<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MAY 31, 1998
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
Seeks to provide long-term capital growth
KEMPER
ASIAN GROWTH FUND
"...Now more than ever, we are convinced that superior
stock selection is the key to superior performance.
Original, forward-looking fundamental equity research is
the cornerstone of our investment strategy...."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
7
MARKET STATISTICS
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
12
FINANCIAL STATEMENTS
14
NOTES TO FINANCIAL STATEMENTS
18
FINANCIAL HIGHLIGHTS
20
SHAREHOLDERS' MEETING
At A GLANCE
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH
FUND TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 1998
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A -15.99%
CLASS B -16.52%
CLASS C -16.44%
LIPPER PACIFIC EX JAPAN FUNDS CATEGORY AVERAGE* -16.61%
- --------------------------------------------------------------------------------
</TABLE>
Returns are historical and do not guarantee 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.
* Lipper Analytical Services, Inc. returns are based upon changes in net asset
value with all dividends reinvested and do not include the effect of sales
charges and, if they had, results may have been less favorable.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
5/31/98 11/30/97
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER ASIAN GROWTH FUND
CLASS A $5.52 $6.65
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND
CLASS B $5.48 $6.58
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND
CLASS C $5.50 $6.60
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
DURING THE SIX-MONTH PERIOD ENDED MAY 31, 1998, THE KEMPER ASIAN GROWTH FUND
MADE THE FOLLOWING DISTRIBUTIONS PER SHARE:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME DIVIDEND $.0775 $.0155 $.0175
- --------------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[STYLE/SIZE DIAGRAM]
Source: Morningstar, Inc., Chicago, IL (312) 696-6000. (Morningstar's Style Box
is based on a portfolio date as of May 31, 1998.) The Equity Style Box placement
is based on a fund's price-to-earnings and price-to-book ratios relative to the
S&P 500, as well as the size of the companies in which it invests, or median
market capitalization.
PLEASE NOTE THAT STYLE BOXES DO NOT REPRESENT AN EXACT ASSESSMENT OF RISK AND
DO NOT REPRESENT FUTURE PERFORMANCE. PLEASE CONSULT THE PROSPECTUS FOR A
DESCRIPTION OF INVESTMENT POLICIES.
CURRENCY DEVALUATION A significant decline of a currency's value relative to
other currencies, such as the U.S. dollar. Trading or central bank intervention
(or the lack of intervention) may prompt this in the currency markets. For U.S.
investors who are investing overseas, a devaluation of a foreign currency can
have the effect of reducing the total return of their investment.
INTERNATIONAL MONETARY FUND An organization focused on lowering trade barriers
and stabilizing currencies. While helping developing nations pay their debts,
the IMF usually imposes tough guidelines aimed at lowering inflation, cutting
imports, and raising exports.
LIQUIDITY A characteristic of an investment or an asset referring to the ease of
convertibility into cash within a reasonably short period of time.
<PAGE> 3
ECONOMIC OVERVIEW
[SILVIA PHOTO]
Dr. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS. HE IS ALSO A MEMBER OF THE INVESTMENT POLICY AND STRATEGY COMMITTEE
FOR KEMPER FUNDS.
SILVIA HOLDS BACHELOR OF ARTS AND PH.D. DEGREES IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND HAS A MASTER'S DEGREE IN ECONOMICS FROM BROWN
UNIVERSITY IN PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER, HE WAS
WITH THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, INC. IS THE INVESTMENT MANAGER FOR KEMPER FUNDS. IT
IS ONE OF THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS
WORLDWIDE, MANAGING MORE THAN $218 BILLION IN ASSETS GLOBALLY FOR MUTUAL FUND
INVESTORS, RETIREMENT AND PENSION PLANS, INSTITUTIONAL AND CORPORATE CLIENTS,
INSURANCE COMPANIES AND PRIVATE, FAMILY AND INDIVIDUAL ACCOUNTS. IT IS ONE OF
THE 10 LARGEST MUTUAL FUND COMPLEXES IN THE UNITED STATES.
DEAR SHAREHOLDERS,
Stable economic growth, low interest rates and sustained low inflation continued
to produce a beneficial market environment for investors in the second quarter
of 1998. Despite heightened sensitivity to earnings estimates and announcements,
the economy continued to support financial assets. We expect this favorable
climate to continue -- in spite of the sensitivity -- at least over the shorter
term.
As always, expectations have been at the heart of the actions and reactions
that move the markets. Expectations appear to be high, as demonstrated by a
record flow of new cash into mutual funds. As of April 30, 1998, a record $5
trillion in mutual fund assets surpassed total assets of the nation's banks,
according to the Investment Company Institute, a trade organization that
monitors the mutual fund industry, and the Federal Reserve Bank in Washington.
Unfortunately, high expectations often combine with high anxiety -- today's
investors are attuned to even the smallest hint of economic change. The result
is volatility. Many who believe that our long-running bull market is too good to
be true or that stock prices are too high are wondering when the market will
reverse.
While a reversal may not be on the immediate horizon, investors are wise to
watch for several signs that change is underway: rising prices, indicating
higher inflation; repercussions of the Asian economic crisis on American
business, which could appear in the form of reduced earnings; and a continued
widening of our trade deficit, a serious imbalance caused by heightened American
demand for foreign goods and services.
But at its monetary policy meeting at the end of the second quarter, the
Federal Reserve Board (the Fed) again chose to leave interest rates alone. In
the coming months, the Fed could raise interest rates if inflation accelerates
or if growth appears to be too rapid compared to the Fed's expectations.
Our positive outlook for the short term is based primarily on the current
resiliency of our marketplace. The United States appears to be firmly planted in
the middle of an economic cycle, with no evidence of detrimental pressures that
might be associated with the market's phenomenal growth. We are not seeing
widespread price increases for goods and services or a downturn in the housing
market, both of which we might expect late in an economic cycle.
Equities have continued to reward investors. The U.S. stock market, as
measured by the Standard & Poor's 500, gained nearly 18 percent in the first
half of 1998 but just 3.5 percent in the second quarter as profit concerns moved
front and center. Bonds in 1998 have also rewarded investors in terms of real
return, which is total return less the rate of inflation. The Treasury and high
yield debt markets have performed particularly well.
U.S. economic growth, as measured by the gross domestic product (GDP) growth
rate, was slightly above 5 percent for the first quarter. Our general
expectation for the year is that growth in all of 1998 will increase between 2.5
and 3 percent over last year. In other words, the economy will remain strong,
but will continue to slow down as the year progresses.
