<PAGE> 1
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED NOVEMBER 30, 1997
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
Seeks to provide long-term capital growth
KEMPER
ASIAN GROWTH FUND
"... We made a significant change in the composition
of the fund following a visit to Asia in March ...
and began a transition from asset stocks to
cash flow generating stock. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
Economic Overview
5
Performance Update
9
Largest Holdings
10
Portfolio Of
Investments
13
Report Of
Independent Auditors
14
Financial Statements
16
Notes To
Financial Statements
20
Financial Highlights
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND
TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED NOVEMBER 30, 1997
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A -33.76%
CLASS B -34.40%
CLASS C -34.20%
LIPPER PACIFIC EX-JAPAN FUNDS
CATEGORY AVERAGE* -33.20%
- --------------------------------------------------------------------------------
</TABLE>
Returns and rankings 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.
*Lipper Analytical Services, Inc. returns and rankings 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
11/30/97 11/30/96
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER ASIAN GROWTH FUND
CLASS A $6.65 $10.04
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND
CLASS B $6.58 $10.03
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND
CLASS C $6.60 $10.03
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND
LIPPER RANKINGS*
- --------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER PACIFIC EX-JAPAN FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ONE YEAR #36 of 77 funds #39 of 77 funds #38 of 77 funds
- --------------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[MATURITY/QUALITY DIAGRAM]
Source: Morningstar, Inc., Chicago, IL (312) 696-6000. (Morningstar Style Box
is based on a portfolio date as of November 30, 1997.) The Equity Style Box
placement is based on a fund's price-to-earnings and price-to-book ratio
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.
<PAGE> 3
ECONOMIC Overview
[ALLYN PHOTO]
MAUREEN F. ALLYN, A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.,
SERVES AS THE FIRM'S CHIEF ECONOMIST. ALLYN GRADUATED SUMMA CUM LAUDE FROM
OAKLAND UNIVERSITY NEAR DETROIT, WITH A BACHELOR'S DEGREE IN PSYCHOLOGY. SHE
RECEIVED HER MASTER'S IN ECONOMICS, WITH A SPECIALIZATION IN INTERNATIONAL TRADE
AND FINANCE, FROM THE NEW SCHOOL FOR SOCIAL RESEARCH IN NEW YORK.
SCUDDER KEMPER INVESTMENTS, INC. IS THE INVESTMENT ADVISOR FOR KEMPER FUNDS. IT
IS ONE OF THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS
WORLDWIDE, MANAGING MORE THAN $200 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 COMPANIES IN THE UNITED STATES.
DEAR SHAREHOLDERS,
We start 1998 optimistic about the long-term prospects of the U.S. economy and
financial markets but cautious about the next several months. The Asian
financial crisis that dominated the global investment environment in the second
half of 1997 promises to continue, posing significant risks to the economy and
investors. We look for the strength of the American consumer -- currently
enjoying rising real incomes, better employment opportunities, lower mortgage
rates and easy access to credit -- and the secular strength of the trend toward
capital spending on high technology to be sufficient to override the influence
of Asia on the U.S. In short, our best case scenario calls for the U.S. to
muddle through an unsettling period. As it has for several years, the country
should continue to enjoy relatively low interest rates and low inflation. But
the new year will be different in at least two ways, both of which can be
expected to have direct bearing on investment opportunities.
First, the economy should grow at a much slower pace. A slowdown in Asia will
depress capital goods spending and heighten import pricing pressure, putting a
damper on American corporations' pricing and profit growth at least through
1999. While the U.S. economy grew at an almost 4 percent rate in 1997, we look
for no better than 2 percent growth for the next two years -- with more than
half of the change attributable to the effect of the Asian fallout.
Disappointing corporate profits is another given for 1998. Profits had begun
to slow last year even before the height of the Asian crisis. High current
valuations, however, seem to suggest that Wall Street has yet to recognize this.
The clash between Wall Street profit expectations and actual reported earnings
is part of the risk likely to be associated with equity investing in 1998.
Volatility, such as we experienced in 1997, should continue. In fact, the
overall market volatility is not likely to reflect the turmoil that individual
equities may experience. There will be a narrowing of the number of companies
able to meet analysts' expectations and this market will be absolutely
unforgiving to those companies that fall far short.
Having stated this, however, we look for the Standard & Poor's 500 to return
about 9.5 percent, including the effect of reinvested dividends. This would be
an average return and in line with the historical long-term 10 percent return of
the stock market. On the heels of the last three 20 percent-plus return years,
an investor in 1998 may weigh the 10 percent prospect against a projected 7
percent total return on bonds and consider the difference insufficient
compensation for the inherent added risk. Adopting a more conservative posture
for the new year may be an appropriate step that you'll want to discuss with
your financial representative in the context of your long-term investing
objectives.
To achieve a 9.5 percent return in 1998, the market's already high valuations
need to move even higher. We expect this to occur for a few reasons: the market
has so far demonstrated a certain complacency about the valuation levels;
American investors don't perceive there's anywhere better to go than the U.S.
equity market; and foreigners think of the U.S. market as a safe haven. All
should help support the market.
