<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED MARCH 31, 1998
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
Seeking capital appreciation through the
use of aggressive investment techniques
KEMPER
AGGRESSIVE GROWTH FUND
"... We're able to work nimbly within the market ...
We made a good decision to substantially overweight
the fund in consumer nondurables, investing an average
of 35 to 40 percent of the portfolio in a sector that has
enjoyed strong performance during the past six months. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
ECONOMIC OVERVIEW
5
PERFORMANCE UPDATE
7
SHAREHOLDERS' MEETING
8
INDUSTRY SECTORS
9
LARGEST HOLDINGS
10
PORTFOLIO OF INVESTMENTS
12
FINANCIAL STATEMENTS
14
NOTES TO
FINANCIAL STATEMENTS
18
FINANCIAL HIGHLIGHTS
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER AGGRESSIVE GROWTH FUND
TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1998
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 13.04%
CLASS B 12.72%
CLASS C 12.72%
LIPPER CAPITAL APPRECIATION CATEGORY AVERAGE* 7.19%
- --------------------------------------------------------------------------------
</TABLE>
Returns and rankings are historical and do not represent future results. Returns
and net asset value fluctuate. Shares are redeemable at current net asset value,
which may be more or less than original cost.
* Lipper Analytical Services, Inc. returns and rankings are based upon changes
in net asset value with all dividends reinvested and do not include the
effect of sales charges and, if they had, results may have been less
favorable.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
3/31/98 9/30/97
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER AGGRESSIVE GROWTH
FUND CLASS A $13.59 $12.60
- --------------------------------------------------------------------------------
KEMPER AGGRESSIVE GROWTH
FUND CLASS B $13.46 $12.52
- --------------------------------------------------------------------------------
KEMPER AGGRESSIVE GROWTH
FUND CLASS C $13.47 $12.53
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
KEMPER AGGRESSIVE GROWTH FUND
LIPPER RANKINGS*
- --------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER CAPITAL APPRECIATION CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #26 of 232 funds #34 of 232 funds #32 of 232 funds
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
DIVIDEND REVIEW
- --------------------------------------------------------------------------------
DURING THE PERIOD, THE FUND MADE THE FOLLOWING PER SHARE DISTRIBUTIONS:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM
CAPITAL GAIN $0.55 $0.55 $0.55
- --------------------------------------------------------------------------------
</TABLE>
There are special risk considerations associated with the fund including
operation as a non-diversified fund, which allows more assets to be invested in
fewer issuers, and flexibility to concentrate in various investment sectors and
to invest significant assets in smaller companies, which present greater risk
than larger more established companies. There is no assurance that the fund's
management style will be successful or that the fund will achieve its objective.
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[MORNINGSTAR EQUITY STYLE BOX]
Source: Morningstar, Inc., Chicago, IL (312) 696-6000. (Morningstar Style Box
is based on a portfolio date as of March 31, 1998.) The Equity Style Box
placement is based on a fund's price-to-earnings and price-to-book ratio
relative to the S&P 500, as well as the size of the companies in which it
invests, or median market capitalization.
Please note that style boxes do not represent an exact assessment of risk and
do not represent future performance. Please consult the prospectus for a
description of investment policies.
GRAY MONDAY On Monday, October 27, 1997, turmoil in Southeast Asian markets
triggered a one-day drop of 7 percent in the U.S. equity market.
PRICE-EARNINGS RATIO A company's stock price, divided by its earnings for the
past four quarters, also referred to as its P/E.
CAPITALIZATION A measure of the size of a publicly traded company,
capitalization is determined by multiplying the current share price by the
number of shares outstanding. The market capitalization of a company has bearing
on its perceived earnings potential and risk. Small capitalization companies
(less than $1 billion) may present the potential for greater growth than larger,
more established companies. On the other hand, the stock of small cap companies
may be more volatile and therefore a greater risk to capital.
<PAGE> 3
ECONOMIC OVERVIEW
[SILVA'S PHOTO]
DR. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS. HE IS ALSO A MEMBER OF THE INVESTMENT POLICY AND STRATEGY COMMITTEE
FOR KEMPER FUNDS.
SILVIA HOLDS A BACHELOR OF ARTS AND PH.D. IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND HAS A MASTER'S DEGREE IN ECONOMICS FROM BROWN
UNIVERSITY IN PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER, HE WAS
WITH THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, INC. IS THE INVESTMENT MANAGER FOR KEMPER FUNDS.
IT IS ONE OF THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT
ORGANIZATIONS WORLDWIDE, MANAGING MORE THAN $200 BILLION IN ASSETS GLOBALLY FOR
MUTUAL FUND INVESTORS, RETIREMENT AND PENSION PLANS, INSTITUTIONAL AND
CORPORATE CLIENTS, INSURANCE COMPANIES AND PRIVATE, FAMILY AND INDIVIDUAL
ACCOUNTS. IT IS ONE OF THE 10 LARGEST MUTUAL FUND COMPLEXES IN THE UNITED
STATES.
DEAR SHAREHOLDERS,
Stable economic growth, low interest rates and sustained lower inflation have
continued to produce a beneficial market environment for investors in the second
quarter of 1998. Despite heightened sensitivity to earnings estimates and
announcements, the market continued to support financial assets. We can expect
this favorable climate to continue--in spite of the sensitivity--at least over
the shorter term.
As always, expectations have been at the heart of the actions and reactions
that move the markets. Expectations appear to be high, as demonstrated by a
record flow of new cash--$37.5 billion--into mutual funds in March. This record
flow surpassed the prior monthly record of $32.7 billion in net mutual fund
investing set in January 1996. Two years ago, many experts were concerned that
the bull market was close to being on its last legs. Quite remarkably today,
investors are still betting on equities. Nearly 75 percent of the new cash
flowing into mutual funds in March went into stock funds, according to the
Investment Company Institute, a trade organization that monitors the mutual
fund industry.
