<PAGE> 1
SEMIANNUAL REPORT TO
SHAREHOLDERS FOR THE PERIOD
ENDED APRIL 30, 1999
LONG-TERM INVESTING IN A SHORT-TERM WORLD(SM)
[MORNINGSTAR RATINGS LOGO]
Seeks long-term growth of capital through a diversified worldwide portfolio of
marketable securities
KEMPER GLOBAL BLUE CHIP FUND
"... One of the most important new themes developing is "The Empowered
Consumer." It focuses on technologies that give consumers more pricing
power. Through it we capture exposure to both consumer-related Internet
infrastructure and consumer Internet usage. ..."
[KEMPER FUNDS LOGO]
<PAGE> 2
CONTENTS
3
Economic Overview
5
Performance Update
8
Geographic Composition
9
Largest Holdings
10
Portfolio Of Investments
16
Financial Statements
18
Notes To Financial Statements
22
Financial Highlights
23
Shareholders' Meeting
AT A GLANCE
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP FUND
TOTAL RETURNS
- --------------------------------------------------------------------------------
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999
(UNADJUSTED FOR ANY SALES CHARGE)
[BAR GRAPH]
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CLASS A 13.81%
CLASS B 13.13%
CLASS C 13.22%
LIPPER GLOBAL FUNDS CATEGORY AVERAGE* 19.65%
- --------------------------------------------------------------------------------
</TABLE>
RETURNS AND RANKINGS ARE HISTORICAL AND DO NOT GUARANTEE FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUES WILL FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.
*LIPPER ANALYTICAL SERVICES, INC. RETURNS AND RANKINGS ARE BASED UPON CHANGES IN
NET ASSET VALUE WITH ALL DIVIDENDS REINVESTED AND DO NOT INCLUDE THE EFFECT OF
SALES CHARGES AND, IF THEY HAD, RESULTS MAY HAVE BEEN LESS FAVORABLE.
INVESTMENT IN FOREIGN SECURITIES PRESENTS SPECIAL RISK CONSIDERATIONS INCLUDING
FLUCTUATING CURRENCY EXCHANGE RATES, GOVERNMENT REGULATION AND DIFFERENCES IN
LIQUIDITY.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
AS OF AS OF
4/30/99 10/31/98
- --------------------------------------------------------------------------------
<S> <C> <C>
KEMPER GLOBAL BLUE CHIP
FUND CLASS A $11.62 $10.21
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP
FUND CLASS B $11.46 $10.13
- --------------------------------------------------------------------------------
KEMPER GLOBAL BLUE CHIP
FUND CLASS C $11.49 $10.14
- --------------------------------------------------------------------------------
</TABLE>
KEMPER GLOBAL BLUE CHIP FUND
LIPPER RANKINGS AS OF 4/30/99*
- --------------------------------------------------------------------------------
COMPARED TO ALL OTHER FUNDS IN THE LIPPER GLOBAL FUNDS CATEGORY
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1-YEAR #64 of 229 funds #87 of 229 funds #83 of 229 funds
- --------------------------------------------------------------------------------
</TABLE>
TERMS TO KNOW
YOUR FUND'S STYLE
- --------------------------------------------------------------------------------
MORNINGSTAR EQUITY STYLE BOX
- --------------------------------------------------------------------------------
[MORNINGSTAR EQUITY STYLE BOX]
Source: Morningstar, Inc. Chicago, IL. (312) 696-6000. The Equity Style Box
placement is based on two variables: a fund's market capitalization relative to
the movements of the market, and a fund's valuation, which is calculated by
comparing the stocks in the fund's portfolio with the most recent of the three
market-cap groups.
THE STYLE BOX REPRESENTS A SNAPSHOT OF THE FUND'S PORTFOLIO ON A SINGLE DAY. IT
IS NOT AN EXACT ASSESSMENT OF RISK AND DOES NOT REPRESENT FUTURE PERFORMANCE.
THE FUND'S PORTFOLIO CHANGES FROM DAY-TO-DAY. A LONGER-TERM VIEW IS REPRESENTED
BY THE FUND'S MORNINGSTAR CATEGORY, WHICH IS BASED ON ITS ACTUAL INVESTMENT
STYLE AS MEASURED BY ITS UNDERLYING PORTFOLIO HOLDINGS. CATEGORY PLACEMENTS OF
NEW FUNDS ARE ESTIMATED. MORNINGSTAR HAS PLACED KEMPER GLOBAL BLUE CHIP FUND IN
THE WORLD STOCK CATEGORY. PLEASE CONSULT THE PROSPECTUS FOR A DESCRIPTION OF
INVESTMENT POLICIES.
CURRENCY DEVALUATION A significant decline of a currency's value relative to
other currencies, such as the U.S. dollar. This may be prompted by trading or
central bank intervention (or the lack of intervention) in the currency markets.
For U.S. investors who are investing overseas, a devaluation of a foreign
currency can have the effect of reducing an investment's total return, because
when investments are converted back into U.S. dollars it takes more of the
foreign currency to purchase U.S. dollars.
FUNDAMENTAL RESEARCH Analysis of a company's financial statements to project
future stock price changes. Considers past records of sales and earnings as well
as the future impact of products, consumer markets, and management in weighting
a company's prospects. This is distinct from TECHNICAL ANALYSIS, which evaluates
the attractiveness of a stock based on historical price and trading volume
movements.
<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.
SILVIA HOLDS A BACHELOR'S DEGREE AND PH.D. IN ECONOMICS FROM NORTHEASTERN
UNIVERSITY IN BOSTON AND A MASTER'S DEGREE IN ECONOMICS FROM BROWN UNIVERSITY IN
PROVIDENCE, R.I. PRIOR TO HIS CAREER AT SCUDDER KEMPER INVESTMENTS, HE WAS WITH
THE HARRIS BANK AND ALSO TAUGHT AT INDIANA UNIVERSITY.
SCUDDER KEMPER INVESTMENTS, THE INVESTMENT MANAGER FOR KEMPER FUNDS, IS ONE OF
THE LARGEST AND MOST EXPERIENCED INVESTMENT MANAGEMENT ORGANIZATIONS IN THE
WORLD, MANAGING MORE THAN $280 BILLION IN ASSETS FOR INSTITUTIONAL AND CORPORATE
CLIENTS, RETIREMENT AND PENSION PLANS, INSURANCE COMPANIES, MUTUAL FUND
INVESTORS AND INDIVIDUALS. SCUDDER KEMPER INVESTMENTS OFFERS A FULL RANGE OF
INVESTMENT COUNSEL AND ASSET MANAGEMENT CAPABILITIES BASED ON A COMBINATION OF
PROPRIETARY RESEARCH AND DISCIPLINED, LONG-TERM INVESTMENT STRATEGIES.
DEAR KEMPER FUNDS SHAREHOLDER:
In April, investor enthusiasm drove the market to its second milestone in a
year -- the Dow Jones Industrial Average rose to 11,000 just a month after it
broke 10,000 for the first time. In May, expectations of rising inflation and
higher short-term interest rates led to a slowdown. But in early June, the
market rallied again. What drove the market rallies, and what, at the same time,
led to investor anxiety?