Where, then, are the opportunities likely to be in 1998? Expect to see
disparate performance within industry sectors. For example, while the financial
services sector in 1997 tended to provide across-the-board strong performance,
in 1998 we expect the sector to include its share of winners and losers. Stock
selection will be key, too, to benefiting from the technology sector. Over the
long term, we are optimistic about technology and corporate America's continuing
commitment to it. It will be difficult to participate in a market return in 1998
without having some exposure to technology-based companies. One caution: Not all
technology companies will survive the year, which raises the risk of investing
in the sector.
Conventional wisdom might argue in favor of remaining in the U.S. with your
investment dollars in 1998 and, more specifically, invested in small
capitalization companies with domestic lines of business. We'd challenge such
thinking as slower growth, slower inflation and even
<PAGE> 4
ECONOMIC OVERVIEW
[BAR GRAPH]
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.
<TABLE>
<CAPTION>
NOW (12/31/97) 6 MONTHS AGO 1 YEAR AGO 2 YEAR AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 5.81 6.22 6.58 5.65
PRIME RATE(2) 8.5 8.5 8.25 8.5
INFLATION RATE(3) 1.7 2.23 3.04 2.72
THE U.S. DOLLAR(4) 10.43 7.32 4.59 -0.57
CAPITAL GOODS ORDERS(5)* 11.61 8.58 2.23 9.56
INDUSTRIAL PRODUCTION(5)* 5.59 3.91 4.7 2.34
EMPLOYMENT GROWTH(6) 2.66 2.3 2.41 1.57
</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 November 30, 1997.
Source: Economics Department, Scudder Kemper Investment, Inc.
deflation and pricing pressures change the U.S. economic climate. The only real
antidote is growth, and from now on growth is more likely to be found outside
the United States. Today to participate in the growth from global business you'd
need to be exposed to large capitalization companies.
International investing is a promising proposition in 1998, the Asian fallout
notwithstanding. In established markets, there are attractive opportunities to
be found in Europe and in Japan. Several Japanese companies have real cash flows
and even relatively attractive valuations. In addition, the effect of the Asian
problems has not been to discourage all investment into emerging markets; rather
investors have tended to divert investment dollars and business to other
increasingly attractive emerging markets in eastern Europe, the Middle East,
Africa and Latin America.
With that 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/ Maureen Allyn
MAUREEN ALLYN
Chief Economist, Scudder Kemper Investments, Inc.
January 9, 1998
4
<PAGE> 5
PERFORMANCE UPDATE
[MASON PHOTO]
ANDREW MASON JOINED WHAT IS NOW SCUDDER KEMPER INVESTMENTS, INC. IN 1994 AND IS
THE DIRECTOR OF ASIAN EQUITIES AND PORTFOLIO MANAGER OF KEMPER ASIAN GROWTH
FUND. MASON RECEIVED HIS BACHELOR'S DEGREE IN ECONOMICS FROM UNIVERSITY COLLEGE
SWANSEA AND UNDERTOOK POST GRADUATE RESEARCH AT UNIVERSITY COLLEGE BUCKINGHAM.
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.
WHILE KEMPER ASIAN GROWTH FUND'S PERFORMANCE REFLECTED THE TROUBLES IN THE
REGION DURING THE FISCAL YEAR, IT ENDED THE PERIOD MORE THAN 8 PERCENT AHEAD OF
ITS BENCHMARK INDEX. FOLLOWING, PORTFOLIO MANAGER ANDREW MASON DISCUSSES THE
MARKET AND THE FUND'S PERFORMANCE.
Q SOUTHEAST ASIA SAW DRAMATIC MARKET ACTIVITY DURING THIS ANNUAL PERIOD. CAN
YOU RECAP SOME OF THE MAJOR EVENTS THAT AFFECTED MARKET PERFORMANCE?
A There were really four main events that set the course of market activity.
1. The Hong Kong handover to China on July 1 went very smoothly and the Hang
Seng Index* reached an all time high in early August before being struck with
the Asian market flu in October.
2. On July 2, the devaluation of the Thai baht focused attention on the high
levels of foreign debt in Asian countries such as Indonesia and the
Philippines, and drew attention to the high levels of bank lending in
Malaysia. The currency weakness spread throughout the region and the phrase
"Asian Contagion" was coined to describe the problems.
3. The competitive devaluation of the Taiwanese currency on October 17 was the
second key currency event during the fiscal year. This had far-reaching
implications as Taiwan devalued from a position of strength supported by a
large current account surplus and huge foreign currency reserves. This
devaluation focused attention on North Asia with the Hong Kong dollar peg
coming under attack and the Korean won buckling under the weight of selling.
4. In November, the International Monetary Fund (IMF) put together a $57 billion
rescue package for South Korea. This followed a $17 billion package for
Thailand and a $38 billion package for Indonesia earlier in the year. The IMF
programs focus on reforming the financial systems and reducing the current
account deficits of these countries. The funds will be released in stages as
IMF conditions are met.
* The Hang Seng Index is a capitalization weighted, price only index that tracks
the performance of shares listed on the Hong Kong Stock Exchange.