Unfortunately, high expectations often combine with high anxiety--today's
investors are attuned to even the smallest hint of economic change. The result
is volatility. Many who believe that our long-running bull market is too good to
be true or that stock prices are too high are wondering when the market will
reverse.
While a reversal may not be on the immediate horizon, investors are wise to
watch for several signs that change is underway: rising prices, indicating
higher inflation; repercussions of the Asian economic crisis on American
business, which could appear in the form of reduced earnings; and a continued
widening of our trade deficit, a serious imbalance caused by heightened American
demand for foreign goods and services.
On Monday, April 27, expectations were tested by reports that the Federal
Reserve Board (Fed) was considering a hike in interest rates. The markets
reacted immediately to this news, driving stock prices downward. Ultimately, we
do not anticipate that an interest rate hike will materialize in the second
quarter; however, the Fed's monetary policy meeting shortly after the release of
this overview will provide more information.
Our positive outlook for this quarter is based primarily on the current
resiliency of our marketplace. The United States appears to be firmly planted in
the middle of an economic cycle, with no evidence of detrimental pressures that
might be associated with the market's phenomenal growth. We are not seeing price
increases for goods and services or a downturn in the housing market, both of
which we might expect late in an economic cycle.
Equities have continued to reward investors. The U.S. stock market, as
measured by the Standard & Poor's 500, gained nearly 14 percent in the first
quarter of 1998 and returned more than 15 percent year-to-date as of April 30.
Bonds have also rewarded investors in terms of real return, which is total
return less the rate of inflation. The high yield and corporate debt
fixed-income markets also have performed well.
U.S. economic growth, as measured by the gross domestic product (GDP) growth
rate, was slightly above 4 percent for the first quarter. Our general
expectation for the year is that growth will increase between 2.5 and 3 percent
over last year. In other words, the economy will remain strong, but will slow
down as the year progresses.
Consumer spending and corporate fixed investments have fueled the economy's
solid growth. Spending on both capital goods and high technology has been
strong. Corporate profits have grown between 5 and 10 percent, which appears to
be acceptable in an environment of stable interest rates. U.S. employment growth
has ranged from 2 to 2.25 percent, continuing to exceed expectations. Consumer
confidence has continued to hit near all-time highs. The increase in output
prices, an indicator of inflation measured by the Consumer Price Index (CPI),
has remained at 1.5 to 2 percent.
Adding to the good news, all seems to be quiet on the domestic policy front.
At the end of February, the U.S. federal budget deficit essentially vanished.
Recent efforts to reduce the deficit, combined with higher federal revenues due
to the robust economy, have left us with an expected budget surplus of $40
billion to $50 billion for fiscal 1998. To date, our Democratic president and
Republican Congress have not agreed on any significant legislation regarding tax
credits, spending cuts or health care that could threaten the newfound federal
budget surplus.
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 (4/30/98) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 5.64 5.88 6.71 6.74
PRIME RATE(2) 8.5 8.5 8.5 8.25
INFLATION RATE(3)* 1.38 2.08 2.43 2.9
THE U.S. DOLLAR(4) 3.92 9.65 6.55 8.51
CAPITAL GOODS ORDERS(5)* 10.89 11.72 8.17 6.82
INDUSTRIAL PRODUCTION(5)* 4.27 5.77 4.72 3.49
EMPLOYMENT GROWTH(6)* 2.59 2.36 2.27 1.78
</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 as 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 March 31, 1998.
Can we expect a little more excitement from overseas? A full-scale global
recession from last year's Asian economic crisis seems unlikely at this point.
The crisis has yet to hurt most U.S. businesses and investors. Quite the
contrary. While the mere threat of repercussions from the Asian crisis added to
the anxiety mentioned earlier, it has also had the effect of keeping U.S.
interest rates and prices in check, making the U.S. economy all the more
attractive to investors around the world.
In the global economy, the U.S. dollar continues to appreciate in value
compared to other currencies. In fact, more capital is flowing into U.S. markets
as investors generally avoid Asia. Europe has also been benefiting from the
crisis. Canada, which is a commodity-producing exporter, has been somewhat
negatively affected as commodity prices have fallen.
Other major developments abroad include the final selection of countries to
participate in Europe's single currency next year. Many European countries are
adopting more restrictive fiscal policy and reducing inflation in anticipation
of the momentous European Economic and Monetary Union (EMU). But after the EMU
is established in 1999, tensions may indeed mount as countries work to adapt to
the new structure.
As we approach the turn of the century, one caveat remains: Don't
underestimate the potential of the Year 2000 computer code problem. It appears
that a significant number of federal government agencies will not meet the
criteria necessary to avoid the problem. Many businesses are revealing that
billions of dollars are being spent on the situation. Some experts say a global
recession is in store. Others adamantly disagree. In any event, we may indeed
see a reduction in capital spending toward the end of 1998 and the first half of
next year as companies focus on fixing existing computers rather than on
purchasing new equipment. We'll keep you posted!
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
/s/ JOHN E. SILVIA
JOHN E. SILVIA
May 8, 1998
4
<PAGE> 5
PERFORMANCE UPDATE
[STALZER PHOTO]
KURT R. STALZER JOINED SCUDDER KEMPER INVESTMENTS, INC. IN JANUARY 1997. HE IS A
SENIOR VICE PRESIDENT OF SCUDDER KEMPER INVESTMENTS AND PORTFOLIO MANAGER OF
KEMPER AGGRESSIVE GROWTH FUND. STALZER RECEIVED A B.B.A. DEGREE FROM THE
UNIVERSITY OF MICHIGAN WHERE HE EARNED A DUAL SPECIALIZATION IN FINANCE AND
ACCOUNTING. HE IS ALSO A MEMBER OF THE FINANCIAL ANALYST FEDERATION AND THE
ASSOCIATION OF INVESTMENT MANAGEMENT AND RESEARCH. STALZER HAS MORE THAN 16
YEARS OF INVESTMENT EXPERIENCE.
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.
