<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 1998
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[LOGO]
Seeks long-term growth of capital and current
income primarily from foreign equity securities.
KEMPER INTERNATIONAL
GROWTH AND INCOME FUND
"... We were able to put all of the
fund's cash to work during one
of the most lucrative periods for
international funds in history. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
Economic Overview
5
Performance Update
8
Industry Sectors
9
Largest Holdings
10
Portfolio of Investments
15
Financial Statements
17
Notes to Financial Statements
20
Financial Highlights
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH AND
INCOME FUND TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE FOUR-MONTH PERIOD ENDED APRIL 30, 1998
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 16.74%
CLASS B 16.42%
CLASS C 16.42%
LIPPER INTERNATIONAL FUNDS CATEGORY AVERAGE* 16.25%
- --------------------------------------------------------------------------------
</TABLE>
Returns are historical and do not represent future performance. Returns and net
asset value fluctuate. Shares are redeemable at current net asset value, which
may be more or less than original cost.
Investment in foreign securities presents special risk considerations including
fluctuating currency exchange rates, government regulation and differences in
liquidity that may increase the volatility of your investment.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
NET ASSET VALUE
- -------------------------------------------------------------------------------
AS OF AS OF
4/30/98 12/31/97
- -------------------------------------------------------------------------------
<S> <C> <C>
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS A $11.09 $9.50
- -------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS B $11.06 $9.50
- -------------------------------------------------------------------------------
KEMPER INTERNATIONAL GROWTH
AND INCOME FUND CLASS C $11.06 $9.50
- -------------------------------------------------------------------------------
</TABLE>
* Lipper Analytical Services, Inc. returns are based upon changes in net asset
value with all dividends reinvested and do not include the effect of sales
charges and, if they had, results may have been less favorable.
TERMS TO KNOW
FUNDAMENTAL RESEARCH Analysis of companies based on the projected impact of
management, products, sales, and earnings on balance sheets and income
statements. Distinct from technical analysis, which evaluates the attractiveness
of a stock based on historical price and trading volume movements, rather than
the financial results of the underlying company.
INTERNATIONAL MONETARY FUND An organization focused on lowering trade barriers
and stabilizing currencies. While helping developing nations pay their debts,
the IMF usually imposes tough guidelines aimed at lowering inflation, cutting
imports, and raising exports.
LIQUIDITY A characteristic of an investment or an asset referring to the ease of
convertibility into cash within a reasonably short period of time.
TRANSPARENCY The degree to which investors can evaluate if a company is managed
in the interests of shareholders. Transparency is often not as good in
developing markets where disclosure requirements may be less stringent, and
protectionism, subsidies, and cronyism may distort the business environment.
<PAGE> 3
ECONOMIC OVERVIEW
[SILVIA PHOTO]
DR. JOHN E. SILVIA IS A MANAGING DIRECTOR OF SCUDDER KEMPER INVESTMENTS, INC.
HIS PRIMARY RESPONSIBILITIES INCLUDE ANALYSIS, MODELING AND FORECASTING OF
ECONOMIC DEVELOPMENTS AND FEDERAL RESERVE ACTIVITY THAT AFFECT FINANCIAL
MARKETS, ESPECIALLY INTEREST RATE TRENDS. THIS EFFORT INCLUDES CLOSE
COLLABORATION WITH BOTH INCOME AND EQUITY MUTUAL FUND MANAGERS AND PENSION FUND
MANAGERS. HE IS ALSO A MEMBER OF THE INVESTMENT POLICY AND STRATEGY COMMITTEE
FOR KEMPER FUNDS.
SILVIA HOLDS BACHELOR OF ARTS AND PH.D. DEGREES IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND HAS A MASTER'S DEGREE IN ECONOMICS FROM BROWN
UNIVERSITY IN PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER, HE WAS
WITH THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, INC. IS THE INVESTMENT MANAGER FOR KEMPER
FUNDS. IT IS ONE OF THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT
ORGANIZATIONS WORLDWIDE, MANAGING MORE THAN $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 expect this
favorable climate to continue -- in spite of the sensitivity -- at least over
the shorter term.
As always, expectations have been at the heart of the actions and
reactions that move the markets. Expectations appear to be high, as
demonstrated by a record flow of new cash into mutual funds. As of April 30,
1998, a record $5 trillion in mutual fund assets surpassed total assets of the
nation's banks, according to the Investment Company Institute, a trade
organization that monitors the mutual fund industry, and the Federal Reserve
Bank in Washington.
Unfortunately, high expectations often combine with high anxiety --
today's investors are attuned to even the smallest hint of economic change. The
result is volatility. Many who believe that our long-running bull market is too
good to be true or that stock prices are too high are wondering when the market
will reverse.
While a reversal may not be on the immediate horizon, investors are
wise to watch for several signs that change is underway: rising prices,
indicating higher inflation; repercussions of the Asian economic crisis on
American business, which could appear in the form of reduced earnings; and a
continued widening of our trade deficit, a serious imbalance caused by
heightened American demand for foreign goods and services.
On April 27, expectations were tested by reports that the Federal
Reserve Board ("the Fed") was considering a hike in interest rates. The markets
reacted immediately to this news, driving stock prices downward. But at its
monetary policy meeting on May 19, the Fed chose to leave interest rates alone.
