<PAGE> 1
ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR
ENDED NOVEMBER 30, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
Seeks to provide long-term growth
KEMPER
ASIAN GROWTH FUND
"... As the Asian recovery deepens, the market will likely differentiate between
companies with improved fundamentals and those whose rebounds have been driven
largely by the improvement in the region's macroeconomic outlook ...."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
15
FINANCIAL STATEMENTS
20
NOTES TO FINANCIAL STATEMENTS
25
REPORT OF INDEPENDENT AUDITORS
26
TAX INFORMATION
AT A GLANCE
ABOUT YOUR REPORT
KEMPER ASIAN GROWTH FUND
TOTAL RETURNS
FOR THE YEAR ENDED NOVEMBER 30, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER ASIAN GROWTH FUND KEMPER ASIAN GROWTH FUND KEMPER ASIAN GROWTH FUND LIPPER PACIFIC EX JAPAN FUNDS
CLASS A CLASS B CLASS C CATEGORY AVERAGE*
- ------------------------ ------------------------ ------------------------ -----------------------------
<S> <C> <C> <C>
48.80% 48.13% 46.36% 58.28%
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH 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; IF SALES CHARGES HAD BEEN INCLUDED, RESULTS MAY HAVE BEEN LESS
FAVORABLE.
NET ASSET VALUE
<TABLE>
<CAPTION>
AS OF AS OF
11/30/99 11/30/98
.........................................................
<S> <C> <C>
KEMPER ASIAN GROWTH FUND
CLASS A $8.05 $5.41
.........................................................
KEMPER ASIAN GROWTH FUND
CLASS B $7.91 $5.34
.........................................................
KEMPER ASIAN GROWTH FUND
CLASS C $7.83 $5.35
.........................................................
</TABLE>
KEMPER ASIAN GROWTH FUND
RANKINGS AS OF 11/30/99
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>
1-YEAR #57 of #59 of #63 of
84 Funds 84 Funds 84 funds
...........................................................................................
3 YEAR #38 of #42 of #44 of
70 Funds 70 Funds 70 funds
...........................................................................................
</TABLE>
THERE ARE SPECIAL RISK CONSIDERATIONS ASSOCIATED WITH INTERNATIONAL INVESTING,
INCLUDING FLUCTUATING EXCHANGE RATES, GOVERNMENT REGULATIONS AND DIFFERENCES IN
LIQUIDITY, WHICH MAY AFFECT THE VOLATILITY OF THE FUND.
TERMS TO KNOW
YOUR FUND'S STYLE
MORNINGSTAR EQUITY STYLE BOX
<TABLE>
<S> <C>
[MORNINGSTAR EQUITY STYLE Source: Morningstar, Inc. The Equity Style Box
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. THE FUND'S PORTFOLIO CHANGES
FROM DAY TO DAY. A LONGER-TERM VIEW IS
REPRESENTED BY THE FUND'S MORNINGSTAR CATEGORY,
WHICH IS BASED ON ITS ACTUAL INVESTMENT STYLE AS
MEASURED BY ITS UNDERLYING PORTFOLIO HOLDINGS
OVER THE PAST THREE YEARS. MORNINGSTAR HAS PLACED
KEMPER ASIAN GROWTH FUND IN THE PACIFIC/ASIA
EX-JAPAN STOCK CATEGORY. PLEASE CONSULT THE
PROSPECTUS FOR A DESCRIPTION OF INVESTMENT
POLICIES.
</TABLE>
LIQUIDITY The ease with which an investment or an asset can be converted into
cash within a reasonably short period of time.
MACROECONOMICS The analysis of a nation's economy as a whole, using such
aggregate data as price levels, unemployment, inflation and industrial
production.
FUNDAMENTAL RESEARCH Analysis of companies based on the projected impact of
management, products, sales, and earnings on balance sheets and income
statements. It is distinct from technical analysis, which evaluates the
attractiveness of a stock based on historical price and trading volume
movements, rather than the financial results of the underlying company.
<PAGE> 3
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $290 BILLION IN ASSETS FOR INSTITUTIONAL AND CORPORATE
CLIENTS, RETIREMENT AND PENSION PLANS, INSURANCE COMPANIES, MUTUAL FUND
INVESTORS AND INDIVIDUALS. SCUDDER KEMPER INVESTMENTS OFFERS A FULL RANGE OF
INVESTMENT COUNSEL AND ASSET MANAGEMENT CAPABILITIES BASED ON A COMBINATION OF
PROPRIETARY RESEARCH AND DISCIPLINED, LONG-TERM INVESTMENT STRATEGIES.
ECONOMIC OVERVIEW
DEAR KEMPER FUNDS SHAREHOLDER:
The end of the metaphorical millennium, it turns out, was not a disaster.
Instead, it was an excuse to party. And why not? As our technological revolution
gained critical mass, its vast potential came into better focus. Capital
spending on information technology didn't slow down; it accelerated. Inflation
remained dormant. The budget surplus nearly doubled, with the promise of oceans
of black ink yet to come. Even the government delivered good news: Its
statisticians toyed with the national accounts to reveal a more productive
economy. It's no wonder the prevailing sentiment could be summed up with the
quintessentially American yelp of glee: Yahoo!
Now, with the potential Y2K crisis seemingly averted, the question hanging
over the economy is whether the Federal Reserve Board will boost interest rates
to soak up extra liquidity caused by its pre-Y2K infusion of cash into the
economy. And unfortunately, all parties end. This one will, too. The questions
are when and how.
The "when" should be before the second half of the year. The Fed has already
raised interest rates three times, and is likely to raise them again on Feb. 2.
Fed officials said they left the rate at 5.5 percent in December mainly because
of "market uncertainties associated with the century-date change." But the Fed
expressed concern that "increases in demand" will foster "inflationary
imbalances" that could spark rate increases once the Y2K issue has been handled.
Although some investors have expressed fear that the Fed's sucking cash out of
banks will jolt the financial system (causing some stock indexes, as well as the
bond markets, to drop sharply in early January), the "how" is likely to be a
slow winding down, thanks to persistent low inflation.
Yes, some prices are higher: Filling up the SUV's gas tank definitely costs
more. But the rate of inflation for non-energy goods and services has actually
slowed during the past year. Although most analysts are worried that the
reprieve won't last -- assuming that higher commodity prices, a softer dollar
and the scarcity of skilled workers will show up as higher prices at the
checkout counter -- we'd turn that worry on its head. If inflation hasn't
accelerated after three years of over 4-percent gross domestic product (GDP)
growth and an unprecedented credit explosion, prices aren't likely to increase
if growth slows and lenders get stingier.
More good news stems from the technological investment boom. While executives
have pared capital budgets in traditional areas such as industrial machinery and
buildings, they've boosted outlays on computers and software. Thanks to the
sheer force of technology spending, overall business investment has grown two to
four times as fast as GDP in every year since 1993. And that expansion should
continue, with more than 20 percent growth likely in high-tech through 2000 and
even beyond. And technology hurts inflation. It saves on labor and inventory,
increases capacity, creates new competitors, cuts out middlemen, gives shoppers
comparative price information and enables global auctions.