Consumer spending and corporate fixed investment have fueled the economy's
solid growth. Spending on both capital goods and high technology has been
strong. Corporate profit growth has continued to slow, which appears to be
acceptable to investors in an environment of stable interest rates. U.S.
employment growth has ranged from 2 to 2.25 percent, continuing to exceed
expectations. Consumer confidence has remained at all-time highs. The increase
in output prices, an indicator of inflation measured by the Consumer Price Index
(CPI), has stayed at 1.5 to 2 percent.
Adding to the good news, all seems to be quiet on the domestic policy front.
At the end of February, the U.S. federal budget deficit essentially vanished.
Recent efforts to reduce the deficit, combined with higher federal revenues due
to the robust economy, have left us with an expected budget surplus of $60
billion to $80 billion for fiscal 1998. To date, our Democratic president and
Republican Congress have not agreed on any significant legislation regarding tax
credits, spending cuts or health care that could threaten the newfound federal
budget surplus.
Can we expect a little more excitement from overseas? A full-scale global
recession from last year's Asian economic crisis seems unlikely at this point.
Although the crisis has impacted exporters in particular, it has yet to hurt
most U.S. businesses and investors. Quite the
3
<PAGE> 4
ECONOMIC OVERVIEW
- --------------------------------------------------------------------------------
ECONOMIC GUIDEPOSTS
- --------------------------------------------------------------------------------
Economic activity is a key influence on investment performance and shareholder
decision-making. Periods of recession or boom, inflation or deflation, credit
expansion or credit crunch have a significant impact on mutual fund
performance.
The following are some significant economic guideposts and their
investment rationale that may help your investment decision-making. The
10-year Treasury rate and the prime rate are prevailing interest rates. The
other data report year-to-year percentage changes.
[BAR GRAPH]
<TABLE>
<CAPTION>
NOW (6/30/98) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <S> <C>
10-YEAR TREASURY RATE(1) 5.5 5.54 6.22 6.87
PRIME RATE(2) 8.5 8.5 8.5 8.25
INFLATION RATE(3)* 1.75 1.7 2.3 2.82
THE U.S. DOLLAR(4) 9.54 9.32 7.32 8.35
CAPITAL GOODS ORDERS(5)* 10.51 14.37 8.58 2.44
INDUSTRIAL PRODUCTION(5)* 4.42 5.74 3.91 3.99
EMPLOYMENT GROWTH(6) 2.62 2.88 2.56 2.23
</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 percent. 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 May 31, 1998.
contrary. While the mere threat of repercussions from the Asian crisis added to
the anxiety mentioned earlier, it has also had the effect of keeping U.S.
interest rates and prices in check, making the U.S. economy all the more
attractive to investors around the world.
In the global economy, the U.S. dollar continues to appreciate in value
compared to other currencies. In fact, more capital is flowing into U.S.
markets as investors generally avoid Asia. Europe also has been benefiting from
the crisis. Canada, which is a commodity-producing exporter, has been somewhat
negatively affected as commodity prices have fallen. Political unrest in
Indonesia, nuclear tests in India and Pakistan and economic turmoil in Russia
have been keeping international investors on the edges of their seats.
Other major developments abroad include the final selection of
countries to participate in Europe's single currency next year. Many European
countries are adopting more restrictive fiscal policy and reducing inflation in
anticipation of their momentous entry into the European Economic and Monetary
Union (EMU). But after the EMU is established in 1999, tensions may indeed
mount as countries work to adapt to the new structure.
As we approach the turn of the century, one caveat remains: Don't
underestimate the potential of the Year 2000 computer code problem. It appears
that a significant number of federal government agencies will not meet the
criteria necessary to avoid the problem. Many businesses are revealing that
billions of dollars are being spent on the situation. Some experts say a global
recession is in store. Others adamantly disagree. In any event, we may indeed
see a reduction in capital spending toward the of 1998 and the first half of
next year as companies focus on fixing existing computers rather than on
purchasing new equipment. We'll keep you posted!
Thank you for your continued support. We appreciate the opportunity to
serve your investment needs.
Sincerely,
/s/ John E. Silvia
JOHN E. SILVIA
July 10, 1998
4
<PAGE> 5
PERFORMANCE UPDATE
[ALLAN PHOTO]
ELIZABETH ALLAN JOINED SCUDDER KEMPER INVESTMENTS, INC. IN 1987. SHE IS A
CO-LEAD PORTFOLIO MANAGER OF KEMPER ASIAN GROWTH FUND AND A MEMBER OF KEMPER
GLOBAL DISCOVERY FUND'S MANAGEMENT TEAM. ALLAN RECEIVED A BACHELOR'S DEGREE WITH
DISTINCTION IN EAST ASIAN STUDIES FROM COLBY COLLEGE AND THREE MASTER'S DEGREES
- -- THE FIRST ONE FROM INDIANA UNIVERSITY IN EAST ASIAN STUDIES AND THE SECOND
FROM PRINCETON UNIVERSITY IN SOCIOLOGY, SPECIALIZING IN JAPAN. SHE ALSO EARNED A
MASTER'S DEGREE IN BUSINESS ADMINISTRATION FROM NEW YORK UNIVERSITY, WITH A
FOCUS IN FINANCE AND INTERNATIONAL BUSINESS.
[GUSMAN PHOTO]
THERESA GUSMAN JOINED SCUDDER KEMPER INVESTMENTS IN 1995, AND IS A CO-LEAD
PORTFOLIO MANAGER OF KEMPER ASIAN GROWTH FUND. SHE RECEIVED A BACHELOR'S DEGREE
IN ECONOMICS FROM STATE UNIVERSITY OF NEW YORK AT STONY BROOK.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT, AS STATED ON THE COVER. THE
MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME, BASED ON MARKET AND OTHER
CONDITIONS.
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 1998 KEMPER ASIAN GROWTH FUND CONFRONTED
DRAMATIC VOLATILITY IN A REGION THAT CONTINUES TO STRUGGLE. FOLLOWING, NEW
PORTFOLIO CO-MANAGERS ELIZABETH ALLAN AND THERESA GUSMAN DISCUSS THE MARKET
AND THEIR APPROACH TO FUND MANAGEMENT.
Q THE STRUGGLES IN ASIA HAVE MADE HEADLINES FOR NEARLY A YEAR NOW. CAN YOU
PROVIDE A BRIEF RECAP OF WHAT HAPPENED IN THESE MARKETS OVER THE LAST SIX
MONTHS?
A The early part of the year was marked by a euphoric reaction to the
International Monetary Fund (IMF) bailouts of Thailand, South Korea and finally
Indonesia. The rally experienced in the first quarter reflected a feeling that
Asia's currency crisis was over.
In April however, as the second quarter got underway, we saw swift
declines as investors began to realize that the damage inflicted by the crisis
could not be quickly reversed and the recovery in Asia would be difficult and
risky. The market also reflected diminished prospects for economic recovery in
Japan, as well as acknowledgement that a weaker Japan would preclude Asian
recovery.