In the coming months, the Fed could raise rates if inflation accelerates or if
growth appears to be too rapid compared to the Fed's expectations.
Our positive outlook for the short term is based primarily on the
current resiliency of our marketplace. The United States appears to be firmly
planted in the middle of an economic cycle, with no evidence of detrimental
pressures that might be associated with the market's phenomenal growth. We are
not seeing 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 13 percent year-to-date through the end
of May. 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 in all of 1998 will increase between
2.5 and 3 percent over last year. In other words, the economy will remain
strong, but will slow down as the year progresses.
Consumer spending and corporate fixed investment have fueled the
economy's solid growth. Spending on both capital goods and high technology has
been strong. Corporate 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 $60 billion to $80 billion for fiscal 1998. To date, our Democratic
president and Republican Congress have not agreed on any significant
legislation regarding tax credits, spending cuts or health care that could
threaten the newfound federal budget surplus.
Can we expect a little more excitement from overseas? A full-scale
global recession from last year's Asian economic crisis seems unlikely at this
point. The crisis has yet
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 (5/31/98) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
<S> <C> <C> <C> <C>
10-YEAR TREASURY RATE(1) 5.65 5.81 6.49 6.91
PRIME RATE(2) 8.5 8.5 8.5 8.25
INFLATION RATE(3)* 1.5 1.89 2.23 2.89
THE U.S. DOLLAR(4) 6.86 10.26 5.52 9.15
CAPITAL GOODS ORDERS(5)* 9.28 10.28 7.16 3.48
INDUSTRIAL PRODUCTION(5)* 3.85 5.76 4.28 3.79
EMPLOYMENT GROWTH(6) 2.61 2.8 2.5 2.13
</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) Change 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 April 30, 1998.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
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 also has been benefiting from the
crisis. Canada, which is a commodity-producing exporter, has been somewhat
negatively affected as commodity prices have fallen. Political unrest in
Indonesia, nuclear tests in India and Pakistan and economic turmoil in Russia
have been keeping international investors on the edges of their seats.
Other major developments abroad include the final selection of countries to
participate in Europe's single currency next year. Many European countries are
adopting more restrictive fiscal policy and reducing inflation in anticipation
of 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
June 10, 1998
4
<PAGE> 5
PERFORMANCE UPDATE
[REILLY PHOTO]
SHERIDAN REILLY IS A MEMBER OF SCUDDER KEMPER INVESTMENTS' GLOBAL EQUITY GROUP
AND LEAD PORTFOLIO MANAGER OF KEMPER INTERNATIONAL GROWTH AND INCOME FUND. HE
HAS 11 YEARS OF INVESTMENT EXPERIENCE. REILLY RECEIVED A B.A. DEGREE FROM ST.
JOHN'S UNIVERSITY AND AN M.A. DEGREE FROM GREGORIAN UNIVERSITY, ROME. HE IS A
MEMBER OF THE INTERNATIONAL ASSOCIATION OF FINANCIAL ANALYSTS AND THE AMERICAN
MATHEMATICS ASSOCIATION.
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.
KEMPER INTERNATIONAL GROWTH AND INCOME FUND HAS TURNED IN AN
OUTSTANDING PERFORMANCE IN ITS FIRST FOUR MONTHS OF OPERATION, PROVIDING
INVESTORS WITH A TOTAL RETURN OF 16.74 PERCENT (CLASS A SHARES, UNADJUSTED FOR
ANY SALES CHARGE). DURING THIS PERIOD, AN EXPANDING ECONOMY AND CORPORATE
GROWTH IN EUROPE PRESENTED ABUNDANT INVESTMENT OPPORTUNITIES, DESPITE A
TROUBLED ASIAN MARKET. PORTFOLIO MANAGER SHERIDAN REILLY DISCUSSES SOME OF THE
BEST PERFORMING AREAS FOR GROWTH DURING THE PERIOD AND THE OPPORTUNITIES AHEAD
FOR INTERNATIONAL INVESTMENTS.
Q KEMPER INTERNATIONAL GROWTH AND INCOME FUND WAS LAUNCHED DECEMBER 31,
1997. HOW DID THE FUND PERFORM COMPARED TO THE MSCI EAFE + CANADA INDEX* SINCE
INCEPTION AND TO WHAT INVESTMENT DECISIONS DO YOU ATTRIBUTE THIS?
A In its first four months of operation, Kemper International Growth And
Income Fund realized a total return of 16.74 percent (Class A shares, unadjusted
for any sales charge) versus a 15.69 percent total return for the unmanaged MSCI
EAFE + Canada Index. The timing of the fund's launch was perhaps the most
significant factor in the fund's strong relative performance. Because the Asian
crisis was well underway at the time, we were able to avoid the troubles there
and in other emerging markets. Relative to EAFE we were underweighted in Japan,
which represents roughly 5 percent of our portfolio. Our country allocation was
excellent and our relatively conservative value approach to investing has served
us well in this environment.
We were able to put all of the fund's cash to work during one of the most
lucrative periods for international funds in history. One of the things that
makes this market performance so satisfying and rewarding for shareholders is
that the gains that we see now reflect real, sustainable increases in
profitability and productivity in the corporate sector.