Q WHILE THE FUND'S PERFORMANCE, DOWN 33.76 PERCENT (CLASS A SHARES,
UNADJUSTED FOR ANY SALES CHARGE), REFLECTS THE TROUBLES IN THE REGION, IT
HELD UP BETTER THAN ITS BENCHMARK INDEX, THE MSCI ASIA COMBINED FAR EAST FREE
EX-JAPAN INDEX**, DOWN 42.07 PERCENT, AND SIGNIFICANTLY OUTPERFORMED THE
BENCHMARK IN RECENT MONTHS. WHAT PROCESS DID YOU AND YOUR TEAM FOLLOW TO TRY TO
WEATHER THE MARKET STORMS?
A We made a significant change in the composition of the fund following a
visit to Asia in March. During that visit, we became extremely concerned about
the levels of bank lending and began a transition from asset stocks to cash flow
generating stocks against the backdrop of a changing interest rate environment.
At the end of February, we held 25 percent in property, 9 percent in
construction related companies, 16 percent in banks and 8 percent in
conglomerates. At the end of the fiscal year we held 12 percent in property,
nothing in construction related stocks,
5
<PAGE> 6
PERFORMANCE UPDATE
11 percent in banks and 8 percent in conglomerates. We increased our emphasis on
stocks that had a high return on equity, low leverage and strong cash flow. We
felt these types of holdings were likely to outperform during the volatile
period. We have never favored highly leveraged companies but now it is more
important, even for companies with modest financial leverage, to know the
breakdown between long- and short-term debt and the foreign exchange exposure if
appropriate.
Our investments are currently focused on companies with U.S. dollar
earnings or foreign management such as Gulf Indonesia Resources, an oil
exploration company; and companies with strong cash flow and balance sheets
such as Resorts World, a Malaysian resort operator. We are also invested in
companies strong enough to take advantage of regional weakness like HSBC, a
global bank.
** The Morgan Stanley Capital International Asia Combined Far East Free
Ex-Japan Index is generally representative of Asian free market
performance, excluding Japan.
Q HOW DID YOUR EXPOSURE TO THE DIFFERENT MARKETS CHANGE THROUGHOUT THE YEAR?
A Our sector adjustments did result in significant geographical shifts. The
chart to the right illustrates the major changes in our market exposure during
the fiscal year.
Our Hong Kong position was as high as 60 percent at the beginning of
October but when the Taiwan dollar was devalued and the Hong Kong dollar peg
came under attack, we raised our cash position and ended the fiscal year with a
higher-than-normal cash position. As of the close of this reporting period, we
had begun to reduce the cash, reinvesting into the markets as good value and
attractive, bottom-up opportunities presented themselves.
Q GOING FORWARD, WHICH MARKETS WILL BE A FOCUS IN THE PORTFOLIO?
A We still like Hong Kong, although it will probably be forced to operate
with higher interest rates for the next six months. We expect property prices to
correct around 25 percent from the peaks seen earlier in the year, but the
property developers' prices are already discounting this. While we do not expect
an immediate rally in the property sector, we believe stocks such as Cheung Kong
offer good value.
Singapore has a strong financial system and although it is not immune to
the problems of the region we continue to like sectors such as banks and
manufacturers in this market.
In Malaysia our exposure is concentrated in quasi-government bodies such
as Tenaga, the main electric power company, and Telekom, the leading
telecommunication company. We believe these utilities are strong enough to
weather the storm and may even benefit from weakened competition. We also like
Resorts World for its strong balance sheet.
We expect to continue to have relatively little exposure to Korea, the
Philippines and Indonesia. That is not to say we will not have any holdings in
these markets; individual stocks that meet our investment criteria will be
considered and added to the portfolio when appropriate.
[BAR GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
QUARTERLY SHIFTS IN MARKET EXPOSURE
- --------------------------------------------------------------------------------
FIRST QUARTER THIRD QUARTER FOURTH QUARTER
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
HONG KONG 37% 47% 36%
SINGAPORE 16% 23% 17%
MALAYSIA 25% 6% 8%
INDONESIA 10% 7% 4%
PHILLIPINES 12% 3% 2%
CASH 0% 5% 27%
</TABLE>
6
<PAGE> 7
PERFORMANCE UPDATE
Q WAS THE FUND HEDGED AT ALL?
A In the second half of our fiscal year we started to hedge some of our
major currency exposure and ended the year with hedges on the Singaporean,
Malaysian and Hong Kong currencies. While we do not feel the Hong Kong dollar
peg will be dismantled in the near future, we felt it was prudent to take some
insurance out given the events of the past six months.
Q IT WAS A TOUGH YEAR IN THESE MARKETS. LOOKING BACK IS THERE ANYTHING YOU
MIGHT HAVE DONE DIFFERENTLY?
A The main thing we missed was the opportunity to invest directly in Taiwan.
Administrative delays in getting permission to invest directly in Taiwan
prevented us from holding a weighting in this market comparable to the index. We
thought the alternative ways of getting exposure to the market, such as through
convertible bonds or Global Depository Receipts, were too expensive and we were
unwilling to invest a large portion of our assets in a Taiwanese fund, another
investment option available to us. Therefore, we missed out on most of the big
rally before the October devaluation. We have subsequently received permission
to enter this market and will be looking more closely at Taiwanese stocks going
forward.
Q WHAT IS YOUR OUTLOOK FOR THE COMING MONTHS?
A The financial turmoil in Asia is expected to slow growth, according to
estimates released by the Organization for Economic Cooperation and Development
(OECD). It is reasonable to expect growth rates across Southeast Asia to halve.