Inflation worries have been seeping into the market for months. The growing
conviction that Asian and Latin American economies are recovering is raising
commodity prices, particularly oil. The price of West Texas Intermediate oil
surged from less than $12 in February to almost $19 in early May. That alone
almost guarantees a rise in the "headline" inflation rate this year, which is
the rate of inflation as measured by the entire CPI. But it's important to note
that the Federal Reserve Board looks primarily at the core inflation rate, which
is the CPI minus food and energy -- and the core inflation rate looks at if it
will remain low at about 2 percent this year. Investors should note, however,
that the Federal Reserve Board also considers what will happen to inflation next
year -- and all indications are that the Fed expects inflation to increase in
2000.
As a result, the Fed is considering a change in monetary policy. Recent Fed
policy has been reactive, not proactive, which means that the Fed tends to
respond to inflation only when it picks up. That may change as the Fed tries to
preemptively halt inflation momentum. Such a change in monetary policy would
likely lead to an increase in short-term interest rates before the end of the
year. However, the change is likely to be small. Because we don't see pressure
toward sustained inflation, there's no reason for the Fed to want a sharp
slowdown in the overall economy.
The long-term economic situation, however, appears to be positive. The
federal budget surplus continues to benefit from good revenue gains (which are
based on good income gains, especially for households), good capital gains and
continued restraint in federal spending. The surplus this year is expected to
approach $100 billion.
This positive environment is exactly what sometimes poses risk for
investors, and is key to understanding recent volatility in the market. A strong
economy has the potential to feed inflation fears and drive up interest rates.
Indeed, recent market events illustrate the domino effect of investors reacting
to positive economic news, which they consider troubling at this point, more
than eight years into the economic expansion. In April, the steady stream of
positive economic news led to a sell-off in the financial markets based on fears
that the strong pace of economic growth would eventually lead to higher
inflation. The benchmark 30-year Treasury bond yield rose, which pulled stocks
lower.
Where can we expect to go from here? The fundamentals by which we judge the
health of the economy suggest continued growth as we move into the second half
of 1999. For example, the gross domestic product (GDP), the value of all goods
and services produced in the U.S., rose at an annual rate of 4.5 percent in the
first quarter, following a tremendous fourth-quarter surge of 6 percent. This is
very much in line with what we've grown accustomed to over the past year -- over
the four quarters of 1998, the U.S. economy expanded by 4.3 percent. Some people
aren't surprised at all by strong GDP growth that once would have alarmed them.
That's partially because we've grown accustomed to a strong economy. But it's
also because we've been able to absorb growth without driving up inflation.
That's important for investors. If prices had been rising as the economy was
growing, the Fed would have most likely raised short-term interest rates by now,
and that would have changed the financial market outlook.
However, we do see some vulnerability on the economic front. Trade is a weak
spot in the economy right now. Exports of U.S. goods and services dropped in the
first quarter while imports soared. This reflects the fact that the U.S. is one
of the few countries financially fit enough to buy goods produced elsewhere in
the world. But for as long as less vibrant international economies are unable to
buy U.S. goods, the profitability of U.S. companies trying to export will be
challenged.
When you think about it, vulnerability in regard to the international
economy is nothing new. Globally, the outlook is slightly more positive than it
was a few months ago. For example, the European markets are slowing down, which
has already led to the European Central Bank lowering interest rates in order to
boost domestic spending. In many countries in Europe there are no fixed-rate
mortgages, only adjustable-rate mortgages. When interest rates go down, mortgage
payments are reduced and homeowners can spend money elsewhere. This has a huge
impact on consumer spending, and will help European equities over time.
Additionally, the situation in Japan remains unchanged. And, problems in the
emerging markets haven't had the negative impact many people expected -- both
the Mexican and Brazilian stock markets have actually risen in the past two
months.
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 (5/31/99) 6 MONTHS AGO 1 YEAR AGO 2 YEARS AGO
------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
10 Year Treasury Rate(1) 5.54 5.34 5.57 6.42
Prime Rate(2) 7.75 8.5 8.5 8.25
Inflation Rate(3)* 2.28 1.68 1.63 3.04
The U.S. Dollar(4) -1.22 8.17 5.05 7.67
Capital goods orders(5)* 11.67 3.05 12.61 3.93
Industrial production (5)* 2.01 2.71 5.92 6.44
Employment growth(6) 2.14 2.67 2.76 2.44
</TABLE>
(1) FALLING INTEREST RATES IN RECENT YEARS HAVE BEEN A BIG PLUS FOR FINANCIAL
ASSETS.
(2) THE INTEREST RATE THAT COMMERCIAL LENDERS CHARGE THEIR BEST BORROWERS.
(3) INFLATION REDUCES AN INVESTOR'S REAL RETURN. IN THE LAST FIVE YEARS,
INFLATION HAS BEEN AS HIGH AS 6 PERCENT. THE LOW, MODERATE INFLATION OF THE
LAST FEW YEARS HAS MEANT HIGH REAL RETURNS.
(4) CHANGES IN THE EXCHANGE VALUE OF THE DOLLAR IMPACT U.S. EXPORTERS AND THE
VALUE OF U.S. FIRMS' FOREIGN PROFITS.
(5) THESE INFLUENCE CORPORATE PROFITS AND EQUITY PERFORMANCE.
(6) AN INFLUENCE ON FAMILY INCOME AND RETAIL SALES.
*DATA AS OF APRIL 30, 1999.
SOURCE: ECONOMICS DEPARTMENT, SCUDDER KEMPER INVESTMENTS, INC.
But don't forget that international crises have the potential to affect the
U.S. markets dramatically. An increase in military spending on Kosovo by the 11
European Monetary Union (EMU) countries could force them to spend less in other
areas, which could have economic implications, including higher interest rates.
That's because many European countries have small economies and little leeway in
their budgets. Consequently, those countries finance unplanned military
expenditures by selling government bonds -- which, in Europe's small bond
market, typically raises interest rates. As an example, consider Italy, which
recently asked for more leeway on its deficit targets. When leeway was granted,
this led to a further sell-off in the eurodollar.
The international situation alone, however, is by no means an indicator of
a U.S. slowdown -- and without any such indications, complacency may be our
greatest concern. It's easy to look at the current U.S. economic situation and
behave as if no risk exists. But when you see the market soaring and are tempted
to jump in, note that the bull market grew to records on the strength of just a
few dozen stocks, while most other stock prices were flat or actually declined.
In summary, there are concerns that the current economy is unsustainable and
we soon could see an abrupt end. In many cases, however, people are looking for
a slowdown because they are fearful growth will drive up inflation these are
particularly older investors who are accustomed to inflation accompanying
growth. But again, sustained inflation seems unlikely, so a sharp slowdown is
not necessary. In the short term, we expect a modest economic slowdown but no
recession. The best approach now, as in any market, is to diversify and invest
for the long term.
Thank you for your continued support. We appreciate the opportunity to serve
your investment needs.