DESPITE A HOSTILE ENVIRONMENT FOR SMALL COMPANY STOCKS AND TROUBLES IN THE
TECHNOLOGY SECTOR, KEMPER AGGRESSIVE GROWTH FUND TURNED IN A STRONG PERFORMANCE
IN THE SIX-MONTH PERIOD FROM OCTOBER 1997 THROUGH MARCH 1998. LEAD PORTFOLIO
MANAGER KURT STALZER DISCUSSES HOW HE PILOTED THE FUND TO OUTPERFORM BOTH ITS
PEERS AND ITS BENCHMARK INDEX DURING VOLATILE MARKET CONDITIONS.
Q KURT, OVER THE PAST SIX MONTHS, THE MARKET HAS EXPERIENCED CONSIDERABLE
TURMOIL. CAN YOU EXPLAIN WHY THE MARKET BEHAVED AS IT HAS?
A Well, we did start off on a sour note. October and November were difficult
across the board. "Gray Monday" on October 27 dealt a blow to equities, and
continuing unrest in the Pacific Rim created an uncertain global market climate.
The situation in Southeast Asia influenced the market for a couple of reasons.
As Asian markets began to unravel, there was a general expectation that earnings
would slow down, but the question remained, where would they slow and to what
extent? This lack of certainty bred volatility.
As the fourth quarter progressed, the consequences of the choppy Asian
markets played out. People began to anticipate lower-than-previously-expected
earnings. For instance, a significant amount of component-related manufacturing
is based in Southeast Asian countries such as Taiwan and Korea, and
disappointing earnings announcements became a key element in many technology
stories.
Q DESPITE THE UNREST IN THE MARKET, KEMPER AGGRESSIVE GROWTH FUND (CLASS A
SHARES UNADJUSTED FOR SALES CHARGE) REWARDED INVESTORS GENEROUSLY, RETURNING
13.04 PERCENT FOR THE SIX-MONTH PERIOD. TO WHAT DO YOU ATTRIBUTE THIS SUCCESS?
A The small size of the portfolio is an advantage at a time like this. The
fund has $30 million in total assets, so liquidity isn't a problem. We're able
to work nimbly within the market and haven't had to fight to get out of
aggressive growth names. We made a good decision to substantially overweight the
fund in consumer nondurables, investing an average of 35 to 40 percent of the
portfolio in a sector that has enjoyed strong performance during the past six
months. We owned good names in restaurants, retail, services, broadcasting and
education -- areas of above average growth and no foreign exposure.
5
<PAGE> 6
PERFORMANCE UPDATE
Q WASN'T THE FUND HINDERED BY THE PROBLEMS IN THE ASIAN MARKETS?
A It certainly was early on, but we recovered fairly well. Because the fund
looks to invest in innovative companies, a large percentage of holdings were in
small firms. Initially, small capitalization stocks reacted more dramatically
than large capitalization stocks did. The market began to shy away from small
cap stocks because it perceived a higher risk.
That was an ironic response, though. The earnings of larger companies are
actually leveraged more toward Asia than are the earnings of small caps. Most
smaller companies have a domestic focus, and aren't doing business in Asia.
Larger companies are more likely to have a multi-national bent, and therefore,
greater exposure to Asia. However, when confidence in the market drops, people
seek the liquidity they associate with large company stocks, rather than staying
focused on earnings. I think that's the primary reason why small caps
underperformed large caps during the fourth quarter of 1997 and the first
quarter of this year. It's going to take time for perceptions to correct.
Q IN LIGHT OF THIS MARKET CLIMATE, HOW DID YOU POSITION THE PORTFOLIO?
A Going into this period, we were a bit overweighted in small companies
because we anticipated small company earnings to be stronger than those of large
companies. Actually, in the long run, the market is proving the accuracy of our
expectations. Many large companies have recently had to revise their earnings
estimates downward. It's becoming apparent the turmoil in Asia isn't hitting
small company earnings as hard as those of larger firms.
Today, the gap between small cap and large cap price-to-earnings ratios
has widened further. As a result, small cap stocks continue to look more
attractive than their larger counterparts. We don't know when Asia will
improve, and I don't think it makes sense for us to try to time that. It has
been suggested that the second half of this year could be worse than the first
half in terms of Asia's effect on earnings. However, Asia might not have as
dramatic an impact as some anticipate. Although Asia is weak, we have an
improving Europe, and to some extent that European strength is offsetting the
Asian weakness.
We're trying to steer the fund away from companies that have a high
degree of Asian exposure. We began to do this in the fourth quarter, but I was
a bit hesitant to remove all Asian exposure from the portfolio. I didn't want
to be left with just service companies. In hindsight, though, it probably
wouldn't have been a bad route to take.
Q AS YOU TRY TO STEER CLEAR OF ASIA, WHAT INDUSTRIES ARE YOU LOOKING AT?
WHAT TYPES OF COMPANIES ARE THRIVING IN TODAY'S ENVIRONMENT?
A Over the past few months we've outperformed relative to the market in a
couple of industries. Health care and retail have been particularly strong for
the fund. In February we started leaning more toward the service sector, and
this move was profitable for us. A temporary staffing firm is one example of a
service stock that did especially well.
I would say domestic-oriented, high-growth companies are the most favored
stocks today. Average growth just isn't attractive enough. The market is looking
for very high growth, say 30 percent rather than 15 percent, and they're willing
to pay extra for it. The appreciation in higher-growth companies has been more
substantial than in the lower-growth companies. I think part of what could be
driving this is that people have historically moved toward technology as a way
to increase earnings growth. But now, the turmoil in Asia has left fewer
technology companies able to deliver fast-paced growth. As a result, people have
had to move more into technology services names and pay up on the multiples.
That, combined with the fact that we're in a lower-rate environment, means that
people are willing to pay a little more for medium earnings growth. We're
benefiting from this trend as more investors move back into these service names.
Q WHAT SECTORS WILL YOU TARGET GOING FORWARD?