* The EAFE + Canada Index (Morgan Stanley Capital International Europe,
Australasia, Far East + Canada Index) is an unmanaged index generally accepted
as a benchmark for major overseas markets. It consists of components of the
EAFE Index as well as Canada.
Q WHAT WERE SOME OF THE ECONOMIC ISSUES THAT AFFECTED THE MARKET DURING THE
PAST FOUR MONTHS?
A The last four months were characterized by volatility and uncertainty in
the Asian and Pacific Rim economies and encouraging signs of strength in some
Western European markets.
The difficulties experienced by the Pacific Rim economies have been the
prevalent economic story. These problems affected Japan for two reasons: its
trading partners were seriously weakened and Japanese banks have lent heavily to
these economies. The magnitude of these problems was reflected in the EAFE over
much of this period. Because of the fund's underweighting in Japan, these
problems had significantly less effect on the portfolio than they did on the
index.
The currency and banking problems and the subsequent International
Monetary Fund (IMF) intervention in many of the Asian economies have created a
difficult investment environment there. The problems in these economies also
<PAGE> 6
PERFORMANCE UPDATE
warrant a critical look at the Japanese banking system since these banks have
invested heavily in their neighboring Pacific Rim economies.
While the fund was underweighted in Japan, it was overweighted in Western
Europe. These holdings performed well for us over most of this period. Given its
concentration of established companies with strong balance sheets that operate
in mature markets, Western Europe aligns nicely with the fund's investment
objectives.
Additionally, many European companies are undergoing the consolidation and
restructuring that U.S. companies experienced in the past decade. Consequently,
we find many of these companies to be attractive at these valuations. These
factors are reflected in our portfolio weightings, with Western European
countries representing nearly 72 percent of the portfolio.
I might also add that our pursuit of value in Western Europe also
afforded us some protection against the extremely volatile Asian currency
markets during this period. The European currencies held up extremely well and
some even benefited from the problems in Asia as there was a flight from the
weaker currencies of the Far East to the stronger, more stable currencies of
the United States and Western Europe.
Q COULD YOU GIVE AN OVERVIEW OF THE FUND'S INVESTMENT DISCIPLINE?
A In pursuit of its objective of long-term growth of capital and current
income, the fund invests primarily in dividend-paying common stocks and
preferred stocks listed on foreign stock exchanges. We like large,
well-established companies with a long history of profitability and steady
dividend payments operating in mature overseas markets.
In selecting stocks we look for undervalued companies, whose dividend
yields are more than 25 percent above their respective market median. On the
flip side, if the yield of a stock we are holding falls to 25 percent below
its market median, we will consider selling that stock.
Once we have identified companies with the requisite relative yields, we
undertake an extensive company analysis. This fundamental analysis is integral
to our investment decision process. It entails a review of the companies'
financial statements and earnings estimates, as well as an evaluation of the
quality and tenure of management. We like companies whose management is ethical,
intelligent, creative and forward thinking.
As a complement to the fundamental company analysis discussed above,
extensive consideration is also given to country and sector diversification.
Sector diversification can reduce investment risk as well as position the
portfolio to accommodate changes in economic factors such as inflation, GDP
growth and interest rate levels in the countries where we invest. Country
diversification allows us to pursue a broader range of investment opportunities
as well as reduce currency exchange risk.
Q COULD YOU TALK ABOUT SOME SPECIFIC INDUSTRIES AND COMPANIES THAT
DEMONSTRATE THE FUND'S INVESTMENT APPROACH?
A I mentioned earlier that the portfolio is heavily weighted in Western
Europe, so I suppose it's not too surprising that a few companies that best
illustrate our approach would be located there. As the European economies
strengthen, so will the demand for consumer goods, and we are positioned to take
advantage of this.
Telecommunications firms are doing well for many reasons. Many were
previously state-owned, so as they move toward privatization, there is enormous
scope for cost-cutting and saving. They've been able to grow their
earnings in many cases just by introducing effective business practices. In
addition, there have been tremendous technological advances in
telecommunications, and the rapid advances have led to the introduction of a
new array of very profitable products. Finally, the demand for
telecommunications services is very high as people worldwide have a greater
need to transmit data today.
Telecom Italia is a good example of a very large, well-established
company. It has a solid balance sheet and management has shown enormous
creativity in taking the company from a sleepy state-owned enterprise to one of
the world's leading telecommunications companies. They did a brilliant job of
cutting costs, introducing new products and innovative marketing. That holding
represents more than 1.3 percent of the portfolio and is up about 25 percent in
the four months we've held it. Another telecom company, Bell Canada Enterprises
(BCE), is up over 30 percent.
Banking is another sector that performed well. European banks are
established, well regulated, and because they are active in the capital
markets, they will benefit from the strengthening economies there. Bank
Austria offers an attractive yield and we feel it is undervalued at these
levels. Allied Irish Bank also offers an attractive yield and seems to have
strong prospects for growth. The Irish economy continues to strengthen with
further integration
6
<PAGE> 7
PERFORMANCE UPDATE
with the European Union and Dublin is becoming an increasingly important
financial center. Allied Irish Bank is well positioned to take advantage of
these changes.
One additional company that has performed exceptionally well for us is OM
Gruppen, a Swedish company that owns the Swedish Stock Exchange and is a world
leader in providing software for electronic trading.