We have long cautioned that although the first leg of the crisis --
involving shocks to currencies and interest rates -- was over, there would be a
second leg featuring more volatility in markets, societies and economies. And in
fact, as we moved into the second quarter, the realities of policy backsliding,
social instability and economic hardship set in. Brave policy statements in
Korea for example, proved difficult to implement. High prices, food shortages
and rising unemployment began to take their toll across Asia. Social
instability throughout the region and most notably in Indonesia culminated with
the Jakarta riots and the end of President Suharto's 30-year regime in May.
The sinking yen and even-weaker-than-expected prospects for Japan's
economy deepened bearish sentiment in the region, as Japan's economic
health is increasingly seen as the key to recovery. The U.S. Federal Reserve
Board's intervention to try and support the yen vs. the dollar brought only
short-term benefit, and at the writing of this report, markets are still
awaiting -- with little hope -- meaningful action by the Japanese.
Q INVESTOR PATIENCE IS DEFINITELY BEING TESTED BY THESE MARKET CONDITIONS.
WHAT DO YOU FEEL ARE THE MOST COMPELLING REASONS FOR SHAREHOLDERS TO KEEP A
PORTION OF THEIR PORTFOLIO INVESTED IN THIS MARKET?
A The rapid decline of stock markets in Asia has created quite bleak
short-term prospects. However, we are seeing efforts to bolster the financial
sectors, notably in Thailand, Indonesia and South Korea. In China, financial and
market reforms are also progressing rapidly. Although fundamental recovery in
Asia will be slow and painful, the good news is that further stock market
declines would push valuations far below what they should be even in this
tumultuous climate. This presents enticing opportunities for patient, long-term
investors. Economic recovery will not happen overnight but stock market
recoveries tend to precede economic recoveries by a year or more so investors
could be rewarded
5
<PAGE> 6
PERFORMANCE UPDATE
for their patience even before all the troubles have been resolved in the
region.
It is also important to note that we have seen this kind of volatility --
and worse -- in Asia before. The charts on page 7 illustrate how several Asian
markets have performed over time and how, despite volatile periods, have
remained on an upward course. In the past, patient, long-term investors have
been rewarded.
Q WITH THE FUND'S LIPPER CATEGORY (SEE PAGE 2 OF THIS REPORT) AND BENCHMARK
INDEX* BOTH DOWN MORE THAN 16 PERCENT FOR THE PERIOD, IT IS OBVIOUS THAT MAKING
MONEY IN THESE MARKETS WAS NOT A REAL POSSIBILITY, BUT WHAT STEPS DID MANAGEMENT
TAKE TO TRY AND PRESERVE SOME SHAREHOLDER VALUE?
A One step taken immediately was to raise the cash position significantly.
In December the fund had about 21 percent of the portfolio in cash. In raising
this cash position, the number of holdings in the portfolio was reduced to
roughly 35 names focusing on cash-rich companies, exporters and the more
defensive utility sector. As the period moved forward and markets bounced back,
dollars were cautiously put back into the market, often by adding to the core
positions such as HSBC Holdings and Johnson Electric. As of May 31, the fund
held only a 5 percent cash position while still holding 33 names.
Q ON MAY 1, 1998, THE PORTFOLIO MANAGEMENT OF THE FUND WAS CHANGED.
TOGETHER, YOU BRING MORE THAN 30 YEARS OF COMBINED EXPERIENCE MANAGING MONEY
IN THE ASIAN MARKETS. WHAT WILL YOUR APPROACH BE GOING FORWARD?
A Now more than ever, we are convinced that superior stock selection is the
key to superior performance. Original, forward-looking fundamental equity
research is the cornerstone of our investment strategy. We will focus on
companies that are undervalued, potentially fast growing, exceptionally
well-managed and that have dominant positions in clearly identifiable market
niches providing them with a clear competitive advantage. The current portfolio
has a focus on blue chip names and is diversified across countries and
industries. We intend to maintain the quality name focus in the fund and, for
the near-term, will maintain its defensive positioning.
We are placing increased emphasis on valuation analyses looking
predominantly at a company's cash flow, non-property asset backing,
normalized earnings (i.e., temporary shocks to earnings are to be expected in
the current environment and may present buying opportunities) as well as its
debt levels. This will help us to determine the proper re-entry price points for
high-quality companies in the region.
We plan to focus on "the best" infrastructure-related, industrial and
consumer-oriented companies in the most proactive and pro-market
countries. Going forward -- using these strict valuation parameters and entry
price limits -- we will strive to position the fund to benefit from a recovery
in Asian equity markets when that happens.
Q WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
A A key ingredient in Asia's recovery will be the end of Japan's impasse,
either proactively through government direction or reactively following
an acute financial crisis. Increasing pressure on the Japanese government
suggests we are moving toward a resolution one way or another. Once market
participants believe the worst is behind us, stocks could rebound well in
advance of countries regaining a clean bill of economic health. Another leading
indicator of the end of the stock market crisis is typically stabilization of
currencies. Although some Asian currencies remain jittery, others have begun to
stabilize. We view this as a positive precursor to stock market recovery.
* THE MORGAN STANLEY CAPITAL INTERNATIONAL ASIA COMBINED FAR EAST FREE EX-JAPAN
INDEX IS GENERALLY REPRESENTATIVE OF ASIAN FREE MARKET PERFORMANCE, EXCLUDING
JAPAN.