Sincerely,
/s/ JOHN E. SILVIA
John E. Silvia
THE INFORMATION CONTAINED IN THIS PIECE HAS BEEN TAKEN FROM SOURCES BELIEVED TO
BE RELIABLE, BUT THE ACCURACY OF THE INFORMATION IS NOT GUARANTEED. THE OPINIONS
AND FORECASTS EXPRESSED ARE THOSE OF DR. JOHN SILVIA AS OF JUNE 9, 1999, AND MAY
NOT ACTUALLY COME TO PASS. THIS INFORMATION IS SUBJECT TO CHANGE. NO PART OF
THIS MATERIAL IS INTENDED AS AN INVESTMENT RECOMMENDATION.
TO OBTAIN A KEMPER FUNDS PROSPECTUS, DOWNLOAD ONE FROM WWW.KEMPER.COM, TALK TO
YOUR FINANCIAL REPRESENTATIVE OR CALL SHAREHOLDER SERVICES AT (800) 621-1048.
THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING MANAGEMENT FEES AND
EXPENSES. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
4
<PAGE> 5
PERFORMANCE UPDATE
[ESPINOSA PHOTO]
DIEGO ESPINOSA HAS SIX YEARS OF INVESTMENT EXPERIENCE AND IS PART OF A FUND
MANAGEMENT TEAM WITH MORE THAN 55 YEARS OF COMBINED EXPERIENCE. ESPINOSA
RECEIVED A B.S. DEGREE IN CIVIL ENGINEERING FROM TUFTS UNIVERSITY IN 1983 AND A
MASTER'S DEGREE IN INTERNATIONAL RELATIONS FROM JOHNS HOPKINS SCHOOL OF ADVANCED
INTERNATIONAL STUDIES IN 1987. IN 1991, HE RECEIVED AN MBA IN FINANCE FROM
WHARTON BUSINESS SCHOOL AT THE UNIVERSITY OF PENNSYLVANIA.
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.
DURING THE SIX MONTHS ENDING APRIL 30, WORLD MARKETS HAVE RISEN DRAMATICALLY.
ONCE AGAIN, LARGE CAPITALIZATION U.S. TECHNOLOGY STOCKS PROVIDED STRONG RETURNS,
EXCEPT FOR A BRIEF PERIOD IN FEBRUARY WHEN INVESTORS GREW NERVOUS OVER
VALUATIONS. EUROPEAN STOCKS STUMBLED ON ECONOMIC TROUBLES, BUT LONG-LANGUISHING
JAPANESE STOCKS TURNED THE CORNER LATE IN THE PERIOD TO HELP BOOST KEMPER GLOBAL
BLUE CHIP FUND'S RETURN. PORTFOLIO MANAGER DIEGO ESPINOSA DISCUSSED THIS
INTERESTING ENVIRONMENT AND WHAT HE EXPECTS WILL BE DRIVING THESE MARKETS IN THE
COMING MONTHS.
Q SIX MONTHS AGO, THE WORLD MARKETS LOOKED VERY DIFFERENT. JAPAN'S MARKET
WAS LANGUISHING, EMERGING MARKETS WERE COLLAPSING AND EUROPE'S MARKET WAS
STABLE. TODAY, WE FIND JAPAN AND EMERGING MARKETS HAVE LED PERFORMANCE FOR THE
SIX-MONTH PERIOD ENDING APRIL 30, 1999 AND EUROPE IS STAGNATING. WHAT HAPPENED?
A It has been a most interesting period. Three times last fall, the U.S.
Federal Reserve cut interest rates in an effort to stem tightening credit
conditions. As credit spreads narrowed, liquidity spilled into the U.S. equity
market, particularly large capitalization technology and retail stocks. In
December, Europe cut rates to stimulate slowing gross domestic product (GDP)
growth. The rate cuts helped fuel the best calendar quarter (fourth quarter,
1998) performance for the MSCI World Index since the second quarter of 1987.
In early 1999, the U.S. market remained strong, a large rate cut supported
the UK market and Europe was troubled by economic growth concerns. A changing
political climate brought center-left or social democrat governments into power
in many major European countries. This meant that much needed reforms that could
help business interests were in jeopardy, and this led to a weakness in business
confidence. Meanwhile, the Euro steadily weakened because of concerns the United
States would raise interest rates while Europe might see further rate cuts. This
economic uncertainty drove European markets down.
Negative news coming from key technology firms caused investors to briefly
turn their backs on the technology sector in February, causing a 10 percent
slide in the NASDAQ 100 and similarly impacting many world markets. Japan cut
interest rates in late February in an effort to stimulate domestic growth.
Investors showed their approval of the cut and their optimism for
potential corporate restructuring by sending Japanese stocks up almost 14
percent in March. Low interest rates worldwide created a flood of global
liquidity that provided a big support to emerging markets. Despite Brazil's
currency devaluation in January, the Latin American and Asian emerging markets
staged a remarkable recovery over the next few months.
In March, strong economic numbers helped push the Dow Jones industrial
average over 10,000 for the first time. The one dark spot was Europe, where
concerns about slowing growth continued to weigh on the equity markets. A
long-awaited European interest rate cut on April 9 finally triggered a rise in
most major European markets and
5
<PAGE> 6
PERFORMANCE UPDATE
gave hope to the thought that growth might be returning to the area.
By the end of the period, investors were growing increasingly nervous
about the valuations of large-capitalization U.S. technology stocks. We
witnessed major U.S. companies beating profit forecasts, but suffering
punishment to their share prices in this environment. Overseas markets were very
sensitive to swings in these stocks because of the perceived link between these
stocks and the overall health of the U.S. equity market.
Q WHAT KINDS OF THEMES WERE YOU INVESTING IN DURING THIS PERIOD, AND CAN YOU
TELL US HOW KEMPER GLOBAL BLUE CHIP FUND HAS CAPITALIZED ON THESE THEMES?
A One of the important elements of our management process is spotting
developing social, demographic and economic trends and then determining what
types of companies will benefit from these themes.
Some examples of dominant themes during this period included "Darkside
Restructuring," "Empowered Consumer" and "Secure Streams of Income." Early this
year, we unveiled a new theme called "Inevitability Arrives." Early in the
period, the portfolio benefited from the "Darkside Restructuring" theme, which
is made up of companies in previously regulated (dark) economies or industries
that are restructuring with a focus on shareholder value. Many European stocks
that rose after the December 3 interest rate cut were from this theme.
One of the most important new themes developing today is "The Empowered
Consumer." It focuses on technologies that give consumers more pricing power.
Through it we capture exposure to both consumer-related Internet infrastructure
and consumer Internet usage. At 22.59 percent of holdings, this theme was the
largest in the portfolio at the close of the period. This theme lost ground in
March due to profit worries in technology stocks, but we still feel this theme
holds much potential. Some examples of "Empowered Consumer" stocks include
America Online, AT&T-Liberty Media Group, British Telecom and Motorola.
The second largest theme in the portfolio today is "Secure Streams of
Income." This established theme accounted for 22.08 percent of the portfolio at
April 30. It focuses on baby boomer demand for stable income in a world in which
the supply of income-producing securities may be shrinking. Some examples of
companies we hold under this theme are Peco Energy Company and Railtrack Group.
"Inevitability Arrives" focuses on stocks that should benefit from an
inflationary environment and the support of the banking sector. Diawa Securities
and Mitsubishi Estates are examples of two Japanese stocks that have rallied
recently based on this theme.
