.B.A. FROM
HARVARD UNIVERSITY.
DEAR SHAREHOLDER:
As we progress through the first quarter of 1997, the fundamentals of the
economy are remarkably similar to what they were one year ago. Long-term
interest rates are in the same 6.5% to 7% range they were in during the first
half of 1996. We believe the economy is growing at a rate of approximately 2.5%.
Inflation continues to be well under control, at about 3.0%.
One significant difference between today and last year is that prices of the
stocks are on average up 20%. While price movements were more volatile in 1996
than in the past few years, the patient investor was amply rewarded. The prime
element sending the stock market higher was strong positive cash flows. This
liquidity in an environment of modestly increasing corporate profits and
relatively stable interest rates pushed stocks higher for most of the year.
This higher stock market has caused many market observers to worry. While we
cannot ignore what has happened, we find no reason to be bearish over the long
term. The environment is benign to favorable for financial assets. Given steady
interest rates, moderate economic growth and continued moderate corporate
earnings growth, there are few excesses in the system. In fact, real interest
rates are probably too high considering our outlook for inflation, and we may
see them decline over time.
Naturally, we cannot rule out the possibility of a market correction. But, in
our belief, the downside would appear to be limited to 5% to 8%, which is the
size of a typical correction based on historical data. As we have said in
previous outlooks, three elements tend to move the market:
- EARNINGS. We forecast corporate earnings to range between 0% and 5% on
average for the Standard & Poor's 500* in 1997 -- not as high as in recent
years but positive nonetheless.
- INTEREST RATES. Rates should remain relatively stable.
- LIQUIDITY. Investors, through mutual funds, 401(k)s and qualified
contribution plans in particular, will continue to create strong demand
for securities.
In order to move the market more than would be expected in a typical decline,
one or more of these elements will have to turn negative in 1997, and, while
future market conditions cannot be predicted with certainty, we fail to see what
would materially change our outlook. Our outlook going forward is that 1997
should be a lot like 1996.
While the economy continued along a relatively consistent path, the United
States took some politically significant steps in 1996. First, of course,
President Bill Clinton and a Republican Congress were re-elected by the voters.
In the first few days after the general election, especially, investors
demonstrated their support for such a balance in our leadership. But of much
greater long-term significance is the expressed commitment by both parties to
balance the federal budget and address certain entitlement programs. The first
year after an election can be a fertile time to accomplish major initiatives,
and we are hopeful that progress can be made.
The future of the Social Security system, which many experts believe will run
out of money about 20 years from now, will be a subject in which you can expect
Zurich Kemper Investments, Inc. to play a leadership role. The possible
solutions for "fixing Social Security" are finite: raise Social Security taxes,
reduce benefits, raise the retirement age, change inflation assumptions or
pursue a higher rate of return on assets contributed by workers. We believe that
a bipartisan solution will be worked out, which will include giving individuals
the option of investing a portion of their Social Security contributions in an
account earmarked for them. This change is needed to return credibility to the
system, which many Americans have lost faith in.
What to do with Social Security is a debate that spans generations and
promises to occupy much attention in the coming years. As we hope to help
advance constructive debate, we'll be advocating partial privatization for this
federal program while maintaining a safety net for many low-wage earners and
providing a seamless transition for seniors near or in retirement.
3
<PAGE> 4
ECONOMIC OVERVIEW
- -------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOW (2/28/97) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 6.42 6.83 6.27 7.2
PRIME RATE(2) 8.25 8.25 8.25 9
INFLATION RATE(3) 2.72 2.62 2.86 2.57
THE U.S. DOLLAR(4) 7.67 3.32 4.53 -8.46
CAPITAL GOODS ORDERS(5)* 4.72 8.23 14.34 12.47
INDUSTRIAL PRODUCTION(5)* 0.39 3.13 5.09 3.38
EMPLOYMENT GROWTH(6) 2.3 2.06 1.76 3.27
</TABLE>
(1) Falling interest rates in recent years have been a big plus for financial
assets.
(2) The interest rate that commercial lenders charge their best borrowers.
(3) Inflation reduces an investor's real return. In the last five years,
inflation has been as high as 6%. The low, moderate inflation of the last
few years has meant high real returns.
(4) Changes in the exchange value of the dollar impact U.S. exporters and the
value of U.S. firms' foreign profits.
(5) These influence corporate profits and equity performance.
(6) An influence on family income and retail sales.
* Data as of January 31, 1997.
SOURCE: ECONOMICS DEPARTMENT, ZURICH KEMPER INVESTMENTS, INC.
With this letter as an economic backdrop, we encourage you to read the
following detailed report of your fund, including an interview with your fund's
portfolio management. Thank you for your continued support. We appreciate the
opportunity to serve your investment needs.
Sincerely,
/s/ Stephen B. Timbers
STEPHEN B. TIMBERS
PRESIDENT, CHIEF INVESTMENT AND EXECUTIVE OFFICER
Zurich Kemper Investments, Inc.
March 18, 1997
*THE STANDARD & POOR'S 500 STOCK INDEX IS AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET.
4
<PAGE> 5
PERFORMANCE UPDATE
[REGNER PHOTO]
THOMAS M. REGNER JOINED ZURICH KEMPER INVESTMENTS, INC. IN 1994 AND IS A SENIOR
VICE PRESIDENT. IN ADDITION, HE IS THE PORTFOLIO MANAGER OF KEMPER HORIZON FUND.
REGNER RECEIVED BOTH HIS BACHELOR'S AND MASTER'S DEGREE FROM THE UNIVERSITY OF
WISCONSIN AND IS A CHARTERED FINANCIAL ANALYST WITH OVER 20 YEARS OF EXPERIENCE
IN THE EQUITY MARKETS.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
THE STRONG OUTPERFORMANCE OF LARGE CAPITALIZATION STOCKS COMPARED WITH OTHER
ASSET CLASSES HAS BEEN A CHALLENGE FOR BROADLY DIVERSIFIED PORTFOLIOS SUCH AS
KEMPER HORIZON FUND. PORTFOLIO MANAGER TOM REGNER DISCUSSES HOW THE FUND HAS
FARED IN THIS ENVIRONMENT.
Q HOW WOULD YOU CHARACTERIZE THE MARKET DURING THE PAST SIX MONTHS?
A From a performance standpoint, large capitalization, domestic stocks were
the place to be. They strongly outperformed all other asset classes. During the
six months ended January 31, 1997, the Standard & Poor's 500 (S&P 500) stock
index gained 24.13%. One of the main catalysts for this outperformance was a
tremendous flow of cash -- primarily retirement and pension fund assets -- into
stocks and stock mutual funds. This activity pushed up the prices of large, high
quality growth stocks, even though their valuations have been at historic highs.
Q HOW DID KEMPER HORIZON FUND PERFORM IN THIS ENVIRONMENT?
A The fund's broad diversification actually worked against it during the
period because of the unusual dominance of one asset class. While each portfolio
owned large capitalization stocks, and those particular stocks performed very
well, we
- -------------------------------------------------------------------------------
LARGE CAPITALIZATION STOCKS OUTPERFORMED OTHER ASSET CLASSES
- -------------------------------------------------------------------------------
Data show the six-month (July 1, 1996 to January 31, 1997) comparative total
returns for four asset classes that Kemper Horizon Fund invests in.*
LARGE CAPITALIZATION STOCKS(1) 24.13%
SMALL CAPITALIZATION STOCKS(2) 17.97%
INTERNATIONAL STOCKS(3) 1.01%
CORPORATE/GOVERNMENT BONDS(4) 4.78%
*Data does not reflect performance of the fund's allocation to the asset
classes.
(1) The Standard & Poor's 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market. Source is Lipper Analytical
Services, Inc.
(2) The Russell 2000 Index is a capitalization weighted price only index which
is comprised of 2000 of the smallest stocks (on the basis of capitalization)
in the Russell 3000 Index. Source is Lipper Analytical Services, Inc.
(3) The EAFE Index (Morgan Stanley Capital International Europe, Australasia,
Far East Index) is an unmanaged index generally accepted as a benchmark for
major overseas markets. Source is Lipper Analytical Services, Inc.
(4) The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
comprised of intermediate and long-term government and investment grade
corporate debt securities. Source is Lipper Analytical Services, Inc.
5
<PAGE> 6
PERFORMANCE UPDATE
KEMPER HORIZON FUND SHAREHOLDERS EXPERIENCED LESS VOLATILITY
FOR THE 6-MONTH PERIOD ENDED JANUARY 31, 1997, THERE WERE FOUR DAYS WHEN THE
STANDARD & POOR'S 500 FELL MORE THAN 1%. THE FOLLOWING COMPARES HOW KEMPER
HORIZON FUND PORTFOLIOS PERFORMED ON THOSE DAYS.
<TABLE>
<CAPTION>
HORIZON 20 HORIZON 10 HORIZON 5
------------------------ ------------------------ ------------------------
VOLATILITY AS A VOLATILITY AS A VOLATILITY AS A
DATE S&P 500 RETURN RETURN % OF THE S&P RETURN % OF THE S&P RETURN % OF THE S&P
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3-DECEMBER-96 -1.09% -0.18% 16.5% -0.09% 8.3% -0.10% 9.2%
---------------------------------------------------------------------------------------------------------------
12-DECEMBER-96 -1.54% -0.73% 47.4% -0.57% 37.0% -0.39% 25.3%
---------------------------------------------------------------------------------------------------------------
31-DECEMBER-96 -1.74% -0.28% 16.1% -0.29% 16.7% -0.30% 17.2%
---------------------------------------------------------------------------------------------------------------
23-JANUARY-97 -1.10% -0.44% 40.0% -0.37% 33.6% -0.38% 34.5%
---------------------------------------------------------------------------------------------------------------
</TABLE>
This table reflects historical information on specific days in accordance with
the above assumptions and is not representative of future results or results
on other days during the period. Due to the relatively short life of Kemper
Horizon Fund, the table does not reflect results over a full market cycle or
the relative potential for appreciation of the fund versus the market.
Typically, lower risk implies lower return potential.
also owned international stocks, small capitalization stocks, value stocks and
bonds -- all of which underperformed large capitalization stocks.
The Russell 2000, a measure of the small capitalization stock market, rose
17.97% during the same period; the Morgan Stanley Europe, Australasia, Far East
(EAFE) index, the benchmark for international stock performance, gained only
1.01%; the Lehman Brothers Government/Corporate Bond index, the benchmark for
the bond portion of the Horizon portfolios, rose 4.75%. (SEE BAR CHART ON PAGE
5.)
The total return, unadjusted for sales charge, for Class A shares of Horizon
20+ Portfolio was 15.83%, Horizon 10+ Portfolio was 13.05% and Horizon 5
Portfolio was 8.93% for the six-month period ended January 31, 1997. The
difference in these returns reflect each portfolio's exposure to large
capitalization equities.
That being said, it should be noted that our investments in small
capitalization, international and value stocks performed quite well within their
respective universes. That helped to buoy the portfolios' overall returns.
Q IN OTHER WORDS, AN INTERNATIONALLY DIVERSIFIED FUND MAY NOT HAVE BEEN THE
BEST PLACE TO BE IN THE SECOND HALF OF 1996?
A For the short term, that's true. But the environment was highly unusual.
Normally one would expect the different asset classes to perform within a much
narrower range. And each portfolio in Kemper Horizon Fund is designed and
managed for a specific time horizon, not just a 12- or 18-month period. Over a
longer term, we know that broad diversification can help provide more consistent
return potential with less volatility. That's what one of this fund's goals: a
relative consistency of returns by controlling volatility. It's a fund that an
investor can be comfortable with over the long term without having to shift in
or out of various asset classes.
Q HOW MUCH OF THE FUND WAS INVESTED IN LARGE CAPITALIZATION GROWTH STOCKS
DURING THE PERIOD?