A After bottoming out earlier this quarter, the earnings growth in the basic
industries and capital goods sectors seems to have leveled out a bit, and we're
seeing more attractive price-earnings ratios in these sectors. We're continuing
to find sustainable, predictable growth in consumer nondurables, so that sector
will likely remain an important part of the portfolio. We're also starting to
see respectable earnings growth in the health care sector. I'm comfortable with
our current underweighting in technology. Within that sector, however, the
more compelling possibilities seem to be in software and services. We're mildly
overweighted in finance today but I wouldn't expect to buy more banks -- the
extended valuations aren't appealing.
6
<PAGE> 7
PERFORMANCE UPDATE
I'm also satisfied with the fund's position in transportation and energy.
Compared to our index, we are currently slightly overweighted in these sectors.
Transportation is showing good industry fundamentals and valuations. Given the
improved stabilization in commodity prices, we have added to our energy
weighting.
That said, while sector allocation is important, we are most concerned
with investing in the right stocks. We are committed to bottom-up stock
picking. We don't feel compelled to underweight or overweight a particular
area. If we've got companies in the portfolio that need to be sold, we'll do
that, regardless of sector. I feel fine having the fund overweighted in a
sector if I'm finding stocks with predictable earnings growth and low
valuations. Ultimately, we plan on outperforming in this market by following
this disciplined stock-focused strategy.
Q WHAT DO YOU FORESEE FOR THE MARKET AND FOR THE FUND FOR THE NEXT SIX
MONTHS?
A I don't think the situation in Asia is going to change over the next two
or three months. And as long as people perceive problems with Asia, the market
will continue to be troublesome for small caps despite their underlying
strength. I also expect more large companies to report disappointing earnings.
These are the same difficulties we've faced for the past six months and
we'll continue to work around them successfully. I expect continued strong
performance from the fund and I am confident that the portfolio is well
positioned to respond to current market conditions.
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 3, 1997, a special shareholders' meeting was held and adjourned as
necessary. Kemper Aggressive Growth Fund shareholders were asked to vote on five
separate issues: election of the nine members to the Board of Trustees,
ratification of Ernst & Young LLP as independent auditors, approval of new
investment management agreement with Scudder Kemper Investments, Inc., approval
of changes in the fund's fundamental investment policies to permit a
master/feeder fund structure and approval of a new rule 12b-1 distribution plan
with Zurich Kemper Distributors, Inc. for Class B shares and Class C shares. The
following are the results for each issue:
1) Election of Trustees
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
David W. Belin 563,703 6,739
Lewis A. Burnham 567,013 3,429
Donald L. Dunaway 567,013 3,429
Robert B. Hoffman 567,013 3,429
Donald R. Jones 567,013 3,429
Shirley D. Peterson 567,013 3,429
Daniel Pierce 567,013 3,429
William P. Sommers 567,013 3,429
Edmond D. Villani 567,013 3,429
</TABLE>
2) Ratification of the selection of Ernst & Young LLP as independent auditors
for the current fiscal year.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
565,119 2,478 2,846
</TABLE>
3) Approval of new investment management agreement with Scudder Kemper
Investments, Inc.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
415,160 1,458 7,692
</TABLE>
4) Approval of changes in the fund's fundamental investment policies to permit a
master/feeder fund structure.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
364,830 10,160 7,803
</TABLE>
5) To approve a new rule 12b-1 distribution plan with Zurich Kemper
Distributors, Inc.
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C> <C>
Class B 207,505 1,975 1,578 8,063
Class C 67,283 0 1,952 0
</TABLE>
7
<PAGE> 8
INDUSTRY SECTORS
A SIX-MONTH COMPARISON
Data show the percentage of the common stocks in the portfolio that each sector
represented on March 31, 1998, and on September 30, 1997.
[BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER AGGRESSIVE KEMPER AGGRESSIVE
GROWTH FUND GROWTH FUND
ON 3/31/98 ON 9/30/97
<S> <C> <C>
CONSUMER NONDURABLES 35.3% 29.4%
FINANCE 9.9% 7.4%
HEALTH CARE 13.2% 14.5%
CAPITAL GOODS 7.8% 14.0%
TECHNOLOGY 19.8% 24.9%
ENERGY 2.9% 2.1%
UTILITIES/TELECOMMUNICATIONS 5.2% 1.7%
CONSUMER DURABLES 1.9% 1.4%
TRANSPORTATION 4.0% 4.6%
</TABLE>
A COMPARISON WITH THE RUSSELL 3000 INDEX*
Data show the percentage of the common stocks in the portfolio that each sector
of Kemper Aggressive Growth Fund represented on March 31, 1998, compared to the
industry sectors that make up the fund's benchmark, the Russell 3000 Index.
[RUSSELL COMPARISON BAR GRAPH]
<TABLE>
<CAPTION>
KEMPER AGGRESSIVE GROWTH FUND RUSSELL 3000 INDEX
ON 3/31/98 ON 3/31/98
<S> <C> <C>
CONSUMER NONDURABLES 35.3% 2.9%
FINANCE 9.9% 19.3%
HEALTH CARE 13.2% 11.4%
CAPITAL GOODS 7.8% 8.7%
TECHNOLOGY 19.8% 13.9%
ENERGY 2.9% 6.8%
UTILITIES/TELECOMMUNICATIONS 5.2% 9.8%
CONSUMER DURABLES 1.9% 2.9%
TRANSPORTATION 4.0% 1.5%
</TABLE>
* The Russell 3000 Index is an unmanaged index comprised of 3000 of the largest
capitalized U.S. domiciled companies whose common stocks trade in the U.S.
This portfolio of securities represents approximately 98 percent of the
investable U.S. Equity Market.
8
<PAGE> 9
LARGEST HOLDINGS
THE FUND'S 10 LARGEST HOLDINGS*
Representing 23.69 percent of the fund's common stock holdings on March 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
HOLDINGS PERCENT
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. COTELLIGENT Provides computer consulting and contract programming 2.86%
GROUP services, including technical personnel who can
perform software development, applications development
support, telecommunications and help-desk support.