Q WHERE DID YOU FIND THE COMPANIES THAT CAPITALIZED ON THESE THEMES?
A As of April 30, just over 55.2 percent of the fund was invested in North
America, greater than the MSCI World weighting of 53.3 percent. Europe accounted
for 29.7 percent of holdings, Japan for 11.3 percent, and Latin America for 3.8
percent. At the beginning of this period, the country weightings were not
considerably different, with the exception of a much smaller 4.9 percent
position in Japan. In February, we made a significant re-entry into the Japanese
market. We added several new financial services and real estate holdings under
the "Inevitability Arrives" theme.
<TABLE>
<CAPTION>
10/31/98 4/30/99 4/30/99
KGBCF KGBCF MSCI WORLD
- ----------------------------------------------------
<S> <C> <C> <C>
UNITED STATES 44.3% 48.5% 51.3%
- ----------------------------------------------------
UNITED KINGDOM 14.9% 9.7% 10.6%
- ----------------------------------------------------
GERMANY 12.5% 10.2% 4.5%
- ----------------------------------------------------
SWITZERLAND 6.4% 3.5% 3.3%
- ----------------------------------------------------
JAPAN 4.9% 11.3% 10.8%
- ----------------------------------------------------
CANADA 5.1% 6.7% 2.0%
- ----------------------------------------------------
AUSTRALIA 2.3% 2.8% 1.4%
- ----------------------------------------------------
SWEDEN 1.9% -- 2.8%
- ----------------------------------------------------
OTHER 7.7% 7.3% 13.3%
- ----------------------------------------------------
</TABLE>
Q KEMPER GLOBAL BLUE CHIP FUND RETURNED 13.81 PERCENT FOR THE SIX-MONTH
PERIOD, WHILE THE MSCI WORLD INDEX* WAS UP 19.78 (CLASS A SHARES UNADJUSTED FOR
ANY SALES CHARGES) PERCENT FOR THE SAME PERIOD. WHY THE UNDERPERFORMANCE?
A A dramatic narrowing of the markets drove the strong performance of the
MSCI for the first half of this period. Many global funds significantly
underperformed the index during this time.
Global managers face a dilemma: Whether to diversify a fund's investments
across styles, sectors, regions and capitalization levels to manage risk, or to
limit investments to a very few companies in select sectors within a limited
geographic region, in a bet that those will be strong performers. To beat the
index during this recent period, a global fund would have had to be invested in
very few, very large high-valuation stocks. This approach does not fit with
either Kemper Global Blue Chip Fund's valuation discipline or its approach to
managing risk.
* MSCI WORLD INDEX IS GENERALLY ACCEPTED AS A BENCHMARK FOR WORLD EQUITY MARKETS
INCLUDING THE U.S. SOURCE IS LIPPER ANALYTICAL SERVICES, INC.
6
<PAGE> 7
PERFORMANCE UPDATE
Q WHAT DO YOU EXPECT FROM WORLD MARKETS IN THE COMING MONTHS?
A Along with most investors, we are growing concerned about the valuations
of the large capitalization U.S. technology stocks. The U.S. market seems to be
valuing many stocks for complete success. In our view, the lack of any margin
for error represents real risk, as the market focuses more on the creation of
the Internet than its consequences in the wider corporate world. That doesn't
mean our investment opportunities are severely limited. We have identified new
themes that should allow us to benefit not only from technology itself, but also
to look further ahead and position ourselves for changes in the traditional
economy.
We feel confident that we have positioned the portfolio correctly for the
combination of secular growth in technology and the difficult price environment
everywhere else that is the basis of our current investment thinking.
7
<PAGE> 8
GEOGRAPHIC COMPOSITION
KEMPER GLOBAL BLUE CHIP FUND'S GEOGRAPHIC COMPOSITION*
BASED ON TOTAL INVESTMENTS ON APRIL 30, 1999.
[BAR GRAPH]
<TABLE>
<CAPTION>
<S> <C>
UNITED STATES 48.5
Japan 11.30
Germany 10.20
United Kingdom 9.70
Canada 6.70
Switzerland 3.50
Australia 2.80
France 2.50
Brazil 2.00
Argentina 1.80
Denmark 1.00
</TABLE>
* Portfolio composition is subject to change.
8
<PAGE> 9
LARGEST HOLDINGS
KEMPER GLOBAL BLUE CHIP FUND'S 15 LARGEST HOLDINGS*
Representing 31.8% of fund's equity securities on April 30, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
HOLDINGS COUNTRY PERCENTAGE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
1. AT&T CORP - LIBERTY MEDIA GROUP United States 2.6%
- -----------------------------------------------------------------------------------------
2. UNUM CORP. United States 2.5%
- -----------------------------------------------------------------------------------------
3. RIO TINTO PLC United Kingdom 2.4%
- -----------------------------------------------------------------------------------------
4. BURLINGTON RESOURCES, INC. United States 2.4%
- -----------------------------------------------------------------------------------------
5. CANADIAN NATIONAL RAILWAY CO. Canada 2.2%
- -----------------------------------------------------------------------------------------
6. MOTOROLA INC. United States 2.2%
- -----------------------------------------------------------------------------------------
7. ALBERTA ENERGY CO., LTD Canada 2.1%
- -----------------------------------------------------------------------------------------
8. BRITISH TELECOM PLC United Kingdom 2.0%
- -----------------------------------------------------------------------------------------
9. YPF S.A. Argentina 2.0%
- -----------------------------------------------------------------------------------------
10. AXA SA France 1.9%
- -----------------------------------------------------------------------------------------
11. PACIFICORP United States 1.9%
- -----------------------------------------------------------------------------------------
12. DUKE ENERGY CORP. United States 1.9%
- -----------------------------------------------------------------------------------------
13. PECO ENERGY CO. United States 1.9%
- -----------------------------------------------------------------------------------------
14. AT&T CORP. United States 1.9%
- -----------------------------------------------------------------------------------------
15. SONY CORP. Japan 1.9%
- -----------------------------------------------------------------------------------------
</TABLE>
*Portfolio holdings are subject to change.
9
<PAGE> 10
PORTFOLIO OF INVESTMENTS
KEMPER GLOBAL BLUE CHIP FUND
Portfolio of Investments at April 30, 1999 (unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT($) MARKET
(A)REPURCHASE AGREEMENTS--4.2% OR NUMBER OF SHARES VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES Donaldson, Lufkin and Jenrette, dated
4/30/1999
4.870%, due 05/03/1999
(Cost $709,000) 709,000 709,000
--------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS--3.6%
- -----------------------------------------------------------------------------------------------------------------
UNITED STATES U.S. Treasury Bond, 6.375%,
08/15/2027 55,000 58,738
--------------------------------------------------------------------------
U.S. Treasury Bond, 5.250%,
02/15/2029 570,000 535,088
--------------------------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS
(Cost $618,535) 593,826
--------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
EQUITY SECURITIES--92.2%
- -----------------------------------------------------------------------------------------------------------------
ARGENTINA--1.8% YPF S.A. "D" (ADR)
(PETROLEUM COMPANY) 7,400shs. 310,800
--------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
AUSTRALIA--2.8% (b) Cable & Wireless Optus Ltd.