A Throughout most of the period, our equity allocations were tilted toward
growth stocks with about 60% in growth stocks and 40% in value stocks. Our
long-term large/small capitalization target ratio was 70% large versus 30%
small. Keep in mind that the proportion of total assets that each portfolio
invests in stocks is set by the prospectus: Kemper Horizon 20+ Portfolio
maintains approximately 80% of its total assets in equity securities, the
Horizon 10+ Portfolio approximately 60% and the Horizon 5 Portfolio
approximately 40%.
Q COULD YOU EXPLAIN HOW THE FUND CAN PROVIDE LESS VOLATILITY THAN THE MARKET?
A Sure. One of the benefits of a broadly diversified portfolio
is that when one asset class declines, another asset class may rise, thereby
providing a cushion for the portfolio. For example, during the six months ended
January 31, 1997, there were four days during which the S&P 500 fell by more
than 1%. On those same days, Kemper Horizon Fund declined, but by a much smaller
degree. (SEE TABLE). Diversification can help provide some downside protection.
6
<PAGE> 7
PERFORMANCE UPDATE
Q LET'S TALK ABOUT THE FUND'S VALUE STOCK POSITIONS.
A This portion of the fund is managed by Tom Sassi of Dreman Value Advisors,
Inc., the value management arm of Zurich Kemper Investments, Inc. (ZKI). Tom
favored financial stocks, certain domestic oil and energy companies and, on a
very selective basis, technology stocks. Amoco, Atlantic Richfield and Columbia
Gas Systems, Inc. are three energy stocks that were staples in our portfolio.
Last July, when technology stocks swooned, we saw some deep value opportunities
in that sector. However, given the rapid ups and downs that technology stocks
are prone to, Tom and his staff have been very diligent in selling stocks as
they reach established target valuations.
Q HOW DID THE FUND'S INTERNATIONAL STOCKS PERFORM?
A Actually, many of the major international markets (with the exception of
Japan) saw double-digit returns in 1996 on a local currency basis. However, the
strength of the dollar eroded those returns for U.S. investors. As with our
domestic stocks, where stock-picking gave us an edge, the research and expertise
provided by Dennis Ferro, managing director of Zurich Investment Manager
Limited, a London-based affiliate of ZKI, and his international investment team
really made a difference. Kemper Horizon Fund held overweight positions
(relative to the EAFE index) in Spain and Hong Kong, which proved to be
beneficial.
Q WHERE ARE YOU CURRENTLY LOOKING FOR OPPORTUNITIES?
A On the growth side, I'm still looking at technology. Our research indicates
that this sector continues to be fundamentally sound. As temporary setbacks
occur in response to negative news, we'll take advantage of buying
opportunities. I'm also looking at select pharmaceutical stocks. This sector
shows promise because new drugs continue to be approved more rapidly. That is
creating some investment opportunities. Also, pharmaceutical stocks have
historically provided a buffer against the volatility that is inherent in
technology stocks.
Finally, I've been taking profits on some of the financial stocks that
performed well in 1996. In this sector, I'm also doing some repositioning,
moving out of insurance and bank stocks in favor of quality financial services
companies. Given the huge inflows of cash to the market, it stands to reason
that investment companies are going to see growth.
On the value side of the portfolio we continue to look for opportunities in
financials and in oil and energy stocks. Political instability in Saudi Arabia
is causing some uncertainty and we think domestic companies with strong reserves
may be poised to surprise on the upside. We continue to look for buying
opportunities in technology as well, particularly with stocks that have not
participated in the recent run or are unjustly out of favor.
Internationally, we are looking closely at Japanese exporters. Although the
Japanese markets are having some difficulty, the exporters are less dependent on
the local economy. We believe Hong Kong will continue to outperform other major
Pacific countries. In Europe, technology stocks look attractive and, with a low
interest rate environment and increased personal savings, European financial
services companies also look strong. Finally, Latin American stocks appear
fairly valued and we may find opportunities in markets with improving economic
fundamentals.
Q MANY EQUITY INVESTORS WERE SURPRISED IN 1996 BY THE CONTINUED STRENGTH OF
THE U.S. MARKET AND A SOMEWHAT HIGHER DEGREE OF VOLATILITY. DID ANYTHING ABOUT
THE MARKET SURPRISE YOU?
A If anything, it was the power that sentiment can have on the market over
the short term. The market was driven very much by sentiment in 1996 rather than
fundamentals. When you see more than $200 billion flooding into stock mutual
funds, as we did last year, it's clear that the rules of supply and demand --
not fundamentals -- are driving the market. I have no doubt, however, that
fundamentals will prevail over time.
Technology stocks provide a good example of the importance of patience and
of staying disciplined with regard to fundamentals instead of following market
sentiment. There were periods when technology stocks appeared to be out of
favor, and the word on the street was to get out of these positions. But when we
studied the fundamentals, selling just didn't appear to be the right decision.
Had we followed sentiment and sold our technology positions, we would have
missed some solid gains and struggled to
7
<PAGE> 8
PERFORMANCE UPDATE
buy back some of those stocks as they began to climb back up.
Q THE NEW YEAR STARTED WITH ANOTHER STRONG MONTH FOR LARGE U.S. STOCKS. HOW
HAVE YOU POSITIONED THE FUND GOING FORWARD?
A At this point (late February 1997), the market appears to have many of the
characteristics we saw in 1996: a bias toward large, blue chip companies driven
more by the substantial flow of cash into the market than by fundamentals. Money
continues to pour into large company growth stocks, despite the fact that many
of these issues are fully valued or even overvalued. With this in mind, I
recently made some adjustments to the fund's equity allocation. As of January
31, 1997, the overall style weightings are still 60% of equity assets in growth
stocks versus 40% in value stocks. However, about 80% of each portfolio's equity
allocation is in large capitalization stocks with the remaining 20% in small
capitalization stocks. Similarly, about 80% is allocated to domestic stocks with
20% in international stocks. This gives the portfolios a distinct slant toward
large cap domestic growth stocks, which is where the strength is at this time.
Q WHAT IS THE RISK TO THAT POSITION?
A The risk is very clear: If the economy reaccelerates and interest rates go
up, price to earnings multiples (SEE TERMS TO KNOW) will fall and we'll probably
see the market correct. In this scenario, though, the Horizon Fund portfolios
should be in a much better position than many funds. The international equities,
value stocks and bonds should provide protection on the downside.
This goes back to the downside "cushion" I mentioned earlier. The
portfolios are designed with built-in hedges. For example: growth and value
stocks, large cap and small cap stocks, and domestic and international stocks
tend to perform in a countercyclical fashion. That is, one may outperform the
other in a typical market. By carefully structuring each portfolio to take
advantage of these different asset classes, we can help to reduce overall risk
and provide consistent return potential over the long term.
8
<PAGE> 9
STATISTICS FOR 20+ PORTFOLIO
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
KEMPER HORIZON 20+ PORTFOLIO* ON 1/31/97
- --------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS 73%
- --------------------------------------------------------------------------------
U.S. GOVERNMENT BONDS 20%
- --------------------------------------------------------------------------------
CASH AND EQUIVALENTS 7%
- --------------------------------------------------------------------------------
100%
- --------------------------------------------------------------------------------
</TABLE>
[PIE CHART]
ON 1/31/97
LARGEST HOLDINGS
THE FUND'S LARGEST EQUITY HOLDINGS*
REPRESENTING 5.1% OF TOTAL NET ASSETS ON JANUARY 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
HOLDING PERCENT
- --------------------------------------------------------------------------------------
<S> <C> <C>
TENET HEALTHCARE Provides a broad range of health care services 1.4%
through the ownership and management of acute
care hospitals and related businesses.
- --------------------------------------------------------------------------------------
TEXAS INSTRUMENTS A high technology company with sales or 1.0%
manufacturing operations in over 30 countries.
Products and services include semiconductors,
defense electronics systems, software
productivity tools, computer and peripheral
products and consumer products.
- --------------------------------------------------------------------------------------
GENERAL ELECTRIC Operates in major businesses including power 0.9%
generators, appliances, lighting, plastics,
medical systems, aircraft engines, financial
services and broadcasting.
- --------------------------------------------------------------------------------------
CANADIAN NATIONAL RAILWAYS Operates one of Canada's principal railways with 0.9%
connections to most major U.S. cities.
- --------------------------------------------------------------------------------------
APPLIED MATERIALS, INC. The world's largest supplier of water fabrication 0.9%
systems and services to the global semiconductor
industry.
- --------------------------------------------------------------------------------------
</TABLE>
*Portfolio compositions and holdings are subject to change.
9
<PAGE> 10
STATISTICS FOR 10+ PORTFOLIO
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
KEMPER HORIZON 10+ PORTFOLIO ON 1/31/97
- -------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS 55%
- -------------------------------------------------------------------------------
U.S. GOVERNMENT BONDS 39%
- -------------------------------------------------------------------------------
CASH AND EQUIVALENTS 6%
- -------------------------------------------------------------------------------
100%
</TABLE>
[PIE CHART]
ON 1/31/97
LARGEST HOLDINGS
THE FUND'S LARGEST EQUITY HOLDINGS*
REPRESENTING 3.9% OF TOTAL NET ASSETS ON JANUARY 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
HOLDING PERCENT
- ----------------------------------------------------------------------------------------
<S> <C> <C>
TENET HEALTHCARE Provides a broad range of health care services 1.0%
through the ownership and management of acute
care hospitals and related businesses.
- ----------------------------------------------------------------------------------------
CANADIAN NATIONAL RAILWAYS Operates one of Canada's principal railways with 0.8%
connections to most major U.S. cities.
- ----------------------------------------------------------------------------------------
TEXAS INSTRUMENTS A high technology company with sales or 0.8%
manufacturing operations in over 30 countries.
Products and services include semiconductors,
defense electronics systems, software
productivity tools, computer and peripheral
products and consumer products.
- ----------------------------------------------------------------------------------------
INTEL CORP. Engaged in the design, development, manufacture 0.7%
and sale of advanced microcomputer components,
such as integrated circuits and other related
products.
- ----------------------------------------------------------------------------------------
ATMEL CORP. Develops, manufactures and markets on a worldwide 0.6%
basis a broad line of complex integrated circuits
including several families of non-volatile
programmable memories; application specific
devices; as well as programmable logic devices
and microcontrollers.
- ----------------------------------------------------------------------------------------
</TABLE>
*Portfolio compositions and holdings are subject to change.
10
<PAGE> 11
STATISTICS FOR 5+ PORTFOLIO
PORTFOLIO COMPOSITION*
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
KEMPER HORIZON 5+ PORTFOLIO ON 1/31/97
- -------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS 40%
- -------------------------------------------------------------------------------
U.S. GOVERNMENT BONDS 56%
- -------------------------------------------------------------------------------
CASH AND EQUIVALENTS 4%
- -------------------------------------------------------------------------------
100%
</TABLE>
[PIE CHART]
ON 1/31/97
LARGEST HOLDINGS
THE FUND'S LARGEST EQUITY HOLDINGS*
REPRESENTING 2.8% OF TOTAL NET ASSETS ON JANUARY 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
HOLDING PERCENT
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TEXAS INSTRUMENTS A high technology company with sales or manufacturing operations in over 30 0.7%
30 countries. Products and services include semiconductors, defense electronics
systems, software productivity tools, computer and peripheral products and
consumer products.
- --------------------------------------------------------------------------------------------------------------------------
INTEL CORP. Engaged in the design, development, manufacture and sale of advanced 0.6%
microcomputer components, such as integrated circuits and other related products.
- --------------------------------------------------------------------------------------------------------------------------
GENERAL ELECTRIC Operates in major businesses including power generators, appliances, lighting, 0.5%
plastics, medical systems, aircraft engines, financial services and broadcasting.
- --------------------------------------------------------------------------------------------------------------------------
PHILIP MORRIS Largest cigarette maker in the U.S. Through its Miller Brewing subsidiary, it is 0.5%
also the country's second largest brewer. This company is also a major branded food
producer through its Kraft and General Foods subsidiaries.