Japan has been generally unproductive for us. We did invest a bit in
Sakura Bank because it met our valuation criteria and it is one of Japan's most
solvent banks. The investment thesis was that these banks would benefit from a
restructuring of the Japanese banking system. Although the thesis remains
intact, the restructuring is going much more slowly than we had anticipated.
Q WHAT IS THE FUND'S ALLOCATION TODAY AND DO YOU EXPECT TO MAKE ANY CHANGES
IN THE NEAR FUTURE?
A At the end of the period the fund had 14 percent exposure to the United
Kingdom, 9 percent positions in France and Germany, 6 percent in Sweden, the
Netherlands, and Italy, and 5 percent in Japan, Spain and Switzerland.
In this environment we will seek to adhere to our investment discipline of
investing in well-run companies that offer high relative yields and strong
balance sheets. We will continue to do our rigorous fundamental analysis and
closely monitor our sector and country allocations. We intend to remain fully
invested and to take profits as stocks reach their target prices and yields and
to purchase stocks that meet our yield and other valuation criteria.
Surely these conditions will change. As the restructuring of the financial
system starts to take hold in Japan and political and economic stability begins
to return to the Pacific Rim area, we would begin our shift out of Europe and
into these areas. I don't foresee these two things happening in the six-month
term. When we do see it coming, we will get ahead of it.
Q WHAT IS YOUR OUTLOOK FOR INTERNATIONAL EQUITIES AND KEMPER INTERNATIONAL
GROWTH AND INCOME FUND?
A Generally speaking, international markets will be a good place for
investors to put money. I think the Asian markets will continue to be volatile.
The problems on the Pacific Rim are still not completely worked out. Bank
lending there will have to be monitored for improvements in lending practices
and the creditworthiness of debtors. In Japan, needed government policies to
encourage economic growth are meeting political resistance, and the banking
system there is still fragile because of its dependence on Pacific Rim
neighbors. By contrast, Europe seems poised to realize the benefits of closer
integration of its economies and the restructuring and consolidation of its
industries.
It is most unlikely that we will see returns like we saw in the first
quarter of this year in Europe. The markets will certainly not maintain their
first quarter clip. However, over the coming years we can expect some excellent
opportunities in Europe. And it's unlikely markets in Southeast Asia will go
down 80 percent again, so in the coming years Asia may offer some opportunities
as well. We need to have realistic expectations while having the foresight and
the intelligence to realize that there are a constant stream of good companies
and positive developments throughout the world that offer opportunities to
investors.
7
<PAGE> 8
INDUSTRY SECTORS
KEMPER INTERNATIONAL GROWTH AND INCOME FUND'S COMPOSITION
BY SECTOR*
Data shows the percentage of the equity holdings in the portfolio that each
sector represented on April 30, 1998.
[BAR GRAPH]
<TABLE>
<CAPTION>
<S> <C>
FINANCE 27.7%
MANUFACTURING 19.0%
COMMUNICATIONS 12.3%
SERVICE INDUSTRIES 8.1%
CONSUMER DISCRETIONARIES 6.7%
DURABLES 5.1%
TRANSPORTATION 4.2%
CONSTRUCTION 4.0%
MEDIA 3.9%
ENERGY 3.9%
CONSUMER STAPLES 3.7%
UTILITIES 1.4%
</TABLE>
* Portfolio composition is subject to change.
8
<PAGE> 9
LARGEST HOLDINGS
KEMPER INTERNATIONAL GROWTH AND INCOME FUND'S TOP 20 HOLDINGS*
REPRESENTING 45.8 PERCENT OF THE FUND'S EQUITY HOLDINGS ON APRIL 30, 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Holding Country Percent
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. OM GRUPPEN Sweden 3.5%
2. BCE, INC. Canada 3.1%
3. ALLIED IRISH BANK Ireland 2.9%
4. BANK AUSTRIA Austria 2.8%
5. CREDIT SUISSE GROUP Switzerland 2.6%
6. BHF-BANK Germany 2.3%
7. SOCIETE NATIONALE ELF AQUITAINE France 2.2%
8. DORLING KINDERSLEY HOLDINGS United Kingdom 2.2%
9. METSA-SERLA OY Finland 2.1%
10. ACCOR S.A. France 2.1%
11. MERITA LTD. Finland 2.1%
12. EMI GROUP United Kingdom 2.1%
13. SCOR S.A. France 2.1%
14. DEXIA FRANCE France 2.0%
15. NINTENDO CO., LTD. Japan 2.0%
16. SOMMER-ALLIBERT France 2.0%
17. RWE AG Germany 2.0%
18. BRITISH TELECOM PLC United Kingdom 1.9%
19. KLM ROYAL DUTCH AIR LINES NV Netherlands 1.9%
20. BANCO BILBAO VIZCAYA S.A. Spain 1.9%
</TABLE>
*Portfolio holdings are subject to change.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER INTERNATIONAL GROWTH AND INCOME FUND
PORTFOLIO OF INVESTMENTS AT APRIL 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT($) OR MARKET
SHORT-TERM NOTES--11.3% NUMBER OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES Federal Home Loan Mortgage Corp.