Instead of 6 percent growth across the region, we expect to see levels around 3
percent. Some countries will see even slower growth such as Thailand which
seems to be adopting the IMF prescription and may see little or no growth. The
table below is one of the more pessimistic forecasts which are being produced
at present, especially on the prospects for China, Hong Kong and Singapore.
They may do slightly better. It does, however, illustrate the scale of problems
facing these countries if currencies aren't stabilized and interest rates
aren't allowed to fall.
Until Governments within the region show that they really are willing to
adopt the appropriate policies -- especially those being assisted by the IMF --
it is difficult to see stability returning to currencies and interest rates in
the near term. It is too early to tell how long it will take for the IMF
programs to be effectively implemented but the next six months should clarify
many of the major issues. Once confidence has been re-established and a number
of weaker companies, including financial institutions, have been liquidated,
interest rates can come down and the investing environment will improve.
But even within this somewhat cloudy forecast, there are opportunities in
these markets. It is possible to pick up some bargains and we will continue to
look for opportunities to buy into strong, undervalued companies.
- --------------------------------------------------------------------------------
TURMOIL IN ASIA EXPECTED TO SLOW GROWTH
- --------------------------------------------------------------------------------
[BAR GRAPH]
<TABLE>
<CAPTION>
1997 ESTIMATED GDP 1998 FORECASTED GDP
- --------------------------------------------------------------------------------
<S> <C> <C>
CHINA 9.0% 7.0%
HONG KONG 5.3% 3.0%
TAIWAN 6.6% 4.0%
SINGAPORE 6.2% 2.0%
MALAYSIA 7.8% 1.5%
KOREA 6.0% 1.8%
THAILAND 1.0% -1.0%
INDONESIA 6.0% 3.0%
</TABLE>
7
<PAGE> 8
PERFORMANCE UPDATE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
FOR PERIODS ENDED NOVEMBER 30, 1997 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR CLASS
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
KEMPER ASIAN GROWTH FUND CLASS A -37.56% -31.21% (since 10/21/96)
- -------------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND CLASS B -36.36 -30.08 (since 10/21/96)
- -------------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND CLASS C -34.20 -27.94 (since 10/21/96)
- -------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND CLASS A
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
CLASS A SHARES FROM 10/31/96 TO 11/30/97
- --------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
10/31/96 12/31/96 6/30/97 11/30/97
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER ASIAN GROWTH FUND CLASS A(1) $10,000 $10,010 $ 8,349.5 $ 6,597
- -----------------------------------------------------------------------------------------------------------
MSCI AC FAR EAST FREE EX-JAPAN INDEX+ 10,000 10,381 8,407.5 6,434
- -----------------------------------------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX++ 10,000 10,557 12,178.5 13,800
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND CLASS B
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
CLASS B SHARES FROM 10/31/96 TO 11/30/97
- --------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
10/31/96 12/31/96 6/30/97 11/30/97
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER ASIAN GROWTH FUND CLASS B(1) $10,000 $10,611 $ 8,665 $ 6,719
- -----------------------------------------------------------------------------------------------------------
MSCI AC FAR EAST FREE EX-JAPAN INDEX+ 10,000 10,381 8,407.5 6,434
- -----------------------------------------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX++ 10,000 10,557 12,168.5 13,800
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER ASIAN GROWTH FUND CLASS C
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT IN
CLASS C SHARES FROM 10/31/96 TO 11/30/97
- --------------------------------------------------------------------------------
[LINE GRAPH]
<TABLE>
<CAPTION>
10/31/96 12/31/96 6/30/97 11/30/97
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER ASIAN GROWTH FUND CLASS C(1) $10,000 $10,621 $ 8,784 $ 6,947
- -----------------------------------------------------------------------------------------------------------
MSCI AC FAR EAST FREE EX-JAPAN INDEX+ 10,000 10,381 8,407.5 6,434
- -----------------------------------------------------------------------------------------------------------
STANDARD & POOR'S 500 STOCK INDEX++ 10,000 10,557 12,178.5 13,800
- -----------------------------------------------------------------------------------------------------------
</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.
* Average annual total return measures net investment income and capital gain
or loss from portfolio investments, assuming reinvestment of all dividends
and for Class A shares adjustment for the maximum sales charge of 5.75
percent, for Class B shares adjustment for the applicable contingent
deferred sales charge (CDSC) as follows: 1 year, 3 percent; 5 year, 1
percent; since inception, 0 percent. For Class C shares there is no
adjustment for sales charge. The maximum CDSC for Class B shares is 4
percent. For Class C shares, there is a 1 percent CDSC on certain
redemptions within the first year of purchase. During the periods noted,
securities prices fluctuated. For additional information, see the
Prospectus and Statement of Additional Information and the Financial
Highlights at the end of this report.
(1) Performance includes reinvestment of dividends and adjustment for the
maximum sales charge for Class A shares and the CDSC in effect at the end
of the period for Class B shares. In comparing Kemper Asian Growth Fund
Class A shares to the MSCI AC Far East Free Ex-Japan Index and the Standard
& Poor's 500 Stock Index, you should also note that the fund's performance
reflects the maximum sales charge, while no such charge is reflected in the
performance of the indices.