Our outlook is for inflation to stay centered around 2 percent, and we expect
the Fed to raise the federal funds rate and the discount rate by one quarter of
a point (0.25%) each on Feb. 2. (More extreme possibilities bandied about by
bearish investors -- including a half-point rise or an emergency move before the
Fed's February meeting -- are unlikely.) We project that the result will be a
gentle slowing of growth from 4 percent in 1999 to around 3.5 percent in 2000
and just under 2.5 percent in 2001.
Despite this positive outlook, the rowdiness of Y2K preparations and
celebration should be sufficient to show us that risks exist in today's markets
and remind us that we could be in for a serious hangover.
The prospect of sparkling growth with no inflation has excited equity
investors, but there's a catch: declining corporate pricing power. If companies
don't have the ability to increase prices, profit growth will decline -- and
it's already happening. For the five years ending in June 1999, S&P 500
operating earnings averaged 9 percent, two and a half percentage points per year
slower than analysts had predicted. Profits did recover strongly in the second
half of 1999, but we suspect that they will soon sputter again. And the
economy's newfound productivity won't change the rules and allow companies to
make money even if they can't raise prices. Productivity gains do produce a
windfall, but historically customers and employees have grabbed the lion's
share. Web sites and dot.coms haven't changed this
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 (12/31/99) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
-------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.00 5.50 4.80 5.90
Prime rate (2) 8.50 7.75 8.00 8.50
Inflation rate (3)* 2.60 2.30 1.50 2.00
The U.S. dollar (4) -0.7 -0.9 1.20 9.40
Capital goods orders (5)* 12.60 2.50 -0.6 6.40
Industrial production (5)* 3.30 2.90 3.50 6.90
Employment growth (6) 2.10 2.10 2.30 2.70
</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 11/30/99.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
one iota. As a result, we expect profits to be virtually flat in all of 2000 and
to decline as the economy slows in 2001.
Debt is another drink that could bring on future headaches. America has been
swigging it in prodigious amounts. Companies have borrowed heavily to fund
mergers, share buybacks and new investments. Homeowners have increased their
debt with new home equity loans and bigger mortgages. Financial institutions
have issued record amounts of new paper to fund aggressive growth. There's no
hard and fast rule for determining if the debt America is taking on is too much,
but warning bells should sound when debt grows by orders of magnitude faster
than necessary to fund economic activity. That happened in 1985 and 1986, when
excess credit created a commercial real estate bubble and funded dubious
leveraged buyouts with suspect junk bonds, and it's happening again now. Both
the commercial real estate and the high yield markets took years to recover.
Today, the sheer size of the excesses could make the "morning after" even more
painful.
The end result: Given the continuing thrust of growth from the technological
revolution, an improving world economy and the Fed's experience and skill, 2000
could turn out to be a good year. But it's highly unlikely to be as good a year
as 1999.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
Scudder Kemper Investments Economics Group
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF THE ECONOMIC ADVISORS OF SCUDDER KEMPER
INVESTMENTS, INC. AS OF JANUARY 6, 2000, AND MAY NOT ACTUALLY COME TO PASS. THIS
INFORMATION IS SUBJECT TO CHANGE. NO PART OF THIS MATERIAL IS INTENDED AS AN
INVESTMENT RECOMMENDATION.
TO OBTAIN A KEMPER FUNDS PROSPECTUS, DOWNLOAD ONE FROM WWW.KEMPER.COM, TALK TO
YOUR FINANCIAL REPRESENTATIVE OR CALL SHAREHOLDER SERVICES AT (800) 621-1048.
THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING MANAGEMENT FEES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
4
<PAGE> 5
PERFORMANCE UPDATE
[SIEH PHOTO]
LEAD PORTFOLIO MANAGER TIEN-YU SIEH JOINED SCUDDER KEMPER INVESTMENTS, INC. IN
1996. HE SERVES AS MANAGER OF KEMPER ASIAN GROWTH FUND, SCUDDER PACIFIC
OPPORTUNITIES FUND AND SEVERAL PACIFIC BASIN INSTITUTIONAL ACCOUNTS. SIEH CAME
ABOARD AS A RESEARCH ANALYST FOR THE GREATER CHINA REGION, INCLUDING HONG KONG,
TAIWAN, SINGAPORE AND THE PEOPLES' REPUBLIC OF CHINA. PREVIOUSLY, SIEH WORKED AS
A SENIOR OFFICER FOR THE SINGAPORE ECONOMICS DEVELOPMENT BOARD.
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.
FOR THE 12-MONTH PERIOD ENDING NOVEMBER 30, 1999, KEMPER ASIAN GROWTH FUND
CONFRONTED SIGNIFICANT VOLATILITY IN A REGION THAT STRUGGLED AMID LINGERING
CURRENCY AND POLITICAL CONCERNS DURING THE FIRST HALF OF THE FISCAL YEAR, ONLY
TO REBOUND DRAMATICALLY IN THE LATTER HALF. LEAD PORTFOLIO MANAGER TIEN-YU SIEH
DISCUSSES HIS MANAGEMENT OF THE FUND AGAINST THIS INTRIGUING BACKDROP.
Q AFTER STAGING QUITE A COMEBACK OVER THE PAST YEAR, THE ASIAN MARKETS HAVE
SLOWED DOWN SOMEWHAT IN RECENT MONTHS. WHAT HAS BEEN THE CAUSE OF THIS?
A The dramatic performance of Asian markets early on in the fiscal year
reflected the improved fundamentals of the region as well as liquidity (see
Terms To Know on page 2) considerations. When the world's major central banks
cut interest rates in the wake of last autumn's financial crisis, they unleashed
a flow of liquidity that eventually reached emerging-market equities. Asia,
which had been depressed for months due to the regional crisis that began in
1997, benefited from huge inflows of investment capital. As the region's stock
market took off, even low-quality, debt-ridden names were taken along for the
ride. All this lost steam by the third calendar quarter, however; the softness
in the Asian markets reflected a consolidation, and perhaps even a reevaluation,
of the consensus view of the Asian economic recovery.
Throughout the fiscal year, three of the strongest-performing markets of
the second quarter -- Korea, Indonesia and Thailand -- gave up some of their
strong gains. Investors were significantly rattled by the announcement that
Korean financial conglomerate Daewoo had defaulted on roughly $57 billion of
debt. While Daewoo's announcement caused short-term disruptions in the market,
we believe that it will ultimately fuel and accelerate Korea's financial reform
process. Investors were also spooked by the earthquake in Taiwan, which
threatened to disrupt the supply chain of the global technology industry. These
fears have proven overblown, since the earthquake appears to have had less
impact on the country's economy than was first anticipated. Once these concerns
dissipated in October and November, the Asian markets again picked up steam
along with the rest of the global markets.
We believe that the spotty third-quarter performance of Asian equities
reflects investors' return to the fundamentals of stock picking, in contrast to
the liquidity-driven gains of the first half of the year. As the Asian recovery
deepens, the market will likely differentiate between companies with improved
fundamentals and those whose rebounds have been driven largely by the
improvement in the region's macroeconomic (see Terms To Know on page 2) outlook.
We feel that this shift plays into our strength of bottom-up stock picking,
which should provide a sound platform for strong fund performance going forward.
Q IS THE LONG-TERM BACKDROP FOR THE REGION STILL POSITIVE?