- --------------------------------------------------------------------------------------------------------------------------
ATMEL CORP. Develops, manufactures and markets on a worldwide basis a broadline of 0.5%
complex integrated circuits including several families of non-volatile programmable
memories; application specific devices; as well as programmable logic devices
and microcontrollers.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Portfolio compositions and holdings are subject to change.
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
KEMPER HORIZON 20+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JANUARY 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
U.S. GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. TREASURY Notes 8.875% 1998 $ 820 $ 861
SECURITIES--17.2% 5.00 1999 295 290
6.00-7.50 1999 1,310 1,325
8.00-9.125 1999 2,530 2,662
6.75 2000 870 885
8.50 2000 205 218
6.625 2001 555 563
----------------------------------------------------------
6,804
- --------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL Pass-through 6.50 2015 975 974
MORTGAGE ASSOCIATION--2.4% certificates
----------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS--19.6%
(Cost: $7,814) 7,778
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--4.0% AK Steel Holding Corp. 1,200 shs. $ 48
AMCOL International 2,000 36
AMP, Inc. 2,000 82
Bayer A.G. 1,860 71
Carpenter Technology Corp. 1,600 58
Cementos Mexicanos, S.A. de C.V., "B" 60,600 252
Champion International Corporation 1,500 63
(a)Culligan Water Technologies 1,200 40
Dow Chemical Co. 1,200 93
Elcor Corp. 1,600 34
Georgia-Pacific Corp. 600 44
(a)Global Industrial Technology, Inc. 2,500 46
Louisiana-Pacific Corp. 6,600 137
(a)Lydall, Inc. 1,800 42
Myers Industries 2,100 34
Philip Environmental 6,810 117
Rentokil Initial PLC 11,140 82
Rexene Corp. 3,700 52
(a)Steel Dynamics Inc. 1,600 37
Technip S.A. 861 91
Toray Industries 12,000 68
Union Camp Corp. 1,600 76
---------------------------------------------------------------------------
1,603
- --------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--4.6% Ball Corp. 1,100 28
(a)BE Aerospace, Inc. 3,300 88
B.F. Goodrich Co. 3,200 131
Blount, Inc., "A" 1,700 69
Edaran Otomobil National Berhad 4,000 40
General Electric Co. 3,600 371
Intermet Corp. 3,800 58
Mannesmann A.G. 197 76
Matsushita Electric Industries Co., Ltd. 5,000 75
(a)Mueller Industries, Inc. 1,200 50
Pacific Scientific Co. 2,700 37
PHH Corporation 500 24
Precision Castparts Corp. 400 21
Quanex Corp. 1,600 42
Raytheon Co. 2,700 124
Simpson Industries 2,000 21
Stewart & Stevenson Services 2,200 55
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a)United Waste System 5,800 $ 220
U.S. Filter Corp. 1,400 54
Walbro Corp. 1,900 34
Watts Industries, Inc. 1,700 41
York International Corp. 3,400 176
---------------------------------------------------------------------------
1,835
- --------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--9.7% (a)AccuStaff 3,600 78
(a)AMC Entertainment 1,500 25
J. Baker, Inc. 5,300 36
Bulgari Spa 3,581 68
(a)Burlington Coat Factory 2,100 27
Bush Industries 700 13
Carnival Corp. 5,910 217
Carrefour S.A. 181 109
Cato Corp. 4,700 19
Christian Dior S.A. 171 26
Circle K Japan Co., Ltd. 2,000 91
CKE Restaurants 2,700 56
(a)Consolidated Stores Corp. 2,812 92
(a)Corporate Express 6,750 228
Dayton Hudson Corp. 1,200 45
Walt Disney Company 1,730 127
Fedders Corporation 3,500 22
(a)Fruit of the Loom 1,100 44
Gap 5,200 150
Gaylord Entertainment Co. 3,845 99
Gucci Group N.V. 792 54
Haggar Apparel Co. 3,000 46
Heilig-Meyers 2,800 38
Jones Intercable Inc. 3,800 36
(a)K-III Communications Corp. 3,000 32
Kerry Group plc 9,663 101
(a)Liberty Media Group, "A" 9,435 179
Liz Claiborne 500 21
Mattel, Inc. 3,350 94
(a)MGM Grand 2,600 102
Mitsui & Co. Ltd 10,000 73
Newell Co. 1,350 45
NIKE 4,250 288
(a)Nine West Group 5,950 307
(a)Outdoor Systems Inc. 2,550 77
J.C. Penny Co. 3,000 142
Philips N.V., ADR 2,000 80
Randstad Holding N.V. 1,255 87
(a)Sports & Recreation 5,500 35
Springs Industries Inc. 300 13
Tabcorp Holdings Ltd. 9,000 39
(a)Tommy Hilfiger Corporation 3,100 159
Vendex International N.V. 2,300 100
V.F. Corp. 900 60
(a)Viacom International, "B" 1,700 58
---------------------------------------------------------------------------
3,838
- --------------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES--2.0% Centros Comerciales PRYCA, S.A. 3,978 70
Fleetwood Enterprises 800 21
Ford Motor Co. 6,500 209
Hoganas AB 4,270 135
Honda Motor Co., Ltd. 4,100 110
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Leggett & Platt Incorporated 1,400 $ 45
Magna International Inc., "A" 2,300 128
Mitsubishi Heavy Industries 9,000 65
---------------------------------------------------------------------------
783
- --------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.5% Clorox Company 500 59
H.J. Heinz Company 4,100 165
Independent Newspapers PLC 18,903 101
(a)Insurance Auto Auctions 4,400 43
Koninklijke Ahold N.V. 2,068 128
(a)MSC Industrial Direct 1,900 74
(a)Performance Food Group 1,700 28
Philip Morris Companies 2,700 321
Reed International PLC 7,990 139
Unilever N.V., ADR 800 132
(a)U.S. Franchise Systems, Inc. 3,300 28
UST, Inc. 6,100 188
---------------------------------------------------------------------------
1,406
- --------------------------------------------------------------------------------------------------------------------
ENERGY--5.5% Amerada Hess Corp. 1,700 100
AMOCO Corp. 3,500 305
Atlantic Richfield Co. 1,100 145
(a)Belden & Blake Corporation 900 24
British Petroleum 21,277 251
(a)Chieftain International Inc. 1,900 47
Chevron Corp. 2,000 133
Columbia Gas System 1,800 117
Elf Aquitaine 944 92
Enron Global Power & Pipeline LLC 1,300 39
Exxon Corporation 1,800 187
Giant Industries 3,300 47
KCS Energy 1,400 54
Noble Affiliates 2,200 96
(a)Nuevo Energy Co. 600 31
Petro-Canada 10,540 133
(a)Seitel, Inc. 1,000 34
Tesoro Petroleum Corp. 3,200 44
Tosco Corporation 3,300 292
---------------------------------------------------------------------------
2,171
- --------------------------------------------------------------------------------------------------------------------
FINANCE--15.0% H.F. Ahmanson & Co. 300 11
American Express Company 3,400 212
American General Corp. 2,400 96
American International Group, Inc. 1,200 145
Banc One Corporation 2,500 113
Banco Bilbao Vizcaya 1,857 113
Bank of Ireland 12,541 118
Bank of New York Co. 1,700 62
BankAmerica Corp. 1,200 134
Bankers Trust New York Corp. 1,400 119
Barnett Banks 2,000 88
Cheung Kong Holdings Ltd. 15,000 140
CITIC Pacific Ltd. 23,000 113
Commercial Federal Corp. 1,500 49
Compass Bancshares 1,400 58
Crestar Financial Corp. 1,400 48
Cullen Frost Bankers 1,300 45
DCB Holdings Berhad 45,000 170
Dean Witter Discover 5,540 211
</TABLE>
14
<PAGE> 15
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Del Webb Corp. 3,100 $ 51
Development Bank of Singapore 15,000 208
Executive Risk 3,100 118
Federal Home Loan Mortgage Corp. 7,200 218
Federal National Mortgage Association 6,600 261
(a)Financial Federal Corporation 3,600 61
First Chicago NBD Corp. 2,000 114
First Commerce Corp. 1,200 48
First Financial Caribbean Corp. 2,000 52
First Financial Corp., Wisconsin 1,800 45
First Union Corp. 1,000 84
Fleet Financial Group, Inc. 1,500 81
General Re Corp. 1,500 242
Great Western Financial Corp. 2,000 63
HCC Insurance Holdings 5,600 156
Imperial Credit Industries 2,400 52
Integon Corp. 2,500 35
Internationale Nederlanden Groep N.V. 4,621 174
ITT Hartford Group 700 51
Kansas City Southern Industry 1,300 64
KeyCorp 1,300 68
Lawyers Title Insurance Corp. 1,100 25
Liberty Bancorp 500 26
Long Island Bancorp 3,000 110
Magnum Corporation Berhad 23,000 46
Mercer International 5,400 57
Merrill Lynch & Co. 1,000 84
NationsBank 2,200 238
North Fork Bancorp 878 31
Norwest Corp. 1,200 57
PNC Bank Corp., N.A. 3,000 119
Quick & Reilly Group 3,000 110
Roosevelt Financial Group 4,300 92
Charles Schwab Corporation 5,600 209
Safeco Corp. 2,000 76
Signet Banking Corp. 3,200 96
Texas Regional Bancshares 1,800 59
Transamerica Corp. 800 66
T.R. Financial Corp. 1,000 34
Washington Mutual 1,950 106
---------------------------------------------------------------------------
5,932
- --------------------------------------------------------------------------------------------------------------------
HEALTH CARE--11.2% Abbott Laboratories 5,445 296
American Home Products Corp. 4,800 304
(a)Amgen, Inc. 5,250 296
Astra A.B., ADR 3,800 182
C.R. Bard 7,400 209
Becton Dickinson & Co. 1,000 49
Bristol-Meyers Squibb Co. 2,450 311
(a)British Biotech plc 21,820 80
(a)Dura Pharmaceuticals 1,900 80
(a)Fresenius Medical Care, ADS 769 57
Glaxo Wellcome
ADR 4,300 137
common 9,853 158
Guidant Corporation 2,450 136
(a)HealthCare COMPARE Corp. 1,350 57
Healthsouth Corp. 4,500 196
(a)IDEXX Laboratories 7,100 231
</TABLE>
15
<PAGE> 16
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Johnson & Johnson 3,150 $ 182
Eli Lilly & Co. 1,200 104
Merck & Co., Inc. 2,500 227
(a)Nellcor Puritan Bennett Incorporated 3,700 63
(a)Novartis 106 121
Roche Holding AG 21 123
(a)Henry Schein Inc. 1,300 44
(a)Steris Corp. 2,400 72
(a)Tenet Healthcare Corporation 20,000 540
(a)Total Renal Care Holdings 4,700 172
-------------------------------------------------------------------------------
4,427
- ------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--13.3% (a)Andrew Corp. 2,400 138
(a)Applied Materials, Inc. 6,850 338
(a)Asyst Technologies 1,200 32
(a)Atmel Corporation 7,050 327
(a)Benchmark Electronics 1,000 31
(a)BMC Software 1,800 78
(a)Burr Brown Corp. 1,000 27
BW/IP, Inc 900 15
(a)Cadence Design Systems 4,800 184
Canon, Inc. 4,000 85
(a)Cisco Systems 4,350 303
(a)Compaq Computer Corp. 1,600 139
(a)Dell Computer Corp. 1,600 106
(a)Diamond Multimedia System 800 12
(a)Electroglas 2,400 47
L.M. Ericsson Telephone Co., "B" 2,051 69
(a)ESS Technology 1,200 39
(a)EXAR Corp. 3,200 50
First Data Corporation 2,200 79
(a)Gartner Group 5,000 171
(a)Gateway 2000 1,900 116
Harris Corp. 2,565 195
HBO & Company 1,550 97
Hewlett-Packard Co. 1,500 79
(a)HNC Software 3,300 99
(a)Informix Corp. 2,600 54
Intel Corp. 2,075 337
(a)Keane, Inc. 2,400 75
(a)KLA Instruments 1,100 47
(a)Komag, Inc. 300 9
(a)Kulicke & Soffa Industries 4,200 116
(a)McAfee Associates 1,450 84
Murata Manufacturing 2,000 62
(a)NCR Corporation 150 6
Nokia Corporation, ADS 3,650 244
(a)Parametric Technology Corp. 2,950 170
Paychex 800 39
(a)Proxima Corp. 2,300 27
(a)Quantum Corporation 3,000 114
(a)Read-Rite Corp. 4,700 155
Scientific Atlanta 3,300 63
(a)SunGard Data Systems 1,800 71
(a)3Com Corporation 950 64
(a)Tech-Sym Corporation 1,800 57
(a)Tellabs, Inc. 800 33
(a)Teltrend 1,000 17
Texas Instruments 5,050 396
</TABLE>
16
<PAGE> 17
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a)Western Digital Corp. 1,500 $ 109
Xerox Corporation 1,300 76
-------------------------------------------------------------------------------
5,281
- ------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.4% Airborne Freight Corp. 2,100 56
Canadian National Railway Company 9,016 358
Swire Pacific Ltd. 8,500 78
(a)Wisconsin Central Transportation Corp. 1,400 52
-------------------------------------------------------------------------------
544
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES--2.8% AT&T 2,400 95
(a)Atlantic Tele-Network 1,900 24
Empresa Noacional de Electricidad S.A. 1,787 117
GTE Corp. 1,900 89
Iberdrola, S.A. 7,100 85
Southern Company 5,000 109
Telecom Italia Mobile 44,189 132
Telefonica del Puru S.A., ADS 3,750 81
United Cities Gas Co. 1,400 31
U.S. West Communications Group 2,500 82
Veba AG 1,775 98
(a)WorldCom, Inc. 6,200 156
-------------------------------------------------------------------------------
1,099
-------------------------------------------------------------------------------
TOTAL COMMON STOCKS--73.0%
(Cost: $26,199) 28,919
-------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.07%-5.38%
INSTRUMENTS--6.5% Due--February to April 1997
Dynamic Funding Corp. $1,000 998
Federal Home Loan Mortgage Corp. 1,200 1,197
Other 400 398
-------------------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS
(Cost: $2,593) 2,593
-------------------------------------------------------------------------------
TOTAL INVESTMENTS--99.1%
(Cost: $36,606) 39,290
-------------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--.9% 343
-------------------------------------------------------------------------------
NET ASSETS--100% $39,633
-------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $36,606,000 for federal income tax purposes
at January 31, 1997, the gross unrealized appreciation was $3,139,000, the gross
unrealized depreciation was $455,000 and the net unrealized appreciation on
investments was $2,684,000.