2. CONCENTRA A large physician practice management company focusing 2.74%
MANAGED CARE on occupational health care with 160 physicians in 90
sites in 13 states providing worker's compensation and
other job-related services.
3. ROYAL CARIBBEAN Provides cruises to North American passengers and to 2.67%
CRUISES the Caribbean cruise market.
4. HEALTHWORLD CORP. An international communications services and marketing 2.44%
company focusing on health care.
5. WORLDCOM A long distance telecommunications company offering 2.24%
domestic and international voice, data and video
products and services to business customers, other
carriers and the residential market.
6. APPLIED POWER Manufactures and sells a wide variety of portable 2.22%
hydraulic-powered equipment and systems including
hydraulic pumps, rams, cylinders, valves and power
packages.
7. INSPIRE INSURANCE A property and casualty insurance provider. 2.18%
SOLUTIONS
8. OUTSOURCE Provides industrial and professional staffing 2.15%
INTERNATIONAL services, payroll administration, human resource
consultation, and benefits administration.
9. PACIFIC SUNWEAR OF A mall-based specialty retailer of young men's 2.11%
CALIFORNIA everyday apparel and accessories reflecting the casual
lifestyle of California.
10. STAR BUFFET Owns and operates buffet-style and Mexican style 2.08%
restaurants in the Western United States.
</TABLE>
*PORTFOLIO HOLDINGS AND COMPOSITION ARE SUBJECT TO CHANGE.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER AGGRESSIVE GROWTH FUND
PORTFOLIO OF INVESTMENTS AT MARCH 31, 1998 (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
COMMON STOCKS NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL GOODS--7.4% (a)American Disposal Services 7,200 $ 272
Applied Power, Inc. 15,000 577
Pittway Corp. 7,300 526
(a)Stoneridge, Inc. 21,800 436
(a)Superior Services, Inc. 6,700 209
--------------------------------------------------------------------
2,020
- -------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--24.5% (a)Career Education Corp. 5,200 114
(a)Cinar Films, Inc. 7,200 307
(a)Consolidated Graphics, Inc. 4,100 237
(a)Education Management Corp. 15,400 524
Four Seasons Hotels, Ltd. 11,500 392
(a)Hearst-Argyle Television, Inc. 13,400 472
(a)Men's Wearhouse 12,200 451
(a)Neiman-Marcus Group 11,000 452
(a)Outdoor Systems, Inc. 12,600 442
(a)Outsource International, Inc. 23,300 559
(a)Pacific Sunwear of California 13,200 548
Regis Corp. 10,000 300
(a)Rio Hotel & Casino 7,500 195
Royal Caribbean Cruises, Ltd. 9,900 694
Select Appointments Holdings, ADR 20,200 510
Stewart Enterprises, Inc. 3,800 211
(a)U.S. Rentals 9,500 262
--------------------------------------------------------------------
6,670
- -------------------------------------------------------------------------------------------------------------
CONSUMER DURABLES--1.9% (a)Tower Automotive, Inc. 5,700 257
U.S. Industries 8,200 247
--------------------------------------------------------------------
504
- -------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--9.2% (a)JLK Direct Distribution, Inc. 9,100 348
(a)Jacor Communications 4,000 236
(a)Landry's Seafood Restaurants 11,100 341
(a)Mortons Restaurant Group 16,200 374
(a)Schlotzsky's, Inc. 8,900 208
(a)Star Buffet, Inc. 32,500 540
(a)Suiza Foods 7,300 449
--------------------------------------------------------------------
2,496
- -------------------------------------------------------------------------------------------------------------
ENERGY--2.8% (a)Dawson Geophysical Co. 14,200 225
(a)Global Industries, Ltd. 26,100 532
--------------------------------------------------------------------
757
- -------------------------------------------------------------------------------------------------------------
FINANCE--9.4% American Express Co. 3,500 321
ESG Re, Ltd. 18,900 491
(a)Healthcare Financial Partners, Inc. 6,500 308
(a)INSpire Insurance Solutions, Inc. 17,000 565
Metris Companies, Inc. 5,100 222
(a)Profit Recovery Group International 22,300 482
Sirrom Capital Corp. 5,600 168
--------------------------------------------------------------------
2,557
- -------------------------------------------------------------------------------------------------------------
HEALTH CARE--12.6% (a)Concentra Managed Care, Inc. 23,100 710
(a)Healthworld Corp. 33,300 633
McKesson Corp. 5,000 289
(a)National Surgery Centers 11,000 281
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(a)Ocular Sciences, Inc. 9,100 $ 290
(a)Province Healthcare Co. 15,600 409
(a)Safeskin Corp. 4,000 296
(a)Serologicals Corp. 18,300 517
--------------------------------------------------------------------
3,425
- -------------------------------------------------------------------------------------------------------------
TECHNOLOGY--18.8% (a)Analog Devices 11,300 376
(a)Brightpoint, Inc. 7,000 120
(a)CHS Electronics, Inc. 13,600 255
(a)Cisco Systems 3,300 226
(a)Cotelligent Group, Inc. 25,000 741
(a)Envoy Corp. 5,700 245
(a)Gartner Group 9,300 348
HBO & Co. 7,400 447
(a)KLA-Tencor Corp. 7,000 268
(a)MRV Communications 5,000 117
(a)Network Appliance, Inc. 12,500 444
(a)Sterling Commerce, Inc. 10,100 468
(a)Tecnomatix Technologies 7,500 282
(a)Visio Corp. 8,500 365
(a)Whittman-Hart, Inc. 9,500 430
--------------------------------------------------------------------
5,132
- -------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--4.9% (a)CBS Corp. 11,200 380
(a)Univision Communications, Inc. 10,400 387
(a)WorldCom, Inc. 13,500 581
--------------------------------------------------------------------
1,348
- -------------------------------------------------------------------------------------------------------------
TRANSPORTATION--3.8% Expeditors International of Washington 4,800 206
(a)Jevic Transportation, Inc. 12,200 183
(a)Knight Transportation 6,300 202
(a)Travis Boats & Motors, Inc. 16,700 445
--------------------------------------------------------------------
1,036
--------------------------------------------------------------------
TOTAL COMMON STOCKS--95.3%
(Cost: $22,038) 25,945
--------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
MONEY MARKET Yield--5.45% to 5.86%
INSTRUMENTS--13.9%
Due--April 1998
ConAgra Inc. $ 1,000 1,000
Federal National Mortgage Association 800 797
GTE Corp. 1,000 997
Mid-Atlantic Fuel Co. 1,000 1,000
--------------------------------------------------------------------
TOTAL MONEY MARKET INSTRUMENTS--13.9%
(Cost: $3,794) 3,794
--------------------------------------------------------------------
TOTAL INVESTMENTS--109.2%
(Cost: $25,832) 29,739
--------------------------------------------------------------------
LIABILITIES, LESS CASH AND OTHER ASSETS--(9.2)% (2,498)
--------------------------------------------------------------------
NET ASSETS--100% $27,241
--------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security
Based on the cost of investments of $25,832,000 for federal income tax purposes
at March 31, 1998, the gross unrealized appreciation was $4,092,000, the gross
unrealized depreciation was $185,000 and the net unrealized appreciation on
investments was $3,907,000.