A In our view, absolutely. Looking past the short-term volatility, we feel
that the process of economic recovery is still in its early stages, and the
fundamental upside that lies ahead is significant enough to justify potentially
impressive gains in these markets for years to come. Improving macroeconomic
fundamentals should provide a stronger
5
<PAGE> 6
PERFORMANCE UPDATE
base for growth and overall demand across the region, and the combination of a
stronger Japanese economy, domestic structural reform and improving consumer
confidence should lead to surprises in both macroeconomic indicators and
corporate-earnings growth in the coming year. This, in turn, should result in a
greater flow of capital into the region, thereby helping companies establish a
stronger foundation for the future. We anticipate that this virtuous cycle will
help reestablish the Asian economy and lay the groundwork for more sustained
economic growth in the years ahead.
Q HOW DID KEMPER ASIAN GROWTH FUND PERFORM IN THIS ENVIRONMENT?
A For the 12-month period ended November 30, 1999, the fund returned 48.80
percent (Class A shares unadjusted for any sales charge), which trailed the
55.49 percent return of its managed benchmark, the MSCI AC Asia Free ex Japan
index, for the same period. We believe that the fund's underperformance can be
attributed to our focus on high-quality companies in a market where many of the
lower-quality names tended to post the best performance. We view this as a
short-term anomaly and are confident that over time our focus on financially
sound, well-run companies is a good investment decision.
Q HOW IS THE PORTFOLIO POSITIONED RIGHT NOW?
A As always, we continue to use in-depth, bottom-up fundamental research
(see Terms To Know on page 2) and on-the-ground experience to find companies
that have taken the initiative to improve their competitive positions. We
continue to utilize a careful stock-selection process that focuses on
fast-growing companies with superior management teams, dominant market
positions, clear competitive advantages, high or improving returns on equity,
strong balance sheets and catalysts for positive change. We expect that as the
Asian recovery deepens, the difference between these companies and others whose
share prices have simply rebounded in line with the improvement in the
macroeconomic outlook will become increasingly clear.
The fund is heavily weighted in the electronics sector and in selected
cyclical companies. Our outlook is positive on the global demand for personal
computers, semiconductor-related products and telecommunications equipment, and
many companies in northern Asia are well positioned to cater to that demand. We
believe that Korea's Samsung Electronics and Taiwan Semiconductor are two of the
best in this industry. We also continue to favor contract manufacturers such as
Precision out of Taiwan, in addition to JIT Holdings and Natsteel Electronics of
Singapore. All of these companies' client lists include international blue-chip
technology firms. In the cyclical sector, we remain very positive on
petrochemical companies, such as Shanghai Petrochemical.
We are also finding some very interesting opportunities in the banking
sector. There are significant changes taking place among Asia's banks,
particularly the larger institutions in some of the more progressive economies
such as Hong Kong, Singapore, Taiwan and, to some degree, Korea. Specifically,
we are encouraged by the fact that bank management is becoming more rational.
The old model of Asian banking focused on lending to corporations at the expense
of the consumer, a practice that was fueled by "crony capitalism" and served
only to stifle economic growth and facilitate the creation of industrial
overcapacity. Today, however, the leading banks are focusing on consumers, a
group that is now being viewed as a better risk. We believe that this new
business mix will act as a catalyst not just for improved financial-sector
earnings, but also for stronger growth in the region as a whole. Our holdings
are concentrated in larger regional banks that possess high-quality management
teams and low levels of nonperforming loans. Larger banks also tend to adhere
more closely to international standards, and they stand to benefit from both
economies of scale and the ability to invest heavily in information technology.
We believe that the concurrent growth of the region's economy and its largest
banks will be a powerful theme in the years ahead.
Q WHAT IS YOUR OUTLOOK FROM HERE?
A We see three catalysts for long-term gains in the Asian markets. First,
stock prices should benefit from the continued improvement in corporate earnings
that will likely be sparked by further economic growth and corporate
restructuring. Second, we feel that there is more room for the expansion of the
earnings multiples as more enlightened management practices are designed to
improve resource allocation and hence provide more potent returns to
shareholders. Finally, we believe that the growth in the usage of technology and
the Internet will facilitate substantial gains in productivity over time.
As these processes move forward, it is reasonable to expect continued
market volatility. There will be times when expectations overshoot reality, and
there will be periods of consolidation. Over time, however, we believe the
direction of the region's fundamentals will be upward, and this trend should
ultimately be reflected in the long-term performance of stock prices.
6
<PAGE> 7
PERFORMANCE UPDATE
AVERAGE ANNUAL TOTAL RETURNS*
FOR PERIODS ENDED NOVEMBER 30, 1999 (ADJUSTED FOR THE MAXIMUM SALES CHARGE)
<TABLE>
<CAPTION>
LIFE OF
1-YEAR 3-YEAR CLASS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KEMPER ASIAN GROWTH FUND CLASS A 40.24% -8.55% -6.62% (since 10/21/96)
...................................................................................................
KEMPER ASIAN GROWTH FUND CLASS B 45.13 -8.16 -6.26 (since 10/21/96)
...................................................................................................
KEMPER ASIAN GROWTH FUND CLASS C 46.36 -7.84 -5.94 (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 11/30/99
[ASIAN GROWTH FUND CLASS A LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER ASIAN GROWTH MSCI AC FAR EAST FREE THE STANDARD & POOR'S
FUND CLASS A(1) EX-JAPAN INDEX(+) 500 STOCK INDEX(++)
------------------- --------------------- ---------------------
<S> <C> <C> <C>
10/31/96 9422.00 10000.00 10000.00
10060.00 10381.00 10503.00
6/30/97 10110.00 10814.00 12550.00
6579.00 6145.00 13760.00
6/30/98 4803.00 4580.00 16077.00
5328.00 5766.00 17429.00
7265.00 8647.00 19464.00
11/30/99 8123.00 8951.00 19696.00
</TABLE>
KEMPER ASIAN GROWTH FUND CLASS B
Growth of an assumed $10,000 investment in Class B
shares from 10/31/96 to 11/30/99
[ASIAN GROWTH FUND CLASS B LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER ASIAN GROWTH MSCI AC FAR EAST FREE THE STANDARD & POOR'S
FUND CLASS B(1) EX-JAPAN INDEX(+) 500 STOCK INDEX(++)
------------------- --------------------- ---------------------
<S> <C> <C> <C>
10/31/96 10000.00 10000.00 10000.00
10667.00 10381.00 10503.00
6/30/97 10677.00 10814.00 12550.00
6906.00 6145.00 13760.00
6/30/98 4996.00 4580.00 16077.00
5527.00 5766.00 17429.00
7500.00 8647.00 19464.00
11/30/99 8227.00 8951.00 19696.00
</TABLE>
KEMPER ASIAN GROWTH FUND CLASS C
Growth of an assumed $10,000 investment in Class C
shares from 10/31/96 to 11/30/99
[ASIAN GROWTH FUND CLASS C LINE GRAPH]
<TABLE>
<CAPTION>
KEMPER ASIAN GROWTH MSCI AC FAR EAST FREE THE STANDARD & POOR'S
FUND CLASS C(1) EX-JAPAN INDEX(+) 500 STOCK INDEX(++)
------------------- --------------------- ---------------------
<S> <C> <C> <C>
10/31/96 10000.00 10000.00 10000.00
10677.00 10381.00 10503.00
6/30/97 10698.00 10814.00 12550.00
6929.00 6145.00 13760.00
6/30/98 5008.00 4580.00 16077.00
5539.00 5766.00 17429.00
7459.00 8647.00 19464.00
11/30/99 8308.00 8951.00 19696.00
</TABLE>
PAST PERFORMANCE IS NOT A GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN ORIGINAL COST.