Discount Note, 5/1/98
(Cost $183,000) 183,000 183,000
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS--4.3%
BERMUDA--1.8% MBL International Finance Bermuda,
3.00%, 11/30/02
(Bank) 28,000 28,630
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
HONG KONG--1.8% Hysan Development Finance Co., Ltd.,
6.75%, 6/01/00
(Investment Holding Company) 30,000 28,875
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--.7% Royal & Sun Alliance Insurance Group
PLC, 7.25%, 11/30/08
(Multi-National Insurance Company) 4,000 11,374
----------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS
(Cost $68,771) 68,879
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--2.4%
AUSTRIA (a)Bank Austria AG
(Commercial and Corporate Banking
and Financial Services)
(Cost $29,978) 500shs. 38,649
----------------------------------------------------------------------------
COMMON STOCKS--82.0%
AUSTRALIA--2.2% Commonwealth Bank of Australia
(Bank) 1,465 17,592
Foster's Brewing Group, Ltd.
(Leading Brewery) 8,100 17,646
----------------------------------------------------------------------------
35,238
- -------------------------------------------------------------------------------------------------------------------------
CANADA--4.1% BCE, Inc.
(Telecommunication Services) 1,000 42,577
Moore Corp. Ltd.
(Manufacturer of Business
Communication Products) 1,500 23,438
----------------------------------------------------------------------------
66,015
- -------------------------------------------------------------------------------------------------------------------------
FINLAND--3.6% Merita Ltd. "B"
(Financial Services Group) 4,600 28,576
Metsa-Serla Oy "B"
(Manufacturer of Papers,
Corrugated and Paper Board, Soft
and Hardwood Pulp) 2,800 29,076
----------------------------------------------------------------------------
57,652
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANCE--8.8% Accor S.A.
(Catering, Hotels, Travel
Services) 105 28,630
Dexia France
(Municipal and Local Development
Financing) 229 27,734
Scor S.A.
(Property, Casualty and Life
Reinsurance Company) 458 28,253
Societe Nationale Elf Aquitaine
(Petroleum Company) 230 30,190
Sommer-Allibert
(Manufacturer of Plastic Products
for Automotive Industry) 637 27,320
----------------------------------------------------------------------------
142,127
- -------------------------------------------------------------------------------------------------------------------------
GERMANY--9.0% BHF-Bank AG
(Universal Banking Services) 774 31,536
Bayer AG
(Leading Chemical Producer) 539 23,974
Dyckerhoff AG (pfd.)
(Producer of Cement,Ready-Mixed
Concrete and Finishing Products) 62 21,357
Hochtief AG
(Construction and Civil
Engineering Services) 423 17,636
RWE AG
(Producer and Marketer of
Petroleum and Chemical Products) 532 27,073
Thyssen AG
(Manufacturer of Capital Goods and
Steel Products) 102 23,321
----------------------------------------------------------------------------
144,897
- -------------------------------------------------------------------------------------------------------------------------
HONG KONG--1.5% South China Morning Post Co., Ltd.
(Newspaper Publisher) 39,000 23,412
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
IRELAND--2.4% Allied Irish Bank PLC
(Bank) 2,860 39,343
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
ITALY--5.6% Banca Commerciale Italiana SpA
(Commercial Bank) 5,000 25,291
(a)Banca di Roma SpA
(Commercial and Savings Bank) 13,000 23,962
La Rinascente SpA di Risparmio
(Department Store Chain) 3,700 19,050
Telecom Italia SpA
(Telecommunications, Electronics,
Network Construction) 4,100 21,618
----------------------------------------------------------------------------
89,921
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JAPAN--5.2% Matsushita Electric Works, Inc.
(Leading Maker of Building
Materials and Lighting Equipment) 1,000 8,985
Nintendo Co., Ltd.
(Game Equipment Manufacturer) 300 27,499
Nippon Meat Packers, Inc.
(Leading Meat Processor) 1,000 13,591
Sakura Bank Ltd.
(Full Service Bank) 4,000 13,742
Teijin Ltd.
(Manufacturer of Polyester
Products) 7,000 19,979
----------------------------------------------------------------------------
83,796
- -------------------------------------------------------------------------------------------------------------------------
NETHERLANDS--5.8% KLM Royal Dutch Air Lines NV
(World-Wide Full Service Airline) 660 25,941
Koninklijke Nedlloyd Groep NV
(Container Shipping and
Transportation) 710 17,046
Koninklijke PTT Nederland
(Telecommunication Services) 300 15,504
Philips Electronics NV
(Leading Manufacturer of
Electrical Equipment) 140 12,336
Royal Dutch Petroleum Co.
(Owner of 60% of Royal Dutch/Shell
Group) 410 22,630
----------------------------------------------------------------------------
93,457
- -------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND--1.2% Telecom Corp. of New Zealand
(Telecommunication Services) 4,000 18,998
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
NORWAY--1.4% Christiania Bank og Kreditkasse
(Commercial Bank) 5,040 23,183
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
PORTUGAL--1.3% Portugal Telecom S.A.
(Telecommunication Services) 390 20,961
----------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
SPAIN--5.0% Autopistas del Mare Nostrum S.A.
(Builder and Operator of Toll
Motorways) 700 13,789
Banco Bilbao Vizcaya S.A.
