<PAGE> 1
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MAY 31, 2000
Seeks to provide long-term growth
KEMPER
ASIAN GROWTH FUND
"... We view volatility in the U.S. markets as 'noise' that only serves to
obscure the positive story that is unfolding in Asia. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
8
LARGEST HOLDINGS
9
PORTFOLIO OF INVESTMENTS
14
FINANCIAL STATEMENTS
17
FINANCIAL HIGHLIGHTS
19
NOTES TO FINANCIAL STATEMENTS
AT A GLANCE
KEMPER ASIAN GROWTH FUND TOTAL RETURNS
FOR THE SIX-MONTH PERIOD ENDED MAY 31, 2000 (UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER ASIAN GROWTH KEMPER ASIAN GROWTH LIPPER PACIFIC EX JAPAN
KEMPER ASIAN GROWTH FUND CLASS A FUND CLASS B FUND CLASS C FUNDS CATEGORY AVERAGE*
-------------------------------- ------------------- ------------------- -----------------------
<S> <C> <C> <C>
-8.57 -8.98 -8.94 -6.15
</TABLE>
RETURNS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE PERFORMANCE. RETURNS AND NET
ASSET VALUE FLUCTUATE. SHARES ARE REDEEMABLE AT CURRENT NET ASSET VALUE, WHICH
MAY BE MORE OR LESS THAN ORIGINAL COST.
*LIPPER, INC. RETURNS 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
5/31/00 11/30/99
..........................................................
<S> <C> <C> <C> <C>
KEMPER ASIAN GROWTH FUND CLASS
A $7.36 $8.05
..........................................................
KEMPER ASIAN GROWTH FUND CLASS
B $7.20 $7.91
..........................................................
KEMPER ASIAN GROWTH FUND CLASS
C $7.13 $7.83
..........................................................
</TABLE>
KEMPER ASIAN GROWTH FUND RANKINGS
AS OF 5/31/00
COMPARED WITH ALL OTHER FUNDS IN THE LIPPER PACIFIC EX JAPAN FUNDS CATEGORY*
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
....................................................................................
<S> <C> <C> <C> <C> <C>
1-YEAR #37 of 76 Funds #39 of 76 funds #40 of 76 funds
....................................................................................
3-YEAR #38 of 67 Funds #43 of 67 funds #45 of 67 funds
....................................................................................
</TABLE>
YOUR FUND'S STYLE
MORNINGSTAR INTERNATIONAL EQUITY STYLE BOX(TM)
<TABLE>
<S> <C>
[MORNINGSTAR EQUITY STYLE Morningstar's International Equity Style Box(TM)
BOX] placement is based on a fund's price-to-earnings
and price-to-cash-flow ratios relative to the
MSCI EAFE, as well as the size of the companies
in which it invests, or median market
capitalization. The style box represents a
snapshot of a fund's portfolio on a single day,
but it's not exact because a portfolio changes
from day to day. A longer-term view is
represented by the fund's Morningstar category,
which is based on actual investment style as
measured by the fund's underlying holdings over
the past three years.
</TABLE>
TERMS TO KNOW
BOTTOM-UP INVESTMENT STYLE An investment style that assesses the performance of
individual companies before considering the impact of economic trends. The
companies may be identified from research reports, stock screens or personal
knowledge of the products and services. This approach, which is the opposite of
"top-down" investing, assumes that individual companies can do well even if the
industry as a whole may not be performing well.
OVERWEIGHTING/UNDERWEIGHTING The allocation of assets -- usually in terms of
sector, industry or country -- within a portfolio relative to the portfolio's
benchmark index or investment universe.
RESTRUCTURING Implementation of major corporate changes aimed at greater
efficiency and adaptation to changing markets. Cost-cutting initiatives, debt
retirement, management realignments and the sale of noncore businesses are all
developments frequently associated with corporate restructuring.
<PAGE> 3
ECONOMIC OVERVIEW
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.
DEAR KEMPER FUNDS SHAREHOLDER,
When an irresistible force such as the ebullient U.S. economy meets an immovable
object, such as a determined Federal Reserve Board, the old song is right:
Something's gotta give. One possibility -- the economy could slow down as the
Fed has ordered. Or, if market volatility becomes true distress, the Fed could
back off, as it has in the past. A third possibility is that neither the Fed nor
the economy will give way until it's too late, which could lead to a recession.
Recent evidence suggests, however, that the economy probably will slow down as
ordered.
Before explaining why, perhaps it's best to start with a review of how
monetary policy works. Central bankers often sound like witch doctors reading
animal entrails, so it's understandable that many people are confused about
monetary policy. But monetary policy still works in the same way it always has.
First, it changes the price and availability of money. More subtly, it alters
people's perceptions about and confidence in the future, thereby adjusting their
willingness to take risks.
It's a bit early to tell how the Fed's monetary policy is working so far. The
policymakers only started raising interest rates about a year ago, and it takes
at least that long for higher rates to impact borrowers. There are two reasons.
First, interest rates on many existing loans are fixed. And, a family who has
just selected a dream house isn't going to walk away if mortgage rates rise a
notch. Similarly, a company that has just approved an expansion program won't
stop cold because the prime rate is higher. So it's foolish to think that
America's economy has become less interest-sensitive because the economy roared
through the first several months of this year. Americans are more in hock than
ever, so higher interest rates will hurt more than ever. The May dip in housing
starts and auto sales -- especially the higher priced, gas guzzling sport
utility vehicles -- is probably the first sign that higher rates are biting.