See accompanying Notes to Financial Statements.
17
<PAGE> 18
PORTFOLIO OF INVESTMENTS
KEMPER HORIZON 10+ PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JANUARY 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
U.S. GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. TREASURY Notes 8.875% 1998 $2,270 $ 2,382
SECURITIES--34.4% 5.00 1999 487 478
6.00-7.75 1999 4,530 4,599
8.00-9.125 1999 2,210 2,330
5.00-6.75 2000 2,658 2,683
7.75-8.50 2000 850 903
6.625 2001 969 983
----------------------------------------------------------
14,358
- ---------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL Pass-through 6.50 2015 2,025 2,023
MORTGAGE ASSOCIATION--4.9% certificates
----------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS--39.3%
(Cost: $16,428) 16,381
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--3.4% AK Steel Holding Corp. 900 shs. $ 36
AMCOL International 1,500 27
AMP, Inc. 1,500 61
Bayer A.G. 2,340 89
Carpenter Technology Corp. 1,000 36
Cementos Mexicanos, S.A. de C.V., "B" 40,900 170
Champion International Corporation 1,700 71
(a)Culligan Water Technologies 1,100 37
Dow Chemical Co. 1,400 108
Eastman Chemical Co. 1,000 55
Elcor Corp. 1,100 24
Georgia-Pacific Corp. 400 29
(a)Global Industrial Technology, Inc. 1,800 33
Louisiana-Pacific Corp. 5,000 104
(a)Lydall, Inc. 1,300 30
Myers Industries 1,500 24
Philip Environmental 7,280 126
Rentokil Initial PLC 12,500 92
Rexene Corp. 2,800 39
(a)Steel Dynamics Inc. 1,200 28
Technip S.A. 667 70
Toray Industries 1,000 57
Union Camp Corp. 1,800 85
---------------------------------------------------------------------------
1,431
- --------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--3.2% Ball Corp. 700 18
(a)BE Aerospace, Inc. 3,400 90
B.F. Goodrich Co. 2,500 102
Blount, Inc., "A" 1,100 45
Edaran Otomobil National Berhad 3,000 30
General Electric Co. 2,350 242
Intermet Corp. 2,900 45
Matsushita Electric Industries Co., Ltd. 3,000 45
(a)Mueller Industries, Inc. 800 34
Pacific Scientific Co. 2,000 27
PHH Corporation 400 19
Precision Castparts Corp. 300 15
Quanex Corp. 1,200 32
Raytheon Co. 2,200 101
Simpson Industries 1,600 17
Stewart & Stevenson Services 1,600 40
</TABLE>
18
<PAGE> 19
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a)United Waste System 4,700 $ 178
U.S. Filter Corp. 1,050 40
Walbro Corp. 1,400 25
Watts Industries, Inc. 1,300 32
York International Corp. 2,700 140
----------------------------------------------------------------------------
1,317
- ---------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--7.2% (a)AccuStaff 2,900 63
(a)AMC Entertainment 1,000 16
J. Baker, Inc. 4,200 29
Bulgari Spa 2,674 51
(a)Burlington Coat Factory 2,000 26
Bush Industries 500 9
Carnival Corp. 4,650 171
Carrefour S.A. 142 85
Cato Corp. 3,000 12
Christian Dior S.A. 139 22
Circle K Japan Co., Ltd. 1,300 59
CKE Restaurants 1,650 34
(a)Consolidated Stores Corp. 2,125 70
(a)Corporate Express 5,300 179
Dayton Hudson Corp. 900 34
Walt Disney Company 1,320 97
Fedders Corporation 2,600 16
(a)Fruit of the Loom 700 28
Gap 3,950 114
Gaylord Entertainment Co. 3,545 91
Gucci Group N.V. 528 36
Haggar Apparel Co. 2,200 34
Heilig - Meyers 2,100 29
Jones Intercable Inc. 2,900 28
(a)K-III Communications Corp. 2,200 23
Kerry Group plc 8,042 84
(a)Liberty Media Group, "A" 7,725 147
Liz Claiborne 400 17
Mattel, Inc. 2,750 77
(a)MGM Grand 2,000 79
Mitsui & Co. Ltd 7,000 51
Newell Co. 1,000 33
NIKE 3,400 231
(a)Nine West Group 4,650 240
(a)Outdoor Systems Inc. 2,250 68
J.C. Penny Co. 3,300 156
Philips N.V., ADR 1,400 56
Randstad Holding N.V. 1,226 85
(a)Sports & Recreation 4,300 27
Springs Industries Inc. 200 8
Tabcorp Holdings Ltd. 3,800 17
(a)Tommy Hilfiger Corporation 2,350 120
Vendex International N.V. 1,175 51
V.F. Corp. 700 47
(a)Viacom International, "B" 1,400 48
----------------------------------------------------------------------------
2,998
</TABLE>
19
<PAGE> 20
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER DURABLES--1.4% Centros Comerciales PRYCA, S.A. 1,517 $ 27
Fleetwood Enterprises 600 16
Ford Motor Co. 6,500 209
Hoganas AB 1,530 48
Honda Motor Co., Ltd. 3,200 86
Leggett & Platt Incorporated 1,100 35
Magna International Inc., "A" 1,720 96
Mitsubishi Heavy Industries 10,000 72
-------------------------------------------------------------------------------
589
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--2.5% Clorox Company 400 47
H.J. Heinz Company 3,200 129
Independent Newspapers PLC 13,887 74
(a)Insurance Auto Auctions 3,300 32
Koninklijke Ahold N.V. 1,764 109
(a)MSC Industrial Direct 2,500 97
(a)Performance Food Group 1,300 21
Philip Morris Companies 1,800 214
Reed International PLC 6,295 110
Unilever N.V., ADR 300 49
(a)U.S. Franchise Systems, Inc. 2,000 17
UST, Inc. 4,500 138
-------------------------------------------------------------------------------
1,037
- ------------------------------------------------------------------------------------------------------------------------
ENERGY--4.2% Amerada Hess Corp. 1,300 77
AMOCO Corp. 2,700 235
Atlantic Richfield Co. 900 119
(a)Belden & Blake Corporation 700 18
British Petroleum 13,462 159
(a)Chieftain International Inc. 1,400 34
Chevron Corp. 2,000 133
Columbia Gas System 1,600 104
Elf Aquitaine 674 65
Enron Global Power & Pipeline LLC 900 27
Exxon Corporation 1,000 104
Giant Industries 2,200 31
KCS Energy 1,000 39
Noble Affiliates 1,700 74
(a)Nuevo Energy Co. 400 21
Petro-Canada 10,030 127
Royal Dutch Petroleum 610 107
(a)Seitel, Inc. 800 28
Tesoro Petroleum Corp. 2,400 33
Tosco Corporation 2,600 230
-------------------------------------------------------------------------------
1,765
- ------------------------------------------------------------------------------------------------------------------------
FINANCE--11.3% Advanta Corp. 1,000 45
H.F. Ahmanson & Co. 300 11
American Express Company 2,700 168
American General Corp. 2,600 104
American International Group, Inc. 1,200 145
Banc One Corporation 1,900 86
Banco Bilbao Vizcaya 1,526 93
Bank of Ireland 9,190 87
Bank of New York Co. 1,200 44
BankAmerica Corp. 900 100
Bankers Trust New York Corp. 900 76
Barnett Banks 1,400 62
Cheung Kong Holdings Ltd. 7,000 65
</TABLE>
20
<PAGE> 21
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CITIC Pacific Ltd. 15,000 $ 74
Commercial Federal Corp. 1,650 54
Compass Bancshares 900 37
Crestar Financial Corp. 1,000 34
Cullen Frost Bankers 900 31
DCB Holdings Berhad 35,000 132
Dean Witter Discover 4,360 166
Del Webb Corp. 2,200 37
Development Bank of Singapore 11,000 152
Executive Risk 1,800 68
Federal Home Loan Mortgage Corp. 5,600 169
Federal National Mortgage Association 5,300 209
(a)Financial Federal Corporation 2,400 41
First Chicago NBD Corp. 1,500 86
First Commerce Corp. 800 32
First Financial Caribbean Corp. 1,500 39
First Financial Corp., Wisconsin 1,250 32
First Union Corp. 1,200 100
Fleet Financial Group, Inc. 1,200 65
General Re Corp. 1,000 162
Great Western Financial Corp. 1,800 57
HCC Insurance Holdings 3,600 100
Imperial Credit Industries 2,000 44
Integon Corp. 1,900 26
Internationale Nederlanden Groep N.V. 4,437 167
ITT Hartford Group 550 40
Kansas City Southern Industry 1,300 64
KeyCorp 1,700 89
Lawyers Title Insurance Corp. 800 19
Liberty Bancorp 400 21
Long Island Bancorp 2,700 99
Magnum Corporation Berhad 19,000 38
Mercer International 4,000 43
Merrill Lynch & Co. 800 67
NationsBank 1,650 178
North Fork Bancorp 622 22
Norwest Corp. 1,300 62
PNC Bank Corp., N.A. 2,100 83
Quick & Reilly Group 2,600 95
Roosevelt Financial Group 2,900 62
Charles Schwab Corporation 4,300 161
Safeco Corp. 1,500 57
Signet Banking Corp. 2,000 60
Texas Regional Bancshares 1,400 46
T.R. Financial Corp. 800 27
Transamerica Corp. 900 74
Washington Mutual 1,600 87
-------------------------------------------------------------------------------
4,694
- ------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--8.5% Abbott Laboratories 4,300 234
American Home Products Corp. 3,800 241
(a)Amgen, Inc. 4,100 231
Astra A.B., ADR 3,000 144
C.R. Bard 6,700 189
Becton Dickinson & Co. 1,000 49
Bristol-Meyers Squibb Co. 1,950 248
(a)British Biotech plc 17,540 64
(a)Dura Pharmaceuticals 1,700 71
(a)Fresenius Medical Care, ADS 807 59
</TABLE>
21
<PAGE> 22
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Glaxo Wellcome
ADR 2,100 $ 67
common 6046 97
Guidant Corporation 2,000 112
(a)HealthCare COMPARE Corp. 1,100 47
Healthsouth Corp. 3,500 153
(a)IDEXX Laboratories 5,800 189
Johnson & Johnson 2,500 144
Eli Lilly & Co. 1,000 87
Merck & Co., Inc. 2,000 182
(a)Nellcor Puritan Bennett Incorporated 2,900 49
(a)Novartis 84 96
Roche Holding AG 17 106
(a)Henry Schein Inc. 900 30
(a)Steris Corp. 1,300 39
(a)Tenet Healthcare Corporation 15,700 424
(a)Total Renal Care Holdings 3,400 125
Zeneca Group plc 2,860 83
----------------------------------------------------------------------------
3,560
- ---------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--10.0% (a)Andrew Corp. 2,200 126
(a)Applied Materials, Inc. 4,500 222
(a)Asyst Technologies 800 21
(a)Atmel Corporation 5,350 248
(a)Benchmark Electronics 800 25
(a)BMC Software 1,350 58
(a)Burr Brown Corp. 800 21
BW/IP, Inc 600 10
(a)Cadence Design Systems 3,900 149
Canon, Inc. 3,000 64
(a)Cisco Systems 3,450 241
(a)Compaq Computer Corp. 1,400 122
(a)Dell Computer Corp. 1,350 89
(a)Diamond Multimedia System 700 11
(a)Electroglas 1,800 35
L.M. Ericsson Telephone Co., "B" 1,619 54
(a)ESS Technology 1,300 42
(a)EXAR Corp. 2,200 34
First Data Corporation 1,750 63
(a)Gartner Group 3,100 106
(a)Gateway 2000 1,550 95
Harris Corp. 1,965 150
HBO & Company 1,300 81
Hewlett-Packard Co. 900 47
(a)HNC Software 2,100 63
(a)Informix Corp. 1,700 35
Intel Corp. 1,675 272
(a)Keane, Inc. 800 25
(a)KLA Instruments 1,100 47
(a)Komag, Inc. 200 6
(a)Kulicke & Soffa Industries 3,700 102
(a)McAfee Associates 1,100 64
Murata Manufacturing 2,600 81
(a)NCR Corporation 125 5
Nokia Corporation, ADS 2,800 187
(a)Parametric Technology Corp. 2,250 130
Paychex 800 39
(a)Proxima Corp. 1,800 21
(a)Quantum Corporation 2,800 10
(a)Read-Rite Corp. 4,700 155
</TABLE>
22
<PAGE> 23
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Scientific Atlanta 2,400 $ 46
(a)SunGard Data Systems 1,900 75
(a)3Com Corporation 800 54
(a)Tech-Sym Corporation 1,300 41
(a)Tellabs, Inc. 1,000 41
(a)Teltrend 600 10
Texas Instruments 4,000 314
(a)Western Digital Corp. 1,150 83
Xerox Corporation 1,000 59
-----------------------------------------------------------------------------
4,175
- ----------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.3% Airborne Freight Corp. 1,500 40
Canadian National Railway Company 8,645 344
Swire Pacific Ltd. 7,000 64
(a)Wisconsin Central Transportation Corp. 1,800 67
-----------------------------------------------------------------------------
515
- ----------------------------------------------------------------------------------------------------------------------
UTILITIES--2.4% AT&T 2,900 114
(a)Atlantic Tele-Network 1,700 21
Empresa Noacional de Electricidad S.A. 1,468 96
GTE Corp. 1,700 80
Iberdrola, S.A. 7,400 88
Southern Company 5,000 109