(Commercial Bank) 500 25,739
Compania Telefonica Nacional de
Espana S.A.
(Telecommunication Services) 500 20,880
(b)Compania Telefonica Nacional de
Espana S.A.
(Telecommunication Services) 27 1,083
Iberdrola S.A.
(Electric Utility) 1,200 19,304
----------------------------------------------------------------------------
80,795
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SWEDEN--6.2% AssiDoman AB
(Forestry Group) 720 19,344
OM Gruppen AB
(Operator of Financial Exchanges
and Clearing Organizations) 2,400 47,895
Skanska AB "B"
(International Construction
Company) 310 14,455
Svedala Industri AB
(Manufacturer of Machinery for
Construction, Mineral Processing
and Materials Handling) 800 19,065
----------------------------------------------------------------------------
100,759
- -------------------------------------------------------------------------------------------------------------------------
SWITZERLAND--5.0% Credit Suisse Group (Registered)
(Provider of Bank Services,
Management Services and Life
Insurance) 161 35,408
Georg Fischer AG (Registered)
(Manufacturer of Automotive
Products and Piping Systems) 60 23,192
Sika Finanz AG
(Manufacturer of Water Management
Products and Systems) 342 21,334
----------------------------------------------------------------------------
79,934
- -------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM--13.7% Albright & Wilson PLC
(Manufacturer of Phosphates,
Surfactants and Specialty
Chemicals) 5,480 15,950
British Telecom PLC
(Telecommunication Services) 2,406 26,139
Courtaulds Textiles PLC
(Producer of Clothing, Fabrics and
Home Furnishings) 3,463 18,594
Dorling Kindersley Holdings PLC
(Book Publisher) 6,980 30,006
(a) EMI Group PLC
(Music Recording and Retailing
Company) 2,785 28,300
General Electric Co., PLC
(Manufacturer of Power,
Communications and Defense
Equipment and Other Various
Electrical Components) 2,147 17,777
Laporte PLC
(Producer of Specialty Chemicals) 1,110 14,946
Man (ED&F) Group PLC
(Commodities Trading Company) 4,278 17,532
Rank Group PLC
(Diversified Leisure Services:
Hotels, Amusement Machines,
Restaurants, Film and Television) 2,420 15,666
Tomkins PLC
(Manufacturer of Fluid Controls,
Industrial Products, Garden and
Leisure Products) 3,368 19,830
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transport Development Group PLC 2,871 13,759
(a)Transport Development Group PLC "B" 2,920 1,661
(DISTRIBUTION, STORAGE AND TRANSPORT
SERVICES)
----------------------------------------------------------------------------
220,160
----------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $1,223,416) 1,320,648
----------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $1,505,165) 1,611,176
----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Security valued in good faith by the Valuation Committee of the Board of
Directors at fair value amounted to $1,083 (.07% of net assets). Its value
has been estimated by the Valuation Committee in the absence of readily
ascertainable market values. However, because of the inherent uncertainty of
valuation, the estimated value may differ significantly from the value that
would have been used had a ready market for the security existed, and the
difference could be material. The cost of the security at April 30, 1998 was
$864. This security may also have certain restrictions as to resale.
Based on the cost of investments of $1,505,165 for federal income tax purposes
at April 30, 1998, the gross unrealized appreciation was $122,776, the gross
unrealized depreciation was $16,765 and the net unrealized appreciation on
investments was $106,011.
See accompanying Notes to Financial Statements.
14
<PAGE> 15
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------
Investments, at value
(Cost $1,505,165) $1,611,176
- --------------------------------------------------------------------------
Cash 3,539
- --------------------------------------------------------------------------
Foreign currency, at value
(Cost $20,770) 20,825
- --------------------------------------------------------------------------
Deferred organization expense 13,984
- --------------------------------------------------------------------------
Receivable for:
Fund shares sold 15,000
- --------------------------------------------------------------------------
Dividends and interest 7,358
- --------------------------------------------------------------------------
Foreign taxes 204
- --------------------------------------------------------------------------
Reimbursement from Adviser 16,484
- --------------------------------------------------------------------------
TOTAL ASSETS 1,688,570
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------
Payable for:
Investments purchased 97,072
- --------------------------------------------------------------------------
Fund shares redeemed 577
- --------------------------------------------------------------------------
Distribution services fee 395
- --------------------------------------------------------------------------
Other payables and accrued expenses 34,874
- --------------------------------------------------------------------------
Total liabilities 132,918
- --------------------------------------------------------------------------
NET ASSETS $1,555,652
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- --------------------------------------------------------------------------
Paid-in capital $1,440,890
- --------------------------------------------------------------------------
Accumulated net realized loss on investments (1,236)
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 106,011
- --------------------------------------------------------------------------
Foreign currency related transactions (124)
- --------------------------------------------------------------------------
Undistributed net investment income 10,111
- --------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $1,555,652
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
THE PRICING OF SHARES
- --------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($928,625 / 83,737 shares outstanding) $11.09
- --------------------------------------------------------------------------
Maximum offering price per share
(net asset value, plus 6.10% of
net asset value or 5.75% of offering price) $11.77
- --------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($490,418 / 44,357 shares outstanding) $11.06
- --------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price
(subject to contingent deferred sales charge) per share
($136,609 / 12,354 shares outstanding) $11.06
- --------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
15
<PAGE> 16
FINANCIAL STATEMENTS
For the period from December 31, 1997 (commencement of operations) to
April 30, 1998 (unaudited)
STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
NET INVESTMENT INCOME
- --------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $923) $ 12,334
- --------------------------------------------------------------------------
Interest 2,869
- --------------------------------------------------------------------------
Total investment income 15,203