They will bite harder in coming months. We look for both housing starts and
vehicle sales to drop about 10 percent in 2001.
Confidence is harder to measure, but there are some early flutters of
weakness. It's true that consumers remain cheerily upbeat. But corporate bond
markets, the most sensitive barometer of business confidence and a vital source
of corporate funds, have been nervous. Investors are demanding a big premium
before they'll buy lower quality bonds, which means there's less new money for
companies to spend. Corporate bond issuance through mid-June was 35 percent
below the first five and a half months of 1999.
So far, companies have been able to get around the bond market stinginess by
turning to their bankers. Banks lent businesses 8 percent more from January
through May of this year than they did during the first five months of 1999. But
some banks are beginning to worry, too. Bank examiners have been questioning the
quality of loans and the level of reserves. In response, more bankers are
tightening lending standards and raising rates. This is a textbook case of how
tighter monetary policy eventually slows an economy.
Aren't bond market and banker concerns overdone? As long as the economy keeps
growing at 3 percent or so, won't that guarantee such good profits that paying
the bills will be a cinch? Not necessarily. Profits are far more cyclical than
economic growth. Earnings actually fell during 1998, even though the economy
continued to roll. That was a global crisis, when foreign earnings fell sharply.
But take a look at the last "soft landing" during 1995. Revenue growth dipped
and pricing power fell, squeezing profits. The same thing is likely to happen
again in the coming slowdown -- and this time, tight labor markets could make it
even tougher for companies to control costs quickly. Assuming growth is between
2.5 percent and 3 percent by the end of 2001, we believe year-over-year profit
comparisons will have turned slightly negative.
A profit slowdown when new lines of credit are hard to come by will take its
toll on capital spending. We expect growth in business outlays for buildings and
equipment to slip from over 12 percent this year to around 8 percent in 2001.
That's still quite robust, and the "high-tech imperative" is the reason why.
Executives believe that they have no option but to keep up with the
technological revolution that is transforming the world. The fact that high-tech
gear keeps getting cheaper year after year and also helps save on expensive
labor makes the decision to buy it easy. Indeed, unit sales of computers and
peripherals to businesses have sustained growth rates in excess of 40 percent
since 1995. And the rush is on to lay down the infrastructure for the next
generation of wireless communications. We estimate that the sector will see unit
growth of about 50 percent this year, double the growth in 1999. It's hard even
for superstars to sustain these stratospheric
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 (5/31/00) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10-year Treasury rate (1) 6.40 6.00 5.50 5.60
Prime rate (2) 9.50 8.50 7.75 8.50
Inflation rate (3)* 3.00 2.60 2.30 1.50
The U.S. dollar (4) 4.30 -0.70 -0.90 6.40
Capital goods orders (5)* 17.00 12.30 2.50 14.50
Industrial production (5)* 6.10 3.70 2.90 5.20
Employment growth (6) 2.60 2.20 2.30 2.60
</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 4/30/00.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
compound growth rates forever, and we do expect some moderation next year.
However, high-tech orders continue to ratchet upwards, and the shortage in
semiconductors and other components has persisted long enough to cause major
players to announce huge capacity additions.
Another battle the Fed must win before it succeeds in slowing the economy is
bringing consumers to heel. Most families still feel better off than they were
last year and much richer than they were five years ago. That's a powerful
incentive to spend and enjoy. Indeed, total real consumption has been galloping
at a 5 percent rate or better since early 1998. But consumers are so important
to the economy that if they don't start spending less freely, there won't be a
slowdown. We expect the Fed to be successful and slow down shoppers in the
months ahead -- but the victory won't be an easy one. We expect at least one
more rate hike and a few more financial fireworks before consumers and the
economy hoist the white flag.
So what will the slowdown look like? During the spring, retail sales, housing
starts and job creation slowed, but strength in high tech orders and capital
equipment production probably will help keep the slowdown from becoming too
abrupt. We expect about 3.5 percent growth in the second half. That would still
produce a hearty 5 percent growth for full year 2000. During 2001, the full
impact of the Fed's recent tightening will probably rein growth in to just 3
percent.
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 JUNE 29, 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 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.
THROUGHOUT THE SEMIANNUAL PERIOD, THE ASIAN MARKETS CLOSELY TRACKED THE
PERFORMANCE OF U.S. EQUITIES. AFTER THE STRONG PERFORMANCE OF THE TECHNOLOGY AND
TELECOMMUNICATIONS SECTORS THROUGHOUT THE LATTER PART OF 1999 AND THE BEGINNING
MONTHS OF 2000, THE NASDAQ TUMBLED OVER THE FINAL TWO AND A HALF MONTHS OF THE
PERIOD, AND ASIAN MARKETS CORRECTED AS WELL. DESPITE THE RECENT VOLATILITY, THE
FUND'S MANAGEMENT TEAM MAINTAINS AN OPTIMISTIC OUTLOOK FOR ASIAN EQUITIES. LEAD
PORTFOLIO MANAGER TIEN-YU SIEH REVIEWS THE RECENT MARKET ENVIRONMENT AND THE
FUND'S PERFORMANCE OVER THE SIX-MONTH PERIOD ENDING MAY 31, 2000.
Q THE ASIAN MARKETS HAVE BEEN EXCEPTIONALLY VOLATILE OVER THE PAST SIX
MONTHS. WHAT HAS BEEN THE DRIVING FORCE BEHIND THIS BEHAVIOR?