+ The MSCI AC Far East Free Ex-Japan Index (Morgan Stanley Capital
International Index) is an unmanaged index generally accepted as a
benchmark for major far eastern markets. Source is Lipper Analytical
Services, Inc.
++ The Standard & Poor's 500 Stock Index is an unmanaged index generally
representative of the U.S. stock market. Source is Towers Data Systems.
8
<PAGE> 9
LARGEST HOLDINGS
KEMPER ASIAN GROWTH FUND'S 10 LARGEST HOLDINGS*
Representing 33.5 percent of the fund's total net assets on November 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
COMPANY COUNTRY % OF NET ASSETS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
1. GULF INDONESIA RESOURCES Indonesia 4.2%
- ---------------------------------------------------------------------------------------------------
2. OVERSEAS UNION BANK Singapore 4.0%
- ---------------------------------------------------------------------------------------------------
3. HSBC HOLDINGS Hong Kong 3.9%
- ---------------------------------------------------------------------------------------------------
4. CHINA LIGHT & POWER CO. Hong Kong 3.3%
- ---------------------------------------------------------------------------------------------------
5. HUTCHISON WHAMPOA Hong Kong 3.2%
- ---------------------------------------------------------------------------------------------------
6. HONG KONG & CHINA GAS CO. Hong Kong 3.1%
- ---------------------------------------------------------------------------------------------------
7. SINGAPORE PRESS HOLDINGS Singapore 3.0%
- ---------------------------------------------------------------------------------------------------
8. JOHNSON ELECTRIC HOLDINGS Hong Kong 3.0%
- ---------------------------------------------------------------------------------------------------
9. DEVELOPMENT BANK OF SINGAPORE Singapore 2.9%
- ---------------------------------------------------------------------------------------------------
10. TENAGA NASIONAL Malaysia 2.9%
- ---------------------------------------------------------------------------------------------------
</TABLE>
*Portfolio composition and holdings are subject to change.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER ASIAN GROWTH FUND
Portfolio of Investments at November 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HONG KONG--36.0% HSBC Holdings, PLC
Banking 10,000 $ 246,000
China Light & Power Co., Ltd.
Electric utility 42,000 212,000
Hutchison Whampoa, Ltd.
Conglomerate 31,000 206,000
Hong Kong & China Gas Co., Ltd.
Gas and electric utility 110,000 198,000
Johnson Electric Holdings, Ltd.
Small motor manufacturer 75,000 190,000
CITIC Pacific, Ltd.
Conglomerate 45,000 179,000
Cheung Kong Holdings, Ltd.
Property development 25,000 176,000
National Mutual Asia, Ltd.
Insurance company 174,000 161,000
Founder Hong Kong, Ltd.
Software development and systems
integration 180,000 140,000
Hysan Development Co., Ltd.
Real estate investment 65,000 130,000
Henderson Land Development Co., Ltd.
Property development 25,000 123,000
Sun Hung Kai & Co., Ltd.
Property development 16,000 122,000
Shanghai Industrial Holdings, Ltd.
Conglomerate 30,000 95,000
Chen Hsong Holdings, Ltd.
Plastic molding machines manufacturer 200,000 78,000
Swire Pacific Ltd., "A"
Conglomerate 10,000 50,000
-------------------------------------------------------------------------
2,306,000
- ------------------------------------------------------------------------------------------------------------------
SINGAPORE--16.8% Overseas Union Bank, Ltd.
Banking 65,000 255,000
Singapore Press Holdings, Ltd.
Publisher 14,000 192,000
Development Bank of Singapore
Banking 20,000 188,000
Advanced Systems Automation, Ltd.
Electronics manufacturer 80,000 146,000
Sunright, Ltd.
Electronics manufacturer 100,000 135,000
City Developments, Ltd.
Real estate development 20,000 99,000
Cycle & Carriage, Ltd.
Automobile sales and distribution 14,000 59,000
-------------------------------------------------------------------------
1,074,000
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MALAYSIA--8.2% Tenaga Nasional, Bhd.
ELECTRIC UTILITY 100,000 $ 186,000
Telekom Malaysia, Bhd.
TELECOMMUNICATIONS 80,000 179,000
Resorts World, Bhd.
RESORT OPERATOR 110,000 158,000
---------------------------------------------------------------------------
523,000
- --------------------------------------------------------------------------------------------------------------------
INDONESIA--4.4% (a)Gulf Indonesia Resources, Ltd.
OIL AND GAS COMPANY 12,000 271,000
PT Matahari Putra Prima
RETAILER 192,000 9,000
---------------------------------------------------------------------------
280,000
- --------------------------------------------------------------------------------------------------------------------
THAILAND--4.3% KCE Electronics, Ltd.
ELECTRONICS MANUFACTURER 37,000 108,000
Siam Makro Co., Ltd.
WHOLESALER 80,000 92,000
Lanna Lignite Public Co., Ltd.
COAL MINING 24,000 77,000
---------------------------------------------------------------------------
277,000
- --------------------------------------------------------------------------------------------------------------------
PHILIPPINES--1.8% SM Prime Holdings, Inc.
REAL ESTATE INVESTMENT 700,000 110,000
(a)International Container Terminal
Services, Inc.