- --------------------------------------------------------------------------
Expenses:
Management fee 2,574
- --------------------------------------------------------------------------
Distribution services fee 395
- --------------------------------------------------------------------------
Administrative services fee 644
- --------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 31,071
- --------------------------------------------------------------------------
Professional fees 4,991
- --------------------------------------------------------------------------
Amortization of organization expenses 1,016
- --------------------------------------------------------------------------
Other 770
- --------------------------------------------------------------------------
Total expenses before expense waiver 41,461
- --------------------------------------------------------------------------
Less expenses waived and absorbed by investment manager (36,369)
- --------------------------------------------------------------------------
Total expenses after expense waiver 5,092
- --------------------------------------------------------------------------
NET INVESTMENT INCOME $ 10,111
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------
Net realized loss on:
Investments (614)
- --------------------------------------------------------------------------
Foreign currency related transactions (622)
- --------------------------------------------------------------------------
(1,236)
- --------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on:
Investments 106,011
- --------------------------------------------------------------------------
Foreign currency related transactions (124)
- --------------------------------------------------------------------------
105,887
- --------------------------------------------------------------------------
Net gain on investments 104,651
- --------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 114,762
- --------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
- --------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- --------------------------------------------------------------------------
<S> <C>
Net investment income $ 10,111
- --------------------------------------------------------------------------
Net realized loss (1,236)
- --------------------------------------------------------------------------
Change in net unrealized appreciation 105,887
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations 114,762
- --------------------------------------------------------------------------
Net increase from capital share transactions 1,420,890
- --------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 1,535,652
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------
Beginning of period 20,000
- --------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment income
of $10,111) $1,555,652
- --------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF THE
FUND Kemper International Growth and Income Fund (the
Fund) is a diversified series of Kemper
Global/International Series, Inc. (the
Corporation), an open-end management investment
company organized as a corporation in the state of
Maryland. The Fund currently offers three 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.
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 SECURITY VALUATION. Portfolio 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
System, for which there have been sales, are valued
at the most recent sale price reported on such
system. If there are no such sales, the value is
the most recent bid quotation. Securities which are
not quoted on the Nasdaq System but are traded in
another over-the-counter market are valued at the
most recent sale price on such market. 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
shall be used. Forward foreign currency contracts
are valued at the prevailing forward exchange rate
of the underlying currencies on that day.
Portfolio debt securities other than money market
securities with an original maturity over sixty
days are valued by pricing agents approved by the
officers of the Fund, which quotations reflect
broker/dealer-supplied valuations and electronic
data processing techniques. If the pricing agents
are unable to provide such quotations, the most
recent bid quotation supplied by a bona fide market
maker 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 market value as
determined in good faith by the Valuation Committee
of the Board of Directors.
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
rates of exchange. Purchases and sales of
investment securities, income and expenses are
translated into U.S. dollars at the prevailing
exchange rates on the respective dates of the
transactions.
Net realized and unrealized gains and losses on
foreign currency transactions represent net gains
and losses from sales and maturities of forward
foreign currency exchange contracts, disposition of
foreign currencies, and the
17
NOTES TO Financial Statements
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
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
result from fluctuations in foreign currency
exchange rates is not separately disclosed.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME.
Investment transactions are accounted for on the
trade date. Dividend income is recorded on the ex-
dividend date, and interest income is recorded on
the accrual basis. 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 close of the Exchange. The net
asset value per share is determined separately for
each class by dividing the Fund's net assets
attributable to that class by the number of shares
of the class outstanding.
FEDERAL INCOME TAXES. The Fund has complied with
the special provisions of the Internal Revenue Code
available to investment companies for the period
ended April 30, 1998.
DIVIDENDS TO SHAREHOLDERS. The Fund declares and
pays dividends of net investment income
semi-annually and net realized capital gains
annually, which are recorded on the ex-dividend
date. Dividends are determined in accordance with
income tax principles which may treat certain
transactions differently from generally accepted
accounting principles. These differences are
primarily due to differing treatments for certain
transactions such as foreign currency transactions.
ORGANIZATIONAL COSTS. Costs incurred by the Fund in
connection with its organization and initial
registration of shares have been deferred and are
being amortized on a straight-line basis over a
five-year period.
- --------------------------------------------------------------------------------
3 TRANSACTIONS WITH
AFFILIATES MANAGEMENT AGREEMENT. The Fund has a management
agreement with Scudder Kemper Investments, Inc.
(the Adviser) and pays a management fee at an
annual rate of 1.00% of average daily net assets.
However, the Fund incurred no management fee for
the period ended April 30, 1998, after an expense
waiver by the Adviser. In addition, the Adviser has
temporarily agreed to absorb certain operating
expenses of the Fund. Under these arrangements, the
Adviser waived and absorbed expenses of $36,369 for
the period ended April 30, 1998.