A The most important factor has been the tremendous volatility in the U.S.
stock market, particularly the Nasdaq. While the fluctuations of U.S. equities
have influenced all of the global markets, the impact has been particularly
acute in Asia, where technology and telecommunications stocks constitute a large
portion of the indices in Taiwan, Korea and China. As stocks in these sectors
rocketed to new highs in the United States, their Asian counterparts followed in
tandem, posting large gains from December through February. The U.S. market
correction ensued over the latter months of the period, and stocks in Asia
dropped sharply as the Nasdaq plunged. While this proved to be a negative
influence on fund performance during this time, we view volatility in the U.S.
markets as 'noise' that only serves to obscure the positive story that is
unfolding in Asia.
Q ON THE SUBJECT OF 'NOISE,' THERE HAS RECENTLY BEEN A LOT OF MEDIA
ATTENTION TO MATTERS CONCERNING TAIWAN, CHINA AND KOREA. WILL YOU COMMENT ON
THESE CONCERNS AND HOW THE INVESTMENT ENVIRONMENT IN THIS REGION IS AFFECTED?
A In Taiwan, the recent defeat of the incumbent KMT party and election of
Chen Shui-bian as president refreshes the debate over Taiwan independence.
However, President Chen has demonstrated considerable prudence, reflecting his
desire for more than one term in office. The new government has cast a
better-than-expected tone on the discussion on economic ties between China and
Taiwan, however, which dampens political risk. Even so, market uncertainty in
response to these recent developments has put negative pressure on the Taiwanese
market.
There has been considerable progress toward the acceptance of China into the
World Trade Organization (WTO). China's market, has, in fact, responded
positively to the developments here in the United States and Europe. The
implications, I believe, include a gradual but significant increase in foreign
direct investment in China from developed nations. A number of industries are
already significantly deregulated, but WTO status should help reinforce and
maintain a reform process that is already under way in such sectors as
telecommunications and financial services. Also,
5
<PAGE> 6
PERFORMANCE UPDATE
new distribution infrastructure should emerge over time, aiding not only trade
with other nations but interprovince trade as well.
As for Korea, investors remain concerned about the health of the banking
system. Nevertheless, we are optimistic from a bottom-up, stock-specific
perspective. Korea is particularly attractive in terms of both valuations and
earnings growth potential. Even more important, the country is undergoing
significant changes in its corporate culture. In the past, the large CHAEBOLS
dominated the country's business environment -- absorbing capital, labor and
natural resources. Today, due in part to the growth of the Internet, we see a
decline in the traditional fear of failure among newcomers to the corporate
world and a corresponding evolution of a more dynamic, entrepreneurial
environment as the result. Over time, we believe that this type of positive
fundamental change is more important than the day-to-day fluctuations of stock
prices.
Q HOW DID THE FUND PERFORM IN THIS ENVIRONMENT?
A For the six months ended May 31, 2000, Kemper Asian Growth Fund was down
8.57 percent (Class A shares unadjusted for any sales charge), proving more
resilient than its unmanaged benchmark, the MSCI Asia All Country Asia Free
Ex-Japan index, which lost 10.60 percent for the same period.
Downside pressures on the fund came primarily from the Nasdaq correction. The
fact is, many Asian companies dominate several subsectors in the technology and
telecommunications industries. Because of that, Asian markets, compared with
other regions around the globe, were influenced more heavily by Nasdaq behavior.
Our overweighted positions in Taiwan and Korea detracted from performance as
well, since both markets were impacted negatively by the country-specific
factors previously discussed.
Although technology and telecommunications slumped in the latter half of the
period, over the long term the fund has been buoyed by its position in these
sectors relative to its benchmark. Within the tech group, we focus on companies
with strong business franchises and management teams that possess real-world
experience. Our position is concentrated in technology enablers, wireless
communications providers, companies that make the "nuts and bolts" of the
communications infrastructure and contract manufacturers in Korea, Taiwan and
Singapore. While Asia's tech sector remains volatile, we believe that it's worth
taking on the additional risk to participate in what we believe is its
substantial long-term upside.
We are also overweighted in consumer stocks, which stand to benefit from the
region's economic recovery and expanding levels of domestic consumption.
Included in this group are retailers, cellular phone operators in the largest
markets, and banks that cater to a high-end clientele. We intend to maintain an
overweight position in companies with exposure to the domestic economy, as well
as leading exporters of industrial products and services.
Another key theme that distinguishes the portfolio is our investment in
companies that have seized the initiative to improve their competitive
positions. We expect that as the region's recovery continues to gain momentum,
there will be an increasing differentiation between companies with strong
fundamentals and those whose stocks prices have merely been lifted by the
improving economic backdrop. For that reason, we are confident that a bottom-up
approach that focuses on fundamentals and on-the-ground research will be well
suited to the stock picker's market that we see emerging over the remainder of
the year.
Q HOW HAVE YOU SOUGHT TO TAKE ADVANTAGE OF THE RECENT VOLATILITY IN THE
ASIAN MARKETS?
A We have been buyers during the recent correction. We have added to our top
holdings -- particularly Samsung Electronics, SK Telecom and China Telecom --
and we made a marginal increase in our holdings in the financial sector. We see
downdrafts in the region's markets as a buying opportunity for the simple reason
that improving fundamentals and positive earnings momentum of many top companies
are not being fully reflected in their stock prices. In general, our valuations
suggest Asian companies are much more reasonably priced than U.S. equities, but
yet during corrections Asian stocks tend to fall just as far as their American
counterparts. If the Standard and Poor's 500 stock index is valued at 30 times
earnings, and Korea's market is valued at less than 10 times, why should a 2
percent drop in the United States translate into a 2 percent drop in Korea? It
shouldn't necessarily, but it has in recent months because local sentiment --
especially among retail investors -- has been a more important driver of market
performance than fundamentals. As bottom-up investors, we welcome this anomaly
as an opportunity to add to positions in quality companies whose prices, in our
estimation, are depressed by external factors.