Telecom Italia Mobile 49,904 149
Telefonica del Puru S.A., ADS 1,750 38
United Cities Gas Co. 1,000 22
U.S. West Communications Group 1,500 49
Veba AG 1,583 88
(a)WorldCom, Inc. 6,000 151
-----------------------------------------------------------------------------
1,005
-----------------------------------------------------------------------------
TOTAL COMMON STOCKS--55.4%
(Cost: $20,857) 23,086
-----------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.23%-5.36%
INSTRUMENTS--4.3% Due--February 1997
(Cost: $1,796) $1,800 1,796
-----------------------------------------------------------------------------
TOTAL INVESTMENTS--99.0%
(Cost: $39,081) 41,263
-----------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--1.0% 416
-----------------------------------------------------------------------------
NET ASSETS--100% $41,679
-----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $39,081,000 for federal income tax purposes
at January 31, 1997, the gross unrealized appreciation was $2,557,000, the gross
unrealized depreciation was $375,000 and the net unrealized appreciation of
investments was $2,182,000.
See accompanying Notes to Financial Statements.
23
<PAGE> 24
PORTFOLIO OF INVESTMENTS
KEMPER HORIZON 5 PORTFOLIO
PORTFOLIO OF INVESTMENTS AT JANUARY 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
COUPON PRINCIPAL
U.S. GOVERNMENT OBLIGATIONS TYPE RATE MATURITY AMOUNT VALUE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S. TREASURY Notes 8.875% 1998 $ 770 $ 808
SECURITIES--46.6% 5.00 1999 605 594
6.375-7.75 1999 4,557 4,631
8.00-9.125 1999 2,530 2,662
5.50 2000 200 196
6.625 2001 918 931
----------------------------------------------------------
9,822
- --------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL Pass-through 6.50 2015 2,000 1,998
MORTGAGE ASSOCIATION--9.5% certificates
----------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS--56.1%
(Cost: $11,849) 11,820
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
COMMON STOCKS SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BASIC INDUSTRIES--2.3% AK Steel Holding Corp. 400 shs. $ 16
AMCOL International 600 11
AMP, Inc. 500 20
Bayer A.G. 1,680 64
Carpenter Technology Corp. 400 14
Cementos Mexicanos, S.A. de C.V., "B" 2,300 10
Champion International Corporation 600 25
(a)Culligan Water Technologies 500 17
Dow Chemical Co. 400 31
Eastman Chemical Co. 400 22
Elcor Corp. 500 11
(a)Global Industrial Technology, Inc. 700 13
Louisiana-Pacific Corp. 2,300 48
(a)Lydall, Inc. 600 14
Myers Industries 800 13
Philip Environmental 2,560 44
Rentokil Initial PLC 1,950 14
Rexene Corp. 1,300 18
Technip S.A. 236 25
Toray Industries 5,000 28
Union Camp Corp. 600 28
-------------------------------------------------------------------------------
486
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--2.5% Ball Corp. 500 13
(a)BE Aerospace, Inc. 2,200 58
B.F. Goodrich Co. 1,100 45
Blount, Inc., "A" 400 16
General Electric Co. 1,050 108
Intermet Corp. 1,300 20
Matsushita Electric Industries Co., Ltd. 1,000 15
(a)Mueller Industries, Inc. 200 8
Pacific Scientific Co. 1,000 14
PHH Corporation 200 10
Quanex Corp. 500 13
Raytheon Co. 400 18
Simpson Industries 800 8
Stewart & Stevenson Services 600 15
(a)United Waste System 2,000 76
U.S. Filter Corp. 450 17
Walbro Corp. 500 9
</TABLE>
24
<PAGE> 25
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Watts Industries, Inc. 600 $ 15
York International Corp. 1,100 57
-------------------------------------------------------------------------------
535
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--5.4% (a)AccuStaff 1,200 26
(a)AMC Entertainment 400 7
J. Baker, Inc. 2,100 14
Bulgari Spa 1,521 29
(a)Burlington Coat Factory 200 3
Bush Industries 300 5
Carnival Corp. 2,200 81
Carrefour S.A. 55 33
Cato Corp. 600 2
Christian Dior S.A. 109 17
Circle K Japan Co., Ltd. 600 27
(a)Consolidated Stores Corp. 937 31
(a)Corporate Express 1,050 35
Dayton Hudson Corp. 400 15
Walt Disney Company 550 40
Fedders Corporation 1,100 7
(a)Fruit of the Loom 300 12
Gap 1,750 50
Gaylord Entertainment Co. 1,295 33
Gucci Group N.V. 526 36
Haggar Apparel Co. 1,000 15
Heilig - Meyers 900 12
Jones Intercable Inc. 1,200 12
Kerry Group plc 2,310 24
(a)Liberty Media Group, "A" 3,450 66
Liz Claiborne 200 8
Mattel, Inc. 1,200 34
(a)MGM Grand 1,000 39
Mitsui & Co. Ltd 5,000 37
Newell Co. 450 15
NIKE 1,450 98
(a)Outdoor Systems Inc. 1,200 36
J.C. Penny Co. 900 43
Philips N.V., ADR 600 24
Randstad Holding N.V. 753 52
(a)Sports & Recreation 2,100 13
Springs Industries Inc. 100 4
Tabcorp Holdings Ltd. 3,400 15
(a)Tommy Hilfiger Corporation 1,050 54
V.F. Corp. 200 13
(a)Viacom International, "B" 600 21
-------------------------------------------------------------------------------
1,138
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES--1.2% Fleetwood Enterprises 200 5
Ford Motor Co. 2,600 84
Hoganas AB 1,103 35
Honda Motor Co., Ltd. 2,000 54
Leggett & Platt Incorporated 500 16
Magna International Inc., "A" 750 42
Mitsubishi Heavy Industries 4,000 29
-------------------------------------------------------------------------------
265
</TABLE>
25
<PAGE> 26
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER STAPLES--2.0%
Clorox Company 200 $ 24
H.J. Heinz Company 1,200 48
Independent Newspapers PLC 4,092 22
(a)Insurance Auto Auctions 1,400 14
Koninklijke Ahold N.V. 934 58
(a)Performance Food Group 600 10
Philip Morris Companies 900 107
Reed International PLC 1,949 34
Unilever N.V., ADR 200 33
UST, Inc. 2,000 62
- --------------------------------------------------------------------------------------------------------------------
412
- --------------------------------------------------------------------------------------------------------------------
ENERGY--2.8% Amerada Hess Corp. 500 29
AMOCO Corp. 900 78
Atlantic Richfield Co. 300 40
(a)Belden & Blake Corporation 400 11
British Petroleum 3,525 42
(a)Chieftain International Inc. 800 20
Chevron Corp. 700 46
Columbia Gas System 600 39
Elf Aquitaine 430 42
Enron Global Power & Pipeline LLC 400 12
Exxon Corporation 300 31
Giant Industries 700 10
KCS Energy 500 19
Noble Affiliates 700 31
(a)Nuevo Energy Co. 200 10
Petro-Canada 2,980 38
(a)Seitel, Inc. 300 10
Tesoro Petroleum Corp. 1,100 15
Tosco Corporation 750 66
- --------------------------------------------------------------------------------------------------------------------
589
- --------------------------------------------------------------------------------------------------------------------
FINANCE--8.2% H.F. Ahmanson & Co. 100 4
American Express Company 1,300 81
American International Group, Inc. 400 48
Banc One Corporation 800 36
Banco Bilbao Vizcaya 908 55
Bank of Ireland 2,724 26
Bank of New York Co. 500 18
BankAmerica Corp. 400 45
Bankers Trust New York Corp. 300 26
Barnett Banks 600 26
Cheung Kong Holdings Ltd. 5,000 47
CITIC Pacific Ltd. 5,000 25
Commercial Federal Corp. 600 20
Compass Bancshares 200 8
Crestar Financial Corp. 400 14
Cullen Frost Bankers 500 17
DCB Holdings Berhad 8,000 30
Dean Witter Discover 1,980 75
Del Webb Corp. 900 15
Development Bank of Singapore 3,500 48
Executive Risk 800 30
Federal Home Loan Mortgage Corp. 2,400 73
Federal National Mortgage Association 1,900 75
First Chicago NBD Corp. 700 40
First Commerce Corp. 200 8
</TABLE>
26
<PAGE> 27
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Financial Caribbean Corp. 600 $ 16
First Financial Corp., Wisconsin 525 13
First Union Corp. 500 42
Fleet Financial Group, Inc. 400 22
General Re Corp. 300 48
Great Western Financial Corp. 800 25
HCC Insurance Holdings 2,000 56
Imperial Credit Industries 800 18
Integon Corp. 800 11
Internationale Nederlanden Groep N.V. 2,628 99
ITT Hartford Group 250 18
KeyCorp 400 21
Lawyers Title Insurance Corp. 300 7
Liberty Bancorp 200 10
Long Island Bancorp 1,100 40
Magnum Corporation Berhad 3,000 6
Mercer International 1,700 18
Merrill Lynch & Co. 400 34
NationsBank 750 81
North Fork Bancorp 211 8
Norwest Corp. 300 14
PNC Bank Corp., N.A. 900 36
Quick & Reilly Group 700 26
Roosevelt Financial Group 800 17
Charles Schwab Corporation 1,900 71
Signet Banking Corp. 900 27
T.R. Financial Corp. 400 14
Washington Mutual 650 35
---------------------------------------------------------------------------
1,723
- --------------------------------------------------------------------------------------------------------------------
HEALTH CARE--5.3% Abbott Laboratories 400 22
American Home Products Corp. 1,000 63
(a)Amgen, Inc. 1,150 65
Astra A.B., ADR 320 15
C.R. Bard 2,400 68
Bristol-Meyers Squibb Co. 500 64
(a)Dura Pharmaceuticals 900 38
(a)Fresenius Medical Care, ADS 423 31
Glaxo Wellcome
ADR 1,670 27
common 1,400 45
Guidant Corporation 900 50
(a)HealthCare COMPARE Corp. 450 19
Healthsouth Corp. 1,500 65
(a)IDEXX Laboratories 1,500 49
Johnson & Johnson 1,150 66
Eli Lilly & Co. 450 39
Merck & Co., Inc. 900 82
(a)Nellcor Puritan Bennett Incorporated 1,300 22
(a)Novartis 50 57
Roche Holding AG 12 44
(a)Steris Corp. 1,100 33
Tenet Healthcare Corporation 3,300 89
Total Renal Care Holdings 1,600 59
---------------------------------------------------------------------------
1,112
</TABLE>
27
<PAGE> 28
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TECHNOLOGY--8.5% (a)Andrew Corp. 900 $ 52
(a)Applied Materials, Inc. 2,050 101
(a)Asyst Technologies 200 5
(a)Atmel Corporation 2,300 107
(a)Benchmark Electronics 300 9
(a)BMC Software 550 24
(a)Burr Brown Corp. 400 11
BW/IP, Inc 400 7
(a)Cadence Design Systems 1,500 57
Canon, Inc. 2,000 42
(a)Cisco Systems 1,100 77
(a)Compaq Computer Corp. 700 61
(a)Dell Computer Corp. 550 36
(a)Diamond Multimedia System 300 5
(a)Electroglas 700 14
L.M. Ericsson Telephone Co., "B" 970 33
(a)EXAR Corp. 800 12
First Data Corporation 750 27
(a)Gartner Group 1,100 38
(a)Gateway 2000 650 40
Harris Corp. 805 61
HBO & Company 650 41
Hewlett-Packard Co. 200 11
(a)HNC Software 1,000 30
Intel Corp. 750 122
(a)KLA Instruments 1,100 47
(a)Komag, Inc. 100 3
(a)McAfee Associates 450 26
Murata Manufacturing 1,000 31
(a)NCR Corporation 56 2
Nokia Corporation, ADS 1,250 84
(a)Parametric Technology Corp. 300 17
Paychex 800 39
(a)Proxima Corp. 800 9
(a)Quantum Corporation 1,300 49
(a)Read-Rite Corp. 2,800 92
Scientific Atlanta 1,100 21
(a)SunGard Data Systems 1,300 51
(a)3Com Corporation 350 23
(a)Tech-Sym Corporation 500 16
(a)Tellabs, Inc. 1,400 58
(a)Teltrend 300 5
Texas Instruments 1,800 141
(a)Western Digital Corp. 550 40
Xerox Corporation 400 23
------------------------------------------------------------------------
1,800
- --------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--.8% Airborne Freight Corp. 600 16
Canadian National Railway Company 2,493 99
Swire Pacific Ltd. 2,500 23
Tranz Rail Holdings, Ltd. 1,600 26
------------------------------------------------------------------------
164
</TABLE>
28
<PAGE> 29
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UTILITIES--1.1% (a)Atlantic Tele-Network 600 $ 8
Empresa Noacional de Electricidad S.A. 571 37
GTE Corp. 700 33
Iberdrola, S.A. 1,520 18
Southern Company 800 17
Telecom Italia Mobile 6,432 19
Telefonica del Puru S.A., ADS 750 16