UNDERWRITING AND DISTRIBUTION SERVICES AGREEMENT.
The Fund has an underwriting and distribution
services agreement with Kemper Distributors, Inc.
(KDI), a subsidiary of the Adviser. Underwriting
commissions paid in connection with the
distribution of Class A shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS ALLOWED
BY KDI TO FIRMS
-------------------
<S> <C>
Period ended April 30, 1998 $4,431
</TABLE>
For services under the distribution services
agreement, the Fund pays KDI a fee of .75% of
average daily net assets of the Class B and Class C
shares. Pursuant
18
<PAGE> 19
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 from redemptions of Class B and Class
C shares. Distribution fees and commissions related
to Class B and Class C shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS AND
DISTRIBUTION FEES DISTRIBUTION FEES PAID
RECEIVED BY KDI BY KDI TO FIRMS
----------------- ----------------------
<S> <C> <C>
Period ended April 30, 1998 $ 395 16,358
</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. The
Fund incurred no administrative services fees for
the period ended April 30, 1998, after an expense
waiver by the Adviser. During the period ended
April 30, 1998, KDI paid fees of $1,252 to various
firms.
SHAREHOLDER SERVICES AGREEMENT. Kemper Service
Company, a subsidiary of the Adviser, is the
transfer, dividend paying and shareholder service
agent for the Fund. The Fund incurred shareholder
services fees of $838 for the period ended April
30, 1998, all of which is unpaid.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation, a subsidiary of the Adviser, is
responsible for determining the daily net asset
value per share and maintaining the portfolio and
general accounting records of the Fund. The Fund
incurred no accounting fees for the period ended
April 30, 1998, after an expense waiver of $16,667
by the Adviser.
OFFICERS AND DIRECTORS. Certain officers or
directors of the Fund are also officers or
directors of the Adviser. For the period ended
April 30, 1998, the Fund made no payments to its
officers or directors.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the period ended April 30, 1998, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $1,424,815
Proceeds from sales 102,065
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the Fund:
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1998
---------------------------
SHARES AMOUNT
<S> <C> <C>
SHARES SOLD
Class A 83,558 $ 830,796
--------------------------------------------------------------------------
Class B 43,995 474,120
--------------------------------------------------------------------------
Class C 11,653 125,948
--------------------------------------------------------------------------
SHARES REDEEMED
Class A (523) (5,890)
--------------------------------------------------------------------------
Class B (340) (4,084)
--------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $1,420,890
--------------------------------------------------------------------------
</TABLE>
19
<PAGE> 20
FINANCIAL HIGHLIGHTS
For the period from December 31, 1997 (commencement of operations) to April 30,
1998 (unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.50 9.50 9.50
- ------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .10 .03 .03
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.49 1.53 1.53
- ------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.59 1.56 1.56
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.09 11.06 11.06
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 16.74% 16.42 16.42
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses absorbed by the Fund 1.81% 2.69 2.66
- ------------------------------------------------------------------------------------------------------------------
Net investment income 4.10% 3.22 3.25
- ------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses 15.94% 16.82 16.79
- ------------------------------------------------------------------------------------------------------------------
Net investment loss (10.03)% (10.91) (10.88)
- ------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
Net assets at end of period $1,555,652
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 36%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: Total return does not reflect the effect of any sales charges. Scudder
Kemper Investments, Inc. has agreed to temporarily waive its management fee and
absorb certain operating expenses of the Fund. The Other Ratios to Average Net
Assets are computed without this expense waiver or absorption.
20
<PAGE> 21
NOTES
21
<PAGE> 22
NOTES
22
<PAGE> 23
NOTES
23
<PAGE> 24
DIRECTORS & OFFICERS
DIRECTORS OFFICERS
DANIEL PIERCE MARK S. CASADY ANN M. MCCREARY
Chairman and Director President Vice President
JAMES E. AKINS PHILIP J. COLLORA KATHRYN L. QUIRK
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK SHERIDAN P. REILLY
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY M. ISABEL SALTZMAN
Director JOYCE E. CORNELL Vice President
Vice President
FRED B. RENWICK LINDA J. WONDRACK
Director DIEGO ESPINOSA Vice President
Vice President
JOHN B. TINGLEFF MAUREEN E. KANE
Director JERARD K. HARTMAN Assistant Secretary
Vice President
JOHN G. WEITHERS CAROLINE PEARSON
Director TARA C. KENNEY Assistant Secretary
Vice President
ELIZABETH C. WERTH
THOMAS W. LITTAUER Assistant Secretary
Vice President
- -------------------------------------------------------------------------------
LEGAL COUNSEL DECHERT PRICE & RHOADS
Ten Post Office Square South
Boston, MA 02109
- -------------------------------------------------------------------------------
SHAREHOLDER KEMPER SERVICE COMPANY
SERVICE AGENT P.O. Box 419557
Kansas City, MO 64141
- -------------------------------------------------------------------------------
CUSTODIAN BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
- -------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606-5808
www.kemper.com
[RECYCLED LOGO]
Printed on recycled paper.
This report is not to be distributed
unless preceded or accompanied by a
Kemper Global and International Funds prospectus.
KIGIF - 3 (6/98) 1048430
Printed in the U.S.A.
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[KEMPER FUNDS LOGO]