*AVERAGE ANNUAL TOTAL RETURN AND TOTAL
RETURN MEASURE NET INVESTMENT INCOME
AND CAPITAL GAIN OR LOSS FROM PORTFOLIO
INVESTMENTS OVER THE PERIODS SPECIFIED,
ASSUMING REINVESTMENT OF ALL DIVIDENDS
AND, WHERE INDICATED, ADJUSTMENT FOR
THE MAXIMUM SALES CHARGE. THE MAXIMUM
SALES CHARGE FOR CLASS A SHARES IS
5.75%. FOR CLASS B SHARES, THE MAXIMUM
CONTINGENT DEFERRED SALES CHARGE (CDSC)
IS 4%. CLASS C SHARES HAVE NO SALES
CHARGE ADJUSTMENT, BUT REDEMPTIONS
WITHIN ONE YEAR OF PURCHASE MAY BE
SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE OF 1%. SHARE CLASSES INVEST IN
THE SAME UNDERLYING PORTFOLIO. AVERAGE
ANNUAL TOTAL RETURN REFLECTS ANNUALIZED
CHANGE, WHILE TOTAL RETURN REFLECTS
AGGREGATE CHANGE. 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
COMBINED 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 COMBINED 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 WIESENBERGER.
7
<PAGE> 8
LARGEST HOLDINGS
KEMPER ASIAN GROWTH FUND'S 15 LARGEST HOLDINGS
Representing 37.6 percent of the fund's total Market value on November 30, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
COMPANY COUNTRY PERCENT
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1. SAMSUNG ELECTRONICS Korea 4.5%
- --------------------------------------------------------------------------------------------------
2. S.K. TELECOM Korea 3.4%
- --------------------------------------------------------------------------------------------------
3. UNITED MICROELECTRONICS Taiwan 2.9%
- --------------------------------------------------------------------------------------------------
4. TAIWAN SEMICONDUCTOR Taiwan 2.7%
- --------------------------------------------------------------------------------------------------
5. DBS GROUP HOLDINGS Singapore 2.5%
- --------------------------------------------------------------------------------------------------
6. LI & FUNG LTD Hong Kong 2.5%
- --------------------------------------------------------------------------------------------------
7. LEGEND HOLDINGS Hong Kong 2.5%
- --------------------------------------------------------------------------------------------------
8. HUTCHISON WHAMPOA Hong Kong 2.5%
- --------------------------------------------------------------------------------------------------
9. FAR EASTERN TEXTILE Taiwan 2.4%
- --------------------------------------------------------------------------------------------------
10. KOREA DATA SYSTEMS Korea 2.4%
- --------------------------------------------------------------------------------------------------
11. DAO HONG BANK GROUP Hong Kong 2.1%
- --------------------------------------------------------------------------------------------------
12. KOREA TELECOM Korea 2.0%
- --------------------------------------------------------------------------------------------------
13. PRESIDENT CHAIN STORE Taiwan 1.8%
- --------------------------------------------------------------------------------------------------
14. ASUSTEK COMPUTER Taiwan 1.7%
- --------------------------------------------------------------------------------------------------
15. KOOKMIN BANK Korea 1.7%
- --------------------------------------------------------------------------------------------------
</TABLE>
*The fund's holdings are subject to change.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER ASIAN GROWTH FUND
Portfolio of Investments at November 30, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AUSTRALIA--1.6%
Austar United Communications Ltd.*
(PROVIDER OF CABLE TELEVISION SERVICES) 41,720 $ 154
Broken Hill Proprietary Co., Ltd.
(PETROLEUM, MINERAL AND STEEL EXPLORATION
PRODUCTION) 9,200 101
Cable & Wireless Optus Ltd.
(PROVIDER OF TELECOMMUNICATION SERVICES) 41,300 108
---------------------------------------------------------------------------
363
- -------------------------------------------------------------------------------------------------------------------------
CHINA--1.2%
Shanghai Petrochemical Co., Ltd.
(MANUFACTURER OF PETROCHEMICAL AND
PETROLEUM PRODUCTS) 1,543,000 280
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
HONG KONG--24.7%
ASM Pacific Technology Ltd.
(MANUFACTURER OF MACHINERY FOR THE
PRODUCTION OF SEMICONDUCTORS) 150,000 240
AXA China/Region Ltd.
(INSURANCE COMPANY) 162,000 146
Cheung Kong Holdings Ltd.
(REAL ESTATE COMPANY) 35,000 394
China Telecom Ltd.*
(PROVIDER OF TELECOMMUNICATION SERVICES) 32,000 171
Citic Pacific Ltd.
(DIVERSIFIED HOLDING COMPANY) 64,000 173
Dah Sing Financial Group
(PROVIDER OF BANKING SERVICES AND
PROPERTY INVESTMENT) 33,400 142
Dao Heng Bank Group Ltd. Bank 83,000 473
Esprit Holdings Ltd.*
(DESIGNER AND MANUFACTURER OF HIGH
QUALITY FASHION PRODUCTS) 193,000 195
Giordano International Ltd.
(RETAILER OF CASUAL APPAREL) 219,000 219
Guangdong Kelon Electric Holdings Co., Ltd.
(REFRIGERATOR MANUFACTURER) 24,000 21
Hengan International Group Co. Ltd.
(MANUFACTURER AND SELLER OF PERSONAL
HYGIENE PRODUCTS) 329,000 90
Hutchison Whampoa, Ltd.
(DIVERSIFIED INVESTMENT HOLDING COMPANY) 46,000 567
Johnson Electric Holdings Ltd.
(MANUFACTURER OF MICRO MOTORS) 38,500 274
Legend Holdings Ltd.
(MANUFACTURER OF COMPUTERS AND
RELATED PRODUCTS) 244,000 569
Li & Fung Ltd.
(EXPORTER OF CONSUMER PRODUCTS) 252,000 579
New World Development Co., Ltd.
(PROPERTY INVESTMENT AND
DEVELOPMENT COMPANY) 73,172 145
New World Infrastructure Ltd.*
(INVESTMENT IN AND OPERATION OF
INFRASTRUCTURE PROJECTS) 64,200 72
SmarTone Telecommunications Holdings Ltd.
(PROVIDER OF TELECOMMUNICATION SERVICES) 55,000 270
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sun Hung Kai Properties Ltd.
(REAL ESTATE DEVELOPER AND
FINANCE COMPANY) 17,000 $ 155
TCL International Holdings Ltd.*
(MANUFACTURER OF ELECTRONIC PRODUCTS) 418,000 144
Timeless Software Ltd.