6
<PAGE> 7
PERFORMANCE UPDATE
Q WHAT IS YOUR OUTLOOK FOR ASIAN EQUITIES?
A Although volatility in the United States should continue to drive the
near-term performance of Asia's markets, our long-term outlook for the region
remains favorable. Growth continues to improve, exports are up, inflation is
benign, and the rapid growth of the consumer culture is leading to a stronger,
more diverse economy. On the individual company level, we are enthusiastic about
increasingly efficient management practices and the growing acceptance of
restructuring as a means to boost profits. These factors, in turn, should
increase the flow of foreign assets into the region, which over time will help
provide financing for companies that are investing for the future. As a result,
we continue to believe that corporate earnings growth will exceed expectations
over the balance of 2000. We therefore urge investors to maintain a long-term
outlook even when the markets are falling. While we expect that the shifting
U.S. interest-rate outlook will continue to roil the global markets in the near
term, we believe that Asia will remain the source of attractive investment
opportunities for many years to come.
7
<PAGE> 8
LARGEST HOLDINGS
THE FUND'S 15 LARGEST HOLDINGS
Representing 54 percent of the funds total investment portfolio on May 31, 2000.
<TABLE>
<CAPTION>
HOLDINGS COUNTRY PERCENT
<S> <C> <C> <C>
-------------------------------------------------------------------------------------
1. SK TELECOM CO. Korea 8.9%
-------------------------------------------------------------------------------------
2. SAMSUNG ELECTRONICS Korea 8.4%
-------------------------------------------------------------------------------------
3. CHINA TELECOM Hong Kong 6.1%
-------------------------------------------------------------------------------------
4. CHARTERED SEMICONDUCTOR Singapore 4.4%
-------------------------------------------------------------------------------------
5. HUTCHISON WHAMPOA Hong Kong 3.3%
-------------------------------------------------------------------------------------
6. INFOSYS TECHNOLOGIES India 3.0%
-------------------------------------------------------------------------------------
7. SATYAM COMPUTER SERVICES India 2.7%
-------------------------------------------------------------------------------------
8. HON HAI PRECISION INDUSTRY CO. Taiwan 2.7%
-------------------------------------------------------------------------------------
9. UNITED MICROELECTRONICS Taiwan 2.5%
-------------------------------------------------------------------------------------
10. TAIWAN SEMICONDUCTOR MANUFACTURING Taiwan 2.4%
CO.
-------------------------------------------------------------------------------------
11. STANDARD CHARTERED United Kingdom 2.2%
-------------------------------------------------------------------------------------
12. DBS GROUP HOLDINGS Singapore 1.9%
-------------------------------------------------------------------------------------
13. KOREA TELECOM Korea 1.9%
-------------------------------------------------------------------------------------
14. QPL INTERNATIONAL HOLDINGS Hong Kong 1.8%
-------------------------------------------------------------------------------------
15. FAR EASTERN TEXTILE Taiwan 1.8%
-------------------------------------------------------------------------------------
</TABLE>
*PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.
8
<PAGE> 9
PORTFOLIO OF INVESTMENTS
KEMPER ASIAN GROWTH FUND
Portfolio of Investments at May 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM OBLIGATIONS--2.3% AMOUNT VALUE
<S> <C> <C> <C> <C> <C>
Student Loan Marketing Association, 6.300%,
06/01/2000** $300,000 $ 300,000
Chase Euro Time Deposit, 6.625%,
06/01/2000** 300,000 300,000
----------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $600,000) 600,000
----------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS--97.7% NUMBER OF SHARES
<S> <C> <C> <C> <C> <C>
AUSTRALIA--0.7%
Davnet Limited
(TELECOMMUNICATION SERVICES) 224,600 180,143
----------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
CHINA--1.1%
Nanjing Panda Electronics Co., Ltd.*
(DEVELOPER, MANUFACTURER AND MARKETER OF
ELECTRONIC AND TELECOMMUNICATIONS
PRODUCTS) 626,000 291,221
----------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
HONG KONG--22.4%
ASM Pacific Technology Ltd.
(MANUFACTURER OF MACHINERY FOR THE
PRODUCTION OF SEMICONDUCTORS) 120,000 431,200
China Telecom Ltd.
(PROVIDER OF CELLULAR TELECOMMUNICATION
SERVICES) 210,000 1,569,839
Esprit Holdings Ltd.*
(DESIGNER AND MANUFACTURER OF HIGH QUALITY
FASHION PRODUCTS) 317,178 321,566
Giordano International Ltd.
(RETAILER OF CASUAL APPAREL) 224,187 351,002
Hutchison Whampoa, Ltd.
(DIVERSIFIED INVESTMENT HOLDING COMPANY) 74,800 861,541
Legend Holdings Ltd.
(MANUFACTURER OF COMPUTERS AND RELATED
PRODUCTS) 386,000 391,340
Li & Fung Ltd.
(EXPORTER OF CONSUMER PRODUCTS) 100,000 428,634
New World Development Co., Ltd.