6
<PAGE> 7
MARKET Statistics
WE HAVE SEEN THIS TYPE OF EQUITY MARKET VOLATILITY BEFORE
[LINE GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Taiwan -- Taiwan Stock Exchange
- --------------------------------------------------------------------------------
YEAR LOCAL MARKET VALUE
<S> <C>
1/85 830.76
2/85 793.63
3/85 780.9
4/85 768.39
5/85 743.45
6/85 714.4
7/85 703.09
8/85 643.83
9/85 674.88
10/85 716.93
11/85 782.19
12/85 778.12
1/86 835.12
2/86 848.68
3/86 970.64
4/86 932.96
5/86 897.48
6/86 954.24
7/86 961.85
8/86 908.04
9/86 912.09
10/86 946.17
11/86 978.96
12/86 995.94
1/87 1039.11
2/87 1150.25
3/87 1289.32
4/87 1434.57
5/87 1840.75
6/87 1857.22
7/87 1648.92
8/87 2078.67
9/87 3214.3
10/87 4673.14
11/87 2735.52
12/87 2957.01
1/88 2339.86
2/88 2858.76
3/88 3490.18
4/88 3365.38
5/88 4257.33
6/88 4599.68
7/88 4960.32
8/88 6215.85
9/88 7817.45
10/88 7990.85
11/88 6191.05
12/88 6838.85
1/89 5119.11
2/89 6236.72
3/89 7124.88
4/89 7224.41
5/89 8100.06
6/89 9497.22
7/89 8853.61
8/89 9472.95
9/89 10084.8
10/89 9911.15
11/89 10630.6
12/89 8931.28
1/90 9624.18
2/90 12087.2
3/90 11419.8
4/90 11163.5
5/90 8734.93
6/90 7664.48
7/90 5049.58
8/90 5771.28
9/90 3574.89
10/90 2560.47
11/90 3139.88
12/90 4798.64
1/91 4530.16
2/91 4002.45
3/91 4955.33
4/91 5297.92
5/91 5850.18
6/91 5709.27
7/91 5768.08
8/91 5141.41
9/91 4673.68
10/91 4858.44
11/91 4332.58
12/91 4355.02
1/92 4600.67
2/92 5391.63
3/92 5144.37
4/92 4676.48
5/92 4545.18
6/92 4456.85
7/92 4523.81
8/92 4072.08
9/92 3960.45
10/92 3584.08
11/92 3559.51
12/92 3646.76
1/93 3377.06
2/93 3501.23
3/93 4517.59
4/93 4795.17
5/93 4473.8
6/93 4316.43
7/93 3995.51
8/93 3946.56
9/93 3859.09
10/93 3806.4
11/93 4131.68
12/93 4468.34
1/94 6070.56
2/94 6176.91
3/94 5452.44
4/94 5308.87
5/94 5777.48
6/94 5961.45
7/94 6005.84
8/94 6839.02
9/94 6974.15
10/94 7183.75
11/94 6201.21
12/94 6444.05
1/95 7111.1
2/95 6307.85
3/95 6337.83
4/95 6573.54
5/95 5789.98
6/95 5714.33
7/95 5312.94
8/95 5199.63
9/95 4785.29
10/95 5045.62
11/95 4801.66
12/95 4809.94
1/96 5158.65
2/96 4775.28
3/96 4877.38
4/96 5127.49
5/96 6114.14
6/96 5973.49
7/96 6560.41
8/96 6106.97
9/96 6342.17
10/96 6513.73
11/96 6455.11
12/96 6982.81
1/97 6933.94
2/97 7346.88
3/97 7880.45
4/97 8163.41
5/97 8485.66
6/97 8197.3
7/97 9030.28
8/97 10001.6
9/97 9504.98
10/97 8695.02
11/97 7646.35
12/97 7400.64
1/98 8187.27
2/98 8405.1
3/98 9277.09
4/98 9041.5
5/98 8304.19
</TABLE>
[LINE GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Hong Kong -- Hang Seng Index
- --------------------------------------------------------------------------------
YEAR LOCAL MARKET VALUE
<S> <C>
1/85 1200.38
2/85 1356.26
3/85 1401.15
4/85 1389.13
5/85 1516.73
6/85 1641.25
7/85 1570.6
8/85 1678.95
9/85 1616.17
10/85 1520.99
11/85 1680.65
12/85 1694.57
1/86 1752.45
2/86 1702.38
3/86 1685.06
4/86 1625.94
5/86 1848.65
6/86 1781.94
7/86 1733.51
8/86 1874.11
9/86 1903.02
10/86 2090.24
11/86 2258.78
12/86 2452.15
1/87 2568.3
2/87 2585.22
3/87 2894.26
4/87 2695.91
5/87 2685.37
6/87 2919.7
7/87 3163.99
8/87 3514.25
9/87 3644.28
10/87 3949.73
11/87 2203.23
12/87 2108.55
1/88 2302.75
2/88 2358.27
3/88 2454.71
4/88 2543.97
5/88 2589.89
6/88 2516.24
7/88 2684.64
8/88 2703.42
9/88 2433.32
10/88 2429.07
11/88 2615.43
12/88 2668.03
1/89 2687.44
2/89 3060.91
3/89 3037.07
4/89 2987.21
5/89 3123.87
6/89 2689.98
7/89 2270.81
8/89 2578.96
9/89 2508.91
10/89 2746.7
11/89 2721.68
12/89 2756.9
1/90 2836.57
2/90 2738.24
3/90 2933.13
4/90 2934.7
5/90 2945.18
6/90 3159.17
7/90 3319.47
8/90 3468.64
9/90 3066.81
10/90 2791.26
11/90 2968.74
12/90 3020.17
1/91 3024.55
2/91 3223.49
3/91 3552.37
4/91 3745.97
5/91 3631.25
6/91 3688.14
7/91 3738.85
8/91 4030.01
9/91 4023.54
10/91 4023.84
11/91 4037.82
12/91 4094.42
1/92 4297.33
2/92 4672.09
3/92 4952.19
4/92 4909.96
5/92 5484.21
6/92 6056
7/92 6134.75
8/92 5910.73
9/92 5711.57
10/92 5528.84
11/92 6231.17
12/92 5501.71
1/93 5512.39
2/93 5697.78
3/93 6398.82
4/93 6408.88
5/93 6790.11
6/93 7375.81
7/93 7205.38
8/93 7029.03
9/93 7542.19
10/93 7676.22
11/93 9629.19
12/93 9254.03
1/94 12086.4
2/94 11826.9
3/94 10148.4
4/94 9029.91
5/94 8799.7
6/94 9512.07
7/94 8634.37
8/94 9683.68
9/94 9890.9
10/94 9492.49
11/94 9573.4
12/94 8430.8
1/95 8191.04
2/95 7342.65
3/95 8296.96
4/95 8400.44
5/95 8226.04
6/95 9559.74
7/95 9138.21
8/95 9385.27
9/95 9196.47
10/95 9724.98
11/95 9782.39
12/95 9862.55
1/96 10073.4
2/96 11362.8
3/96 11194.9
4/96 10926.8
5/96 10907
6/96 11059.8
7/96 11002.6
8/96 10789.9
9/96 11106.6
10/96 11921.2
11/96 12529.3
12/96 13517.6
1/97 13451.5
2/97 13451.1
3/97 13507.3
4/97 12074.2
5/97 13020.8
6/97 14990.9
7/97 15196.8
8/97 16379.2
9/97 13425.6
10/97 15049.3
11/97 11255.1
12/97 10750.9
1/98 10722.8
2/98 10578.6
3/98 11318.8
4/98 11331.4
5/98 10563.7
</TABLE>
[LINE GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Malaysia -- Kuala Lumpor Stock Exchange Composite
- --------------------------------------------------------------------------------
YEAR LOCAL MARKET VALUE
<S> <C>
1/85 298.725
2/85 309.53
3/85 314.08
4/85 303.53
5/85 293.36
6/85 296.44
7/85 274.79
8/85 282.63
9/85 269.53
10/85 299.01
11/85 284.09
12/85 257.04
1/86 219.75
2/86 205.36
3/86 196.04
4/86 194.3
5/86 171.74
6/86 196.3
7/86 219.07
8/86 209.55
9/86 234.25
10/86 226.2
11/86 272.03
12/86 248.6
1/87 252.43