United Cities Gas Co. 400 9
(a)WorldCom, Inc. 2,600 65
---------------------------------------------------------------------------
222
---------------------------------------------------------------------------
TOTAL COMMON STOCKS--40.1%
(Cost: $7,553) 8,446
---------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.26%
INSTRUMENT--1.0% Due--February 1997
(Cost: $199) $ 200 199
---------------------------------------------------------------------------
TOTAL INVESTMENTS--97.2%
(Cost: $19,601) 20,465
---------------------------------------------------------------------------
CASH AND OTHER ASSETS, LESS LIABILITIES--2.8% 590
---------------------------------------------------------------------------
NET ASSETS--100% $21,055
---------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $19,601,000 for federal income tax purposes
at January 31, 1997, the gross unrealized appreciation was $1,029,000, the gross
unrealized depreciation was $165,000 and the net unrealized appreciation of
investments was $864,000.
See accompanying Notes to Financial Statements.
29
<PAGE> 30
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER HORIZON FUND
---------------------------------------------
20+ PORTFOLIO 10+ PORTFOLIO 5 PORTFOLIO
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------
Investments, at value
(Cost: $36,606, $39,081 and $19,601) $39,290 41,263 20,465
- -----------------------------------------------------------------------------------------------------------
Cash 682 828 132
- -----------------------------------------------------------------------------------------------------------
Receivable for:
Fund shares sold 218 71 138
- -----------------------------------------------------------------------------------------------------------
Investments sold 315 612 281
- -----------------------------------------------------------------------------------------------------------
Dividends and interest 194 336 235
- -----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 40,699 43,110 21,251
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -----------------------------------------------------------------------------------------------------------
Payable for:
Fund shares redeemed 14 1 2
- -----------------------------------------------------------------------------------------------------------
Investments purchased 970 1,338 143
- -----------------------------------------------------------------------------------------------------------
Management fee 18 19 11
- -----------------------------------------------------------------------------------------------------------
Distribution services fee 13 14 9
- -----------------------------------------------------------------------------------------------------------
Administrative services fee 7 8 5
- -----------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 42 47 23
- -----------------------------------------------------------------------------------------------------------
Trustees' fees and other 2 4 3
- -----------------------------------------------------------------------------------------------------------
Total liabilities 1,066 1,431 196
- -----------------------------------------------------------------------------------------------------------
NET ASSETS $39,633 41,679 21,055
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
Paid-in capital $36,410 38,819 19,850
- -----------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 429 431 186
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 2,684 2,182 864
- -----------------------------------------------------------------------------------------------------------
Undistributed net investment income 110 247 155
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $39,633 41,679 21,055
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
THE PRICING OF SHARES
- -----------------------------------------------------------------------------------------------------------
CLASS A SHARES
Net assets applicable to shares outstanding $15,910 18,174 8,057
- -----------------------------------------------------------------------------------------------------------
Shares outstanding 1,428 1,694 785
- -----------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share
(net assets / shares outstanding) $ 11.15 10.73 10.26
- -----------------------------------------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $ 11.83 11.38 10.89
- -----------------------------------------------------------------------------------------------------------
CLASS B SHARES
Net assets applicable to shares outstanding $20,578 19,011 10,830
- -----------------------------------------------------------------------------------------------------------
Shares outstanding 1,854 1,772 1,056
- -----------------------------------------------------------------------------------------------------------
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
(net assets / shares outstanding) $ 11.10 10.73 10.26
- -----------------------------------------------------------------------------------------------------------
CLASS C SHARES
Net assets applicable to shares outstanding $ 2,201 4,112 2,053
- -----------------------------------------------------------------------------------------------------------
Shares outstanding 198 383 200
- -----------------------------------------------------------------------------------------------------------
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
(net assets / shares outstanding) $ 11.11 10.72 10.25
- -----------------------------------------------------------------------------------------------------------
CLASS I SHARES
Net assets applicable to shares outstanding $ 944 382 115
- -----------------------------------------------------------------------------------------------------------
Shares outstanding 85 36 11
- -----------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share
(net assets / shares outstanding) $ 11.17 10.70 10.26
- -----------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 31
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER HORIZON FUND
---------------------------------------------
20+ PORTFOLIO 10+ PORTFOLIO 5 PORTFOLIO
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------------
Dividends $ 137 104 46
- ----------------------------------------------------------------------------------------------------------
Interest 232 430 412
- ----------------------------------------------------------------------------------------------------------
Total investment income 369 534 458
- ----------------------------------------------------------------------------------------------------------
Expenses:
Management fee 82 85 56
- ----------------------------------------------------------------------------------------------------------
Distribution services fee 59 60 47
- ----------------------------------------------------------------------------------------------------------
Administrative services fee 32 35 24
- ----------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 98 79 40
- ----------------------------------------------------------------------------------------------------------
Professional fees 8 9 4
- ----------------------------------------------------------------------------------------------------------
Reports to shareholders 3 3 1
- ----------------------------------------------------------------------------------------------------------
Trustees' fees and other 11 12 8
- ----------------------------------------------------------------------------------------------------------
Total expenses 293 283 180
- ----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 76 251 278
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------------
Net realized gain on sales of investments 442 462 215
- ----------------------------------------------------------------------------------------------------------
Net realized gain from futures transactions 93 61 15
- ----------------------------------------------------------------------------------------------------------
Net realized gain 535 523 230
- ----------------------------------------------------------------------------------------------------------
Change in net unrealized depreciation on investments 3,245 2,571 1,020
- ----------------------------------------------------------------------------------------------------------
Net gain on investments 3,780 3,094 1,250
- ----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,856 3,345 1,528
- ----------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 32
FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
KEMPER HORIZON FUND
------------------------------------------------------------------------------------
20+ PORTFOLIO 10+ PORTFOLIO 5 PORTFOLIO
-------------------------- -------------------------- --------------------------
SIX MONTHS DECEMBER 29, SIX MONTHS DECEMBER 29, SIX MONTHS DECEMBER 29,
ENDED 1995 TO ENDED 1995 TO ENDED 1995 TO
JANUARY 31, JULY 31, JANUARY 31, JULY 31, JANUARY 31, JULY 31,
1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------------------------
Net investment income $ 76 59 251 104 278 82
- ---------------------------------------------------------------------------------------------------------------
Net realized gain 535 (102) 523 (88) 230 (42)
- ---------------------------------------------------------------------------------------------------------------
Change in net unrealized
depreciation 3,245 (561) 2,571 (389) 1,020 (156)
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 3,856 (604) 3,345 (373) 1,528 (116)
- ---------------------------------------------------------------------------------------------------------------
Net equalization credits 106 71 159 97 80 46
- ---------------------------------------------------------------------------------------------------------------
Distribution from net
investment income (206) -- (298) (70) (279) (54)
- ---------------------------------------------------------------------------------------------------------------
Net increase from capital
share transactions 17,626 18,684 19,561 19,158 8,895 10,855
- ---------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 21,382 18,151 22,767 18,812 10,224 10,731
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------------------
Beginning of period 18,251 100 18,912 100 10,831 100
- ---------------------------------------------------------------------------------------------------------------
END OF PERIOD 39,633 18,251 41,679 18,912 21,055 10,831
- ---------------------------------------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT
INCOME AT END OF PERIOD $ 110 134 247 135 155 76
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
32
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper Horizon Fund (the "Fund") is an open-end
diversified management investment company
organized as a business trust under the laws of
Massachusetts. The Fund consists of three
investment portfolios ("Portfolios") designed for
investors with different investment objectives.