(PROPERTY INVESTMENT AND DEVELOPMENT
COMPANY) 704 696
Next Media Ltd.*
(PUBLISHER) 432,000 58,766
Pacific Century CyberWorks Ltd.*
(PROVIDER OF INTERNET SERVICES) 167,000 326,833
QPL International Holdings Ltd.*
(MANUFACTURER OF LEADFRAMES AND INTEGRATED
CIRCUITS) 335,000 475,058
Quality Healthcare Asia Ltd.*
(PROVIDER OF MEDICAL COVERAGE SERVICES) 696,000 205,436
Sunevision Holdings Ltd.*
(PROVIDER OF INTERNET INFRASTRUCTURE AND
SERVICES) 233,500 212,758
TCL International Holdings Ltd.*
(MANUFACTURER OF ELECTRONIC PRODUCTS) 360,000 147,840
----------------------------------------------------------------------------
5,782,509
</TABLE>
The accompanying notes are an integral part of the financial statements. 9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C>
INDIA--11.5%
Cipla Ltd.
(MANUFACTURER OF FINE CHEMICALS AND
PHARMACEUTICALS) 10,300 $ 179,311
Dr. Reddy's Laboratories Ltd.
(PHARMACEUTICAL COMPANY) 7,700 239,430
Global Tele-Systems Limited
(MANUFACTURER OF TELECOMMUNICATION
PRODUCTS AND SERVICES) 11,700 268,542
Hindalco Industries Ltd.
(MINER/REFINER OF ALUMINUM) 8,500 137,583
Hindustan Lever Ltd.
(MANUFACTURER OF CONSUMER PRODUCTS) 3,100 178,385
Infosys Technologies Ltd.
(FINANCIAL AND INDUSTRIAL SOFTWARE
DEVELOPER) 5,000 784,072
Ranbaxy Laboratories, Ltd.
(MANUFACTURER AND DISTRIBUTOR OF
PHARMACEUTICAL PRODUCTS) 14,900 183,847
Satyam Computer Services Ltd.
(PROVIDER OF SOFTWARE SERVICES) 12,300 701,383
State Bank of India
(BANK) 64,600 294,921
----------------------------------------------------------------------------
2,967,474
-----------------------------------------------------------------------------------------------------------------------
INDONESIA--0.2%
PT Astra Agro Lestari Tbk
(PRODUCER OF OIL PALM, RUBBER, TEA AND
COCOA) 80 14
PT Indonesia Satellite Corp. (ADR)*
(PROVIDER OF TELECOMMUNICATIONS SERVICES) 4,700 50,231
----------------------------------------------------------------------------
50,245
-----------------------------------------------------------------------------------------------------------------------
KOREA--26.0%
Dacom Corp.*
(PROVIDER OF DOMESTIC LONG-DISTANCE AND
INTERNET SERVICES) 2,660 354,431
Dreamline Corp.*
(PROVIDER OF INTERNET SERVICES) 1,449 43,104
Housing & Commercial Bank
(BANK) 15,169 275,312
Insung Information Co., Ltd.
(PROVIDER OF A WIDE RANGE OF NETWORK
SOLUTIONS AND COMPUTER TECHNOLOGY) 8,290 108,258
Korea Telecom Corp. (ADR)
(PROVIDER OF TELECOMMUNICATIONS SERVICES) 13,100 484,700
Locus Corporation*
(PROVIDER OF SPECIALIZED SYSTEM
INTEGRATION AND SOLUTIONS FOR VARIOUS
COMMUNICATIONS SERVICES) 1,780 130,171
Opicom Co., Ltd.*
(FIBER OPTIC COMMUNICATIONS COMPANY) 7,473 111,814
SK Telecom Co., Ltd.
(PROVIDER OF MOBILE TELECOMMUNICATIONS
SERVICES) 6,740 2,297,388
Samsung Electro-Mechanics Co.*
(MANUFACTURER OF PRECISION AND ELECTRONIC
PARTS) 7,530 473,333
Samsung Electronics Co.
(ELECTRONICS MANUFACTURER) 7,937 2,164,317
Shinhan Bank (GDR)
(BANK) 19,400 286,635
----------------------------------------------------------------------------
6,729,463
</TABLE>
10 The accompanying notes are an integral part of the financial statements.
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C>
MALAYSIA--1.2%
Unisem (M) Berhad
(MANUFACTURER OF SEMICONDUCTORS) 37,000 $ 314,017
----------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
SINGAPORE--6.2%
Chartered Semiconductor (ADR)*
(PROVIDER OF WAFER FABRICATION SERVICES TO
SEMICONDUCTOR SUPPLIERS) 14,050 1,127,513
DBS Group Holdings Ltd.
(PROVIDER OF BANKING AND FINANCING
SERVICES) 48,978 489,214
----------------------------------------------------------------------------
1,616,727
-----------------------------------------------------------------------------------------------------------------------
TAIWAN--22.1%
ASE Test Ltd.*
(PROVIDER OF TESTING SERVICES TO
SEMICONDUCTOR MANUFACTURERS) 12,300 339,788
China Motor Company Ltd.
(MANUFACTURER OF TRUCKS AND AUTOMOBILES) 682 715
Chinatrust Commercial Bank
(BANK) 303,800 301,729
Compeq Manufacturing Co., Ltd.
(MANUFACTURER OF MULTI-LAYER AND
DOUBLE-SIDED PRINTED CIRCUIT BOARDS) 73,000 431,224
Far Eastern Textile Ltd.
(MANUFACTURER OF NATURAL AND SYNTHETIC
TEXTILE PRODUCTS) 292,280 474,327
Formosa Plastics Corp.