2/87 278.38
3/87 326.19
4/87 312.16
5/87 359.38
6/87 412.94
7/87 410.74
8/87 446.9
9/87 409.66
10/87 417.21
11/87 273.21
12/87 238.74
1/88 261.19
2/88 282.85
3/88 272.46
4/88 286.53
5/88 312.49
6/88 325.2
7/88 365.99
8/88 367
9/88 333.86
10/88 333.77
11/88 342.74
12/88 347.38
1/89 357.38
2/89 390.52
3/89 388.54
4/89 411.13
5/89 441.25
6/89 456.25
7/89 445.12
8/89 462.37
9/89 462.74
10/89 495.03
11/89 479.61
12/89 510.74
1/90 562.28
2/90 570.21
3/90 600.2
4/90 565.92
5/90 520.57
6/90 586.54
7/90 584.65
8/90 632.51
9/90 550.74
10/90 459.08
11/90 480.46
12/90 469.86
1/91 505.92
2/91 497.26
3/91 559.51
4/91 587.06
5/91 588.72
6/91 631.44
7/91 615.69
8/91 600.75
9/91 559.09
10/91 521.81
11/91 537.03
12/91 528.21
1/92 556.22
2/92 570.64
3/92 601.93
4/92 588.37
5/92 591.63
6/92 585.33
7/92 596.47
8/92 601.39
9/92 573.5
10/92 598.1
11/92 649.06
12/92 637.23
1/93 643.96
2/93 624.49
3/93 634.87
4/93 649.56
5/93 717.37
6/93 740.06
7/93 719.84
8/93 763.46
9/93 821.04
10/93 859.87
11/93 967.05
12/93 1015.42
1/94 1288.85
2/94 1106.99
3/94 1113.41
4/94 959.94
5/94 1054.5
6/94 982.8
7/94 1003.76
8/94 1056.34
9/94 1155.27
10/94 1127.35
11/94 1093.58
12/94 986.13
1/95 971.21
2/95 883.29
3/95 979.64
4/95 966.31
5/95 951.8
6/95 1070.82
7/95 1023.51
8/95 1058.94
9/95 1009.29
10/95 984.12
11/95 941.78
12/95 975.54
1/96 995.17
2/96 1055.42
3/96 1093.56
4/96 1158.44
5/96 1189.54
6/96 1131.5
7/96 1137.05
8/96 1087.97
9/96 1106.2
10/96 1134.96
11/96 1172.48
12/96 1220.18
1/97 1237.96
2/97 1221.9
3/97 1260.44
4/97 1187.77
5/97 1080.17
6/97 1117.97
7/97 1078.9
8/97 1002.63
9/97 804.4
10/97 795.83
11/97 716.72
12/97 528.45
1/98 594.44
2/98 569.51
3/98 745.12
4/98 700.05
5/98 625.97
</TABLE>
7
<PAGE> 8
LARGEST HOLDINGS
THE FUND'S 15 LARGEST HOLDINGS*
Representing 61.6 percent of the fund's common stock holdings on May 31, 1998.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
COMPANY COUNTRY % OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. JOHNSON ELECTRIC HOLDINGS Hong Kong 6.2%
- -----------------------------------------------------------------------------------------------------------------
2. COMPAL ELECTRONICS CO. Taiwan 5.5%
- -----------------------------------------------------------------------------------------------------------------
3. HSBC HOLDINGS Hong Kong 4.8%
- -----------------------------------------------------------------------------------------------------------------
4. HONG KONG TELECOMMUNICATIONS Hong Kong 4.7%
- -----------------------------------------------------------------------------------------------------------------
5. CHINA LIGHT & POWER CO. Hong Kong 4.6%
- -----------------------------------------------------------------------------------------------------------------
6. VARITRONIX INTERNATIONAL Hong Kong 4.2%
- -----------------------------------------------------------------------------------------------------------------
7. CHEUNG KONG HOLDINGS Hong Kong 4.1%
- -----------------------------------------------------------------------------------------------------------------
8. HUTCHISON WHAMPOA Hong Kong 4.1%
- -----------------------------------------------------------------------------------------------------------------
9. ACER, INC. Taiwan 3.8%
- -----------------------------------------------------------------------------------------------------------------
10. FOUNDER HONG KONG Hong Kong 3.6%
- -----------------------------------------------------------------------------------------------------------------
11. OVERSEAS UNION BANK Singapore 3.5%
- -----------------------------------------------------------------------------------------------------------------
12. OVERSEA-CHINESE BANKING CORP. Singapore 3.3%
- -----------------------------------------------------------------------------------------------------------------
13. TENAGA NASIONAL Malaysia 3.2%
- -----------------------------------------------------------------------------------------------------------------
14. TELEKOM MALAYSIA Malaysia 3.2%
- -----------------------------------------------------------------------------------------------------------------
15. AVIMO GROUP Singapore 2.8%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Portfolio composition and holdings are subject to change.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER ASIAN GROWTH FUND
PORTFOLIO OF INVESTMENTS AT MAY 31, 1998 (unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HONG KONG--48.5%
Johnson Electric Holdings, Ltd.
SMALL MOTOR MANUFACTURER 105,000 $ 407,000
HSBC Holdings, PLC
BANKING 13,000 310,000
Hong Kong Telecommunications, Ltd.
TELECOMMUNICATIONS 169,000 304,000
China Light & Power Co., Ltd.
ELECTRIC UTILITY 70,000 302,000
Varitronix International, Ltd.
CRYSTAL DISPLAYS MANUFACTURER 130,000 273,000
Cheung Kong Holdings, Ltd.
PROPERTY DEVELOPMENT 50,000 270,000
Hutchison Whampoa, Ltd.
CONGLOMERATE 51,000 267,000
Founder Hong Kong, Ltd.
SOFTWARE DEVELOPMENT AND SYSTEMS
INTEGRATION 372,000 232,000
Shanghai Industrial Holdings, Ltd.
CONGLOMERATE 65,000 182,000
New World Development Co., Ltd.
PROPERTY DEVELOPMENT AND INVESTMENT 75,000 177,000
Swire Pacific Ltd., "A"
CONGLOMERATE 45,000 166,000
(a)Yanzhou Coal Mining Co., Ltd.
COAL MINING 750,000 155,000
CITIC Pacific, Ltd.