(PROVIDER OF COMMUNICATION AND
TELECOMMUNICATION SERVICES) 73,274 164,863
Foster's Brewing Group, Ltd.
(LEADING BREWERY) 43,200 126,014
Normandy Mining Ltd.
(MINING AND OIL ENTERPRISES) 54,300 47,072
Woodside Petroleum Ltd.
(OIL AND GAS PRODUCER) 19,900 135,639
--------------------------------------------------------------------------
473,588
- -----------------------------------------------------------------------------------------------------------------
BRAZIL--2.0% Aracruz Celulose S.A. (ADR)
(PRODUCER OF EUCALYPTUS KRAFT PULP) 7,800 156,000
Companhia Vale do Rio Doce (ADR)
(MINING, RAIL TRANSPORTATION, AND
MINERAL SALES IN IRON ORE,
ALUMINUM, MANGANESE, TITANIUM,
GOLD, & COPPER) 8,900 170,769
--------------------------------------------------------------------------
326,769
- -----------------------------------------------------------------------------------------------------------------
CANADA--6.7% Alberta Energy Co., LTD
(OIL AND GAS COMPANY) 11,000 324,417
BCE, Inc.
(TELECOMMUNICATION SERVICES) 3,500 159,636
Barrick Gold Corp.
(GOLD EXPLORATION AND PRODUCTION IN
NORTH AND SOUTH AMERICA) 8,100 163,012
Canadian National Railway Co.
(RAILROAD OPERATOR) 5,400 340,741
Molson Cos., Ltd. "A"
(BREWERY) 8,600 128,292
--------------------------------------------------------------------------
1,116,098
- -----------------------------------------------------------------------------------------------------------------
DENMARK--1.0% Unidanmark A/S "A" (Registered)
(FINANCIAL SERVICES COMPANY) 2,500 171,637
--------------------------------------------------------------------------
</TABLE>
10
<PAGE> 11
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FRANCE--2.5% AXA S.A.
(INSURANCE GROUP PROVIDING
INSURANCE, FINANCE AND REAL ESTATE
SERVICES) 2,310 298,245
Canal Plus S.A.
(PAY TELEVISION NETWORK) 456 126,806
--------------------------------------------------------------------------
425,051
- -----------------------------------------------------------------------------------------------------------------
GERMANY--10.2% Allianz AG
(MULTI-LINE INSURANCE COMPANY) 550 175,202
BASF AG
(INTERNATIONAL CHEMICAL PRODUCER) 5,129 224,619
Bayerische Vereinsbank AG
(COMMERCIAL BANK) 3,320 216,428
Deutsche Telekom AG
(TELECOMMUNICATION SERVICES) 3,940 155,273
Gerresheimer Glas AG
(MANUFACTURER OF GLASS CONTAINERS
AND TUBING) 7,609 121,393
Hoechst AG
(CHEMICAL PRODUCER) 5,642 267,353
Muenchener Rueckversicherungs-
Gesellschaft AG (New)
(PROVIDER OF COMPREHENSIVE
REINSURANCE SERVICES) 339 67,336
Muenchener Rueckversicherungs-
Gesellschaft AG (Registered)
(INSURANCE COMPANY) 391 78,491
RWE AG
(PRODUCER AND MARKETER OF PETROLEUM
AND CHEMICAL PRODUCTS) 1,999 91,451
RWE AG (pfd.) 200 6,065
Schering AG
(PHARMACEUTICAL AND CHEMICAL
PRODUCER) 1,033 119,237
VIAG AG
(PROVIDER OF ELECTRICAL POWER AND
NATURAL GAS SERVICES, ALUMINUM
PRODUCTS, CHEMICALS, CERAMICS AND
GLASS) 340 172,788
--------------------------------------------------------------------------
1,695,636
</TABLE>
11
<PAGE> 12
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JAPAN--11.3% Bank of Tokyo-Mitsubishi, Ltd.
(PROVIDER OF FINANCIAL SERVICES) 6,000 88,506
Canon Inc.
(PRODUCER OF VISUAL IMAGE AND
INFORMATION EQUIPMENT) 9,000 220,008
Daiwa Securities Co., Ltd.
(PROVIDER OF BROKERAGE AND OTHER
FINANCIAL SERVICES) 34,000 207,786
Mitsubishi Estate Co., Ltd.
(REAL ESTATE COMPANY) 14,000 143,106
Mitsui Fudosan Co., Ltd.
(REAL ESTATE COMPANY) 9,000 82,880
Sanwa Bank, Ltd.
(BANK) 7,000 78,527
Sharp Corp.
(MANUFACTURER OF CONSUMER AND
INDUSTRIAL ELECTRONICS) 18,000 210,967
Sony Corp.
(MANUFACTURER OF CONSUMER
ELECTRONIC PRODUCTS) 3,100 289,368
Sumitomo Metal Mining Co., Ltd.
(GOLD, NICKEL AND COPPER MINING
COMPANY) 27,000 122,512
TDK Corp.
(MANUFACTURER OF MAGNETIC TAPES AND
FLOPPY DISCS) 2,000 151,193
Yamanouchi Pharmaceutical Co., Ltd.
(MANUFACTURER OF ETHICAL DRUGS) 9,000 284,805
--------------------------------------------------------------------------
1,879,658
- -----------------------------------------------------------------------------------------------------------------
SWITZERLAND--3.5% Nestle SA (Registered)
(FOOD MANUFACTURER) 128 236,838
Novartis AG (Registered)
(PHARMACEUTICAL COMPANY) 141 206,366
(b) Swisscom AG
(OPERATOR OF TELECOMMUNICATION
NETWORKS AND NETWORK APPLICATION
SERVICES) 268 98,368
UBS AG-Registered
(PROVIDER OF BANKING AND ASSET
MANAGEMENT SERVICES) 124 42,100
--------------------------------------------------------------------------
583,672
</TABLE>
12
<PAGE> 13
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED KINGDOM--9.7% British Telecom PLC
(TELECOMMUNICATION SERVICES) 18,622 310,936
Carlton Communications PLC
(TELEVISION POST PRODUCTION
PRODUCTS AND SERVICES) 12,604 121,750
(b) Flextech PLC
(BROADCASTER OF ENTERTAINMENT
PROGRAMS) 11,541 166,393
National Grid Group PLC
(OWNER AND OPERATOR OF ELECTRIC
TRANSMISSION SYSTEMS) 28,387 195,896
Railtrack Group PLC
(OPERATOR OF RAILWAY
INFRASTRUCTURE) 9,718 202,908
Reuters Group PLC
(INTERNATIONAL NEWS AGENCY) 8,201 111,144
(b) Rio Tinto PLC
(MINING COMPANY) 21,108 368,404
(b) Shell Transport & Trading PLC
(PART OWNER OF ROYAL DUTCH SHELL
CO.) 18,521 138,835
--------------------------------------------------------------------------
1,616,266
- -----------------------------------------------------------------------------------------------------------------
UNITED STATES--40.7% (b) AT&T Corp--Liberty Media Group
(HOLDING COMPANY OF ENTERTAINMENT
NETWORKS) 6,172 394,236
AT&T Corp.