(MANUFACTURER OF PLASTICS MATERIALS) 116,370 241,729
GigaMedia Ltd.*
(PROVIDER OF BROADBAND INTERNET ACCESS
SERVICES AND CONTENT) 11,300 198,456
Hon Hai Precision Industry Co., Ltd.
(MANUFACTURER OF ELECTRONIC PRODUCTS) 75,400 690,127
Pacific Electric Wire & Cable Co., Ltd.*
(MANUFACTURER OF ELECTRICAL WIRES AND
CABLES) 423,000 433,846
Synnex Technology International Corp. (GDR)
(DISTRIBUTOR OF PERSONAL COMPUTERS AND
PERIPHERALS) 69,000 385,200
Taiwan Cement Corp.
(MANUFACTURER OF CEMENT) 487,000 441,003
Taiwan Semiconductor Manufacturing Co.
(MANUFACTURER OF INTEGRATED CIRCUITS) 120,806 615,597
United Microelectronics Corp., Ltd.*
(MANUFACTURER OF INTEGRATED CIRCUITS) 210,000 637,293
Via Technologies Inc.
(DESIGNER, MANUFACTURER AND MARKETER OF
INTEGRATED PC CHIPSETS) 19,000 328,075
WYSE Technology Taiwan Ltd.
(MANUFACTURER OF COMPUTER TERMINALS) 90,000 197,176
----------------------------------------------------------------------------
5,716,285
-----------------------------------------------------------------------------------------------------------------------
THAILAND--1.3%
Telecomasia, Ltd. (Foreign registered)*
(TELECOMMUNICATION SERVICES) 325,300 323,682
----------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--3.7%
HSBC Holdings PLC
(INTERNATIONAL BANKING AND FINANCIAL
SERVICES COMPANY) 35,600 392,906
Standard Chartered PLC
(INTERNATIONAL BANKING GROUP) 44,608 575,306
----------------------------------------------------------------------------
968,212
</TABLE>
The accompanying notes are an integral part of the financial statements. 11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE
<S> <C> <C> <C> <C> <C>
UNITED STATES--1.3%
AsiaInfo Holdings, Inc.*
(PROVIDER OF INTERNET-RELATED SOFTWARE
PRODUCTS) 7,300 $ 329,413
----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $23,878,576) 25,269,391
----------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100.0%
(Cost $24,478,576)(a) $25,869,391
----------------------------------------------------------------------------
</TABLE>
NOTES TO PORTFOLIO OF INVESTMENTS
* Non-income producing security.
** Annualized yield at time of purchase; not a coupon rate.
(a) The cost for federal income tax purposes was $24,478,576. At May 31, 2000,
net unrealized appreciation for all securities based on tax cost was
$1,390,815. This consisted of aggregated gross unrealized appreciation for
all securities in which there was an excess of market value over tax cost of
$4,453,334 and aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over market value of $3,062,519.
12 The accompanying notes are an integral part of the financial statements.
<PAGE> 13
PORTFOLIO OF INVESTMENTS
At May 31, 2000, the Fund's portfolio of investments had the following industry
diversification:
<TABLE>
<CAPTION>
VALUE %
------------------------------------------------------------------------------------------
<S> <C> <C>
Technology $ 6,514,616 25.2%
------------------------------------------------------------------------------------------
Communications 6,026,803 23.3%
------------------------------------------------------------------------------------------
Manufacturing 4,582,392 17.7%
------------------------------------------------------------------------------------------
Financial 3,478,260 13.4%
------------------------------------------------------------------------------------------
Consumer Discretionary 1,753,914 6.8%
------------------------------------------------------------------------------------------
Service 1,526,067 5.9%
------------------------------------------------------------------------------------------
Health 808,024 3.1%
------------------------------------------------------------------------------------------
Construction 441,003 1.7%
------------------------------------------------------------------------------------------
Metals & Minerals 137,583 0.5%
------------------------------------------------------------------------------------------
Durables 715 0.0%
------------------------------------------------------------------------------------------
Staples 14 0.0%
------------------------------------------------------------------------------------------
Total Common Stocks 25,269,391 97.7%
------------------------------------------------------------------------------------------
Short-Term Obligations 600,000 2.3%
------------------------------------------------------------------------------------------
TOTAL INVESTMENTS $25,869,391 100.0%
------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 13
<PAGE> 14
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
As of May 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $24,478,576) $25,869,391
---------------------------------------------------------------------------
Cash 429,239
---------------------------------------------------------------------------
Foreign currency, at value (cost $1,912,956) 1,903,433
---------------------------------------------------------------------------
Dividend receivable 17,902
---------------------------------------------------------------------------
Receivable for Fund shares sold 160,487
---------------------------------------------------------------------------
Foreign taxes recoverable 301
---------------------------------------------------------------------------
Due from Adviser 44,691
---------------------------------------------------------------------------
TOTAL ASSETS 28,425,444
---------------------------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed 1,357,813
---------------------------------------------------------------------------
Total liabilities 1,357,813
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $27,067,631
---------------------------------------------------------------------------
NET ASSETS
Net assets consist of:
Accumulated net investment loss $ (280,273)
---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 1,390,815
---------------------------------------------------------------------------
Foreign currency related transactions (9,688)
---------------------------------------------------------------------------
Accumulated net realized gain (loss) (593,082)