CONGLOMERATE 60,000 146,000
Sun Hung Kai & Co., Ltd.
PROPERTY DEVELOPMENT 28,000 137,000
--------------------------------------------------------------------------------
3,328,000
- -----------------------------------------------------------------------------------------------------------------------
SINGAPORE--14.0%
Overseas Union Bank, Ltd.
BANKING 75,000 228,000
Oversea-Chinese Banking Corp., Ltd.
BANKING 55,000 218,000
Avimo Group, Ltd.
PRECISION INSTRUMENTS MANUFACTURER 125,000 183,000
Singapore Press Holdings, Ltd.
PUBLISHER 21,000 168,000
City Developments, Ltd.
REAL ESTATE DEVELOPMENT 45,000 163,000
--------------------------------------------------------------------------------
960,000
</TABLE>
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MALAYSIA--10.9%
Tenaga Nasional, Bhd.
ELECTRIC UTILITY 125,000 $ 207,000
Telekom Malaysia, Bhd.
TELECOMMUNICATIONS 90,000 206,000
Malayan Banking, Bhd.
BANKING 120,000 169,000
Resorts World, Bhd.
RESORT OPERATOR 105,000 162,000
--------------------------------------------------------------------------------
744,000
- -----------------------------------------------------------------------------------------------------------------------
TAIWAN--10.7%
(a)Compal Electronics Co.
ELECTRONICS MANUFACTURER 118,000 360,000
(a)Acer, Inc.
ELECTRONICS MANUFACTURER 170,000 250,000
(a)Yageo Corp.
ELECTRONICS MANUFACTURER 60,000 126,000
--------------------------------------------------------------------------------
736,000
- -----------------------------------------------------------------------------------------------------------------------
THAILAND--7.1%
(a)PTT Exploration & Production Public Co.,
Ltd.
PETROLEUM PRODUCER 20,000 173,000
(a)Phatra Thanakit Public Co., Ltd.
FINANCIAL SERVICES 200,000 105,000
Thai Farmers Bank Public Co., Ltd.
BANKING 55,000 84,000
Siam Makro Co., Ltd.
WHOLESALER 50,000 74,000
Lanna Lignite Public Co., Ltd.
COAL MINING 27,000 51,000
--------------------------------------------------------------------------------
487,000
- -----------------------------------------------------------------------------------------------------------------------
PHILIPPINES--4.0%
Bank of the Philippine Islands
BANKING 55,000 138,000
SM Prime Holdings, Inc.
REAL ESTATE INVESTMENT 750,000 133,000
--------------------------------------------------------------------------------
271,000
--------------------------------------------------------------------------------
TOTAL COMMON STOCKS--95.2%
(Cost: $8,419,000) 6,526,000
--------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------------------------
MONEY MARKET Yield--5.41%
INSTRUMENT--2.2% Due--June 1998
(Cost: $150,000) $ 150,000 150,000
--------------------------------------------------------------------------------
TOTAL INVESTMENTS--97.4%
(Cost: $8,569,000) 6,676,000
--------------------------------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--2.6% 180,000
--------------------------------------------------------------------------------
NET ASSETS--100% $6,856,000
--------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
At May 31, 1998, the Fund's portfolio of investments had the following industry
diversification:
<TABLE>
<CAPTION>
VALUE %
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Banks $1,147,000 16.7
- -------------------------------------------------------------------------------------------
Electronics 1,143,000 16.7
- -------------------------------------------------------------------------------------------
Diversified Holding Companies 761,000 11.1
- -------------------------------------------------------------------------------------------
Utilities 715,000 10.4
- -------------------------------------------------------------------------------------------
Real Estate 703,000 10.3
- -------------------------------------------------------------------------------------------
Services 536,000 7.8
- -------------------------------------------------------------------------------------------
Energy 379,000 5.5
- -------------------------------------------------------------------------------------------
Finance 282,000 4.1
- -------------------------------------------------------------------------------------------
Publishing 168,000 2.5
- -------------------------------------------------------------------------------------------
Leisure 162,000 2.4
- -------------------------------------------------------------------------------------------
Wholesaling 74,000 1.1
- -------------------------------------------------------------------------------------------
Miscellaneous 456,000 6.6
- -------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 6,526,000 95.2
- -------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS, CASH AND OTHER NET ASSETS 330,000 4.8
- -------------------------------------------------------------------------------------------
NET ASSETS $6,856,000 100.0
- -------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $8,569,000 for federal income tax purposes
at May 31, 1998, the gross unrealized appreciation was $130,000, the gross
unrealized depreciation was $2,023,000 and the net unrealized depreciation on
investments was $1,893,000.
See accompanying Notes to Financial Statements.
11
<PAGE> 12
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998 (unaudited)
<TABLE>
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Investments, at value
(Cost: $8,569,000) $ 6,676,000
- ---------------------------------------------------------------------------
Cash 412,000
- ---------------------------------------------------------------------------
Receivable for:
Dividends 32,000
- ---------------------------------------------------------------------------
Fund shares sold 2,000
- ---------------------------------------------------------------------------
Reimbursement from advisor 18,000
- ---------------------------------------------------------------------------
TOTAL ASSETS 7,140,000
- ---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- --------------------------------------------------------------------------------
Payable for:
Investments purchased 238,000
- ---------------------------------------------------------------------------
Administrative services fee 4,000
- ---------------------------------------------------------------------------
Distribution services fee 2,000
- ---------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 28,000
- ---------------------------------------------------------------------------
Other 12,000
- ---------------------------------------------------------------------------
Total liabilities 284,000
- ---------------------------------------------------------------------------
NET ASSETS $ 6,856,000
- ---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in capital $10,852,000
- ---------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (2,167,000)
- ---------------------------------------------------------------------------
Net unrealized depreciation on investments and assets and
liabilities in foreign currencies (1,896,000)
- ---------------------------------------------------------------------------
Undistributed net investment income 67,000
- ---------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 6,856,000
- ---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($3,860,000 + 700,000 shares outstanding) $5.52
- ---------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $5.86
- ---------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($2,722,000 + 497,000 shares outstanding) $5.48
- ---------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price per share
(subject to contingent deferred sales charge) per share
($274,000 + 50,000 shares outstanding) $5.50
- ---------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998 (unaudited)
<TABLE>
- ---------------------------------------------------------------------------
NET INVESTMENT INCOME