See accompanying Notes to Financial Statements.
11
<PAGE> 12
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------
Investments, at value
(Cost: $25,832) $29,739
- -----------------------------------------------------------------------
Cash 215
- -----------------------------------------------------------------------
Receivable for:
Investments sold 323
- -----------------------------------------------------------------------
Fund shares sold 79
- -----------------------------------------------------------------------
Dividends 2
- -----------------------------------------------------------------------
TOTAL ASSETS 30,358
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
LIABILITIES AND NET ASSETS
- -----------------------------------------------------------------------
Payable for:
Investments purchased 3,086
- -----------------------------------------------------------------------
Management fee 8
- -----------------------------------------------------------------------
Distribution services fee 6
- -----------------------------------------------------------------------
Administrative services fee 5
- -----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 9
- -----------------------------------------------------------------------
Other 3
- -----------------------------------------------------------------------
Total liabilities 3,117
- -----------------------------------------------------------------------
NET ASSETS $27,241
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -----------------------------------------------------------------------
Paid-in capital $22,657
- -----------------------------------------------------------------------
Undistributed net realized gain on investments 677
- -----------------------------------------------------------------------
Net unrealized appreciation on investments 3,907
- -----------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $27,241
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
THE PRICING OF SHARES
- -----------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($16,132 / 1,187 shares outstanding) $13.59
- -----------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $14.42
- -----------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($9,579 / 711 shares outstanding) $13.46
- -----------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($1,530 / 114 shares outstanding) $13.47
- -----------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
12
<PAGE> 13
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<S> <C>
- ----------------------------------------------------------------------
INVESTMENT INCOME
- ----------------------------------------------------------------------
Interest $ 59
- ----------------------------------------------------------------------
Dividends 19
- ----------------------------------------------------------------------
Total investment income 79
- ----------------------------------------------------------------------
Expenses:
Management fee 39
- ----------------------------------------------------------------------
Distribution services fee 28
- ----------------------------------------------------------------------
Administrative services fee 21
- ----------------------------------------------------------------------
Custodian and transfer agent fees and related expenses 37
- ----------------------------------------------------------------------
Shareholder reports 11
- ----------------------------------------------------------------------
Professional fees 2
- ----------------------------------------------------------------------
Other 3
- ----------------------------------------------------------------------
Total expenses 141
- ----------------------------------------------------------------------
NET INVESTMENT LOSS (62)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
- ----------------------------------------------------------------------
Net realized gain on sales of investments 671
- ----------------------------------------------------------------------
Change in net unrealized appreciation on investments 2,357
- ----------------------------------------------------------------------
Net gain on investments 3,028
- ----------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,966
- ----------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED DECEMBER 31, 1996
MARCH 31, TO
1998 SEPTEMBER 30,
(UNAUDITED) 1997
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
OPERATIONS, DIVIDENDS AND CAPITAL SHARE ACTIVITY
- ------------------------------------------------------------------------------------------------
Net investment loss $ (62) (41)
- ------------------------------------------------------------------------------------------------
Net realized gain 671 729
- ------------------------------------------------------------------------------------------------
Change in net unrealized appreciation 2,357 1,550
- ------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,966 2,238
- ------------------------------------------------------------------------------------------------
Net equalization charges (74) --
- ------------------------------------------------------------------------------------------------
Distribution from net realized gain on investments (723) --
- ------------------------------------------------------------------------------------------------
Net increase from capital share transactions 13,463 9,271
- ------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 15,632 11,509
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------
Beginning of period 11,609 100
- ------------------------------------------------------------------------------------------------
END OF PERIOD $27,241 11,609
- ------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Kemper Aggressive Growth Fund is an open-end
management investment company organized as a
business trust under the laws of Massachusetts. The
Fund commenced operations on December 31, 1996. The
Fund currently offers four classes of shares. Class
A shares are sold to investors subject to an
initial sales charge. Class B shares are sold
without an initial sales charge but are subject to
higher ongoing expenses than Class A shares and a
contingent deferred sales charge payable upon
certain redemptions. Class B shares automatically
convert to Class A shares six years after issuance.
Class C shares are sold without an initial sales
charge but are subject to higher ongoing expenses
than Class A shares and a contingent deferred sales
charge payable upon certain redemptions within one
year of purchase. Class C shares do not convert
into another class. Class I shares (none sold
through March 31, 1998) are offered to a limited
group of investors, are not subject to initial or
contingent deferred sales charges and have lower
ongoing expenses than other classes. Differences in
class expenses will result in the payment of
different per share income dividends by class. All
shares of the Fund have equal rights with respect
to voting, dividends and assets, subject to class
specific preferences.