PORT OPERATOR 30,000 5,000
---------------------------------------------------------------------------
115,000
- --------------------------------------------------------------------------------------------------------------------
TAIWAN--1.5% ROC Taiwan Fund
INVESTMENT HOLDINGS 10,000 95,000
---------------------------------------------------------------------------
TOTAL COMMON STOCKS--73.0%
(Cost: $6,097,000) 4,670,000
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET Yield--5.46% to 5.51%
INSTRUMENTS--25.0% Due--December 1997
Federal Home Loan Mortgage Co. $ 900,000 899,000
Federal National Mortgage Association 700,000 699,000
---------------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--25.0%
(Cost: $1,598,000) 1,598,000
---------------------------------------------------------------------------
TOTAL INVESTMENTS--98.0%
(Cost: $7,695,000) 6,268,000
---------------------------------------------------------------------------
CASH AND OTHER ASSETS,
LESS LIABILITIES--2.0% 130,000
---------------------------------------------------------------------------
NET ASSETS--100.0% $6,398,000
---------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
At November 30, 1997, the Fund's portfolio of investments had the following
industry diversification:
<TABLE>
<CAPTION>
VALUE %
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Utilities $ 775,000 12.1
- -------------------------------------------------------------------------------------------
Real Estate 760,000 11.9
- -------------------------------------------------------------------------------------------
Banks 689,000 10.8
- -------------------------------------------------------------------------------------------
Electronics 579,000 9.0
- -------------------------------------------------------------------------------------------
Diversified Holding Companies 530,000 8.3
- -------------------------------------------------------------------------------------------
Energy 348,000 5.4
- -------------------------------------------------------------------------------------------
Finance 256,000 4.0
- -------------------------------------------------------------------------------------------
Media 192,000 3.0
- -------------------------------------------------------------------------------------------
Leisure 158,000 2.5
- -------------------------------------------------------------------------------------------
Services 140,000 2.2
- -------------------------------------------------------------------------------------------
Automobiles 59,000 .9
- -------------------------------------------------------------------------------------------
Transportation 5,000 .1
- -------------------------------------------------------------------------------------------
Miscellaneous 179,000 2.8
- -------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 4,670,000 73.0
- -------------------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS, CASH AND OTHER NET ASSETS 1,728,000 27.0
- -------------------------------------------------------------------------------------------
NET ASSETS $6,398,000 100.0
- -------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
Based on the cost of investments of $7,695,000 for federal income tax purposes
at November 30, 1997, the gross unrealized appreciation was $58,000, the gross
unrealized depreciation was $1,485,000 and the net unrealized depreciation on
investments was $1,427,000.
See accompanying Notes to Financial Statements.
12
<PAGE> 13
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF TRUSTEES AND SHAREHOLDERS
KEMPER ASIAN GROWTH FUND
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Kemper Asian Growth Fund as of
November 30, 1997, the related statement of operations for the year then ended
and the statement of changes in net assets and the financial highlights for the
year then ended and for the period from October 21, 1996 (commencement of
operations) to November 30, 1996. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
November 30, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Kemper
Asian Growth Fund at November 30, 1997, the results of its operations, the
changes in its net assets and the financial highlights for the periods referred
to above in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 20, 1998
13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------
Investments, at value
(Cost: $7,695,000) $ 6,268,000
- ---------------------------------------------------------------------------
Cash 152,000
- ---------------------------------------------------------------------------
Receivable for:
Investments sold 33,000
- ---------------------------------------------------------------------------
Fund shares sold 11,000
- ---------------------------------------------------------------------------
Dividends 2,000
- ---------------------------------------------------------------------------
TOTAL ASSETS 6,466,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- ---------------------------------------------------------------------------
Payable for:
Investments purchased 40,000
- ---------------------------------------------------------------------------
Management fee 3,000
- ---------------------------------------------------------------------------
Distribution services fee 2,000
- ---------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 21,000
- ---------------------------------------------------------------------------
Other 2,000
- ---------------------------------------------------------------------------
Total liabilities 68,000
- ---------------------------------------------------------------------------
NET ASSETS $ 6,398,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ---------------------------------------------------------------------------
Paid-in capital $ 8,934,000
- ---------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign
currency transactions (1,193,000)
- ---------------------------------------------------------------------------
Net unrealized depreciation on investments and assets and
liabilities in foreign currencies (1,401,000)
- ---------------------------------------------------------------------------
Undistributed net investment income 58,000
- ---------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 6,398,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
THE PRICING OF SHARES
- ---------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($3,549,000 / 533,000 shares outstanding) $6.65
- ---------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $7.06
- ---------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($2,545,000 / 387,000 shares outstanding) $6.58
- ---------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($304,000 / 46,000 shares outstanding) $6.60
- ---------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
14
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------
NET INVESTMENT INCOME
- ---------------------------------------------------------------------------
Dividends (less foreign taxes withheld of $6,000) $ 103,000
- ---------------------------------------------------------------------------
Interest 33,000
- ---------------------------------------------------------------------------
Total investment income 136,000
- ---------------------------------------------------------------------------
Expenses:
Management fee 45,000
- ---------------------------------------------------------------------------
Distribution services fee 20,000
- ---------------------------------------------------------------------------
Administrative services fee 9,000
- ---------------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 49,000
- ---------------------------------------------------------------------------
Professional fees 27,000
- ---------------------------------------------------------------------------
Reports to shareholders 9,000
- ---------------------------------------------------------------------------