(TELECOMMUNICATION SERVICES) 5,755 290,627
America Online Inc.
(PROVIDER OF ONLINE COMPUTER
SERVICES) 300 42,825
Anadarko Petroleum Corp.
(OIL AND GAS EXPLORATION AND
PRODUCTION) 3,400 128,987
Burlington Resources, Inc.
(OIL AND NATURAL GAS EXPLORATION
AND PRODUCTION) 7,800 359,287
CINergy Corp.
(HOLDING COMPANY OF ELECTRICAL
UTILITIES IN OHIO, INDIANA AND
KENTUCKY) 200 5,962
CSX Corp.
(RAILROAD, INTEGRATED
TRANSPORTATION SYSTEMS AND SHIPPING
CONTAINER COMPANY) 5,600 275,800
Comcast Corp. "A"
(CABLE TV, SOUND AND
TELECOMMUNICATION SYSTEMS) 3,200 210,200
Duke Energy Corp.
(ELECTRIC UTILITY IN THE CAROLINAS) 5,300 296,800
Enron Corp.
(PRODUCER OF NATURAL GAS AND
ELECTRICITY) 3,000 225,750
Homestake Mining Co.
(INTERNATIONAL GOLD PRODUCER) 19,400 185,512
(b) Immunex Corp.
(BIOPHARMACEUTICAL COMPANY) 800 76,400
International Business Machines Corp.
(MANUFACTURER OF COMPUTERS AND
SERVICER OF INFORMATION PROCESSING
UNITS) 800 167,350
(b) Intuit Inc.
(PROVIDER OF FINANCIAL SOFTWARE FOR
HOUSEHOLDS AND SMALL BUSINESSES) 300 25,837
</TABLE>
13
<PAGE> 14
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lockheed Martin Corp.
(MANUFACTURER OF AIRCRAFT, MISSILES
AND SPACE EQUIPMENT) 5,900 254,069
(b) Metzler Group, Inc.
(PROVIDER OF CONSULTING SERVICES TO
ENERGY BASED AND OTHER NETWORK AND
RELATED INDUSTRIES) 3,700 103,138
Motorola Inc.
(MANUFACTURER OF TELECOMMUNICATION
PRODUCTS AND SEMICONDUCTORS) 4,100 328,513
Newmont Mining Corp.
(INTERNATIONAL GOLD EXPLORATION AND
MINING COMPANY) 8,000 192,500
Northrop Grumman Corp.
(MANUFACTURER OF AIRCRAFT, AIRCRAFT
ASSEMBLIES AND ELECTRONIC SYSTEMS
FOR MILITARY AND COMMERCIAL USE) 3,400 217,388
(b) Oracle Systems Corp.
(DATABASE MANAGEMENT SOFTWARE) 3,600 97,425
PacifiCorp
(ELECTRIC UTILITY) 17,800 297,038
Peco Energy Co.
(ELECTRIC AND GAS UTILITY) 6,200 294,113
ProLogis Trust (REIT)
(GLOBAL OWNER OF CORPORATE
DISTRIBUTION FACILITIES) 5,600 117,600
Progressive Corp.
(PROPERTY AND CASUALTY INSURANCE
COMPANY) 1,500 215,250
(b) Sabre Group Holdings Inc. "A"
(TRAVEL RESERVATION SYSTEM
PROVIDER) 3,700 192,863
(b) Sterling Commerce, Inc.
(PRODUCER OF ELECTRONIC DATA
INTERCHANGE PRODUCTS AND SERVICES) 3,100 97,069
(b) Stillwater Mining Co.
(EXPLORATION AND DEVELOPMENT OF
MINES IN MONTANA PRODUCING
PLATINUM, PALLADIUM AND ASSOCIATED
METALS) 4,800 135,900
(b) Sun Microsystems, Inc.
(PRODUCER OF HIGH-PERFORMANCE
WORKSTATIONS, SERVERS AND
NETWORKING SOFTWARE) 3,300 197,381
(b) TeleBanc Financial Corp.
(PROVIDER OF FINANCIAL SERVICES
THROUGH THE INTERNET AND TELEPHONE) 700 72,538
UNUM Corp.
(PROVIDER OF GROUP DISABILITY AND
SPECIAL RISK INSURANCE) 7,100 387,838
(b) US Airways Group, Inc.
(MAJOR AIRLINE) 1,900 103,431
USEC Inc.
(PROVIDER OF ENRICHED URANIUM
PRODUCTS AND SERVICES) 10,500 130,594
Unicom Corp.
(ELECTRIC UTILITY) 6,100 236,756
</TABLE>
14
<PAGE> 15
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
MARKET
NUMBER OF SHARES VALUE ($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unocal Corp.
(EXPLORER AND PRODUCER OF OIL AND
GAS) 4,000 166,250
Williams Cos., Inc.
(GAS PIPELINE OPERATOR, PETROLEUM
PRODUCER) 5,500 259,875
---------------------------------------------------------------------------
6,783,102
---------------------------------------------------------------------------
COMMON STOCKS TOTAL
(Cost $13,469,371) 15,382,277
---------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO--100%
(Cost $14,796,906) 16,685,103
---------------------------------------------------------------------------
</TABLE>
(a) Repurchase agreements are fully collateralized by U.S. Treasury or
Government agency securities. The collateral is monitored daily by the fund
so that its market value exceeds the carrying value of the repurchase
agreement.
(b) Non-income producing security
Based on the cost of investments of $14,822,898 for federal income tax purposes
at April 30, 1999, the gross unrealized appreciation was $2,365,600, the gross
unrealized depreciation was $503,395 and the net unrealized appreciation on
investments was $1,862,205.
See accompanying Notes to Financial Statements.