- ---------------------------------------------------------------------------
<S> <C>
Dividends (less foreign taxes withheld of $5,000) $ 124,000
- ---------------------------------------------------------------------------
Interest 25,000
- ---------------------------------------------------------------------------
Total investment income 149,000
- ---------------------------------------------------------------------------
Expenses:
Management fee 31,000
- ---------------------------------------------------------------------------
Distribution services fee 11,000
- ---------------------------------------------------------------------------
Administrative services fee 8,000
- ---------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 45,000
- ---------------------------------------------------------------------------
Professional fees 8,000
- ---------------------------------------------------------------------------
Reports to shareholders 5,000
- ---------------------------------------------------------------------------
Other 1,000
- ---------------------------------------------------------------------------
Total expenses before expense waiver 109,000
- ---------------------------------------------------------------------------
Less expenses waived by investment manager 31,000
- ---------------------------------------------------------------------------
Total expenses after expense waiver 78,000
- ---------------------------------------------------------------------------
NET INVESTMENT INCOME 71,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
- ---------------------------------------------------------------------------
Net realized loss on sales of investments and foreign
currency transactions (974,000)
- ---------------------------------------------------------------------------
Change in net unrealized depreciation on investments and
assets and liabilities in foreign currencies (495,000)
- ---------------------------------------------------------------------------
Net loss on investments (1,469,000)
- ---------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,398,000)
- ---------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, YEAR ENDED
1998 NOVEMBER 30,
(UNAUDITED) 1997
- ------------------------------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 71,000 26,000
- ------------------------------------------------------------------------------------------------
Net realized loss (974,000) (1,174,000)
- ------------------------------------------------------------------------------------------------
Change in net unrealized depreciation (495,000) (1,459,000)
- ------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations (1,398,000) (2,607,000)
- ------------------------------------------------------------------------------------------------
Net equalization credits -- 13,000
- ------------------------------------------------------------------------------------------------
Distribution from net investment income (49,000) --
- ------------------------------------------------------------------------------------------------
Net increase from capital share transactions 1,905,000 7,043,000
- ------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 458,000 4,449,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------
Beginning of period 6,398,000 1,949,000
- ------------------------------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment
income of $67,000 and $58,000, respectively) $ 6,856,000 6,398,000
- ------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Kemper Asian Growth Fund is an open-end management
investment company organized as a business trust
under the laws of Massachusetts. The Fund 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 (none sold through
May 31, 1998) 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
the Fund 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 are valued at the last
sale price on that exchange or, if there is no
recent sale price available, at the last current
bid quotation. Portfolio securities that are
primarily traded on foreign securities exchanges
are generally valued at the preceding closing
values of such securities on their respective
exchanges where primarily traded. A security that
is listed or traded on more than one exchange is
valued at the quotation on the exchange determined
to be the primary market for such security by the
Board of Trustees or its delegates. All other
securities not so traded 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 and foreign currencies are
valued at the forward and current exchange rates,
respectively, prevailing on the day of valuation.
Other securities and assets are valued at fair
value as determined in good faith by the Board of
Trustees.
FOREIGN CURRENCY TRANSLATION. The books and records
of the Fund are maintained in U.S. dollars.
Investment securities and other assets and
liabilities denominated in a foreign currency are
translated into U.S. dollars at the prevailing
rates of exchange. Purchases and sales of
investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rates on the respective dates of the
transactions.
The Fund includes 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).
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign
securities are recorded as soon as the information
is available to the Fund. Interest income is
recorded on the accrual basis and includes discount
amortization on money market instruments. Realized
gains and losses from investment transactions are
reported on an identified cost basis.
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 Fund's net assets
attributable to that class by the number of shares
of the class outstanding. Because of the need to
obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of
net asset value does not take place
contemporaneously with the determination of the
prices of the majority of the portfolio securities.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies for the six
months ended May 31, 1998. The accumulated net
realized loss on sales of investments for federal
income tax purposes at May 31, 1998, amounting to
approximately $1,851,000, is available to offset
future taxable gains. If not applied, the loss
carryover expires during the years 2005 and 2006.
DIVIDENDS TO SHAREHOLDERS. The Fund declares and
pays dividends of net investment income and net
realized capital gains annually, which are recorded
on the ex-dividend date. Dividends are determined
in accordance with income tax principles which may
treat certain transactions differently from
generally accepted accounting principles. These
differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
EQUALIZATION ACCOUNTING. Prior to December 1, 1997,
Kemper Asian Growth Fund used equalization
accounting to keep a continuing shareholder's per
share interest in undistributed net investment
income unaffected by shareholder activity. This was
accomplished by allocating a per share portion of
the proceeds from sales and the cost of redemptions
of Fund shares to undistributed net investment
income. As of December 1, 1997, the Fund
discontinued using equalization. This change has no
effect on the Fund's net assets, net asset value
per share or distributions to shareholders.
Discontinuing the use of book equalization will
result in simpler financial statements. The
cumulative effect of the change was to decrease
undistributed net investment income and increase
paid-in-capital previously reported through
November 30, 1997 by $13,000.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a management fee at an
annual rate of .85% of the first $250 million of
average daily net assets declining to .72% of
average daily net assets in excess of $12.5
billion. However, the Fund incurred no management
fee for the six months ended May 31, 1998, after a
fee waiver of $31,000 by Scudder Kemper.