- --------------------------------------------------------------------------------
2 SIGNIFICANT
ACCOUNTING POLICIES INVESTMENT VALUATION. Investments are stated at
value. Portfolio securities that are traded on a
domestic securities exchange or securities listed
on the NASDAQ National Market are valued at the
last sale price on the exchange or market where
primarily traded or listed or, if there is no
recent sale, at the last current bid quotation.
Portfolio securities that are primarily traded on
foreign securities exchanges are generally valued
at the preceding closing values of such securities
on their respective exchanges where primarily
traded. Securities not so traded or listed are
valued at the last current bid quotation if market
quotations are available. Fixed income securities
are valued by using market quotations, or
independent pricing services that use prices
provided by market makers or estimates of market
values obtained from yield data relating to
instruments or securities with similar
characteristics. Equity options are valued at the
last sale price unless the bid price is higher or
the asked price is lower, in which event such bid
or asked price is used. Financial futures and
options thereon are valued at the settlement price
established each day by the board of trade or
exchange on which they are traded. Forward foreign
currency contracts are valued at the forward rates
prevailing on the day of valuation. Other
securities and assets are valued at fair value as
determined in good faith by the Board of Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date (date the order to buy or sell is
executed). Dividend income is recorded on the
ex-dividend date, and interest income is recorded
on the accrual basis and includes discount
amortization on money market instruments. Realized
gains and losses from investment transactions are
reported on an identified cost basis.
FUND SHARE VALUATION. Fund shares are sold and
redeemed on a continuous basis at net asset value
(plus an initial sales charge on most sales of
Class A shares). Proceeds payable on redemption of
Class B and Class C shares will be reduced by the
amount of any applicable contingent deferred sales
charge. On each day the New York Stock Exchange is
open for trading, the net asset value per share is
determined as of the earlier of 3:00 p.m. Chicago
time or the close of the Exchange. The net asset
value per share is determined separately for each
class
14
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
by dividing the Fund's net assets attributable to
that class by the number of shares of the class
outstanding.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies for the six
months ended March 31, 1998.
DIVIDENDS TO SHAREHOLDERS. The Fund declares and
pays dividends of net investment income and net
realized capital gains annually, which are recorded
on the ex-dividend date. Dividends are determined
in accordance with income tax principles which may
treat certain transactions differently from
generally accepted accounting principles.
EQUALIZATION ACCOUNTING. A portion of proceeds from
sales and cost of redemptions of Fund shares is
credited or charged to undistributed net investment
income so that income per share available for
distribution is not affected by sales or
redemptions of shares.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES INVESTMENT MANAGER COMBINATION. Effective December
31, 1997, Zurich Insurance Company, the parent of
Zurich Kemper Investments, Inc. (ZKI), acquired a
majority interest in Scudder, Stevens & Clark, Inc.
(Scudder), another major investment manager. As a
result of this transaction, the operations of ZKI
were combined with Scudder to form a new global
investment organization named Scudder Kemper
Investments, Inc. (Scudder Kemper). The transaction
resulted in the termination of the Fund's
investment management agreement with ZKI, however,
a new investment management agreement between the
Fund and Scudder Kemper was approved by the Fund's
Board of Trustees and by the Fund's shareholders.
The new management agreement, which was effective
December 31, 1997, is the same in all material
respects as the previous management agreement,
except that Scudder Kemper is the new investment
adviser to the Fund. In addition, the names of the
Fund's principal underwriter and shareholder
service agent were changed to Kemper Distributors,
Inc. (KDI) and Kemper Service Company (KSvC),
respectively.
MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper and pays a management
fee at a base annual rate of .65% of average daily
net assets which is then adjusted upward or
downward by a maximum of .20% based upon the Fund's
performance as compared to the performance of the
Standard & Poor's 500 Stock Index (thus the fee on
an annual basis can range from .45% to .85% of
average daily net assets).
During the six months ended March 31, 1998, the
Fund incurred management fees as follows:
<TABLE>
<S> <C>
Base fee $ 58,000
Performance adjustment (19,000)
--------
Total fees $ 39,000
========
</TABLE>
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with KDI. Underwriting
commissions paid in connection with the
distribution of Class A shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS
COMMISSIONS ALLOWED BY KDI
RETAINED BY ----------------------------
KDI TO ALL FIRMS TO AFFILIATES
----------- ------------ -------------
<S> <C> <C> <C>
Six months ended March 31, 1998 $12,000 105,000 5,000
</TABLE>
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of Class B and Class C
shares. Pursuant to the agreement, KDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares. In addition, KDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B and Class C shares. Distribution fees, CDSC
and commissions related to Class B and Class C
shares are as follows:
<TABLE>
<CAPTION>
DISTRIBUTION FEES COMMISSIONS AND
AND CDSC DISTRIBUTION FEES PAID
RECEIVED BY KDI BY KDI TO FIRMS
----------------- ----------------------
<S> <C> <C>
Six months ended March 31, 1998 $39,000 148,000
</TABLE>
ADMINISTRATIVE SERVICES AGREEMENT. The Fund has an
administrative services agreement with KDI. For
providing information and administrative services
to shareholders, the Fund pays KDI a fee at an
annual rate of up to .25% of average daily net
assets 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.
Administrative services fees (ASF) paid are as
follows:
<TABLE>
<CAPTION>
ASF PAID BY
THE FUND ASF PAID BY
TO KDI KDI TO FIRMS
----------- ------------
<S> <C> <C>
Six months ended March 31, 1998 $21,000 31,000
</TABLE>
SHAREHOLDER SERVICES AGREEMENT. Pursuant to a
services agreement with the Fund's transfer agent,
KSvC is the shareholder service agent of the Fund.
Under the agreement, KSvC received shareholder
services fees of $24,000 for the six months ended
March 31, 1998.