(PROVIDER OF COMPUTER SOFTWARE SERVICES) 175,000 116
Yizheng Chemical Fibre Co., Ltd. H*
(MANUFACTURER AND DISTRIBUTOR OF
POLYESTER CHIPS AND STABLE FIBERS) 1,144,000 324
Yue Yuen Industrial Holdings
(MANUFACTURER AND MARKETER OF ATHLETIC
AND OUTDOOR FOOTWEAR) 67,000 168
I-Cable Communications Ltd. (ADR)*
(OPERATOR OF CABLE TELEVISION SYSTEMS) 1,600 48
---------------------------------------------------------------------------
5,695
- -------------------------------------------------------------------------------------------------------------------------
INDIA--8.2%
Cipla Ltd.(b)
(MANUFACTURER OF FINE CHEMICALS AND
PHARMACEUTICALS) 5,300 199
Hero Honda Motors Ltd.(b)
(MANUFACTURER OF MOTORIZED TWO WHEELERS) 3,600 90
Hindustan Lever Ltd.(b)
(MANUFACTURER OF CONSUMER PRODUCTS) 3,100 163
ICICI Ltd. (ADR)*
(VENTURE CAPITAL FIRM) 19,600 218
Infosys Technologies Ltd.(b)
(FINANCIAL AND INDUSTRIAL SOFTWARE
DEVELOPER) 1,000 213
NIIT Ltd.(b)
(DESIGNER AND DISTRIBUTOR OF
COMPUTER SOFTWARE) 5,000 271
Ranbaxy Laboratories, Ltd.(b)
(MANUFACTURER AND DISTRIBUTOR OF
PHARMACEUTICAL PRODUCTS) 9,800 224
Satyam Computer Services, Ltd.(b)
(PROVIDER OF SOFTWARE SERVICES) 7,500 331
State Bank of India(b)
(BANK) 31,900 172
---------------------------------------------------------------------------
1,881
- -------------------------------------------------------------------------------------------------------------------------
INDONESIA--1.3%
Hindalco Industries Ltd.(b)
(MANUFACTURER OF ALUMINUM) 8,500 167
PT Indo-Rama Synthetics Tbk
(PRODUCER OF POLYESTER YARN, FIBER
AND FABRIC) 315,000 60
PT Indofood Sukses Makmur Tbk (MANUFACTURER
OF FOOD PRODUCTS) 33,000 36
PT Indosat (ADR)
(INTERNATIONAL TELECOMMUNICATION
SERVICES) 3,400 47
---------------------------------------------------------------------------
310
- -------------------------------------------------------------------------------------------------------------------------
KOREA--24.1%
Dacom Corp.*
(PROVIDER OF DOMESTIC LONG-DISTANCE AND
INTERNET SERVICES) 1,080 270
Honam Petrochemical Corp.
(CHEMICAL MANUFACTURER) 11,510 214
Housing & Commercial Bank*
(BANK) 13,790 387
Kookmin Bank
(COMMERCIAL BANK) 23,748 395
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Korea Data System
(MANUFACTURER OF COMPUTER MONITORS) 28,574 $ 557
Korea Telecom Corp. (ADR)*
(PROVIDER OF TELECOMMUNICATION SERVICES) 8,800 466
Medison Co., Ltd.
(PRODUCER OF MEDICAL EQUIPMENT) 5,870 72
Pohang Iron & Steel Co., Ltd.(b)
(STEEL PRODUCER) 2,080 282
SK Telecom Co., Ltd.
(PROVIDER OF MOBILE
TELECOMMUNICATION SERVICES) 340 786
Samsung Corp., Ltd.
(TRADING COMPANY) 13,570 282
Samsung Display Devices Co. (GDR)*
(MANUFACTURER OF CATHODE RAY TUBES) 10,600 143
Samsung Electro-Mechanics Co.
(MANUFACTURER OF PRECISION AND ELECTRONIC
PARTS) 3,470 269
Samsung Electronics Co.
(ELECTRONICS MANUFACTURER) 5,037 1,043
Samsung Securities Co., Ltd.
(PROVIDER OF BROKERAGE, INVESTMENT AND
UNDERWRITING SERVICES) 7,857 321
Shinhan Bank (GDR)*
(BANK) 3,400 76
---------------------------------------------------------------------------
5,563
- -------------------------------------------------------------------------------------------------------------------------
MALAYSIA--1.0%
Unisem (M) Berhad
(MANUFACTURER OF SEMICONDUCTORS) 45,000 230
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
PAPUA NEW GUINEA--.7%
Oil Search Ltd.*
(OIL AND GAS EXPLORATION AND PRODUCTION) 86,000 113
Orogen Minerals Ltd.
(INVESTMENT COMPANY WITH CONTROLLING
INTEREST IN PAPUA NEW GUINEA GOLD AND OIL
COMPANIES) 52,200 57
---------------------------------------------------------------------------
170
- -------------------------------------------------------------------------------------------------------------------------
PHILIPPINES--1.3%
Bank of the Philippine Islands
(COMMERCIAL BANK) 36,000 95
International Container Terminal Services,
Inc.
(CONTAINERIZED CARGO HANDLING FIRM) 1,494,700 124
Metropolitan Bank and Trust Company
(COMMERCIAL BANK) 12,430 89
---------------------------------------------------------------------------
308
- -------------------------------------------------------------------------------------------------------------------------
SINGAPORE--7.9%
Allgreen Properties Ltd.*
(REAL ESTATE DEVELOPMENT) 118,000 110
Chartered Semiconductor (ADR)*
(PROVIDER OF WAFER FABRICATION SERVICES
TO SEMICONDUCTOR SUPPLIERS) 2,200 117
City Developments Ltd.
(REAL ESTATE DEVELOPER) 27,000 153
DBS Group Holdings Ltd.
(PROVIDER OF BANKING AND
FINANCING SERVICES) 44,978 583
JIT Holdings Ltd.
(MANUFACTURER AND DISTRIBUTOR OF
ELECTRONIC PRODUCTS) 145,000 328
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Keppel Land Ltd.
(PROPERTY INVESTMENT AND DEVELOPMENT) 79,000 $ 128
NatSteel Electronics Ltd.
(MANUFACTURER OF TELECOMMUNICATION AND
NETWORK PRODUCTS) 29,000 120
Oversea-Chinese Banking Corp., Ltd.
(BANK) 36,750 276
---------------------------------------------------------------------------
1,815
- -------------------------------------------------------------------------------------------------------------------------
TAIWAN--24.4%
ASE Test Ltd.*
(PROVIDER OF TESTING SERVICES TO
SEMICONDUCTOR MANUFACTURERS) 3,700 82
Acer Peripherals, Inc.
(DEVELOPER AND DISTRIBUTOR OF COMPUTER
PERIPHERAL PRODUCTS) 81,254 257
Asustek Computer Inc.
(MANUFACTURER OF COMPUTER PRODUCTS) 38,022 401
Bank Sinopac
(BANK) 343,366 199
China Motor Company Ltd.
(MANUFACTURER OF TRUCKS AND AUTOMOBILES) 682 1
China Petrochemical Development Corp.
(MANUFACTURER OF PETROCHEMICAL PRODUCTS) 325,600 150
China Steel Corp.
(MANUFACTURER AND MARKETER OF STEEL
PRODUCTS) 302,000 215
Chinatrust Commercial Bank
(BANK) 180,800 171
Compal Electronics Inc.
(MANUFACTURER AND MARKETER OF COMPUTERS
AND MONITORS) 81,991 261
Compal Electronics, Inc.*
(RIGHTS) 819 1
Compeq Manufacturing Co., Ltd.
(MANUFACTURER OF MULTI-LAYER AND
DOUBLE-SIDED PRINTED CIRCUIT BOARDS) 42,000 207
Delta Electronic Industrial Co.
(MANUFACTURER OF POWER SUPPLY AND VIDEO
DISPLAY EQUIPMENT) 26,000 104
Far Eastern Textile Ltd.