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
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 Class A shares are as
follows:
<TABLE>
<CAPTION>
COMMISSIONS COMMISSIONS ALLOWED
RETAINED BY KDI BY KDI TO FIRMS
--------------- --------------------
<S> <C> <C>
Six months ended May 31, 1998 $3,000 32,000
</TABLE>
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of the 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. In addition, KDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B and Class C shares. Distribution fees, CDSC
and commissions related to Class B and Class C
shares are as follows:
<TABLE>
<CAPTION>
DISTRIBUTION FEES COMMISSIONS AND
AND CDSC DISTRIBUTION FEES
RECEIVED BY KDI PAID BY KDI TO FIRMS
---------------------- ---------------------
<S> <C> <C>
Six months ended May 31, 1998 $15,000 38,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to shareholders, the Fund pays KDI a fee at an
annual rate of up to .25% of average daily net
assets. KDI in turn has various agreements with
financial services firms that provide these
services and pays these firms based on assets of
Fund accounts the firms service. Administrative
services fees (ASF) paid are as follows:
<TABLE>
<CAPTION>
ASF PAID BY ASF PAID BY
THE FUND TO KDI KDI TO FIRMS
------------------ ------------
<S> <C> <C>
Six months ended May 31, 1998 $8,000 11,000
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
service agent of the Fund. Under the agreement,
KSvC received shareholder services fees of $35,000
for the six months ended May 31, 1998.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. During the six months ended May 31,
1998, the Fund made no payments to its officers or
trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended May 31, 1998, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $6,539,000
Proceeds from sales 3,381,000
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30, 1997
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 515,000 $ 3,468,000 624,000 $5,526,000
-------------------------------------------------------------------------------------
Class B 381,000 2,467,000 444,000 4,154,000
-------------------------------------------------------------------------------------
Class C 36,000 239,000 46,000 427,000
-------------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 6,000 36,000 -- --
-------------------------------------------------------------------------------------
Class B 1,000 6,000 -- --
-------------------------------------------------------------------------------------
SHARES REDEEMED
Class A (368,000) (2,438,000) (177,000) (1,579,000)
-------------------------------------------------------------------------------------
Class B (258,000) (1,651,000) (147,000) (1,351,000)
-------------------------------------------------------------------------------------
Class C (32,000) (222,000) (18,000) (134,000)
-------------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 14,000 93,000 4,000 38,000
-------------------------------------------------------------------------------------
Class B (14,000) (93,000) (4,000) (38,000)
-------------------------------------------------------------------------------------
NET INCREASE
FROM CAPITAL SHARE
TRANSACTIONS $ 1,905,000 $7,043,000
-------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
------------------------------------------------
CLASS A
------------------------------------------------
SIX MONTHS YEAR OCTOBER 21
ENDED ENDED TO
MAY 31, NOVEMBER 30, NOVEMBER 30,
1998 1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.65 10.04 9.50
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .07 .08 --
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1.12) (3.47) .54
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.05) (3.39) .54
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .08 -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.52 6.65 10.04
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) (15.99)% (33.76) 5.68
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses absorbed by the Fund 1.73% 1.60 1.46
- --------------------------------------------------------------------------------------------------------------
Net investment income 2.35% .97 .74
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses 2.58% 2.62 --
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.50% (.05) --
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------
CLASS B
------------------------------------------------
SIX MONTHS YEAR OCTOBER 21
ENDED ENDED TO
MAY 31, NOVEMBER 30, NOVEMBER 30,
1998 1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.58 10.03 9.50
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 -- --
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1.12) (3.45) .53
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.08) (3.45) .53
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .02 -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.48 6.58 10.03
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) (16.52)% (34.40) 5.58
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses absorbed by the Fund 2.74% 2.57 2.34
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.34% -- (.14)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses 3.59% 3.51 --
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .49% (.94) --
- --------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
SIX MONTHS YEAR OCTOBER 21
ENDED ENDED TO
MAY 31, NOVEMBER 30, NOVEMBER 30,
1998 1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 6.60 10.03 9.50
- --------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 -- --
- --------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (1.12) (3.43) .53
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (1.08) (3.43) .53
- --------------------------------------------------------------------------------------------------------------
Less distribution from net investment income .02 -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.50 6.60 10.03
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) (16.44)% (34.20) 5.58
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses absorbed by the Fund 2.74% 2.54 2.34
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.34% .03 (.14)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- --------------------------------------------------------------------------------------------------------------
Expenses 3.59% 3.55 --
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .49% (.98) --
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS YEAR OCTOBER 21
ENDED ENDED TO
MAY 31, NOVEMBER 30, NOVEMBER 30,
1998 1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Net assets at end of period $6,856,000 6,398,000 1,949,000
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 106% 155 74
- --------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
Total return does not reflect the effect of any sales charges. The investment
manager agreed to temporarily waive a portion of its management fee and absorb
certain operating expenses of the Fund. The Other Ratios to Average Net Assets
are computed without this expense waiver or absorption. Data for the period
ended May 31, 1998 is unaudited.
19
<PAGE> 20
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 3, 1997, a special shareholders' meeting was held and adjourned as
necessary. Kemper Asian Growth Fund shareholders were asked to vote on six
separate issues: election of the nine members to the Board of Trustees,
ratification of Ernst & Young LLP as independent auditors, approval of a new
investment management agreement with Scudder Kemper Investments, Inc., approval
of changes in the fund's fundamental investment policies to permit a
master/feeder fund structure, approval of a sub-advisory agreement with Zurich
Investment Management Limited and approval of a new rule 12b-1 distribution plan
with Zurich Kemper Distributors, Inc. for Class B shares and Class C shares. The
following are the results for each issue:
1) Election of Trustees
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
David W. Belin 394,327 6,633
Lewis A. Burnham 394,172 6,788
Donald L. Dunaway 394,327 6,633
Robert B. Hoffman 394,327 6,633
Donald R. Jones 394,327 6,633
Shirley D. Peterson 394,076 6,884
Daniel Pierce 394,327 6,633
William P. Sommers 394,327 6,633
Edmond D. Villani 394,128 6,832
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the current fiscal year.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
391,963 1,518 7,479
</TABLE>
3) Approval of new investment management agreement with Scudder Kemper
Investments, Inc.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
359,260 5,816 7,824 28,060
</TABLE>
4) Approval of changes in the fund's fundamental investment policies to permit a
master/feeder fund structure.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
355,823 16,174 17,871
</TABLE>
5) Approval of a new sub-advisory agreement with Zurich Investment Management
Limited.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
357,785 5,861 9,254 28,060
</TABLE>
6) To approve a new rule 12b-1 distribution plan with Zurich Kemper
Distributors, Inc.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C> <C>
Class B 156,800 2,318 10,499 27,764
Class C 27,513 0 0 0
</TABLE>
20
<PAGE> 21
NOTES
21
<PAGE> 22
NOTES
22
<PAGE> 23
NOTES
23
<PAGE> 24
TRUSTEES & OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY MAUREEN E. KANE
Chairman and Trustee President Assistant Secretary
DAVID W. BELIN PHILIP J. COLLORA CAROLINE PEARSON
Trustee Vice President and Assistant Secretary
Secretary
LEWIS A. BURNHAM ELIZABETH C. WERTH
Trustee JOHN R. HEBBLE Assistant Secretary
Treasurer
DONALD L. DUNAWAY
Trustee JERARD K. HARTMAN
Vice President
ROBERT B. HOFFMAN
Trustee THOMAS W. LITTAUER
Vice President
DONALD R. JONES
Trustee ANN M. MCCREARY
Vice President
SHIRLEY D. PETERSON
Trustee KATHRYN L. QUIRK
Vice President
WILLIAM P. SOMMERS
Trustee STEVEN H. REYNOLDS
Vice President
EDMOND D. VILLANI
Trustee LINDA J. WONDRACK
Vice President
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SERVICE AGENT P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND INVESTORS FIDUCIARY TRUST COMPANY
TRANSFER AGENT 801 Pennsylvania
Kansas City, MO 64105
- --------------------------------------------------------------------------------
FOREIGN CUSTODIAN THE CHASE MANHATTAN BANK
Chase Metro Center
Brooklyn, NY 11245
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
- --------------------------------------------------------------------------------
[KEMPER FUNDSLOGO]
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
Printed on recycled paper in the U.S.A.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Asian Growth Fund prospectus.
KAGF - 3 (7/98) 1050240