OFFICERS AND TRUSTEES. Certain officers or trustees
of the Fund are also officers or directors of
Scudder Kemper. During the six months ended March
31, 1998, the Fund made no payments to its officers
or trustees.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the six months ended March 31, 1998, investment
transactions (excluding short-term instruments) are
as follows (in thousands):
Purchases $28,105
Proceeds from sales 15,754
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED FOR THE PERIOD ENDED
MARCH 31, 1998 SEPTEMBER 30, 1997
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 834 $10,406 766 $ 7,757
-------------------------------------------------------------------------------
Class B 420 5,256 379 3,908
-------------------------------------------------------------------------------
Class C 71 875 144 1,404
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHARES ISSUED IN REINVESTMENT OF DIVIDENDS
Class A 35 398 -- --
-------------------------------------------------------------------------------
Class B 22 250 -- --
-------------------------------------------------------------------------------
Class C 5 59 -- --
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SHARES REDEEMED
Class A (183) (2,326) (276) (2,723)
-------------------------------------------------------------------------------
Class B (59) (739) (47) (508)
-------------------------------------------------------------------------------
Class C (57) (716) (53) (567)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CONVERSION OF SHARES
Class A 2 28 5 60
-------------------------------------------------------------------------------
Class B (2) (28) (5) (60)
-------------------------------------------------------------------------------
NET INCREASE FROM CAPITAL
SHARE TRANSACTIONS $13,463 $ 9,271
-------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------
CLASS A
----------------------------------
SIX MONTHS DECEMBER 31, 1996
ENDED TO
MARCH 31, SEPTEMBER 30,
1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------
Net asset value, beginning of period $12.60 9.50
- -----------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.02) (.02)
- -----------------------------------------------------------------------------
Net realized and unrealized gain 1.56 3.12
- -----------------------------------------------------------------------------
Total from investment operations 1.54 3.10
- -----------------------------------------------------------------------------
Less distribution from net realized gain .55 --
- -----------------------------------------------------------------------------
Net asset value, end of period $13.59 12.60
- -----------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 13.04% 32.63
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------
Expenses 1.19% 1.49
- -----------------------------------------------------------------------------
Net investment loss (.75)% (.35)
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------
CLASS B
----------------------------------
SIX MONTHS DECEMBER 31, 1996
ENDED TO
MARCH 31, SEPTEMBER 30,
1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- -----------------------------------------------------------------------------
Net asset value, beginning of period $12.52 9.50
- -----------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.07) (.08)
- -----------------------------------------------------------------------------
Net realized and unrealized gain 1.56 3.10
- -----------------------------------------------------------------------------
Total from investment operations 1.49 3.02
- -----------------------------------------------------------------------------
Less distribution from net realized gain .55 --
- -----------------------------------------------------------------------------
Net asset value, end of period $13.46 12.52
- -----------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 12.72% 31.79
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- -----------------------------------------------------------------------------
Expenses 2.09% 2.41
- -----------------------------------------------------------------------------
Net investment loss (1.65)% (1.27)
- -----------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
---------------------------------
CLASS C
---------------------------------
SIX MONTHS DECEMBER 31, 1996
ENDED TO
MARCH 31, SEPTEMBER 30,
1998 1997
---------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------
Net asset value, beginning of period $ 12.53 9.50
- ----------------------------------------------------------------------------
Income from investment operations:
Net investment loss (.07) (.07)
- ----------------------------------------------------------------------------
Net realized and unrealized gain 1.56 3.10
- ----------------------------------------------------------------------------
Total from investment operations 1.49 3.03
- ----------------------------------------------------------------------------
Less distribution from net realized gain .55 --
- ----------------------------------------------------------------------------
Net asset value, end of period $ 13.47 12.53
- ----------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 12.72% 31.89
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ----------------------------------------------------------------------------
Expenses 2.09% 2.19
- ----------------------------------------------------------------------------
Net investment loss (1.65)% (1.05)
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- ----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS DECEMBER 31, 1996
ENDED TO
MARCH 31, SEPTEMBER 30,
1998 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
- ----------------------------------------------------------------------------
Net assets at end of period (in
thousands) $27,241 11,609
- ----------------------------------------------------------------------------
Portfolio turnover rate (annualized) 191% 364
- ----------------------------------------------------------------------------
Average commission rate paid per share on
stock transactions $ .0521 .0588
- ----------------------------------------------------------------------------
</TABLE>
NOTES: Total return does not reflect the effect of any sales charges. Data for
the period ended March 31, 1998 is unaudited.
19
<PAGE> 20
TRUSTEES&OFFICERS
TRUSTEES OFFICERS
DANIEL PIERCE MARK S. CASADY KURT R. STALZER
Chairman and Trustee President Vice President
DAVID W. BELIN PHILIP J. COLLORA LINDA J. WONDRACK
Trustee Vice President, Vice President
Secretary and Treasurer
LEWIS A. BURNHAM JOHN R. HEBBLE
Trustee JERALD K. HARTMAN Assistant Treasurer
Vice President
DONALD L. DUNAWAY MAUREEN E. KANE
Trustee THOMAS W. LITTAUER Assistant Secretary
Vice President
ROBERT B. HOFFMAN CAROLINE PEARSON
Trustee ANN M. MCCREARY Assistant Secretary
Vice President
DONALD R. JONES ELIZABETH C. WERTH
Trustee KATHRYN L. QUIRK Assistant Secretary
Vice President
SHIRLEY D. PETERSON
Trustee STEVEN H. REYNOLDS
Vice President
WILLIAM P. SOMMERS
Trustee
EDMOND D. VILLANI
Trustee
- --------------------------------------------------------------------------------
LEGAL COUNSEL VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 North LaSalle Street
Chicago, IL 60601
- --------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 419557
Kansas City, MO 64141
- --------------------------------------------------------------------------------
CUSTODIAN AND INVESTORS FIDUCIARY TRUST COMPANY
TRANSFER AGENT 801 Pennsylvania
Kansas City, MO 64105
- --------------------------------------------------------------------------------
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 Equity Funds/Growth Style prospectus.
KAGGF - 3 (5/98) 1047030