(MANUFACTURER OF NATURAL AND SYNTHETIC
TEXTILE PRODUCTS) 325,280 560
Formosa Plastics Corp.
(MANUFACTURER OF PLASTICS MATERIALS) 116,370 217
Hon Hai Precision Industry Co., Ltd.
(MANUFACTURER OF ELECTRONIC PRODUCTS) 49,400 352
President Chain Store Corp.
(OPERATOR OF SEVEN-ELEVEN
CONVENIENCE STORES) 146,000 408
Siliconware Corp.
(TESTING AND PACKAGING OF
INTEGRATED CIRCUITS) 196,093 237
Siliconware Precision Industries Co.
(MANUFACTURER OF PACKAGING FOR INTEGRATED
CIRCUITS) 71,340 142
Taiwan Semiconductor Manufacturing Co.
(MANUFACTURER OF INTEGRATED CIRCUITS) 130,380 611
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Microelectronics Corp., Ltd.
(MANUFACTURER OF INTEGRATED CIRCUITS) 239,000 $ 672
Yageo Corp.
(MANUFACTURER OF RESISTORS AND RELATED
EQUIPMENT) 234,000 223
Yang Ming Marine Transport
(MARINE TRANSPORTATION) 285,000 150
---------------------------------------------------------------------------
5,621
- -------------------------------------------------------------------------------------------------------------------------
THAILAND--.6%
BEC World Public Co., Ltd.(b)
(ENTERTAINMENT AND TELEVISION
BROADCASTING COMPANY) 21,200 129
---------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--3.0%
HSBC Holdings plc*
(INTERNATIONAL BANKING AND FINANCIAL
SERVICES COMPANY) 24,400 322
Standard Chartered plc
(INTERNATIONAL BANKING GROUP) 27,026 369
---------------------------------------------------------------------------
691
---------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $17,000)(a) $23,056
---------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO
- --------------------------------------------------------------------------------
* Non-income producing security.
(a) The cost for federal income tax purposes was $17,072. At November 30, 1999,
net unrealized appreciation for all securities based on tax cost was $5,984.
This consisted of aggregated gross unrealized appreciation for all
securities in which there was an excess of market value over tax cost of
$6,439 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $455.
(b) Securities valued in good faith by the Valuation Committee of the Board of
Trustees in the absence of readily ascertainable market values. However,
because of the inherent uncertainty of valuation, those estimated values may
differ significantly from the values that would have been used had a ready
market for these securities existed, and the difference could be material.
The cost of these securities at November 30, 1999 aggregated $1,905. These
securities may also have certain restrictions as to resale.
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
At November 30, 1999, the fund's portfolio of investments had the following
industry diversification:
<TABLE>
<CAPTION>
VALUE %
- --------------------------------------------------------------------------------------
<S> <C> <C>
Technology $ 6,797 29.5%
- --------------------------------------------------------------------------------------
Financial 6,459 28.0%
- --------------------------------------------------------------------------------------
Manufacturing 2,538 11.0%
- --------------------------------------------------------------------------------------
Communications 2,118 9.2%
- --------------------------------------------------------------------------------------
Staples 1,197 5.2%
- --------------------------------------------------------------------------------------
Consumer discretionary 1,134 4.9%
- --------------------------------------------------------------------------------------
Metals & minerals 764 3.3%
- --------------------------------------------------------------------------------------
Health 495 2.1%
- --------------------------------------------------------------------------------------
Service 406 1.8%
- --------------------------------------------------------------------------------------
Energy 393 1.7%
- --------------------------------------------------------------------------------------
Media 331 1.4%
- --------------------------------------------------------------------------------------
Transportation 223 1.0%
- --------------------------------------------------------------------------------------
Construction 110 0.5%
- --------------------------------------------------------------------------------------
Durables 91 0.4%
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS $23,056 100.0%
- --------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AS OF NOVEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------
Investments in securities, at value (Cost $17,000) $23,056
- -----------------------------------------------------------------------
Foreign currency, at value (Cost $110) 111
- -----------------------------------------------------------------------
Receivable for investments sold 178
- -----------------------------------------------------------------------
Dividends receivable 6
- -----------------------------------------------------------------------
Receivable for Fund shares sold 265
- -----------------------------------------------------------------------
Due from Advisor 50
- -----------------------------------------------------------------------
TOTAL ASSETS 23,666
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------
Due to custodian bank 388
- -----------------------------------------------------------------------
Payable for investments purchased 265
- -----------------------------------------------------------------------
Payable for Fund shares redeemed 238
- -----------------------------------------------------------------------
Other accrued expenses and payables 234
- -----------------------------------------------------------------------
Total liabilities 1,125
- -----------------------------------------------------------------------
NET ASSETS, AT VALUE $22,541
- -----------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------
Net assets consist of:
Undistributed net investment income (loss) $ (17)
- -----------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
securities 6,056
- -----------------------------------------------------------------------
Accumulated net realized gain (loss) (3,503)
- -----------------------------------------------------------------------
Paid-in capital 20,005
- -----------------------------------------------------------------------
NET ASSETS, AT VALUE $22,541
- -----------------------------------------------------------------------
NET ASSET VALUE AND OFFERING PRICE
- -----------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($12,685 / 1,576 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $8.05
- -----------------------------------------------------------------------
Maximum offering price per share
(100/94.25 of $8.05) $8.54
- -----------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($8,674 / 1,097 outstanding shares of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $7.91
- -----------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,182 / 151 outstanding shares of beneficial interest,
$.01 par value, unlimited number of shares authorized) $7.83
- -----------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<S> <C>
- ----------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $17) $ 154
- ----------------------------------------------------------------------
Interest 49
- ----------------------------------------------------------------------
Total income 203
- ----------------------------------------------------------------------
Expenses:
Management fee 109
- ----------------------------------------------------------------------
Services to shareholders 96
- ----------------------------------------------------------------------
Custodian fees 62
- ----------------------------------------------------------------------
Distribution services fee 42
- ----------------------------------------------------------------------
Administrative services fee 32
- ----------------------------------------------------------------------
Auditing 47
- ----------------------------------------------------------------------
Legal 8
- ----------------------------------------------------------------------
Trustees' fees and expenses 10
- ----------------------------------------------------------------------
Reports to shareholders 69
- ----------------------------------------------------------------------
Other 12
- ----------------------------------------------------------------------
Total expenses, before expense reductions 487
- ----------------------------------------------------------------------
Expense reductions (247)
- ----------------------------------------------------------------------
Total expenses, after expense reductions 240
- ----------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (37)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
- ----------------------------------------------------------------------
Net realized gain (loss) from:
Investments 949
- ----------------------------------------------------------------------
Foreign currency related transactions (36)
- ----------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on investments 5,384
- ----------------------------------------------------------------------
Net gain (loss) on investments transactions 6,297
- ----------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $6,260
- ----------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------
1999 1998
<S> <C> <C>
- ------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- ------------------------------------------------------------------------------------------
Operations:
Net investment income (loss) $ (37) 112
- ------------------------------------------------------------------------------------------
Net realized gain (loss) 913 (3,409)
- ------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period 5,384 2,073
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 6,260 (1,224)
- ------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income
Class A -- (42)
- ------------------------------------------------------------------------------------------
Class B -- (6)
- ------------------------------------------------------------------------------------------
Class C -- (1)
- ------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 103,948 21,923
- ------------------------------------------------------------------------------------------
Reinvestment of distributions -- 42
- ------------------------------------------------------------------------------------------
Cost of shares redeemed (95,083) (19,674)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund shares sold 8,865 2,291
- ------------------------------------------------------------------------------------------
Increase (decrease) in net assets 15,125 1,018
- ------------------------------------------------------------------------------------------
Net assets at beginning of period 7,416 6,398
- ------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including undistributed net
investment income (loss) of $(17) and $108, respectively) $22,541 7,416
- ------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
THE FOLLOWING TABLES INCLUDE SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS.