The three Portfolios are Kemper Horizon 20+
Portfolio, Kemper Horizon 10+ Portfolio, and
Kemper Horizon 5 Portfolio. Each Portfolio
currently offers four 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 sales charge but are subject to higher
ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions within one year of purchase.
Class C shares do not convert into another class.
Class I shares are offered to a limited group of
investors, are not subject to initial or
contingent deferred sales charges and have lower
ongoing expenses than other classes. Differences
in class expenses will result in the payment of
different per share income dividends by class. All
shares of each Portfolio have equal rights with
respect to voting, dividends and assets, subject
to class specific preferences.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES INVESTMENT VALUATION. Investments are stated at
value. Portfolio securities that are traded on a
domestic securities exchange or securities listed
on the NASDAQ National Market are valued at the
last sale price on the exchange or market where
primarily traded or listed or, if there is no
recent sale, at the last current bid quotation.
Portfolio securities that are primarily traded on
foreign securities exchanges are generally valued
at the preceding closing values of such securities
on their respective exchanges where primarily
traded. Securities not so traded or listed are
valued at the last current bid quotation if market
quotations are available. Fixed income securities
are valued by using market quotations, or
independent pricing services 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. 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 are valued at the forward rates
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.
33
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS
CURRENCY TRANSLATION. The books and records of the
Portfolios 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
rates of exchange are 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 rates of exchange
prevailing on the respective dates of such
transactions. The Portfolios include that portion
of the results of operations resulting from changes
in foreign exchange rates with net realized and
unrealized gain (loss) on investments, 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). Dividend income is recorded on the
ex-dividend date, and interest income is recorded
on the accrual basis and includes discount
amortization on fixed income securities. Realized
gains and losses from investment transactions are
reported on an identified cost basis.
EXPENSES. Expenses arising in connection with a
specific Portfolio are allocated to that Portfolio.
Other Fund expenses are allocated among the
Portfolios in proportion to their relative net
assets.
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 and Class C 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
class by dividing the Portfolio's net assets
attributable to that class by the number of shares
of the class outstanding.
FEDERAL INCOME TAXES. Each Portfolio has complied
with the special provisions of the Internal Revenue
Code available to investment companies for the six
months ended January 31, 1997.
DIVIDENDS TO SHAREHOLDERS. Each Portfolio intends
to pay dividends of net investment income as
follows: annually for the Horizon 20+ Portfolio,
semiannually for the Horizon 10+ Portfolio, and
quarterly for the Horizon 5 Portfolio. Each
Portfolio will pay any net realized capital gains
at least annually. Dividends are recorded on
ex-dividend date. Dividends are determined in
accordance with income tax principles which may
treat certain transactions differently from
generally accepted accounting principles.
34
<PAGE> 35
EQUALIZATION ACCOUNTING. A portion of proceeds from
sales and costs of redemptions of Portfolio 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 Zurich Kemper Investments, Inc.
(ZKI), and each Portfolio pays a management fee at
an annual rate of .58% of the first $250 million of
average daily net assets declining to .42% of
average daily net assets in excess of $12.5
billion. The Fund paid a management fee of $223,000
for the six months ended January 31, 1997. Dreman
Value Advisors, Inc. (DVA), a wholly owned
subsidiary of ZKI, is a subadviser for the Fund and
manages the value portion of the Portfolios. Zurich
Investment Management Limited (ZIML), an affiliate
of ZKI, also serves as a subadvisor for the Fund
with respect to foreign securities investments in
the Portfolios. DVA and ZIML are paid by ZKI for
their services.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The Fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (KDI). Underwriting commissions
paid in connection with the distribution of each
Portfolio's Class A shares for the six months ended
January 31, 1997 are as follows:
<TABLE>
<CAPTION>
COMMISSIONS
ALLOWED BY KDI
COMMISSIONS ----------------------------
RETAINED BY KDI TO ALL FIRMS TO AFFILIATES
--------------- ------------ -------------
<S> <C> <C> <C>
Kemper Horizon 20+ Portfolio $11,000 101,000 --
Kemper Horizon 10+ Portfolio 14,000 102,000 --
Kemper Horizon 5 Portfolio 11,000 63,000 --
</TABLE>
For services under the distribution services
agreement, each Portfolio pays KDI a fee of .75% of
average daily net assets of Class B and Class C
shares. Pursuant to the agreement, KDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares of each Portfolio. In addition, KDI receives
any contingent deferred sales charges (CDSC) from
redemptions of Class B and Class C shares.
Distribution fees and commissions paid in
connection with the sale of Class B and Class C
shares and the CDSC received in connection with the
redemption of such shares for the six months ended
January 31, 1997 are as follows:
<TABLE>
<CAPTION>
COMMISSIONS AND
DISTRIBUTION FEES
DISTRIBUTION PAID BY KDI
FEES AND CDSC ----------------------------
RECEIVED BY KDI TO ALL FIRMS TO AFFILIATES
--------------- ------------ -------------
<S> <C> <C> <C>
Kemper Horizon 20+ Portfolio $67,000 311,000 --
Kemper Horizon 10+ Portfolio 63,000 244,000 --
Kemper Horizon 5 Portfolio 52,000 132000 --
</TABLE>
35
NOTES TO FINANCIAL STATEMENTS
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to Class A, Class B and Class C shareholders, each
Portfolio pays KDI a fee at an annual rate of up to
.25% of average daily net assets of each class. KDI
in turn has various agreements with financial
services firms that provide these services and pays
these firms based on assets of Portfolio accounts
the firms service. Administrative services fees
(ASF) paid for the six months ended January 31,
1997 are as follows:
<TABLE>
<CAPTION>
ASF FEES PAID BY KDI
ASF PAID BY ----------------------------
THE PORTFOLIOS TO KDI TO ALL FIRMS TO AFFILIATES
--------------------- ------------ -------------
<S> <C> <C> <C>
Kemper Horizon 20+ Portfolio $32,000 40,000 --
Kemper Horizon 10+ Portfolio 35,000 38,000 --
Kemper Horizon 5 Portfolio 24,000 25,000 --
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's custodian and
transfer agent, Kemper Service Company (KSvC) is
the shareholder service agent of the Fund. Under
the agreement, KSvC received shareholder services
fees of $145,000 for the six months ended January
31, 1997.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of ZKI.
During the six months ended January 31, 1997, the
Fund made no payments to its officers and incurred
trustees' fees of $13,000 to independent trustees.
36
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended January 31, 1997,
investment transactions (excluding short-term
instruments) are as follows (in thousands):
<TABLE>
<CAPTION>
KEMPER KEMPER KEMPER
HORIZON 20+ HORIZON 10+ HORIZON 5
----------- ----------- ---------
<S> <C> <C> <C>
Purchases $39,345 38,676 29,024
Proceeds from sales 24,374 21,001 20,503
</TABLE>
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following tables summarize the activity in
capital shares of the Portfolios (in thousand) :
----------------------------
KEMPER HORIZON 20+ PORTFOLIO
----------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 29, 1995
JANUARY 31, 1997 TO JULY 31, 1996
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------
SHARES SOLD
------------------------------------------------------------------------------
Class A 654 $ 6,931 854 $ 8,500
------------------------------------------------------------------------------
Class B 1,053 11,040 888 8,850
------------------------------------------------------------------------------
Class C 180 1,888 86 857
------------------------------------------------------------------------------
Class I 24 251 103 1,045
------------------------------------------------------------------------------
------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
------------------------------------------------------------------------------
Class A 12 123 -- --
------------------------------------------------------------------------------
Class B 5 58 -- --
------------------------------------------------------------------------------
Class C 1 6 -- --
------------------------------------------------------------------------------
Class I 1 13 -- --
------------------------------------------------------------------------------
------------------------------------------------------------------------------
SHARES REDEEMED
------------------------------------------------------------------------------
Class A (72) (772) (26) (264)
------------------------------------------------------------------------------
Class B (74) (822) (18) (179)
------------------------------------------------------------------------------
Class C (65) (688) (7) (68)
------------------------------------------------------------------------------
Class I (38) (402) (5) (57)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
CONVERSION OF SHARES
------------------------------------------------------------------------------
Class A 3 30 -- --
------------------------------------------------------------------------------
Class B (3) (30) -- --
------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE
TRANSACTIONS $17,626 $18,684
------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS
----------------------------
KEMPER HORIZON 10+ PORTFOLIO
----------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 29, 1995 TO
JANUARY 31, 1997 JULY 31, 1996
-------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------
SHARES SOLD
-------------------------------------------------------------------------------
Class A 777 $ 7,974 986 $ 9,625
-------------------------------------------------------------------------------
Class B 922 9,410 920 8,999
-------------------------------------------------------------------------------
Class C 300 3,065 89 877
-------------------------------------------------------------------------------
Class I 41 436 12 104
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
-------------------------------------------------------------------------------
Class A 16 162 5 48
-------------------------------------------------------------------------------
Class B 10 104 2 20
-------------------------------------------------------------------------------
Class C 2 22 1 3
-------------------------------------------------------------------------------
Class I 1 4 -- --
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHARES REDEEMED
-------------------------------------------------------------------------------
Class A (74) (752) (21) (208)
-------------------------------------------------------------------------------
Class B (56) (600) (27) (264)
-------------------------------------------------------------------------------
Class C (8) (82) (4) (45)
-------------------------------------------------------------------------------
Class I (17) (182) (1) (1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CONVERSION OF SHARES
-------------------------------------------------------------------------------
Class A 2 21 -- --
-------------------------------------------------------------------------------
Class B (2) (21) -- --
-------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $19,561 $ 19,158
-------------------------------------------------------------------------------
</TABLE>
--------------------------
KEMPER HORIZON 5 PORTFOLIO
--------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 29, 1995 TO
JANUARY 31, 1997 JULY 31, 1996
--------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------
SHARES SOLD
-------------------------------------------------------------------------------
Class A 439 $ 4,336 509 $ 4,935
-------------------------------------------------------------------------------
Class B 850 8,343 611 5,902
-------------------------------------------------------------------------------
Class C 176 1,748 64 625
-------------------------------------------------------------------------------
Class I 1 13 10 102
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
-------------------------------------------------------------------------------
Class A 11 106 3 26
-------------------------------------------------------------------------------
Class B 15 144 2 22
-------------------------------------------------------------------------------
Class C 2 17 1 3
-------------------------------------------------------------------------------
Class I 1 2 1 1
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHARES REDEEMED
-------------------------------------------------------------------------------
Class A (133) (1,340) (54) (524)
-------------------------------------------------------------------------------
Class B (398) (4,051) (20) (195)
-------------------------------------------------------------------------------
Class C (42) (415) (4) (42)
-------------------------------------------------------------------------------
Class I (2) (8) -- --
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CONVERSION OF SHARES
-------------------------------------------------------------------------------
Class A 7 68 -- --
-------------------------------------------------------------------------------
Class B (7) (68) -- --
-------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $ 8,895 $10,855
-------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6 FINANCIAL FUTURES
CONTRACTS The Portfolios have entered into exchange traded
financial futures contracts in order to take
advantage of anticipated market conditions and, as
such, bear the risk that arises from owning these
contracts.