15
<PAGE> 16
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (unaudited)
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------
Investments, at value
(Cost $14,796,906) $16,685,103
- ---------------------------------------------------------------------------
Cash and foreign currency holdings, at market (identified
cost $5,529) 5,529
- ---------------------------------------------------------------------------
Receivable for:
Investments sold 388,012
- ---------------------------------------------------------------------------
Dividends and interest 25,052
- ---------------------------------------------------------------------------
Fund shares sold 22,718
- ---------------------------------------------------------------------------
Foreign taxes 4,025
- ---------------------------------------------------------------------------
Unrealized appreciation on forward currency exchange
contracts 5,774
- ---------------------------------------------------------------------------
Deferred organization expense 11,047
- ---------------------------------------------------------------------------
Other assets 4,574
- ---------------------------------------------------------------------------
TOTAL ASSETS 17,151,834
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------
Payable for:
Investments purchased 307,836
- ---------------------------------------------------------------------------
Fund shares redeemed 2,349
- ---------------------------------------------------------------------------
Unrealized depreciation on forward currency exchange
contracts 3,350
- ---------------------------------------------------------------------------
Other payables and accrued expenses 38,741
- ---------------------------------------------------------------------------
Total liabilities 352,276
- ---------------------------------------------------------------------------
NET ASSETS $16,799,558
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- ---------------------------------------------------------------------------
Paid-in capital $15,235,287
- ---------------------------------------------------------------------------
Accumulated net realized loss on investments (361,341)
- ---------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on:
Investments 1,888,197
- ---------------------------------------------------------------------------
Foreign currency related transactions 2,412
- ---------------------------------------------------------------------------
Undistributed net investment income 35,003
- ---------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $16,799,558
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
THE PRICING OF SHARES
- ---------------------------------------------------------------------------
CLASS A SHARES
Net asset value and redemption price per share
($10,065,813 / 866,237 shares outstanding) $11.62
- ---------------------------------------------------------------------------
Maximum offering price per share (net asset value, plus
6.10% of net asset value or 5.75% of offering price) $12.33
- ---------------------------------------------------------------------------
CLASS B SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($5,410,298 /
471,973 shares outstanding) $11.46
- ---------------------------------------------------------------------------
CLASS C SHARES
Net asset value and redemption price (subject to
contingent deferred sales charge) per share ($1,323,447 /
115,214 shares outstanding) $11.49
- ---------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
16
<PAGE> 17
FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999 (unaudited)
<TABLE>
<S> <C>
- --------------------------------------------------------------------------
NET INVESTMENT INCOME
- --------------------------------------------------------------------------
Dividends (net of foreign taxes withheld of $7,695) $ 98,760
- --------------------------------------------------------------------------
Interest 44,257
- --------------------------------------------------------------------------
Total investment income 143,017
- --------------------------------------------------------------------------
Expenses:
Management fee 63,234
- --------------------------------------------------------------------------
Distribution services fee 18,323
- --------------------------------------------------------------------------
Administrative services fee 15,808
- --------------------------------------------------------------------------
Custodian, accounting and transfer agent fees and related
expenses 130,189
- --------------------------------------------------------------------------
Reports to shareholders 5,500
- --------------------------------------------------------------------------
Professional fees 15,750
- --------------------------------------------------------------------------
Registration fees 1,282
- --------------------------------------------------------------------------
Amortization of organization expenses 1,448
- --------------------------------------------------------------------------
Directors' fees and other 6,000
- --------------------------------------------------------------------------
Total expenses before expense waiver 257,534
- --------------------------------------------------------------------------
Less expenses waived and absorbed by investment manager (122,365)
- --------------------------------------------------------------------------
Total expenses after expense waiver 135,169
- --------------------------------------------------------------------------
NET INVESTMENT INCOME 7,848
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------------------------------
Net realized (gain) loss from:
Investments (130,254)
- --------------------------------------------------------------------------
Foreign currency related transactions (46,241)
- --------------------------------------------------------------------------
(176,495)
- --------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) on:
Investments 1,848,753
- --------------------------------------------------------------------------
Foreign currency related transactions 42,915
- --------------------------------------------------------------------------
1,891,668
- --------------------------------------------------------------------------
Net gain on investments 1,715,173
- --------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,723,021
- --------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
FOR THE PERIOD FROM
SIX MONTHS DECEMBER 31, 1997
ENDED (COMMENCEMENT OF
APRIL 30, 1999 OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1998
- ---------------------------------------------------------------------------------------------------
OPERATIONS AND CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 7,848 26,409
- ---------------------------------------------------------------------------------------------------
Net realized loss (176,495) (184,100)
- ---------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) 1,891,668 (1,059)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 1,723,021 (158,750)
- ---------------------------------------------------------------------------------------------------
Net increase from capital share transactions 5,536,914 9,678,373
- ---------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 7,259,935 9,519,623
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
NET ASSETS
- ---------------------------------------------------------------------------------------------------
Beginning of period 9,539,623 20,000
- ---------------------------------------------------------------------------------------------------
END OF PERIOD (including undistributed net investment income
of $35,003 and $27,155, respectively) $16,799,558 9,539,623
- ---------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 DESCRIPTION OF
THE FUND Kemper Global Blue Chip 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
commenced operations on December 31, 1997. 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. Investments are stated at
value. 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 Stock Market
(Nasdaq), for which there have been sales, are
valued at the most recent sale price reported. If
there are no such sales, the value is the most
recent bid quotation. Securities which are not
quoted on Nasdaq but are traded in another
over-the-counter market are valued at the most
recent sale price 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 exchange
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
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
currency exchange contracts, disposition of foreign
currencies, and the difference between the amount
of net investment income accrued and the U.S.
dollar amount actually received. That portion of
both realized and unrealized gains and losses on
investments that 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's policy is to
comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to
regulated investment companies, and to distribute
all of its taxable income to its shareholders.
Accordingly, the fund paid no federal income taxes
and no federal income tax provision was required.
At October 31, 1998, the fund had a tax basis net
loss carryforward of approximately $156,000, which
may be applied against any realized net taxable
gains of each succeeding year until fully utilized
or it will expire in the period ended 2006.
DIVIDENDS TO SHAREHOLDERS. The fund declares and
pays dividends of net investment income and net
realized capital gains annually, which are recorded
on the ex-dividend date. Dividends are determined
in accordance with income tax principles which may
treat certain transactions differently from
generally accepted accounting principles. These
differences are primarily due to differing
treatments for certain transactions such as foreign
currency transactions.
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.
(Scudder Kemper) and pays a monthly management fee
of 1/12 of the annual rate of 1.00% of the first
$250 million of average daily net assets declining
to .90% of average daily net assets in excess of $1
billion. However, the fund incurred no management
fee for the period ended April 30, 1999, after an
expense waiver by Scudder Kemper. In addition,
Scudder Kemper has temporarily agreed to absorb
certain operating expenses of the fund. Under these
arrangements, Scudder Kemper waived and absorbed
expenses of $122,365 for the period ended April 30,
1999.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
UNDERWRITING AND DISTRIBUTION SERVICES
AGREEMENT. The fund has an underwriting and
distribution services agreement with Kemper
Distributors, Inc. (KDI). Underwriting commissions
paid in connection with the distribution of Class A
shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS COMMISSIONS ALLOWED
RETAINED BY KDI BY KDI TO FIRMS
--------------- -------------------
<S> <C> <C>
Period ended April 30, 1999 $3,233 32,690
</TABLE>
For services under the distribution services
agreement, the fund pays KDI a fee of .75% of
average daily net assets of the Class B and Class C
shares. Pursuant to the agreement, KDI enters into
related selling group agreements with various firms
at various rates for sales of Class B and Class C
shares. In addition, KDI receives any contingent
deferred sales charges (CDSC) from redemptions of
Class B and Class C shares. The fund incurred no
distribution fees for the period ended April 30,
1999, after an expense waiver by Scudder Kemper.
Distribution fees, CDSC and commissions related to
Class B and Class C shares are as follows:
<TABLE>
<CAPTION>
COMMISSIONS AND
CDSC DISTRIBUTION FEES PAID
RECEIVED BY KDI BY KDI TO FIRMS
--------------- ----------------------
<S> <C> <C>
Period ended April 30, 1999 $5,339 70,101
</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, 1999, after an expense
waiver by Scudder Kemper. During the period ended
April 30, 1999, KDI paid fees of $15,135 to various
firms.
SHAREHOLDER SERVICES AGREEMENT. Kemper Service
Company is the transfer, dividend paying and
shareholder service agent for the fund. The fund
incurred shareholder services fees of $44,125 for
the period ended April 30, 1999, 20,953 of which is
unpaid.