<TABLE>
<CAPTION>
---------------------------------------------------------------
CLASS A
---------------------------------------------------------------
FOR THE PERIOD FROM
OCTOBER 21, 1996
YEAR ENDED NOVEMBER 30, (COMMENCEMENT OF
------------------------------------- OPERATIONS) TO
1999 1998 1997 NOVEMBER 30, 1996
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.41 6.65 10.04 9.50
- ----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.01)(a) .11 .08 --
- ----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 2.65 (1.27) (3.47) .54
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.64 (1.16) (3.39) .54
- ----------------------------------------------------------------------------------------------------------------------------
Less distributions from net investment income -- (.08) -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.05 5.41 6.65 10.04
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 48.80(B) (17.66)(B) (33.76)(B) 5.68**
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period ($ thousands) 12,685 4,047 3,549 827
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 3.35 2.65 2.62 1.46*
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.76 1.80 1.60 1.46*
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.17) 2.05 .97 .74*
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 80 131 155 74*
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
CLASS B
---------------------------------------------------------------
FOR THE PERIOD FROM
OCTOBER 21, 1996
YEAR ENDED NOVEMBER 30, (COMMENCEMENT OF
------------------------------------ OPERATIONS) TO
1999 1998 1997 NOVEMBER 30, 1996
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 5.34 6.58 10.03 9.50
- -----------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.02)(a) .06 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
transactions 2.59 (1.28) (3.45) .53
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.57 (1.22) (3.45) .53
- -----------------------------------------------------------------------------------------------------------------------------
Less distributions from net investment income -- (.02) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.91 5.34 6.58 10.03
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 48.13(B) (18.65)(B) (34.40)(B) 5.58**
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net assets at end of period ($ thousands) 8,674 3,035 2,545 941
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses before expense reductions (%) 4.25 4.29 3.51 2.34*
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses after expense reductions (%) 1.91 2.78 2.57 2.34*
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (.32) 1.07 -- (.14)*
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 80 131 155 74*
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------------------------
CLASS C
----------------------------------------------------------------
FOR THE PERIOD FROM
OCTOBER 21, 1996
YEAR ENDED NOVEMBER 30, (COMMENCEMENT OF
------------------------------------------ OPERATIONS) TO
1999 1998 1997 NOVEMBER 30, 1996
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $5.35 6.60 10.03 9.50
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (.08)(a) .05 -- --
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions 2.56 (1.28) (3.43) .53
- ------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.48 (1.23) (3.43) .53
- ------------------------------------------------------------------------------------------------------------------
Less distributions from net investment
income -- (.02) -- --
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.83 5.35 6.60 10.03
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (C) 46.36(B) (18.72) (B) (34.20) (B) 5.58**
- ------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------
Net assets at end of period ($ thousands) 1,182 334 304 180
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses, before expense reductions
(%) 5.17 4.56 3.55 2.34*
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses, after expense reductions
(%) 2.81 2.71 2.54 2.34*
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.22) 1.14 .03 (.14)*
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 80 131 155 74*
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Based on monthly average shares outstanding during the period.
(b) Total return would have been lower had certain expenses not been reduced.
(c) Total return does not reflect the effect of sales charges.
* Annualized.
** Not annualized.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 SIGNIFICANT
ACCOUNTING POLICIES Kemper Asian Growth Fund (the "Fund") is registered
under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end,
diversified management investment company organized
as a Massachusetts business trust.
The Fund offers multiple classes of shares. Class A
shares are offered to investors subject to an
initial sales charge. Class B shares are offered
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 offered 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.
Investment income, realized and unrealized gains
and losses, and certain fund-level expenses and
expense reductions, if any, are borne pro rata on
the basis of relative net assets by the holders of
all classes of shares except that each class bears
certain expenses unique to that class such as
distribution services, shareholder services,
administrative services and certain other class
specific expenses. Differences in class expenses
may result in payment of different per share
dividends by class. All shares of the Fund have
equal rights with respect to voting subject to
class specific arrangements.
The Fund's financial statements are prepared in
accordance with generally accepted accounting
principles which require the use of management
estimates. The policies described below are
followed consistently by the Fund in the
preparation of its financial statements.
SECURITY VALUATION. Investments are stated at value
determined as of the close of regular trading on
the New York Stock Exchange. Securities which are
traded on U.S. or foreign stock exchanges are
valued at the most recent sale price reported on
the exchange on which the security is traded most
extensively. If no sale occurred, the security is
then valued at the calculated mean between the most
recent bid and asked quotations. If there are no
such bid and asked quotations, the most recent bid
quotation is used. Securities quoted on the Nasdaq
Stock Market ("Nasdaq"), for which there have been
sales, are valued at the most recent sale price
reported. If there are no such sales, the value is
the most recent bid quotation. Securities which are
not quoted on Nasdaq but are traded in another
over-the-counter market are valued at the most
recent sale price, or if no sale occurred, at the
calculated mean between the most recent bid and
asked quotations on such market. If there are no
such bid and asked quotations, the most recent bid
quotation shall be used. Money market instruments
purchased with an original maturity of sixty days
or less are valued at amortized cost. All other
securities are valued at their fair value as
determined in good faith by the Valuation Committee
of the Board of Trustees.
FOREIGN CURRENCY TRANSLATIONS. 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
exchange rates at period end. Purchases and sales
of investment securities,
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
income and expenses are translated into U.S.
dollars at the prevailing exchange rates on the
respective dates of the transactions.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses between trade and settlement dates on
securities transactions, the disposition of forward
foreign currency exchange contracts and foreign
currencies, and the difference between the amount
of net investment income accrued and the U.S.
dollar amount actually received. That portion of
both realized and unrealized gains and losses on
investments that results from fluctuations in
foreign currency exchange rates is not separately
disclosed but is included with net realized and
unrealized gains and losses on investment
securities.
FEDERAL INCOME TAXES. The Fund's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated investment companies and to distribute
all of its taxable income to its shareholders.
Accordingly, the Fund paid no federal income taxes
and no federal income tax provision was required.
At November 30, 1999, the Fund had a net tax basis
capital loss carryforward of approximately
$3,448,000 which may be applied against any
realized net taxable capital gains of each
succeeding year until fully utilized or until
November 30, 2005 ($61,000) and November 30, 2006
($3,387,000), the respective expiration dates,
whichever occurs first.
DISTRIBUTION OF INCOME AND GAINS. Distributions of
net investment income, if any, are made annually.
Net realized gains from investment transactions, in
excess of available capital loss carryforwards,
would be taxable to the Fund if not distributed,
and, therefore, will be distributed to shareholders
at least annually.