---------------------------------------------------------------------------
Paid-in-capital 26,559,859
---------------------------------------------------------------------------
NET ASSETS, AT VALUE $27,067,631
---------------------------------------------------------------------------
NET ASSET VALUE
CLASS A SHARES
Net asset value and redemption price per share
($15,707,612 / 2,134,838 shares outstanding of beneficial
interest, $.01 par value, unlimited number of shares
authorized) $7.36
---------------------------------------------------------------------------
Maximum offering price per share (100 / 94.25 of $7.36) $7.81
---------------------------------------------------------------------------
CLASS B SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($9,812,304 /
1,362,909 shares outstanding of beneficial interest, $.01
par value, unlimited number of shares authorized) $7.20
---------------------------------------------------------------------------
CLASS C SHARES
Net asset value, offering and redemption price (subject to
contingent deferred sales charge) per share ($1,547,715 /
217,195 shares outstanding of beneficial interest, $.01
par value, unlimited number of shares authorized) $7.13
---------------------------------------------------------------------------
</TABLE>
14 The accompanying notes are an integral part of the financial statements.
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
Six months ended May 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $11,826) $ 81,874
---------------------------------------------------------------------------
Interest (net of foreign taxes withheld of $544) 18,451
---------------------------------------------------------------------------
Total income 100,325
---------------------------------------------------------------------------
Expenses:
Management fee 133,782
---------------------------------------------------------------------------
Services to shareholders 84,184
---------------------------------------------------------------------------
Custodian fees 45,939
---------------------------------------------------------------------------
Distribution services fees 49,667
---------------------------------------------------------------------------
Administrative services fees 39,348
---------------------------------------------------------------------------
Auditing 5,875
---------------------------------------------------------------------------
Legal 9,702
---------------------------------------------------------------------------
Trustees' fees and expenses 5,742
---------------------------------------------------------------------------
Reports to shareholders 36,841
---------------------------------------------------------------------------
Registration fees 41,439
---------------------------------------------------------------------------
Interest expense 22,641
---------------------------------------------------------------------------
Other 1,098
---------------------------------------------------------------------------
Total expenses, before expense reductions 476,258
---------------------------------------------------------------------------
Expense reductions (113,119)
---------------------------------------------------------------------------
Total expenses, after expense reductions 363,139
---------------------------------------------------------------------------
NET INVESTMENT LOSS (262,814)
---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain (loss) from:
Investments 2,969,274
---------------------------------------------------------------------------
Foreign currency related transactions (59,190)
---------------------------------------------------------------------------
2,910,084
---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) during the period
on:
Investments (4,664,669)
---------------------------------------------------------------------------
Foreign currency related transactions (10,782)
---------------------------------------------------------------------------
(4,675,451)
---------------------------------------------------------------------------
Net gain (loss) on investment transactions (1,765,367)
---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $(2,028,181)
---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements. 15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
MAY 31, NOVEMBER 30,
2000 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment gain (loss) $ (262,814) (37,134)
-----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions 2,910,084 912,949
-----------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investment
transactions during the period (4,675,451) 5,384,378
-----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (2,028,181) 6,260,193
-----------------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from shares sold 109,768,090 103,948,703
-----------------------------------------------------------------------------------------------------
Cost of shares redeemed (103,213,823) (95,083,496)
-----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from Fund share
transactions 6,554,267 8,865,207
-----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 4,526,086 15,125,400
-----------------------------------------------------------------------------------------------------
Net assets at beginning of period 22,541,545 7,416,145
-----------------------------------------------------------------------------------------------------
NET ASSETS AT END OF PERIOD (including accumulated net
investment loss of $280,273 and $17,459, respectively) $ 27,067,631 22,541,545
-----------------------------------------------------------------------------------------------------
</TABLE>
16 The accompanying notes are an integral part of the financial statements.
<PAGE> 17
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
(UNAUDITED) FROM
SIX MONTHS OCTOBER 21, 1996
ENDED YEARS ENDED NOVEMBER 30, (COMMENCEMENT OF
MAY 31, ------------------------ OPERATIONS) TO
2000 1999 1998 1997 NOVEMBER 30, 1996
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 8.05 5.41 6.65 10.04 9.50
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.06)(a) (.01)(a) .11 .08 --
-----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions (0.63) 2.65 (1.27) (3.47) .54
-----------------------------------------------------------------------------------------------------
Total from investment operations (0.69) 2.64 (1.16) (3.39) .54
-----------------------------------------------------------------------------------------------------
Less distributions from net investment
income -- -- (.08) -- --
-----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.36 8.05 5.41 6.65 10.04
-----------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B)(C) (8.57)* 48.80 (17.66) (33.76) 5.68*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets at end of period ($ thousands) 15,708 12,685 4,047 3,549 827
-----------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 2.54** 3.35 2.65 2.62 1.46**
-----------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 2.09** 1.76 1.80 1.60 1.46**
-----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.45)** (.17) 2.05 .97 .74**
-----------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 81** 80 131 155 74**
-----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
FOR THE PERIOD
(UNAUDITED) FROM
SIX MONTHS OCTOBER 21, 1996
ENDED YEARS ENDED NOVEMBER 30, (COMMENCEMENT OF
MAY 31, ------------------------ OPERATIONS) TO
2000 1999 1998 1997 NOVEMBER 30, 1996
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.91 5.34 6.58 10.03 9.50
-----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(a) (.02)(a) .06 -- --