FUND ACCOUNTING AGENT. Scudder Fund Accounting
Corporation 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, 1999, after a fee waiver of
$25,000 by Scudder Kemper.
OFFICERS AND DIRECTORS. Certain officers or
directors of the fund are also officers or
directors of Scudder Kemper. For the period ended
April 30, 1999, the fund made no payments to its
officers and incurred directors' fees of $6,000 to
independent directors.
- --------------------------------------------------------------------------------
4 INVESTMENT
TRANSACTIONS For the period ended April 30, 1999, investment
transactions (excluding short-term instruments) are
as follows:
Purchases $8,755,991
Proceeds from sales 3,789,683
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5 CAPITAL SHARE
TRANSACTIONS The following table summarizes the activity in
capital shares of the fund:
<TABLE>
<CAPTION>
PERIOD ENDED PERIOD ENDED
APRIL 30, 1999 OCTOBER 31, 1998
------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHARES SOLD
Class A 380,985 $ 4,139,156 652,704 $6,738,953
--------------------------------------------------------------------------------
CLASS B 253,125 2,711,226 315,577 3,205,303
--------------------------------------------------------------------------------
Class C 70,145 748,170 86,586 897,853
--------------------------------------------------------------------------------
SHARES REDEEMED
Class A (113,131) (1,258,844) (55,023) (561,638)
--------------------------------------------------------------------------------
Class B (47,212) (512,239) (50,219) (450,263)
--------------------------------------------------------------------------------
Class C (27,158) (290,555) (15,061) (151,835)
--------------------------------------------------------------------------------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS $ 5,536,914 $9,678,373
</TABLE>
- --------------------------------------------------------------------------------
6 FORWARD FOREIGN
CURRENCY CONTRACTS In order to protect itself against a decline in the
value of a particular foreign currency against the
U.S. dollar, the fund has entered into forward
contracts to deliver foreign currency in exchange
for U.S. dollars as described below. The fund bears
the market risk that arises from changes in foreign
exchange rates, and accordingly, the net unrealized
gain or loss on these contracts are reflected in
the accompanying financial statements. The fund
also bears the credit risk (which is limited to the
unrealized gain, if any) if the counterparty fails
to perform under the contract. At April 30, 1999,
the fund had the following forward foreign currency
contracts outstanding.
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
FOREIGN CURRENCY SETTLEMENT AMOUNT IN GAIN (LOSS) AT
TO BE DELIVERED DATE U.S. DOLLARS ($) 4/30/99 ($)
------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
8,164,415 Japanese Yen 6/29/99 70,000 1,129
34,042,655 Japanese Yen 6/29/99 291,811 4,645
30,942,600 Japanese Yen 8/31/99 $260,000 (3,350)
------------------------------------------------------------------------------------
2,424
</TABLE>
21
<PAGE> 22
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE
PERIOD FROM PERIOD FROM PERIOD FROM
DECEMBER 31, DECEMBER 31, DECEMBER 31,
SIX MONTHS 1997 SIX MONTHS 1997 SIX MONTHS 1997
ENDED (COMMENCEMENT ENDED (COMMENCEMENT ENDED (COMMENCEMENT
APRIL 30, OF OPERATIONS) TO APRIL 30, OF OPERATIONS) TO APRIL 30, OF OPERATIONS) TO
1999 OCTOBER 31, 1999 OCTOBER 31, 1999 OCTOBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $10.21 9.50 10.13 9.50 10.14 9.50
- ----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) .01 .05 (.02) -- (.02) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain 1.40 .66 1.35 .63 1.37 .64
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.41 .71 1.33 .63 1.35 .64
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.62 10.21 11.46 10.13 11.49 10.14
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 13.81% 7.47 13.13 6.63 13.22 6.74
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses absorbed by the fund 1.80% 1.80 2.68 2.68 2.65 2.65
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) .45% .92 (.40) .04 (.37) .07
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses 3.49% 6.06 4.98 7.69 5.06 7.66
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment loss (1.24)% (3.34) (2.70) (4.97) (2.78) (4.94)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
DECEMBER 31,
SIX MONTHS 1997
ENDED (COMMENCEMENT
APRIL 30, OF OPERATIONS) TO
1999 OCTOBER 31,
(UNAUDITED) 1998
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA FOR ALL CLASSES
- -------------------------------------------------------------------------------------------------
Net assets at end of period $16,799,558 9,539,623
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate (annualized) 62% 84
- -------------------------------------------------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
TAX INFORMATION
- --------------------------------------------------------------------------------
Please consult a tax adviser if you have questions about federal or state income
tax laws, or on how to prepare your tax returns. If you have specific questions
about your Kemper Fund account, please call 1-800-621-1048.
22
<PAGE> 23
SHAREHOLDERS' MEETING
SPECIAL SHAREHOLDERS' MEETING
On December 17, 1998, a special shareholders' meeting was held. Kemper Global
Blue Chip Fund shareholders were asked to vote on two separate issues: approval
of the new Investment Management Agreement between the fund and Scudder Kemper
Investments, Inc., and to modify or eliminate certain policies and to eliminate
the shareholder approval requirements as to certain other matters. The following
are the results.
1) Approval of the new Investment Management Agreement between the fund and
Scudder Kemper Investments, Inc. This item was approved.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C>
622,555 1,432 9,591
</TABLE>
2) To modify or eliminate certain policies and to eliminate the shareholder
approval requirements as to certain other matters. These items were approved.
Investment objectives
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
475,692 19,041 17,185 121,661
</TABLE>
Diversification
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
475,964 18,768 17,185 121,661
</TABLE>
Lending
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Votes
<S> <C> <C> <C>
475,926.. 18,806 17,185 121,661
</TABLE>
23
<PAGE> 24
DIRECTORS AND OFFICERS
DIRECTORS OFFICERS
JAMES E. AKINS MARK S. CASADY ANN M. MCCREARY
Director President Vice President
JAMES R. EDGAR PHILIP J. COLLORA SHERIDAN P. REILLY
Director Vice President and Vice President
Secretary
ARTHUR R. GOTTSCHALK M. ISABEL SALTZMAN
Director JOHN R. HEBBLE Vice President
Treasurer
FREDERICK T. KELSEY LINDA J. WONDRACK
Director JOYCE E. CORNELL Vice President
Vice President
KATHRYN L. QUIRK MAUREEN E. KANE
Director and DIEGO ESPINOSA Assistant Secretary
Vice President Vice President
CAROLINE PEARSON
FRED B. RENWICK JOAN R. GREGORY Assistant Secretary
Director Vice President
ELIZABETH C. WERTH
JOHN G. WEITHERS TARA C. KENNEY Assistant Secretary
Director Vice President
BRENDA LYONS
THOMAS W. LITTAUER Assistant Treasurer
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
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS ERNST & YOUNG LLP
200 Clarendon Street
Boston, MA 02116
- --------------------------------------------------------------------------------
PRINCIPAL UNDERWRITER KEMPER DISTRIBUTORS, INC.
222 South Riverside Plaza Chicago, IL 60606-5808
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 Global and International Funds prospectus.
KGBCF - 3 (6/21/99) 1076910