The timing and characterization of certain income
and capital gains distributions are determined
annually in accordance with federal tax regulations
which may differ from generally accepted accounting
principles. As a result, net investment income
(loss) and net realized gain (loss) on investment
transactions for a reporting period may differ
significantly from distributions during such
period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital
accounts without impacting the net asset value of
the fund.
INVESTMENT TRANSACTIONS AND INVESTMENT
INCOME. Investment transactions are accounted for
on the trade date. Interest income is recorded on
the accrual basis. Dividend income is recorded on
the ex-dividend date. Certain dividends from
foreign securities may be recorded subsequent to
the ex-dividend date as soon as the Fund is
informed of such dividends. Realized gains and
losses from investment transactions are recorded on
an identified cost basis.
All discounts are accreted for both tax and
financial reporting purposes.
- --------------------------------------------------------------------------------
2 PURCHASES AND
SALES OF SECURITIES For the year ended November 30, 1999, investment
transactions (excluding short-term investments) are
as follows (in thousands):
Purchases $19,483
Proceeds from sales 9,345
- --------------------------------------------------------------------------------
3 TRANSACTIONS
WITH AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment
management fee of 1/12 of the annual rate of .85%
of the first $250 million of
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
average daily net assets declining to .72% of
average daily net assets in excess of $12.5
billion. However, the Fund incurred no management
fees for the year ended November 30, 1999, after a
fee waiver of $109,000 by Scudder Kemper, which is
equivalent to an annual effective rate of .85% of
the Fund's average daily net assets.
In addition, Scudder Kemper has temporarily agreed
to absorb certain operating expenses of the fund.
Under these arrangements, Scudder Kemper waived and
absorbed expenses of $124,000 for the year ended
November 30, 1999.
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 for the year ended November 30, 1999 are
$6,000.
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 separate Rule 12b-1 plans for
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 (after an expense waiver
of $42,000) and CDSC received by KDI for the year
ended November 30, 1999 are $14,000.
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to Class A, Class B and Class C shareholders, the
Fund pays KDI a fee at an annual rate of up to .25%
of average daily net assets of each class. KDI in
turn has various agreements with financial services
firms that provide these services and pays these
firms based on assets of fund accounts the firms
service. The Fund incurred no administrative
services fees (ASF) for the year ended November 30,
1999, after an expense waiver of $32,000 by Scudder
Kemper.
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
Kemper Service Company (KSvC) is the shareholder
services agent of the Fund. Under the agreement,
KSvC received shareholder services fees of $71,000
for the year ended November 30, 1999 of which
$20,000 is unpaid.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. For the year ended November 30,
1999, the Fund made no payments to its officers and
incurred fees of $10,000 to its independent
trustees.
22
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------
1999 1998
------------------ -----------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
------------------------------------------------------------------------
SHARES SOLD
------------------------------------------------------------------------
Class A 11,077 $ 67,206 2,297 12,245
------------------------------------------------------------------------
Class B 4,477 $ 26,454 1,653 8,787
------------------------------------------------------------------------
Class C 1,533 $ 10,105 155 788
------------------------------------------------------------------------
------------------------------------------------------------------------
SHARES ISSUED TO REINVESTMENT OF DIVIDENDS
------------------------------------------------------------------------
Class A -- -- 6 36
------------------------------------------------------------------------
Class B -- -- 1 6
------------------------------------------------------------------------
------------------------------------------------------------------------
SHARES REDEEMED
------------------------------------------------------------------------
Class A (10,278) (62,296) (2,104) (11,163)
------------------------------------------------------------------------
Class B (3,919) (22,943) (1,456) (7,686)
------------------------------------------------------------------------
Class C (1,444) (9,661) (139) (722)
------------------------------------------------------------------------
------------------------------------------------------------------------
CONVERSION OF SHARES
------------------------------------------------------------------------
Class A 29 183 16 103
------------------------------------------------------------------------
Class B (30) (183) (16) (103)
------------------------------------------------------------------------
NET INCREASE FROM CAPITAL
SHARE TRANSACTIONS $ 8,865 $ 2,291
------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
5 EXPENSE OFF-SET
ARRANGEMENTS The Fund has entered into arrangements with its
custodian whereby credits realized as a result of
uninvested cash balances were used to reduce a
portion of the fund's expenses. During the period,
the Fund's custodian fees were reduced by $14,000
under these arrangements.
- --------------------------------------------------------------------------------
6 LINE OF CREDIT The Fund and several Kemper funds (the
"Participants") share in a $750 million revolving
credit facility for temporary or emergency
purposes, including the meeting of redemption
requests that otherwise might require the untimely
disposition of securities. The Participants are
charged an annual commitment fee which is allocated
pro rata among each of the Participants. Interest
is calculated based on the market rates at the time
of the borrowing. The Fund may borrow up to a
maximum of 25 percent of its net assets under the
agreement.
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
7 INVESTING IN
EMERGING MARKETS Investing in emerging markets may involve special
risks and considerations not typically associated
with investing in the United States. These risks
include revaluation of currencies, high rates of
inflation, repatriation restrictions on income and
capital, and future adverse political and economic
developments. Moreover, securities issued in these
markets may be less liquid, subject to government
ownership controls, delayed settlements, and their
prices more volatile than those of comparable
securities in the United States.
24
<PAGE> 25
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 the Kemper Asian Growth Fund as of
November 30, 1999, and the related statements of operations for the year then
ended and the statement of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the fiscal
periods since 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 auditing standards generally
accepted in the United States. 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, 1999, by correspondence with the custodian. 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, 1999, the results of its operations, the
changes in its net assets and the financial highlights for the periods referred
to above in conformity with accounting principles generally accepted in the
United States.
ERNST & YOUNG LLP
Chicago, Illinois
January 18, 2000
25
<PAGE> 26
TAX INFORMATION
- --------------------------------------------------------------------------------
Tax Information
- --------------------------------------------------------------------------------
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your account, please call 1-800-621-1048.
26
<PAGE> 27
NOTES
27
<PAGE> 28
TRUSTEES&OFFICERS
TRUSTEES OFFICERS
<TABLE>
<S> <C> <C>
JOHN W. BALLANTINE MARK S. CASADY LINDA J. WONDRACK
Trustee President Vice President
LEWIS A. BURNHAM PHILIP J. COLLORA MAUREEN E. KANE
Trustee Vice President and Assistant Secretary
Secretary
LINDA C. COUGHLIN CAROLINE PEARSON
Trustee THERESA GUSMAN Assistant Secretary
Vice President
DONALD L. DUNAWAY BRENDA LYONS
Trustee JOHN R. HEBBLE Assistant Treasurer
Treasurer
ROBERT B. HOFFMAN
Trustee THOMAS W. LITTAUER
Vice President
DONALD R. JONES
Trustee ANN M. MCCREARY
Vice President
THOMAS W. LITTAUER
Trustee KATHRYN L. QUIRK
Vice President
SHIRLEY D. PETERSON
Trustee TIEN YU SIEH
Vice President
WILLIAM P. SOMMERS
Trustee WILLIAM F. TRUSCOTT
Vice President
</TABLE>
................................................................................
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
...............................................................................
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 219557
Kansas City, MO 64121
...............................................................................
TRANSFER AGENT INVESTORS FIDUCIARY TRUST COMPANY
801 Pennsylvania Avenue
Kansas City, MO 64105
...............................................................................
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 (01/25/00) 1099510