-----------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investment transactions (0.61) 2.59 (1.28) (3.45) .53
-----------------------------------------------------------------------------------------------------
Total from investment operations (0.71) 2.57 (1.22) (3.45) .53
-----------------------------------------------------------------------------------------------------
Less distributions from net investment
income -- -- (.02) -- --
-----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.20 7.91 5.34 6.58 10.03
-----------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B)(C) (8.98)* 48.13 (18.65) (34.40) 5.58*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets at end of period ($ thousands) 9,812 8,674 3,035 2,545 941
-----------------------------------------------------------------------------------------------------
Ratio of expenses before expense
reductions (%) 3.54** 4.25 4.29 3.51 2.34**
-----------------------------------------------------------------------------------------------------
Ratio of expenses after expense
reductions (%) 2.63** 1.91 2.78 2.57 2.34**
-----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.99)** (.32) 1.07 -- (.14)**
-----------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 81** 80 131 155 74**
-----------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
FOR THE PERIOD
(UNAUDITED) FROM
SIX MONTHS OCTOBER 21, 1996
ENDED YEARS ENDED NOVEMBER 30, (COMMENCEMENT OF
MAY 31, ----------------------------- OPERATIONS) TO
2000 1999 1998 1997 NOVEMBER 30, 1996
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.83 5.35 6.60 10.03 9.50
---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.10)(a) (.08)(a) .05 -- --
---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investment transactions (0.60) 2.56 (1.28) (3.43) .53
---------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.70) 2.48 (1.23) (3.43) .53
---------------------------------------------------------------------------------------------------------------------
Less distributions from net investment
income -- -- (.02) -- --
---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.13 7.83 5.35 6.60 10.03
---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (%) (B)(C) (8.94)* 46.36 (18.72) (34.20) 5.58*
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL DATA
Net assets at end of period ($ thousands) 1,548 1,182 334 304 180
---------------------------------------------------------------------------------------------------------------------
Ratio of expenses, before expense reductions
(%) 3.80** 5.17 4.56 3.55 2.34**
---------------------------------------------------------------------------------------------------------------------
Ratio of expenses, after expense reductions
(%) 2.60** 2.81 2.71 2.54 2.34**
---------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) (%) (1.97)** (1.22) 1.14 .03 (.14)**
---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 81** 80 131 155 74**
---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
(a) Based on monthly average shares outstanding during the period.
(b) Total return does not reflect the effect of sales charge.
(c) Total return would have been lower had certain expenses not been waived.
18
<PAGE> 19
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,
19
<PAGE> 20
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 six months ended May 31, 2000, investment
transactions (excluding short-term investments) are
as follows:
Purchases $30,713,822
Proceeds from sales 26,804,698
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
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 0.85%
of the first $250 million of average daily net
assets declining to 0.72% of average daily net
assets in excess of $12.5 billion. The Fund
incurred a management fee of $102,113 for the six
months ended May 31, 2000 after an expense waiver
of $31,669 by Scudder Kemper.
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 $113,119 for the six months
ended May 31, 2000.
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The Fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (KDI). Underwriting commissions
retained by KDI in connection with the distribution
of Class A shares for the six months ended May 31,
2000 are $17,135.
For services under the distribution services
agreement the Fund pays KDI a fee of 0.75% 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 $32,963) and CDSC received by KDI for the six
months ended May 31, 2000 are $44,963.
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
0.25% 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 for the six months ended May 31,
2000, after an expense waiver of $39,011 by Scudder
Kemper, and of which $3 was paid to KDI affiliates.
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 $65,953
for the six months ended May 31, 2000.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. For the six months ended May 31,
2000, the Fund made no payments to its officers and
incurred fees of $5,742 to its independent
trustees.
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
(UNAUDITED) YEAR ENDED
SIX MONTHS ENDED NOVEMBER 30,
MAY 31, 2000 1999
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 9,083,305 $ 80,614,483 11,106,474 $ 67,389,155
---------------------------------------------------------------------------------------
Class B 1,407,770 12,325,460 4,476,157 26,454,401
---------------------------------------------------------------------------------------
Class C 1,999,527 16,674,467 1,532,583 10,105,147
---------------------------------------------------------------------------------------
SHARES REDEEMED
Class A (8,541,509) (76,696,535) (10,277,996) (62,296,327)
---------------------------------------------------------------------------------------
Class B (1,124,508) (9,985,359) (3,948,621) (23,126,232)
---------------------------------------------------------------------------------------
Class C (1,933,294) (16,378,249) (1,443,621) (9,660,937)
---------------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 16,563 153,680 29,000 183,000
---------------------------------------------------------------------------------------
Class B (16,889) (153,680) (30,000) (183,000)
---------------------------------------------------------------------------------------
NET INCREASE FROM CAPITAL SHARE
TRANSACTIONS $ 6,554,267 $ 8,865,207
---------------------------------------------------------------------------------------
</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 six
months, the Fund's custodian and transfer agent
fees were reduced by $8,225 and $1,251,
respectively, 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.
--------------------------------------------------------------------------------
7 BORROWINGS At May 31, 2000, the weighted average outstanding
daily balance of all loans for the Fund (based on
the number of days the loans were outstanding) was
approximately $1,546,875, with an average interest
rate of 6.50%. Interest expense for the six months
ended May 31, 2000 is $22,641. The maximum
borrowings outstanding during the year ended April
30, 2000 is $3,900,000.
--------------------------------------------------------------------------------
8 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.
22
<PAGE> 23
NOTES
23
<PAGE> 24
TRUSTEES&OFFICERS
<TABLE>
<S> <C> <C>
TRUSTEES OFFICERS
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>
<TABLE>
<S> <C>
.............................................................................................
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
</TABLE>
[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 - 3 (7/25/00) 1116550
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