Other 3,000
- ---------------------------------------------------------------------------
Total expenses before expense waiver 162,000
- ---------------------------------------------------------------------------
Less expenses waived and absorbed by investment manager 52,000
- ---------------------------------------------------------------------------
Total expenses after expense waiver 110,000
- ---------------------------------------------------------------------------
NET INVESTMENT INCOME 26,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
- ---------------------------------------------------------------------------
Net realized loss on sales of investments and foreign
currency transactions (1,174,000)
- ---------------------------------------------------------------------------
Change in net unrealized appreciation on investments
and assets and liabilities in foreign currencies (1,459,000)
- ---------------------------------------------------------------------------
Net loss on investments (2,633,000)
- ---------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(2,607,000)
- ---------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 21 TO
NOVEMBER 30, NOVEMBER 30,
1997 1996
- ---------------------------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 26,000 --
- ---------------------------------------------------------------------------------------------
Net realized loss (1,174,000) --
- ---------------------------------------------------------------------------------------------
Change in net unrealized appreciation (1,459,000) 58,000
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,607,000) 58,000
- ---------------------------------------------------------------------------------------------
Net equalization credits 13,000 --
- ---------------------------------------------------------------------------------------------
Net increase from capital share transactions 7,043,000 1,391,000
- ---------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 4,449,000 1,449,000
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------
Beginning of period 1,949,000 500,000
- ---------------------------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment
income of $58,000 at November 30, 1997) $ 6,398,000 1,949,000
- ---------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
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 commenced
operations on October 21, 1996. 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
November 30, 1997) 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.
CURRENCY TRANSLATION. The books and records of the
Fund are maintained in U.S. dollars. All assets and
liabilities initially expressed in foreign currency
values are converted into U.S. dollar values at the
mean between the bid and offered quotations of such
currencies against U.S. dollars as last quoted by a
recognized dealer. If such quotations are not
readily available, the 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 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.
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
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, 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 and therefore no
federal income tax provision is required. The
accumulated net realized loss on sales of
investments for federal income tax purposes at
November 30, 1997, amounting to approximately
$1,131,000, 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. A portion of proceeds from
sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment
income so that income per share available for
distribution is not affected by sales or
redemptions of shares.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES INVESTMENT MANAGER COMBINATION. Zurich Insurance
Company, the parent of Zurich Kemper Investments,
Inc. (ZKI), has acquired a majority interest in
Scudder, Stevens & Clark, Inc. (Scudder), another
major investment manager. At completion of this
transaction on December 31, 1997, Scudder changed
its name to Scudder Kemper Investments, Inc.
(Scudder Kemper) and the operations of ZKI were
combined with Scudder Kemper. In addition, the
names of the Fund's principal underwriter and
shareholder service agent were changed to Kemper
Distributors, Inc. (KDI) and Kemper Service Company
(KSvC), respectively.
MANAGEMENT AGREEMENT. The Fund has a management
agreement with 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
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
assets in excess of $12.5 billion. However, Scudder
Kemper has agreed to temporarily reduce its
management fee to .60%. For the year ended November
30, 1997, the Fund incurred a management fee of
$32,000 after a waiver of $13,000 by Scudder
Kemper. In addition, Scudder Kemper has agreed to
temporarily absorb certain operating expenses of
the Fund. Under this arrangement, Scudder Kemper
absorbed operating expenses of $39,000 for the year
ended November 30, 1997.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with 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>
Year ended November 30, 1997 $14,000 59,000
</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>
Year ended November 30, 1997 $27,000 106,000
</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 (AFTER EXPENSE
WAIVER) PAID BY ASF PAID BY
THE FUND TO KDI KDI TO FIRMS
------------------ ------------
<S> <C> <C>
Year ended November 30, 1997 $7,000 19,000
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
KSvC is the shareholder service agent of the Fund.
Under the agreement, KSvC received shareholder
services fees of $30,000 for the year ended
November 30, 1997.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. During the year ended November 30,
1997, the Fund made no payments to its officers or
trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the year ended November 30, 1997, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $12,947,000
Proceeds from sales 7,178,000
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 21 TO
NOVEMBER 30, 1997 NOVEMBER 30, 1996
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 624,000 $5,526,000 64,000 $ 631,000
----------------------------------------------------------------------------------
Class B 444,000 4,154,000 77,000 760,000
----------------------------------------------------------------------------------
Class C 46,000 427,000 -- --
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
SHARES REDEEMED
Class A (177,000) (1,579,000) -- --
----------------------------------------------------------------------------------
Class B (147,000) (1,351,000) -- --
----------------------------------------------------------------------------------
Class C (18,000) (134,000) -- --
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 4,000 38,000 -- --
----------------------------------------------------------------------------------
Class B (4,000) (38,000) -- --
----------------------------------------------------------------------------------
NET INCREASE
FROM CAPITAL SHARE
TRANSACTIONS $7,043,000 $1,391,000
----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6 FORWARD FOREIGN
CURRENCY CONTRACTS In order to protect itself against a decline in the
value of particular foreign currencies against the
U.S. Dollar, the Fund has entered into forward
contracts to deliver foreign currencies in exchange
for U.S. Dollars as described below. The Fund bears
the market risk that arises from changes in foreign
exchange rates, and accordingly, the net unrealized
gain or loss on these contracts is reflected in the
accompanying financial statements. The Fund also
bears the credit risk (which is limited to the
unrealized gain, if any) if the counterparty fails
to perform under the contract. At November 30,
1997, the Fund had the following forward foreign
currency contracts outstanding with settlement
dates in December 1997 and January 1998.