At the time a Portfolio enters into a futures
contract, it is required to make a margin deposit
with its custodian. Subsequently, gain or loss is
recognized and payments are made on a daily basis
between the Portfolio and the broker as the market
value of the futures contract changes. At January
31, 1997, the market value of assets pledged by the
Portfolios to cover margin requirements for open
futures positions was $149,000 for Horizon 20+ and
$96,000 for Horizon 10+ for the following financial
futures contracts held by the Portfolios.
<TABLE>
<CAPTION>
CONTRACT EXPIRATION GAIN
TYPE AMOUNT POSITION MONTH AT 1/31/97
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
HORIZON 20+ PORTFOLIO:
S&P 500 Index $3,499,000 Long March '97 $45,000
---------------------------------------------------------------------
HORIZON 10+ PORTFOLIO:
S&P 500 Index $2,333,000 Long March '97 $30,000
---------------------------------------------------------------------
</TABLE>
39
<PAGE> 40
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------------------------- -------------------------------
CLASS A CLASS B
------------------------------- -------------------------------
SIX MONTHS SIX MONTHS
ENDED DECEMBER 29, 1995 ENDED DECEMBER 29, 1995
JANUARY 31, TO JANUARY 31, TO
KEMPER HORIZON 20+ PORTFOLIO 1997 JULY 31, 1996 1997 JULY 31, 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------- -------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, beginning of period $ 9.72 9.50 9.65 9.50
- -------------------------------------------------------------------------------- -------------------------------
Income from investment operations:
Net investment income .05 .18 .01 .11
- -------------------------------------------------------------------------------- -------------------------------
Net realized and unrealized gain 1.48 .04 1.48 .04
- -------------------------------------------------------------------------------- -------------------------------
Total from investment operations 1.53 .22 1.49 .15
- -------------------------------------------------------------------------------- -------------------------------
Less distribution from net investment income .10 -- .04 --
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, end of period $11.15 9.72 11.10 9.65
- -------------------------------------------------------------------------------- -------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.83% 2.32 15.44 1.58
- -------------------------------------------------------------------------------- -------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------- -------------------------------
Expenses 1.68% 1.48 2.41 2.26
- -------------------------------------------------------------------------------- -------------------------------
Net investment income .92% 1.51 .19 .73
- -------------------------------------------------------------------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------- -------------------------------
CLASS C CLASS I
------------------------------- -------------------------------
SIX MONTHS SIX MONTHS APRIL 8
ENDED DECEMBER 29, 1995 ENDED TO
JANUARY 31, TO JANUARY 31, JULY 31,
1997 JULY 31, 1996 1997 1996
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------- -------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, beginning of period $ 9.67 9.50 9.73 10.03
- -------------------------------------------------------------------------------- -------------------------------
Income from investment operations:
Net investment income .01 .13 .08 .07
- -------------------------------------------------------------------------------- -------------------------------
Net realized and unrealized gain (loss) 1.47 .04 1.49 (.37)
- -------------------------------------------------------------------------------- -------------------------------
Total from investment operations 1.48 .17 1.57 (.30)
- -------------------------------------------------------------------------------- -------------------------------
Less distribution from net investment income .04 -- .13 --
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, end of period $11.11 9.67 11.17 9.73
- -------------------------------------------------------------------------------- -------------------------------
TOTAL RETURN (NOT ANNUALIZED) 15.27% 1.79 16.21 (2.99)
- -------------------------------------------------------------------------------- -------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------- -------------------------------
Expenses 2.43% 2.23 1.11 .73
- -------------------------------------------------------------------------------- -------------------------------
Net investment income .17% .76 1.49 2.32
- -------------------------------------------------------------------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED DECEMBER 29, 1995
JANUARY 31, TO
1997 JULY 31, 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net assets at end of period (in thousands) $39,633 18,251
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 173% 122
- ------------------------------------------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0461 .0417
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Highlights.
40
<PAGE> 41
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------------------------- -------------------------------
CLASS A CLASS B
------------------------------- -------------------------------
KEMPER HORIZON 10+ PORTFOLIO SIX MONTHS SIX MONTHS
ENDED DECEMBER 29, 1995 ENDED DECEMBER 29, 1995
JANUARY 31, TO JANUARY 31, TO
1997 JULY 31, 1996 1997 JULY 31, 1996
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------- -------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, beginning of period $ 9.60 9.50 9.60 9.50
- -------------------------------------------------------------------------------- -------------------------------
Income from investment operations:
Net investment income .11 .20 .07 .17
- -------------------------------------------------------------------------------- -------------------------------
Net realized and unrealized gain (loss) 1.14 (.04) 1.13 (.04)
- -------------------------------------------------------------------------------- -------------------------------
Total from investment operations 1.25 .16 1.20 .13
- -------------------------------------------------------------------------------- -------------------------------
Less distribution from net investment income .12 .06 .07 .03
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, end of period $10.73 9.60 10.73 9.60
- -------------------------------------------------------------------------------- -------------------------------
TOTAL RETURN (NOT ANNUALIZED) 13.05% 1.70 12.54 1.38
- -------------------------------------------------------------------------------- -------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------- -------------------------------
Expenses 1.42% 1.48 2.29 2.26
- -------------------------------------------------------------------------------- -------------------------------
Net investment income 2.22% 2.40 1.35 1.62
- -------------------------------------------------------------------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------- -------------------------------
CLASS C CLASS I
------------------------------- -------------------------------
SIX MONTHS SIX MONTHS APRIL 8
ENDED DECEMBER 29, 1995 ENDED TO
JANUARY 31, TO JANUARY 31, JULY 31,
1997 JULY 31, 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------- -------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, beginning of period $ 9.60 9.50 9.57 9.83
- -------------------------------------------------------------------------------- -------------------------------
Income from investment operations:
Net investment income .06 .17 .13 .09
- -------------------------------------------------------------------------------- -------------------------------
Net realized and unrealized gain (loss) 1.12 (.04) 1.13 (.26)
- -------------------------------------------------------------------------------- -------------------------------
Total from investment operations 1.18 .13 1.26 (.17)
- -------------------------------------------------------------------------------- -------------------------------
Less distribution from net investment income .06 .03 .13 .09
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, end of period $10.72 9.60 10.70 9.57
- -------------------------------------------------------------------------------- -------------------------------
TOTAL RETURN (NOT ANNUALIZED) 12.34% 1.39 13.21 (1.74)
- -------------------------------------------------------------------------------- -------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------- -------------------------------
Expenses 2.65% 2.23 1.28 .73
- -------------------------------------------------------------------------------- -------------------------------
Net investment income .99% 1.65 2.36 3.21
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED DECEMBER 29, 1995
JANUARY 31, TO
1997 JULY 31, 1996
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net assets at end of period (in thousands) $41,679 18,912
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 142% 87
- -------------------------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0475 .0413
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Highlights.
41
<PAGE> 42
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------------------------- -------------------------------
CLASS A CLASS B
------------------------------- -------------------------------
KEMPER HORIZON 5 PORTFOLIO SIX MONTHS SIX MONTHS
ENDED DECEMBER 29, 1995 ENDED DECEMBER 29, 1995
JANUARY 31, TO JANUARY 31, TO
1997 JULY 31, 1996 1997 JULY 31, 1996
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------- -------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, beginning of period $ 9.57 9.50 9.57 9.50
- -------------------------------------------------------------------------------- -------------------------------
Income from investment operations:
Net investment income .17 .25 .13 .21
- -------------------------------------------------------------------------------- -------------------------------
Net realized and unrealized gain (loss) .68 (.07) .68 (.07)
- -------------------------------------------------------------------------------- -------------------------------
Total from investment operations .85 .18 .81 .14
- -------------------------------------------------------------------------------- -------------------------------
Less distribution from net investment income .16 .11 .12 .07
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, end of period $10.26 9.57 10.26 9.57
- -------------------------------------------------------------------------------- -------------------------------
TOTAL RETURN (NOT ANNUALIZED) 8.93% 1.84 8.53 1.44
- -------------------------------------------------------------------------------- -------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------- -------------------------------
Expenses 1.39% 1.48 2.12 2.26
- -------------------------------------------------------------------------------- -------------------------------
Net investment income 3.33% 3.20 2.60 2.42
- -------------------------------------------------------------------------------- -------------------------------
<CAPTION>
------------------------------- -------------------------------
CLASS C CLASS I
------------------------------- -------------------------------
SIX MONTHS SIX MONTHS APRIL 8
ENDED DECEMBER 29, 1995 ENDED TO
JANUARY 31, TO JANUARY 31, JULY 31,
1997 JULY 31, 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------- -------------------------------
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, beginning of period $ 9.57 9.50 9.58 9.69
- -------------------------------------------------------------------------------- -------------------------------
Income from investment operations:
Net investment income .13 .21 .18 .08
- -------------------------------------------------------------------------------- -------------------------------
Net realized and unrealized gain (loss) .67 (.07) .68 (.11)
- -------------------------------------------------------------------------------- -------------------------------
Total from investment operations .80 .14 .86 (.03)
- -------------------------------------------------------------------------------- -------------------------------
Less distribution from net investment income .12 .07 .18 .08
- -------------------------------------------------------------------------------- -------------------------------
Net asset value, end of period $10.25 9.57 10.26 9.58
- -------------------------------------------------------------------------------- -------------------------------
TOTAL RETURN (NOT ANNUALIZED) 8.41% 1.45 9.06 (.31)
- -------------------------------------------------------------------------------- -------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -------------------------------------------------------------------------------- -------------------------------
Expenses 2.40% 2.23 1.23 .73
- -------------------------------------------------------------------------------- -------------------------------
Net investment income 2.32% 2.45 3.49 4.11
- -------------------------------------------------------------------------------- -------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED DECEMBER 29, 1995
JANUARY 31, TO
1997 JULY 31, 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net assets at end of period (in thousands) $21,055 10,831
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 220% 57
- ------------------------------------------------------------------------------------------------------------------
Average commission rate paid per share on stock transactions $ .0417 .0460
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL HIGHLIGHTS FOR ALL THREE PORTFOLIOS:
Total returns do not reflect the effect of any sales charges.
Per share data for the period ended July 31, 1996 was determined based on
average shares outstanding.
For the fiscal period ended July 31, 1996, the investment manager agreed to
reduce its management fee and absorb certain operating expenses of the
Portfolios. If these expense waivers had not been in effect, the expense ratio
of each share class would have increased by .06% of average net assets for
Horizon 20+, .04% for Horizon 10+ and .05% for Horizon 5. There would have been
a corresponding decrease in the net investment income ratio for the period. The
waivers were discontinued on August 1, 1996.
42
<PAGE> 43
43
NOTES
<PAGE> 44
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
STEPHEN B. TIMBERS CHARLES R. MANZONI, JR.
President and Trustee Vice President
JAMES E. AKINS JOHN E. NEAL
Trustee Vice President
ARTHUR R. GOTTSCHALK THOMAS M. REGNER
Trustee Vice President
FREDERICK T. KELSEY STEVEN H. REYNOLDS
Trustee Vice President
DOMINIQUE P. MORAX PHILIP J. COLLORA
Trustee Vice President and
Secretary
FRED B. RENWICK
Trustee JEROME L. DUFFY
Treasurer
JOHN B. TINGLEFF
Trustee ELIZABETH C. WERTH
Assistant Secretary
JOHN G. WEITHERS
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT KEMPER SERVICE COMPANY
P.O. Box 419557
Kansas City, MO 64141
1-800-621-1048
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
127 West 10th Street
Kansas City, MO 64105
- --------------------------------------------------------------------------------
INVESTMENT MANAGERS ZURICH KEMPER INVESTMENTS, INC.
DREMAN VALUE ADVISORS, INC.
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza, Chicago, IL 60606
www.kemper.com
[RECYCLE LOGO]
Printed on recycled paper.
This report is not to be distributed unless preceded
or accompanied by a Kemper Horizon
Fund prospectus.
KHF - 3 (3/97) 1030050
Printed in the U.S.A. [KEMPER FUND LOGO]