<TABLE>
<CAPTION>
FOREIGN CURRENCY CONTRACT AMOUNT UNREALIZED
TO BE DELIVERED IN U.S. DOLLARS GAIN (LOSS)
----------------------------------------------------------------------------
<C> <S> <C> <C>
7,916,000 Hong Kong Dollars $1,000,000 $(19,000)
----------------------------------------------------------------------------
1,364,000 Malaysian Ringgils 400,000 10,000
----------------------------------------------------------------------------
1,500,000 Singapore Dollars 983,000 41,000
----------------------------------------------------------------------------
Net unrealized gain $ 32,000
----------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
--------------------------- -------------------------- --------------------------
CLASS A CLASS B CLASS C
--------------------------- -------------------------- --------------------------
YEAR OCTOBER 21 YEAR OCTOBER 21 YEAR OCTOBER 21
ENDED TO ENDED TO ENDED TO
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996 1997 1996
- ---------------------------------------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------------------- -------------------------- --------------------------
Net asset value, beginning of
period $10.04 9.50 10.03 9.50 10.03 9.50
- ---------------------------------------------------------- -------------------------- --------------------------
Income from investment
operations:
Net investment income .08 -- -- -- -- --
- ---------------------------------------------------------- -------------------------- --------------------------
Net realized and unrealized
gain (loss) (3.47) .54 (3.45) .53 (3.43) .53
- ---------------------------------------------------------- -------------------------- --------------------------
Total from investment
operations (3.39) .54 (3.45) .53 (3.43) .53
- ---------------------------------------------------------- -------------------------- --------------------------
Net asset value, end of period $6.65 10.04 6.58 10.03 6.60 10.03
- ---------------------------------------------------------- -------------------------- --------------------------
TOTAL RETURN (NOT ANNUALIZED) (33.76)% 5.68 (34.40) 5.58 (34.20) 5.58
- ---------------------------------------------------------- -------------------------- --------------------------
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED)
- ---------------------------------------------------------- -------------------------- --------------------------
Expenses absorbed by the Fund 1.60% 1.46 2.57 2.34 2.54 2.34
- ---------------------------------------------------------- -------------------------- --------------------------
Net investment income (loss) .97% .74 -- (.14) .03 (.14)
- ---------------------------------------------------------- -------------------------- --------------------------
OTHER RATIOS TO AVERAGE NET
ASSETS (ANNUALIZED)
- ---------------------------------------------------------- -------------------------- --------------------------
Expenses 2.62% -- 3.51 -- 3.55 --
- ---------------------------------------------------------- -------------------------- --------------------------
Net investment income (loss) (.05)% -- (.94) -- (.98) --
- ---------------------------------------------------------- -------------------------- --------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -----------------------------------------------------------------------------------------
YEAR OCTOBER 21
ENDED TO
NOVEMBER 30, NOVEMBER 30,
1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Net assets at end of period $6,398,000 1,949,000
- -----------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 155% 74
- -----------------------------------------------------------------------------------------
Average commission rate paid per share on stock
transactions(a) $.0110 .0154
- -----------------------------------------------------------------------------------------
</TABLE>
NOTES:
(A) FOREIGN COMMISSIONS USUALLY ARE LOWER THAN U.S. COMMISSIONS WHEN EXPRESSED
AS CENTS PER SHARE DUE TO THE LOWER PER SHARE PRICE OF MANY NON-U.S.
SECURITIES.
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.
20
<PAGE> 21
NOTES
21
<PAGE> 22
NOTES
22
<PAGE> 23
NOTES
23
<PAGE> 24
TRUSTEES AND OFFICERS
TRUSTEES OFFICERS
DAVID W. BELIN DANIEL PIERCE LINDA J. WONDRACK
Trustee Chairman of the Board Vice President
LEWIS A. BURNHAM MARK S. CASADY JOHN R. HEBBLE
Trustee President Assistant Treasurer
DONALD L. DUNAWAY PHILIP J. COLLORA MAUREEN E. KANE
Trustee Vice President, Assistant Secretary
Secretary and Treasurer
ROBERT B. HOFFMAN CAROLINE PEARSON
Trustee JERARD K. HARTMAN Assistant Secretary
Vice President
DONALD R. JONES ELIZABETH C. WERTH
Trustee THOMAS W. LITTAUER Assistant Secretary
Vice President
SHIRLEY D. PETERSON
Trustee ANN M. MCCREARY
Vice President
DANIEL PIERCE
Trustee KATHRYN L. QUIRK
Vice President
WILLIAM P. SOMMERS
Trustee STEVEN H. REYNOLDS
Vice President
EDMOND D. VILLANI
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
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
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG, LLP
233 South Wacker Drive
Chicago, IL 60606
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606
www.kemper.com
[KEMPER FUNDS LOGO]
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 - 2 (1/98) 1041970
